Power and progress. The age-old struggle for technology and prosperity.
On 12 February 2024, the Rafael del Pino Foundation organised the online Master Conference "Power and Progress. The millennial struggle for technology and prosperity" given by Daron Acemoglu on the occasion of the presentation of his latest book of the same title, published by Deusto. The dialogue was retransmitted via the frp channel of the Foundation.
Daron Acemoglu is Professor of Economics at the Massachusetts Institute of Technology (MIT). He has published articles in prestigious international journals and is one of the ten most cited economists in the world according to IDEAS/RePEc. He is a member of the American Academy of Arts and Sciences, the European Economic Association and the Econometric Society. He was awarded the BBVA Frontiers of Knowledge Award in Economics, Finance and Management in 2016 for his fundamental contributions to the economics of growth and development.
Summary:
On 12 February 2024, the Rafael del Pino Foundation organised the online conference "Power and Progress. The millennial struggle for technology and prosperity", by Daron Acemoglu, Professor of Economics at the Massachusetts Institute of Technology (MIT), on the occasion of the publication of his book of the same title by the Deusto publishing house.
When it comes to new technologies, economists see these as major market gateways that will lead to new trends. Societies will benefit, especially in the labour market, where higher wages will be achieved. If this link to the labour market were no longer there, we would not be so optimistic about the implications of technology. Today we are on the verge of seeing these major changes and this theory needs to be rethought.
Firstly, the idea that workers will benefit from these new technologies must be criticised. This is based on assumptions that sometimes do not occur. One of them is that, when there is an increase in productivity, this will benefit workers, companies will have to hire more and wages will go up. But this does not have to be the case. For example, when mills were introduced in the Middle Ages, which increased productivity tenfold; or the Whitney threshing machine, which was introduced in the southern United States. In the case of the mills, the aristocracy and the clergy reaped the benefits, while most of the population was locked into serfdom. Black slaves fared worse with the cotton gin. The reason is simple. We were in a world where there was no competition and workers lacked power because power was in the hands of the elites. If this doesn't work, there will be no advantages for the workers.
Our current prosperity began with the industrial revolution. It is a process in which a series of technological changes took place, in an institutional environment that was neither slavery nor serfdom, but was a more complex environment. Workers were not going to be better off if employers had more power, but the factory system was used in a particular way. It is very different to use technology with the worker in mind, to make the worker more productive, than to replace the worker with automation. Automation is an option for the industrial revolution and that is what was envisaged at the beginning. Machinery starts by displacing workers. Companies made more money, but workers could not take advantage of it. Weavers saw their incomes fall as they were displaced by machines. The working conditions of unskilled labour are much worse than those of weavers, wages are low and everything fits into a larger system where the employer can monitor the worker. Living conditions are also terrible, pandemics, pollution, life expectancy plummets in some parts of England. But the foundations of our current very comfortable life are also laid.
Digital technologies and artificial intelligence offer opportunities and challenges and we must be clear that we are going to have to make this work. We are not going to have a winning option that guarantees that everyone will be better off.
These issues are interesting, but not only in historical terms, but also because modern times are not so different from the past. There are certain tensions in the labour market that are striking, especially in the United States, but not only there.
In the labour market there are ten groups: men, women, with different types of university education, etc. In the 1960s we see a pattern of shared prosperity. The different demographic groups show a similar pattern in terms of wages. It is a period when the economy improves for all groups, real wages grow by 2.5%. At the end of the 1970s we see a radical change: the population sees their wages stagnate or decline. In the case of men, real earnings plummet for school leavers. This is a phenomenon that is not unique to the United States. The two most important patterns are that inequality is increasing, i.e. those who are unskilled see their earnings worsen. It is the same pattern in country after country. In the US, inequality is most striking.
To understand the reality of this era, what we have to do is to ask ourselves what it is that allows prosperity to be shared in the 1950s and 1960s. There are two drivers. First, it is imperative that technological change is not just about automation. In the early years of the 20th century, Henry Ford and other innovators make everything change with new machinery and new methods, but they were also at the forefront in introducing new jobs for workers. These are important and skilled jobs. So the sector used more and more capital and hired more and more workers. Organisational changes are also revolutionary, at Ford, at General Motors, and so on. Today there are robots, but there are no skilled workers. We focus on automation, but we don't create new tasks, so we don't create new labour demand.
This is also important for changes that generate inequality. The real wages of half of the groups are decreasing, with differences in ethnicity, age, education and gender. There is a very important negative relationship between automation and wage structure. The basic approach to the distribution of benefits also changes. Changes in the value and priority advocated by associations. Sharing profits with workers was not important, so costs had to be cut, which means a change in the way of organising, which focuses more on automation and cost-cutting. Unions are weakening, especially after Ronald Reagan came to power.
It is important to look at what has happened in the 1980s and 1990s because we are about to see big changes with artificial intelligence, which is leading to new ways of increasing productivity. These changes are not going to transform into shared prosperity. It will depend on the direction of change. This technology must be harnessed to improve productivity. Generative AI is an alternative that allows real-time information to be made available to workers at all times. This is going to be important especially for average workers, who know their speciality. It allows bridging their gaps.
The use of this technology will depend on important institutional decisions. Entrepreneurs, companies make political decisions. If we study the past of artificial intelligence, we see that there are two very different visions, which rise and fall like the tides. Alan Turing was central to the early work in AI, where machine intelligence and the intelligent machine are essential. But this vision is biased towards automation. There is a better view of AI, which emphasises another aspect, the utility of the machine. The potential of computers mattered if it improved human productivity.
When this vision comes to fruition, it gives rise to truly striking versions, which make it possible to achieve a human-machine symbiosis, but this is not what has happened. Excessive automation has effects on the organisation and on jobs. Often, AI does not deliver what it promises. If you focus only on AI, you are relegating humans, there are going to be failures. There are now examples of failed automation. Productivity is good for humans, but not as good as it could be because it's moving so fast.
The biggest threat from AI is not just the impoverishment of the working class and the loss of equality. What we see in these now commonplace ideas is that, because machines are smart and humans will never be as smart as they are, it makes sense for the algorithm to control humans because it is smarter.
If this is the way things are, how can we make sure that we move towards a more democratic future and more shared prosperity. We need human beings making decisions, collective decision-making capacity, democratic control of institutions also in relation to technology. Decisions have to be made by countervailing powers. We need organisations to protect consumers. These organisations will be very important. We need the necessary regulation on taxation, market abuse, data. In the US we are at the beginning of these activities.
All this is not limited to current technology, but involves a rethink. We need to do things differently to improve productivity. This is what the computer innovators of the 1970s advocated. It was about decentralisation of information, new tasks and human action. Can government redirect change or not? A little government intervention has led to a rethink in the energy sector. With a bit of regulation, there has been a shift, renewables are more economical. The government can influence the direction of new technologies.
The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of their authors.
The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.
