Future Jobscapes in the Face of AI: A Keynesian Perspective
With wages unable to match the escalating cost of living and the threat of ever-increasing inflation, the last thing the labor force needs is a faceless entity that stands to entirely change the very fabric of the global economy, potentially posing a threat to jobs and society as a whole.
Artificial Intelligence (AI) has and will continue to change and disrupt economic and societal factors that are crucial to the very nature of how one conducts their life. Its infancy does not preclude its infamy. While AI has only been reaching inescapable heights of social and political awareness within the last few years, AI has conceptually been around for more than half a century (Kaplan, A.M., & Haenlein, 2019). In many ways, the ramifications of the AI revolution and rapid technological advancement upon the lives of workers have been pondered for even longer, such as within the writings of John Maynard Keynes, which will be revisited in this article.
The Industrial Revolution and the more recent Digital Revolution have impacted the evolution of labor and brought about widespread Macroeconomic events, from efficiency gains leading to lower costs and increased occupations to increasing the widening inequality gaps that continue to ravage society. AI promises to do the same, and for many, it already has.
AI proponents propagate the notion that AI will enhance production to create anything one could dream up, increasing the variety and availability of consumer goods, along with making the production of such goods more efficient and cheaper. But much like most technological advancements, Artificial Intelligence and the way it is utilized and by whom stand to widen inequality and income gaps. AI stands to create top-down profound changes to the very landscape of the world’s economies, forever changing the way in which the labor force and individual workers will have to survive (Cockburn, Henderson & Stern, 2019).
While concerns grow over the rising prominence of AI usage across fields and for many purposes, varying research postulates that AI is here for good and here to do good. McKinsey Institute estimates generative AI has the potential to add more than $10 trillion of economic benefits and value across various major industries, (McKinsey, 2023) while yet more research suggests AI could increase GDP globally by 7% (Goldman Sachs, 2023).
Against the backdrop of the potential benefits of artificial intelligence, a question may arise: Are reactions to AI justified? Is AI something to fear?
Artificial Intelligence and discussions about it are still grounded in speculation and prediction. AI has become an unavoidable force, but its full potential and mechanisms of action are not yet comprehensively manifested in the present, rather growing into a portal to our near future. The scope of this article seeks to answer these questions for the average worker and employee of an increasingly alien economy. Answers may lie in awareness of the evolution of economies in response to historic catalysts, such as the Keynesian Technological Unemployment paradigm, found within his seminal essay Economic Possibilities for our Grandchildren (Keynes, 1930).
This essay was published within a collection of articles and essays written by Keynes between the years of 1919 and 1931. Keynes wrote these essays, including the essay we will revisit in this article, with a sense of urgency. He felt the world was “standing at a point of transition” (Essays in Persuasion, 1932) and hoped to inform and “persuade” the course of economic events and the public through his writings. Noticeably devoid of jargon that would exclude the public from his message, he wrote with language that could be deemed approachable for a wide audience. Perhaps in addition to persuasion, there is an element of prediction within his essays.
Fears surrounding the loss of jobs and one's livelihood due to advancements in manufacturing, production, and technology are nothing new, centuries old, in fact (Kessler, 2019). At every major systemic economic advancement, there erupts a hue and cry arising from the fears that a portion of the population will be left behind, replaced by these advancements.
Yet seemingly, despite certain individuals being left jobless, as a society we have been able to move forward.
What if the changes are so drastic this time, permeating every aspect of our society and economy, that the survival of such a sacrifice in the name of efficiency and progress is no longer guaranteed?
In Economic Possibilities for our Grandchildren (1930), Keynes speaks as though reflecting upon our times, “growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another” (Keynes, 2010). He recognizes that at no other time in history have we faced such profound economic changes and that the process of adjusting may cost many livelihoods in the process, a process he called “technological unemployment.”
Keynes states this is simply a part of the growing pains we as a society must go through to achieve economic efficiency. It seems those growing pains are fast approaching, as reports show nearly 4,000 jobs were lost in May, with a potential for 12 million job changes required by 2030 due to the effects AI has on the destruction of certain jobs (McKinsey, 2023).
For all its glamor and all its potential for good, the changes AI is bringing about may be detrimental if genuine protection parameters are not put into place. Today's workers are already in the midst of a struggle with highly saturated and COVID-impacted job markets, along with increasing costs of living that do not get met by current wages. Tomorrow is still a mystery, but perhaps glimmers of hope can be seen through the faceless fears of AI.
Economists Acemoglu and Restrepo have given us a recent and relevant framework to comprehend in what capacity AI and advanced technologies will bring about change in the labor market. They have theorized three phases: The Displacement effect, The Productivity effect, and the Reinstatement effect.
Within the initial period of time characterized by the Displacement Effect, widespread job loss and the cessation of entire industries and workforces will become a force to reckon with for the common man and woman. These waves of displacement will be met with rapid growth and productivity in the following juncture of time marked by the Productivity Effect. An economy and society recovering from the effects of displacement will be met with increases in productivity and output larger than the pre-displacement effect period. Rapid productivity will further lead to opportunities for new jobs and areas where the demand for such labor will grow in the final timeframe experiencing the Reinstatement Effect, where jobs lost are replaced with new jobs, industries, and types of work.
Justified fears and hopes for a positive future will ultimately be shaped by shareholders and power brokers of AI. This has always been the case for any major technological advancement that has had widespread effects on the labor force and the economy. It is not so much the question of whether AI will harm the lives of average workers but more so, will those with the tools and machinery of power and control over AI use it for maximum capital gain without thought for you and me?
The lives of employees, the disposable and often displaced masses, are at the mercy of those with the tools to wield technology. It remains to be seen how employees will survive in the face of technological unemployment and whether the speed with which new jobs and industries are developed will match the rate at which jobs are replaced and work displaced. The historical basis for the fears of AI confirms that its potential for harm is real while also confirming that there are avenues for overcoming it.
The coming years will be the most crucial to understanding AI's role in our future. By examining Keynes’ Technological Unemployment paradigm, we can observe a timeframe within recent history that can serve as a guiding light for which the average individual can navigate current and future economic shifts. Opining on contemporaneous economic changes and their ramifications on employment, Keynes articulates that while rapid and seemingly abrupt technological advancements can prove to be detrimental to livelihoods, it is a necessary part of economic evolution and will ultimately be survived. This article leaves with the hope that survival is in humanity’s cards, as we are on the brink of AI expansion.
Works Cited
Cockburn, I., Henderson, R. & Stern, S. (2019). 4. The Impact of Artificial Intelligence on Innovation: An Exploratory Analysis. In A. Agrawal, J. Gans & A. Goldfarb (Ed.), The Economics of Artificial Intelligence: An Agenda (pp. 115-148). Chicago: University of Chicago Press. https://doi.org/10.7208/9780226613475-006
Kaplan, A.M., & Haenlein, M. (2019). Siri, Siri, in my hand: Who’s the fairest in the land? On the interpretations, illustrations, and implications of artificial intelligence. Business Horizons.
McKinsey & Company. (2023). The economic potential of generative AI: The next productivity frontier. McKinsey & Company. https://www.mckinsey.com/~/media/mckinsey/business%20functions/mckinsey%20digital/our%20insights/the%20economic%20potential%20of%20generative%20ai%20the%20next%20productivity%20frontier/the-economic-potential-of-generative-ai-the-next-productivity-frontier-vf.pdf.
Goldman Sachs. (2023) Generative AI could raise global GDP by 7%. https://www.goldmansachs.com/intelligence/pages/generative-ai-could-raise-global-gdp-by-7-percent.html.
John Maynard Keynes, “Economic Possibilities for our Grandchildren (1930),” in Essays in Persuasion (New York: Harcourt Brace, 1932), 358-373.
Preface within Essays in Persuasion (New York: Harcourt Brace, 1932), 358-373.
Kessler, S. (2019) Automation anxiety dates back to the late 16th century. https://qz.com/1681832/the-history-of-the-future-of-work.
Keynes, J.M. (2010). Economic Possibilities for Our Grandchildren. In: Essays in Persuasion. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-59072-8_25.
McKinsey and Company. (2023) Generative AI and the Future of Work in America. https://www.mckinsey.com/mgi/our-research/generative-ai-and-the-future-of-work-in-america#/
