I’ve written before on how interesting I think the implications of technological development is for the economy (see here, here and here). So I read The Second Machine Age with interest. It’s one of the better pieces I’ve read so far (which isn’t saying much; both because I haven’t had the chance to read much, and there doesn’t seem to be a huge amount on the topic).
Overall, I think Brynjolfsson and McAfee (B&M henceforth) are a little too optimistic; but they do a good job picking out some of the main questions.
Some of the perhaps obvious, but still important, points:
Rapid advances in our digital tools are creating unprecedented wealth, but there is no economic law that says all workers, or even a majority of workers, will benefit from these advances.
… there is a floor on how low wages for human labor can go [essentially, sustenance for a human]. In turn, that floor can lead to unemployment: people who want to work, but are unable to find jobs [that will let them live]. If neither the worker nor any entrepreneur can think of a profitable task that requires that worker’s skills and capabilities, then that worker will go unemployed indefinitely. Over history, this has happened to many other inputs to production that were once valuable, from whale oil to horse labor. They are no longer needed in today’s economy even at zero price. In other words, just as technology can create inequality, it can also create unemployment. And in theory, this can affect a large number of people, even a majority of the population, and even if the overall economic pie is growing.
The better machines can substitute for human workers, the more likely it is that they’ll drive down the wages of humans with similar skills … you don’t want to compete against close substitutes, especially if they have a cost advantage.
They make an important point that technology can complement human skills, increasing demand for some types of skills. I’m not convinced (and they don’t make a quantitative argument) that it’s enough.
They also argue that machines aren’t good at what they call ideation – thinking of new ideas, identifying goals and planning successful strategies, in new environments. But given the cases that they themselves document, of mistaken predictions of what computers ‘can’t do’, and their arguments that technology will only develop more quickly from here on out, they’re wise to say that it’s uncertain. [From a philosophical perspective, I don’t see anything unique in the material human minds rest on; when the technology gets good enough, it seems likely that something highly intelligent – possibly in very different ways – will emerge as a brain. But that’s a topic for another day; I’d recommend Dennett as the best I’ve read on that topic].
They talk about the long term; a stage when labour is very low in value, and the economic value of labour may be well below what it costs to maintain it. That’s when we get into interesting territory; a new discussion about how things are structured economically. They talk about a basic income, which I think is an interesting idea (they’re critical, but more supportive of a negative tax credit).
Ultimately, The Second Machine Age is the most interesting piece I’ve read so far, on what I think is a hugely important topic. Technological change has really important implications, and I don’t think enough thought has been given for what that means for our society. Population matters here too, enormously; that’s an area I don’t understand nearly well enough. But change is coming, and I think there are important questions unanswered; well articulated in an article [behind a paywall] called We need a new Bismarck to tame the machines.