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Image by Frits Ahlefeldt under Creative Commons License
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Sharing the gains, supporting the transition.
If technological innovation creates profits while displacing workers, part of those gains should help finance social protection.
Revised October 1, 2026
A market economy can generate prosperity while leaving some people without a viable way to earn a living. Technological change makes that tension especially clear: a company may become more productive precisely because it needs fewer workers.
For those displaced, the problem is not necessarily a lack of effort or willingness. Their skills may no longer match demand, and new opportunities may arrive too late, too far away, or behind barriers they cannot immediately overcome.
The case for stronger social protection begins there. People should not have to absorb the full cost of a transition whose benefits accrue more widely.
Progress Has Uneven Costs
That argument does not depend on forecasts of mass unemployment. Estimates of which tasks could be automated are not counts of jobs that will certainly disappear. The ILO’s 2025 assessment of generative AI points primarily to job transformation rather than wholesale replacement.
But an economy can create new jobs and still leave particular workers worse off. Aggregate growth offers little immediate consolation to someone whose income has vanished. Retraining can help, provided there is suitable work to train for and enough financial security to complete the transition.
The Gains Should Help Finance the Adjustment
If technological innovation creates substantial profits, part of those gains should contribute to the public resources needed to support people affected by the change. Income protection, healthcare, and practical routes back into employment are reasonable uses of that revenue.
This need not mean abandoning a market economy or treating commercial success as an offense. It means recognizing that the distribution of productivity gains is a political choice. Effective taxation of profits can help finance social protection while businesses continue to invest, innovate, and earn returns.
The details matter: who pays, what revenue can be collected, and how support reaches those who need it. A promise to “tax technology” is insufficient without a workable fiscal and administrative framework.
A Welfare State for Changing Work
A system built around the expectation of continuous, stable employment needs to adapt when that expectation becomes less reliable. Support should help people remain economically active, while protecting them when the labor market cannot offer a timely route back.
The welfare state can serve that purpose within a market economy. Its role is to ensure that technological progress does not depend on leaving the costs with those least able to bear them. Innovation creates possibilities; public policy helps determine who can benefit from them.
