Crowd finance and the future of work

This week, Google’s computer program AlphaGo defeated the world’s best player of Go, the ancient Chinese board game. It served as another reminder that automation and machine learning are here to stay and will have a huge impact on all of our lives. 

For many, this is deeply troubling. But it should be considered an opportunity – one that can only be realised with the help of the crowd economy. 

Harvard Business Review reports that half the activities people are paid to do in the global economy could be automated by adapting existing technology. That's over 1.2 billion workers. The White House predicts 83% of low paying US jobs could be lost. The Independent says machines could soon do half of all UK manufacturing jobs.  

People are fearful of these developments. But history teaches us not to be. 

When Henry Ford invented the assembly line, people had similar fears. They believed millions employed in agriculture and transport would be put out of work. But the opposite occurred. Mass production forced unemployment down and wages up

This is because humans adapt. In 1900, 41% of all US jobs were agricultural. In 2000, that had dropped to under 2%. But unemployment remained flat, as people found ways to remain employed. The same will happen today, with millions of jobs being lost to automation, and millions created by automation, too. 

Alternative finance is key to this process of adaptation. Without a robust crowd economy, innovation and entrepreneurship will stagnate and automation will erode jobs, not create them. 

In 2016 Funding Circle loaned more money to UK entrepreneurs and SMEs than all UK high street banks combined. The low volumes of money being loaned to SMEs - which make up 99% of the UK economy – via traditional methods is a concern for UK economic development, especially with automation on the horizon. 

If automation damages the SME job market, the effects will be catastrophic for our economy. To avoid this, funding must continue to flow to the startups and established businesses that need it most. And, as we’ve seen since the 07/08 financial crisis, the most effective, liquid and flexible source of funding for start-ups and SMEs is the crowd, via P2P and crowdfunding. 

Undoubtedly, automation is a worry for employees and entrepreneurs. Employees fear for their jobs. Entrepreneurs fear losing access to finance. The two are linked. UK policymakers and business leaders must acknowledge the importance of alternative finance and the crowd to startups and SMEs and thus, to the future of the UK economy. 

A proactive approach to adapting and re-orientating our economy in order to best leverage the power and flexibility of the crowd will yield long term competitive advantages that will outlive all of us. 

If this approach is taken, automation doesn’t have to be feared. It should be welcomed and embraced.


This article was created in association with Crowdsurfer, the leading resource for data and news on the crowd economy and alternative finance. 

Edward Playfair