(Roughly) Daily

The estimable economic historian Louis Hyman has been engaged in an on-going “friendly debate” with his equally-estimable friend and Johns Hopkins colleague Rama Chellappa on “what AI means”…

… As I see this debate, this question of our age, there are two main questions that history can shed some light on.

1. Is AI a complement or a substitute for labor? That is, will it increase demand for and the productivity of workers, or decrease it?
   
2. Will AI be controlled by the few or be accessible to the many?

A Complement or a Substitute?

Consider a some of the most important technologies of the past 200 years.

When I am asked about what automation might look like, I inevitably discuss agriculture. Roughly all of our ancestors were farmers and approximately none of us today are. Yet we still eat bread made from wheat. That shift is possible because of automation.

The mechanical thresher, used to process wheat, was a substitute for the most backbreaking work of the harvest. But it also enabled more land to be cultivated, and that land was cultivated more efficiently, allowing for greater harvests. Mechanization of the farm, like the thresher, turned the American Midwest into the breadbasket of the world.

Those displaced farmers found work on railroads, moving all that. And those jobs, according to people at the time, were a kind of liberation from the raw animal labor of threshing. On net, it created demand for more workers at better wages in work more fit for people than beasts. For those that remained farmers, they found other higher-value work to be done. On a farm, there is always more work to do.

The failure, then and now, is to think farmers were only threshers. That was one part of their jobs. Today, our work, for most people, is also a bundle of tasks. Workers then and now could and can focus on parts of their job that are of higher value. And in a new economy, new tasks in new industries will be created. Many of the jobs that we do today (web designer, UI expert) were simply unimaginable in 1850. That is a good thing.

Consider now the assembly line. I’m sure you all know about the staggering increases in productivity that come from the division of labor. If you take my class in industrial history, you would learn deeply about the story of the automobile. With the assembly line, and no other change in technology, car assembly went from 12 and a half hours to about 30 minutes (once they worked out the kinks). Did this reduce the demand for workers? No. It reduced the price of cars. And that increased the demand for workers, who eventually could demand even higher wages through unionization.

It is important here to realize that better tools don’t make us get paid worse. They generally make us get paid more. Why? Because the tool, without the person, is useless. Even for today’s most cutting-edge AIs, that is true. It can code, but it can only code what I imagine it to code. It can draw, but only what I imagine it to draw. That is true for AIs as it was true for the thresher.

So, I would offer that AI will create more growth, more abundance. In the long run, all growth comes from higher productivity.

I would add one more piece to this story. Economic inequality has worsened since roughly 1970. It has worsened, therefore, not in the industrial era, but the digital era. I have argued elsewhere that this happened because for decades we did not use computers as tools of automation but as glorified typewriters (and then as televisions). Our productivity did not increase, especially to justify the expense of computers. Economists have debated for decades now over the lack of increase in productivity that came with the “digital age” of computing, but it is simple. We don’t use them as computers. Now we can.

For the first time now, normal people with their normal problems can use their computers to solve and automate their problems. AI can write code. AI can automate their tedium. The digital age did not bring any gains because it had no yet arrived. We were living through the last gasp of the industrial economy.

It is now here.

This technology will unleash unimaginable productivity gains. It will level the playing field between coders and the rest of us. Coders will lose their jobs, to be sure, but for the rest of us, the bundle of workplace tasks will become much better.

And truthfully, the demand for real computer scientists will probably increase in the era of vibe-coding. Computer science itself is a bundle of skills, of which coding is just one. The more important skill – software and data architecture – will only increase in demand as the usefulness of software expands…

[Hyman goes on to explore the dangers of monopolization (which, for reasons he explains, he believes are overstated); the future of softward (which, he believes, will skew to open-sorce), and of hardware (which, he believes will not be a bottleneck). He concludes…]

… Put together we come to a very different picture of what the digital age will be. The industrial age required massive investments to build the factories to make the products that were in demand. In the digital age, in contrast, the factories to build digital products will be made by the AI on your laptop. That is not inequality. That is equality.

The physical products of the Fordist industrial age were made for the mass market. In contrast, the digital products of the post-fordist digital age will be long-tail products. I don’t need to make mass market products; I can make them for a small niche, or just for myself.

Rather than fostering inequality, AI, then, is a great equalizer. To make products for a global market you don’t need a billion-dollar factory. You just need a laptop. That is astonishing.

That said, it will not be all sunshine and rainbows. Will AI solve the inequities of capitalism or its reliance on externalities as a source of primitive accumulation? Probably not.

But at the same time, AI is not a normal technology in that it has the potential to radically undermine many of the tendencies to concentrate capital that we have seen in the industrial age. We have been automated out of work before, that is nothing new, but it has always concentrated capital in the hands of the few. For the first time, there is potentially an alternative path forward.

AI will bring the digital age out of the hands of the coders. AI will not widen the gap—it will bridge it. Its ubiquity will mean that AI will be a tool that nearly all of us will be able to use in our daily work, which will make ordinary people more productive and prosperous…

Eminently worth reading in full: “Hooray! Post-Fordism Is Finally Here!“

Even as Hyman’s message is reassuring in the context of the flood of jeremiads in which we’re awash, it’s worth remembering that eerily-similar points were made a couple of decades ago about the threat/promise of digital publishing/commerce. Given the then-current conditions and then-plausible futures, those predictions might have come true… but in the event, they didn’t pan out as projected. That said, things are changing, so maybe this time things are different?

(Image above: source)

* song (by Eric Idle) from Monty Python’s Life Of Brian

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As we resolve to remain rosy, we might send productive birthday greetings to Andrew Meikle; he was born on this date in 1719. A Scottish millwright, he invented the threshing machine (for removing the husks from grain, as mentioned above). One of the key developments of the British Agricultural Revolution in the late 18th century., it was also one of the main causes of the Swing Riots— an 1830 uprising by English and Scottish agricultural workers protesting agricultural mechanization and harsh working conditions.