Executive Outlook:
In 1938, amidst the aftermath of the Great Depression, the world grappled with the uncertainties of technological unemployment. The rise of machines, warned British economist John Maynard Keynes, was “outrunning the pace at which we can find new uses for labor.” Fast forward to today, and the debate echoes through the fears of AI and automation replacing human workers. Drawing parallels with historical perspectives, this article explores the enduring discourse on technological unemployment and the lessons we can glean for our AI era.
1. The Historical Debate:
It was 1938, and the pain of the Great Depression was still very real. Unemployment in the US was around 20%. Everyone was worried about jobs.
In 1930, the prominent British economist John Maynard Keynes had warned that we were “being afflicted with a new disease” called technological unemployment. Labor-saving advances, he wrote, were “outrunning the pace at which we can find new uses for labour.” There seemed to be examples everywhere. New machinery was transforming factories and farms. Mechanical switching being adopted by the nation’s telephone network was wiping out the need for local phone operators, one of the most common jobs for young American women in the early 20th century.
Were the impressive technological achievements that were making life easier for many also destroying jobs and wreaking havoc on the economy? To make sense of it all, Karl T. Compton, the president of MIT from 1930 to 1948 and one of the leading scientists of the day, wrote in the December 1938 issue of this publication about the “Bogey of Technological Unemployment.”
How, began Compton, should we think about the debate over technological unemployment—“the loss of work due to obsolescence of an industry or use of machines to replace workmen or increase their per capita production”? He then posed this question: “Are machines the genii which spring from Aladdin’s Lamp of Science to supply every need and desire of man, or are they Frankenstein monsters which will destroy man who created them?” Compton signaled that he’d take a more grounded view: “I shall only try to summarize the situation as I see it.”
His essay concisely framed the debate over jobs and technical progress in a way that remains relevant, especially given today’s fears over the impact of artificial intelligence. Impressive recent breakthroughs in generative AI, smart robots, and driverless cars are again leading many to worry that advanced technologies will replace human workers and decrease the overall demand for labor. Some leading Silicon Valley techno-optimists even postulate that we’re headed toward a jobless future where everything can be done by AI.
While today’s technologies certainly look very different from those of the 1930s, Compton’s article is a worthwhile reminder that worries over the future of jobs are not new and are best addressed by applying an understanding of economics, rather than conjuring up genies and monsters.
Uneven Impacts of Progress:
Compton made a crucial distinction between the impact of technological progress on industries as a whole and its effects on individuals. While he argued that technological unemployment was a myth for industries overall, he acknowledged the real and often painful challenges faced by individuals in specific jobs and communities.
Lessons from the 1960s:
In the early 1960s, another wave of anxiety emerged about automation and its potential to outpace the demand for labor. MIT economist Robert Solow debunked these fears, emphasizing that technological progress did not necessarily lead to catastrophic unemployment. However, he acknowledged the human cost as certain types of labor became obsolete.
AI in the 2010s:
Fast forward to the early 2010s, where the advent of AI raised similar concerns. Erik Brynjolfsson and Andrew McAfee argued that technological change was eliminating jobs faster than it was creating them. The worry was not just about specific industries shutting down but a broader transformation affecting a range of jobs.
AI and Jobs:
Contrary to doomsday predictions, current estimates suggest that AI’s impact on productivity growth will be around 1.5% per year over the next decade. While some jobs are exposed to automation, it doesn’t necessarily translate to widespread unemployment. Most positions are only partially exposed to automation, with AI becoming an integral part of the workday.
The Path Forward:
The critical question lies in how AI will shape the future of work. Will it merely replace workers, or can it be harnessed to enhance skills and capabilities, leading to economic growth and new job opportunities?
Responsibility of Tech Companies:
Taking inspiration from Compton’s 1938 essay, the responsibility of mitigating the impact of technological transitions falls on the shoulders of companies. Coordinated efforts and a focus on the long-term benefit of the public must guide AI companies in navigating the evolving job landscape.
Wrap-Up
As AI continues to transform our world, understanding the lessons from historical debates on technological unemployment is essential. Instead of succumbing to doomsday predictions, we have the power to shape a future where AI complements human capabilities, leading to sustainable economic growth and new opportunities.
In a world where the genie of AI is already out of the bottle, the choices we make today will define the future of work for generations to come.