The AI revolution has far-reaching implications for human productivity, labor markets, and the future of work – who will truly benefit from this transformative technology?
Human Productivity Just Doubled. Who Reaps the Benefits?
The AI revolution has arrived, and it’s no understatement to call it a ‘revolution.’ It’s a historic event comparable to the invention of the steam engine and the ensuing industrial revolution.
If you’re skeptical about AI’s impact, pay attention as labor markets transform. But let’s take this slowly. To grasp the significance of this revolution, let’s first explore AI’s capabilities and potential consequences.
Fact: AI Outsmarts and Outperforms Us
Automation has pressured labor markets ever since the first assembly line went into service. In the last decade, we have seen self-checkouts, autonomous vehicles, and factory robots becoming increasingly common. In Japan, caretaking robots are being tested. But AI is different—it does not take care of physical tasks, but it excels in intellectual tasks, often surpassing human capabilities. On top of this, implementing AI is relatively inexpensive, ensuring rapid adoption and widespread transformation. So, where does this leave us?
We’re already witnessing the impact: layoffs at Microsoft, Google, Facebook, Amazon, Apple, and many others are happening right now (find a comprehensive list of 2023 tech-layoffs here). Interestingly, the companies most heavily invested in this new technology are currently shedding the most employees. The reason is clear: AI outperforms humans as programmers, lawyers, tax consultants, and even medical doctors in some cases. This doesn’t render all lawyers and programmers obsolete; we’ll still need them to manage the software handling most of the actual work. However, efficiency in many fields has increased tenfold. A programmer with an AI assistant can now accomplish the work of ten programmers, and the days of lawyers charging $500 per hour may soon be gone.
It’s essential to recognize that while replacing a cashier with an automated checkout machine required significant investment, AI is dirt cheap to implement. As a result, this transformation will unfold more rapidly than anything we’ve seen before.
The Ideal Future vs. Reality
Overall, human efficiency has—at least—doubled, more so in service economies. In an ideal world, our AI assistants would make life easier, improve our work, and reduce our workload.
While this is an appealing idea, there are reasons to doubt its short-term feasibility. Human efficiency has steadily increased since feudal times, but the individuals who benefit most are rarely those whose work is supposed to be made easier. For example, during the industrial revolution, those with capital for steam engine infrastructure profited significantly more than the coal shovelers. It’s rare for a disposable workforce to be the first to benefit from technological progress.
Examining the past 50 years, between 1971 and 2017, overall productivity increased by a factor of 2.5, while workers’ compensation only increased by a modest factor of 1.15:
The economy has grown more productive, but most people’s living standards have declined. It’s naive to assume the AI revolution will immediately improve most people’s material well-being. On the contrary, we may assume that the gap between productivity and compensation becomes even more severe.
AI Threatens White-Collar Jobs Worldwide
AI is generating significant buzz right now, but it hasn’t yet fully penetrated the core of society and our daily lives. However, as we continue to observe the labor market and rising unemployment, AI’s impact will become increasingly apparent. This will be especially true in the deindustrialized West, where a large portion of the economy relies on service-based, knowledge-driven professions like programmers, graphic designers, tax consultants, copywriters, and insurance brokers.
Currently, the jobs that seem safe involve social aspects, like waiters and caretakers, or manual labor, such as factory workers, cleaners, and handymen. These occupations aren’t at immediate risk of being replaced by robots, as investments in physical automation technologies may decline. This is because it’s now more efficient and profitable for companies to invest in low-cost AI technologies that replace white-collar workers than in new, more expensive, robots that replace blue-collar workers.
The Challenge: Unemployment and Inequality
To emphasize it once more: unemployment will become a big issue in the coming years, particularly affecting white-collar workers in deindustrialized, first-world economies.
But every action has a reaction, and every movement spurs a countermovement. The industrial revolution led to generations of exploited people working grueling 16-hour shifts in factories and mines. Yet, from their struggles emerged an international workers’ movement, that has achieved significant results. It took over a century, but the workers’ movement transformed child labor and endless workdays into paid vacations and casual Fridays—benefits now enjoyed by many workers, especially in the West.
The hope is that the digital revolution will similarly ignite a movement advocating for a fairer distribution of wealth generated by technological advancements. Ultimately, this would enable everyone to benefit from the enormous increase in human productivity.
Epilogue: The Importance of People’s History in the AI Revolution
Throughout history, the lives of most people have been relatively unaffected by the major events we typically study as history—such as Napoleon’s wars or the fall of empires. Instead, their lives were more profoundly influenced by droughts or harsh winters that have long since been forgotten, as well as by simple inventions like the match, which made their everyday lives much easier. To truly understand people’s experiences, we must explore their histories as people’s history, as exemplified by Michael Parenti’s work. As the AI revolution unfolds, it would be a good time to start paying attention to the people’s history while it is still being written.
What do you think about all this? Let me know in the comments.
This article was created with the assistance of a human.