The promise of artificial intelligence (AI) in our economy has sparked a critical debate: will AI serve as an economic blessing or a curse? History offers insight into the possible outcomes, given the uncertainties and inequalities that often accompany Technological Advancements. Just as medieval improvements in farming tools failed to uplift Europe’s peasants due to wealth redirection towards cathedrals, the economic Impact of AI could be similarly shaped by how its benefits are distributed.

A fork in the road for AI

The potential of AI is vast, but it is accompanied by a pivotal choice that society must make. Simon Johnson, a professor of global economics and management at MIT Sloan School of Management, emphasizes that AI has the capacity to either bring immense benefits or exacerbate inequalities.

AI proponents anticipate a surge in productivity that could result in increased wealth and better living standards. A study by McKinsey estimated that AI could add trillions of dollars in value annually to the global economy. Some enthusiasts even envision AI and robots freeing humans from mundane tasks, ushering in an era of greater creativity and leisure. However, concerns loom about the potential loss of jobs across various sectors, with even Hollywood actors fearing the emergence of AI-generated replacements.

Historical insights show the uneven impact of technological advancements

History reminds us that the outcomes of technological progress are often uncertain, uneven, and sometimes negative. A recent book co-authored by Simon Johnson and Daron Acemoglu, both MIT economists, examined a millennium of technological advancements to assess their success in job creation and wealth distribution. The spinning jenny’s automation in the 18th-century textiles industry, for example, led to longer work hours in harsh conditions. Similarly, the expansion of the American South’s slavery was facilitated by 19th-century mechanical cotton gins.

Complex impact of the Internet and AI

The Internet’s impact, while transformative, has been mixed. It created new job roles but concentrated wealth in the hands of a few billionaires. Moreover, the initially touted productivity gains have slowed in many economies. French bank Natixis cautioned against assuming AI’s automatic positive impact on labour productivity, pointing out that even a pervasive technology like the Internet left many sectors untouched and created low-skilled jobs.

Uneven distribution of AI gains

Globalization adds complexity to the AI equation. Governments may engage in a “race to the bottom” to attract AI investment with lax regulations, potentially leading to unequal distribution of benefits. Additionally, the substantial infrastructure required for AI investment could leave poorer countries struggling to catch up.

The role of politics and innovation

While innovation is part of the equation, ensuring that AI benefits everyone is a greater challenge that requires political solutions. Historical examples, such as the introduction of railways in 19th-century England, show how democratic reforms allowed broader societal access to technological advances. However, the last four decades have seen aggressive shareholder capitalism erode these gains, as seen with automated self-checkout systems that prioritize profit over broader benefits.

AI’s impact on workers’ rights

Worker groups express concerns about AI’s implications for labour rights and employment. The potential for AI-driven decision-making in hiring and firing without human oversight threatens job security. Unions advocate for consultation rights and collective bargaining to address these concerns.

Multifaceted factors shaping AI’s impact

The effects of AI on the economy hinge on numerous factors, ranging from antitrust policies to workforce retraining. An OECD survey revealed that while AI could enhance job satisfaction, health, and wages, it also raised concerns about privacy, workplace biases, and overworking.

Ultimately, the question remains: will AI magnify existing inequalities or pave the way for a more equitable future? Simon Johnson underscores the critical role of choices society makes in shaping AI’s economic influence. The lessons from history urge us to be mindful of AI’s potential blessings and curses, advocating for equitable distribution and thoughtful regulations to ensure that the benefits are widely shared.