According to a new report by Barclays, new technology is changing our work and social lives at unprecedented speed and intensity.
Leaps in technological advancement are nothing new, and innovation often results in incredible step changes in the home and the workplace: the printing presses of the 1400s widened access to books (and therefore knowledge) for the first time; the Industrial Revolution’s mechanisation led to an explosion in both industrial output and urbanisation; cars, aeroplanes and the internet have connected people around the world like never before.
Machines are ascendant – but don’t discount humans
Current advances in Artificial Intelligence and machine learning are being made possible through the confluence of three powerful tech-driven events: the rapid digitisation of the economy, which is creating trillions of gigabytes of data every year (and rising); the plummeting cost of storing all that data; and an explosion in ever cheaper, ever more powerful computing power.
Historical technological breakthroughs often succeeded in eliminating back-breaking and repetitive tasks, allowing us to spend our time and energy on more ‘worthwhile’ activities. Now advances in Artificial Intelligence mean machines are increasingly imitating humans in how they think and act, and are increasingly involved in work that has been exclusively done by people.
However, we don’t believe that robots will completely replace humans in the workplace any time soon. Crucially, people retain the upper hand over machines in two important ways:
Preparing for change
Innovation continues to improve human lives, but technological advances do not always have an unambiguously positive impact.
We’ve learned from history that the application of new technology often leads initially – counter intuitively – to lower productivity, depressed wages and disrupted industries. We argue in Delayed expectations: automation, productivity and wages that the true effects of new, groundbreaking technologies often take decades to improve productivity.
It takes time for economies of scale to kick in on the production side, for consumer behaviour to adapt, for companies using the technology to refine or even change their business models. While business and society catch up, productivity tends to lag, despite relatively low unemployment figures.
Governments, institutions and society at large should all be preparing for the potential economic fall-out by seeking solutions to mitigate the effects of disruption and job and wage polarisation. The concept of a universal minimum income, for example, is currently hotly debated, while taxation on robots has also been proposed by such luminaries as Bill Gates.
The debate around possible solutions will likely continue for years to come. Historically, society has always found a way to adapt to both the beneficial and the challenging effects of technological change. We believe that people will successfully navigate the current period of technological change as they have in previous periods of technological advancement throughout history.
Ajay Rajadhyaksha is a Managing Director and Head of Macro Research at Barclays, based in New York. Aroop Chatterjee is a Director and Head of FX and EM Macro Strategy, Americas.