History suggests profound technological change presents significant challenges for policymakers. Each of the three previous industrial revolutions had a similar initial impact: it hollowed out jobs across the economy, it led to an increase in inequality and to a decline in the share of income going to labour.
AI threatens to have precisely the same effects, but with one key difference. Left unchecked, owners of the new machines will make enormous sums of money out of their innovations. Capital will see its share of income rise at the expense of labour.
That’s Larry Elliott and normally he’s better than that.
Agreed, certain flavours of economic theory insist that capital will get ever more of the money. But that’s not, in fact, what actually happened. Does anyone really, truly, believe that capital got more of the cash in the High Victorian Age than it did in, say, 1320?
Wheelllpp…. In 1320 getting your hands on more of the moolah depended more on Marrying Right and doing some effective percussive maintenance on any opposition, innit? High stakes..
And all those peasants fled the riches of agricultural labouring to become poor peasants in dark satanic mills, did they?
No, they did so because it paid better.
I started work when desktop IT was just becoming mainstream. The ‘microprocessor’ will devastate typists’ jobs, hordes of unemployed. End of the world as we know it.
Instead, there was a vast increase in clerical jobs: inside work with no heavy lifting.
Progress.
These AI owners: to whom will they sell?
Even Our Ford (PBUH), realsied you cannot selll a million ‘Model T’s unless the average worker i.e. one of his employees, was paid well enough to afford one.
However, AI drivel-generators are indeed a mortal threat to journaloids like Ms/Mr Elliot.
“Each of the three previous industrial revolutions …”: there haven’t been three, just one continuing one with different phases. The idea that revolutions might have phases should surely be familiar to anyone with the slightest familiarity with the French and Russia gorefests.
As for capitalists pocketing all the cash, what an ignorant tit. Consider the shareholders in, for instance, 19th century railways or 20th century airlines.
That’s not a good choice of dates to form a comparison. 1320 is nearing the end of the feudal period when much labour was effectively indentured. Y Pestis (aka Black Death) in the middle of the century and the attendant loss of life dramatically altered the balance in favour of labour. The constituents of capital (land, buildings, livestock) remained constant between 1320 and 1360, say, so that would be a better basis for comparison
1320 deliberately chosen to be before pestis……
I thought it might be but then you introduced the confounding elements of industrialisation and all that that entails.
I started work when desktop IT was just becoming mainstream. The ‘microprocessor’ will devastate typists’ jobs, hordes of unemployed. End of the world as we know it.
Instead, there was a vast increase in clerical jobs: inside work with no heavy lifting.
Progress.
I do wonder about that period though. I was working in that sort of environment when ‘typing stuff’ & manual number crunching & data processing were a large part of oganisations. The largest part if anything. And yes, IT did give the coup de grace to those sort of jobs. But the organisations still seem to employ the same number of people if not more. WTF they’re all doing, beats me.
Parkinson’s in action? When you’ve built your little office empire & some of your territory gets captured, you look to expand into other territory? Even if it takes discovering it?
Producing client service for a stockbrokers was a two page letter (dicto-typist) & valuation (manual number crunching & copy type) once or twice a year. Seems to have inflated to a monthly 10 pages of valuation data & a 35 page pamphlet including personal mission statement on one’s personal broker plus suggestions for commission producing portfolio churn. All with designer graphics.
I remember when they rounded all us clerks up at Viccy Bks, took us around to the typing pool, and said to put your hands on the keyboard and type something on the screen. I then asked, ‘What’s next’ and they said ‘Congratulations. You can type’.
But I certainly don’t remember anyone being sacked. The girls were just distributed as clerks throughout the barracks.
I suspect it’ll be much the same this time.
@ Tim, sadly very many people *do* believe just that – and that Picketty is talking through his mouth.
Population of England 1290 – 1650
1290 4,750,000 +7.2%
1315 4,690,000 −1.3%
1325 4,120,000 −12.2%
1348 4,810,000 +16.7%
1351 2,600,000 −45.9%
1377 2,500,000 −3.8%
1400 2,080,000 −16.8%
1430 2,020,000 −2.9%
1450 1,900,000 −5.9%
1490 2,140,000 +12.6%
1522 2,350,000 +9.8%
1541 2,830,000 +20.4%
1560 3,200,000 +13.1%
1600 4,110,000 +28.4%
1650 5,310,000 +29.2%
You can certainly see the plague event. But population continues to fall until 1450. So if population growth is a marker for the benefits of a move of the benefits of production towards labour, it’s hard to see it.
The first important change was that the plague and the resulting fall in numbers brought feudalism to an end so the drastic and sudden fall in population disrupted the social order to the benefit of ‘labour’. The second is that there were several recurrences of the plague during the remainder of the 14th century after its first arrival in Britain. Luckily Pfizer and Bill Gates weren’t around at the time.
TMB and BiS
The population graph does not go far enough. Don’t forget that 1665 was a significant Plague Year and it made frequent journeys to these shores throughout the 16th and 17th Century. The population in England did not recover fully from the Black Death until well into the 18th Cent.
We also have to contend with the Little Ice Age, which had two main characteristics: freezing winters and uncertain summers. Summers were often stupidly hot and caused famine because the poor quality corn wouldn’t grow or just as often cold and wet so that the poor quality corn did not grow.
Before the Ind Rev came the Ag Rev – the Age of Improvement where land use went from subsistence farming to industrial scale production. The rise of the Great Landowners, enclosing of common land, the replacement of tied labour by wage and true tenant labour and better communications ( turnpikes, canals ) all laid the foundations for the Ind Rev to come.
Ottokring,
I think it’s always a bit mistaken to think of revolutions, when it’s really more about gradual improvements to things. As you mention, canals. You couldn’t build a railway works in Swindon without canals. It’s one reason it got railway works, because there was a wharf.
It’s like people think Apple invented the iPhone and technically yes, they did. But it was mostly dependent on various components reaching a point where you could make such a thing. Technology first invented in the 50s, 60s, whatever getting small enough and cheap enough.
Dear Mr Worstall
The horrors of capitalist exploitation of the downtrodden workers has deposited 30 million cars on our roads and allowed millions of the aforementioned downtrodden to jet off for a holiday in Torremolinos and other sunny places.
Oh the humanity …
I am not sure that any policies made by challenged policymakers added anything to the lot of the downtrodden.
“Left unchecked, owners of the new machines will make enormous sums of money out of their innovations.”
Excellent! So leave them unchecked and the rest of us will enjoy even more value added.
DP