If mediaeval improvements in the plough did not help lift Europe’s peasants out of poverty, it was mostly because their rulers chose to construct cathedrals with the wealth created by the increased increases in output.

According to economists, if artificial intelligence (AI) penetrates our life in a way that only a select few benefit from the proclaimed advantages rather than the majority, something similar may take place.

“AI has got a lot of potential – but potential to go either way,” argues Simon Johnson, professor of global economics and management at MIT Sloan School of Management.

“We are at a fork in the road.”

AI supporters anticipate a surge in production that will increase wealth and raise living standards. In June, consulting firm McKinsey predicted it could increase value by between $14 trillion and $22 trillion yearly. The higher estimate is nearly equivalent to the size of the U.S. economy today.

Some techno-optimists go even further, arguing that AI is the technology that will eventually liberate humans from routine duties and usher us into lives of greater creativity and leisure, along with robots.

Yet there are many concerns about its effects on livelihoods, including its potential to eliminate jobs in a variety of areas – as evidenced by the Hollywood actors’ strike in July over their concern that their AI-generated doubles may replace them.

These worries are not without merit. History demonstrates that technological innovations typically have an unclear, uneven, and occasionally negative economic impact.

In a book released this year, Johnson and fellow MIT economist Daron Acemoglu examined the success of technology during the past 1,000 years, from the plough to automated self-checkout kiosks, in terms of generating employment and distributing wealth.

Although the spinning jenny was essential to the automation of the textile industry in the 18th century, they discovered that it resulted in longer working hours in more difficult circumstances. The growth of slavery in the American South throughout the 19th century was made possible by mechanical cotton gins.

The history of the Internet is complicated: while numerous new employment opportunities have been established, a small number of billionaires have reaped the majority of the benefits in terms of wealth. In many economies, the productivity increases it was previously praised for have stalled.

Even a technology as prevalent as the Internet left many areas untouched, and many of the employment it created were low-skilled – think of the delivery chain for online purchases – according to a research note published in June by the French bank Natixis.

“Conclusion: We should be cautious when estimating the effects of artificial intelligence on labour productivity,” Natixis warned.

There are additional reasons to question whether the potential benefits of AI will be distributed equally in a globalised economy.

A “race to the bottom” could occur as nations compete for AI investment with looser regulations, on the one hand. On the other hand, the obstacles to attracting that investment might be too great, leaving many less developed nations behind.

“You have to have the right infrastructure – huge computing capacity,” said Stefano Scarpetta, Director of Employment, Labour and Social Affairs at the Paris-based Organisation for Economic Cooperation and Development (OECD).

“We have the G7 Hiroshima Process, we need to go further to the G20 and UN,” he said, advocating the expansion of an accord at a May summit of Group of Seven (G7) powers to jointly seek to understand the opportunities and challenges of generative AI.

It turns out that innovation is the simple part. Making it work for everyone is harder, and here is where politics enters the picture.

According to MIT’s Johnson, the introduction of railways in 19th-century England at a time of swift democratic transformation made it possible for wider society to benefit from these advancements, whether it was through the quicker delivery of fresh food or a first experience with leisure travel.

Millions were able to benefit from technological advancements well into the 20th century thanks to similar democratic advances made in other countries. Johnson, however, argues that the aggressive shareholder capitalism that has characterised the past forty years is what first caused this to change.

He cites the automatic self-checkout as one example. Only the benefit from the decrease in labour expenses is realised; groceries do not become more affordable, shoppers’ lives are not improved, and no new job is created.

Worker groups, who have lost most of their influence since the 1980s, see AI as a potential threat to workers’ rights as well as employment, for instance if AI-driven hiring and firing decisions are not subject to human oversight.

The importance of unions “having statutory consultation rights, having the ability to collectively bargain around technology at work,” according to Mary Towers, employment rights policy officer of the Trades Union Congress of Great Britain.

That is just one of many variables that will affect how AI impacts our economic lives, including antitrust laws that promote healthy competition among AI vendors and worker retraining.

According to a July OECD poll of 5,300 workers, AI may increase job happiness, health, and income, but it also raises concerns about privacy, reinforces biases at work, and encourages overworking.

“The question is: will AI exacerbate existing inequalities or could it actually help us get back to something much fairer?” said Johnson.

(Adapted from ThePrint.com)

Categories: Economy & Finance, Entrepreneurship, Strategy, Uncategorized