Artificial intelligence is altering economies in many ways. In fact, last year companies spent around $22 billion to buy companies which had AI technologies. A PWC report found out that North America and Europe will be the biggest targets of AI-induced automation. 23% to 76% of jobs are considered at ‘high risk from AI. On the other hand, 11% and 29% of jobs in Asia are considered under ‘high threat’ from AI.
- Automation and AI directly displace labour in the sector
- It leads to different jobs that make up for some of the job losses in another sector
- Increase in incomes in the economy leads to increase in job demand
- Automation does not replace jobs, but it performs certain tasks within the area
This leaves good space for human employment and a good partnership between technology and humans to run the economy.
Despite alarmist predictions, AI has improved medical technology and has largely democratised the supply of medical equipment by making it cheaper and more accessible. Many public services have reached the hands of the masses only because AI allowed the stakeholders to make the services flexible and inclusive.
The two coins of AI have puzzled many observers and experts because it becomes harder to evaluate and predict what an AI future holds for us.
The Alternate Question
Discussions have been going on ad nauseam about whether AI is good or bad for humanity. But now, experts have started commenting on the effect AI has had on capitalism and the economy in general. There are speculations that large corporations leveraging their data and creating AI agents which capture many facets of human endeavour will lead to a unemployment.
Let us imagine that this is the case. There could be a play-by-play for the same:
- AI leads to unemployment
- Unrest in the country
- Government provides basic income, minimum wage with makework jobs to citizens
- Similar welfare schemes would be announced to compensate for the lack of amenities
In this scenario, how would the Government finance the welfare schemes on such a scale where a percentage of the population will be dependent on government assistance? The obvious answer is this — increased taxation on income and consumption. This will obviously take a toll on the working economy and savings.
If such measures are not used in a struggling economy where jobs are hard to come by, the voting public will use the ballot to enforce these measures. In an environment where jobs are hard to come by, the general public will vote for progressive policies which favour government intervention to help individuals.
Already there are arguments made to show the power of a planned centralised economic system in tackling such an eventuality. Feng Xiang, a professor of law at Tsinghua University, writes:
“…China’s socialist market economy could provide a solution to this. If AI rationally allocates resources through big data analysis, and if robust feedback loops can supplant the imperfections of “the invisible hand” while fairly sharing the vast wealth it creates, a planned economy that actually works could at last be achievable.”
Marx And Capitalism Committing Suicide
German philosopher and economist Karl Marx had predicted that as industrialisation increases, there would be a great problem of inequality. As capitalist economies rally through generations, more and more people would be at the bottom of the pyramid, and this would lead to declining wages. But in the 20th century, the predictions made by Marx were proved to be false. The population doing manual labour had considerably decreased and the middle class was booming as wealth had increased substantially.
Socialist side of politics always waited for a revolution led by the middle and lower classes which never really happened. This was obviously because the middle class was booming and the lowest strata of society was supported by small Government policies in a capitalist system. This gave rise to welfare states where people at the bottom of the pyramid were helped by the government to pull them out of poverty to make sure that they became a part of the tax-paying machinery.
The rise of AI and AI-driven industry is now threatening to take away labour opportunities from the population. There is also a chance that some aspects of human life can be totally replaced by AI — for example, driving. Hence there is a chance that AI becomes a cause of both economic and emotional distress in the economy. Capitalism showed promise to the middle and lower class, and averted a revolution in the 20th century — but will excessive dependence on AI harm capitalism?
The Relation Between Data and Labour
Part of the reason for the rise of this discussion is the nature in which some of the biggest capitalist organisations work today. Organisations like Google, Amazon or Facebook, who are the prime movers and shakers of today’s capitalist society, take advantage of user data — sometimes without even the required permissions. To make matters worse the organisations have also been reportedly avoiding taxes and allegedly dumping large amounts in offshore accounts. Some experts believe to expect that the corporates acting in the interest of social welfare is a wild expectation.
The nature of these companies where they are largely responsible only to the shareholders and not to the public, in general, is surely a problem. There are a few solutions to the problem:
- The first solution includes looking at data as labour. Today’s AI boom is largely driven by data gathered from users and leveraging them to build intelligent products that help drive profits. Experts believe that in such a case, data should be seen as labour and payments regarding that labour should be made to the users. How the implementations would work is still not clear but guaranteed to be clunky.
- The governments can form a sovereign wealth fund (like Norway), and use it to buy shares of multinational and deep technology companies to keep them in control.
The popularity of this option here in India is unquestionable. We did this in 1969 when the (then) Prime Minister Indira Gandhi moved to nationalise banks.
However, as AI becomes a part of every conversation and every move that we make, it becomes obvious that some of the actions of companies have to be regulated.
So are a few probable scenarios:
- If we, as a society, let the AI research develop uncontrollably, there is every chance that we may end up making a huge number of citizens rely on Government assistance.
- If there is an effort to reign in companies and startups in a premature manner there is an eventuality that would involve heavy regulations and monitoring on many other aspects of our lives.
In either case, it is sure that the ghost Of Karl Marx is smiling.
Subscribe to our NewsletterGet the latest updates and relevant offers by sharing your email.
What's Your Reaction?
As a thorough data geek, most of Abhijeet's day is spent in building and writing about intelligent systems. He also has deep interests in philosophy, economics and literature.