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It has always been the conventional wisdom that businesses should be fit to survive in the market competition, that only the best businesses can survive beyond horizon of several years, that survival of some enterprise certifies both its style of conducting business and its general meaning for the society.

But Industry 4.0 and globalization has created 2 interesting trends:

  1. Automation, robotics and artificial intelligence are providing opportunities to automate jobs, but some investment is required. So - for the first time in the human history the humans compete against machines and sometimes human labour lower the standards of remuneration to survive in this competition. So, in that way the primitive businesses emerge - those enterprises that rely on the cheap human labour and that simply do not make investment. So, if someone has no capital and if someone has enough cruelty to create mean jobs, the he or she can build up primitive business and survive the market competition relying on the cruelty of primitive, low wage jobs. The general society suffer - the society provides cheap labour, the society does no receive taxes from low wage job, the society looses could-be scientists, technologists, ethical businessman, artists and so on, so on.

  2. Globalization and "race to bottom", international and interregional competition relax the standards on labour and renumeration, sometimes countries or regions asks for any job the enterprises can provide and this is again the opportunity for the unethical people to create enterprises with precarious jobs.

So - both those trends do very much good to the society, but those trends also create opportunities for the unhealthy, unethical companies without investment and use of technologies to emerge, so - in short - primitive businesses can exists, survive and even thrive in this new era.

My questions are:

  1. Is there economic research about primitive business or maybe they are called differently in the economic research? There is research about financially-constrained households and how their option space is bounded and how they disturb the usual assumptions about the benefits of free market, free will and utility maximization. Maybe there is literature about primitive businesses as well?
  2. Is there normative economic research that considers the constraining the power of primitive businesses - both - by the increased regulation (e.g. common minimal standards) and by increased opportunities for the workforce to escape the trap in falling the braces of primitive businesses.

p.s. I am aware about the usual thinking that any jobs are good in the era when automation automates away the jobs and that people should work whatever that means. But there is escape from the low standard jobs either by Universal Basic Income or by Universal Dividend (better yet) and people will not become vegetables in these settings, because, the mentally healthy people, according to Maslov et el, prefer self-realisation (science, arts, travelling, volunteering, etc., etc.) and not laziness (and there should be treatment for mentally unfit people).

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  • $\begingroup$ The "primitive business" you're asking about is probably called a sweatshop by everyone else. Besides that, it's not terribly clear what else do you want to know. "normative economic research"? Are you sure you're not confusing political ideology with economics (research)? $\endgroup$ – Fizz May 2 at 11:52
  • $\begingroup$ I mean surely there are economists (even Nobel-prize winning ones) working on "normative economics" topics like inequality etc. Is that really news to you? $\endgroup$ – Fizz May 2 at 11:59
  • $\begingroup$ Of course, I am aware of the notion of sweatshop, but such enterprises emerged in the times when there were not alternatives to them. Currently there are alternatives - automation can automate almost any job in them, so, there is no moral sense of having sweatshops now. But anyway, they still exist in the economy. So, the notion of progress, of social value/social welfare, of economic fitness should be accomodated to take this fact into account. My question was about them in the time of Industry 4.0 and "race to bottom". $\endgroup$ – TomR May 2 at 12:13
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    $\begingroup$ Some recent reports from SEB Group cited Industry 4.0 as the force that can boost the supply side and in such way it can cease those business cycles that are induced but the supply-side restriction, e.g., it can cease the downturn that can start this year. I am really aware that economists are far behind the Artificial Intelligence, Robotics and other Technological science in quantifying the effects of them, but that is failure of the economists, that is bad for society. $\endgroup$ – TomR May 2 at 12:27
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    $\begingroup$ Mkay, so one hand you claim that all of economics should really be dealing with fairness (your caps lock comment) and you also seem to know the answer to your more specific question about "industry 4.0". Why don't you just post your own answer then? $\endgroup$ – Fizz May 2 at 12:31
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There surely is research about the complement(s) of the (low tech) "primitive businesses", i.e. the high-tech and/or innovative businesses.

The US CES for instance publishes a BDS-HT (Business Dynamics Statistics - High Tech) report. You can compare these with the core BDS data and get an idea how the high-tech sector differs. The US CES method of high-tech business classification is based on the number of STEM employees.

Ultimately, High Tech industries account for about 4% of firms and 6% of employment.

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So there are a lot "primitive businesses" by this standard, even in the US.

A different method is used by CES for finding/reporting "innovative firms", BDS-IF. This is based on patents (BDS-PF) and trademarks.

I'm guessing the German Industrie 4.0 that motivated your question is probably similar to BDS-HT, but I don't know their exact methodology.

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