The pace of AI''s development is known to all, and the media has no shortage of appetite for the subject, rummaging up piece after piece on a very hot and thought-provoking topic. Yet while there has certainly been attention on AI and its innovation, that attention has mainly been concentrated around two talking points: the potential AI holds to enhance and deliver services, and the concurrent threat of unauthorised activity, a pitfall of the rapid, commercially driven development of the technology.

In this essay I aim to explore another consequence of growing AI utility, and to establish the conditions and political approach needed to address it, so that AI can be put to maximal benefit instead of deepening a divide.

The promise, and the J-curve

This concern begins with acknowledging the potential AI has to enhance and revolutionise industry, and why it is likely to reshape our future as opposed to merely supplementing it.

Critics have noted that despite the media storm surrounding AI, short-term gains have been low or non-existent. A US Census Bureau working paper, The Rise of Industrial AI in America, found a mean difference in productivity of –1.33 percent after a standard-deviation increase in a firm''s AI index, a disappointing and largely unexpected result for AI hopefuls.

However, though early gains have been genuinely negative, the initial economic reaction needs to be viewed through a long-term lens. This is best understood through the "J-curve" model of productivity, proposed by the same co-authors as the study above, which shows that while early adoption data paints a pessimistic picture, long-term operational health says otherwise.

Tracking the productivity of firms across a multi-year timeline, the research found that firms that had incorporated AI before 2017 progressed at a significantly faster rate than competitors that were later to adopt it, and were better off in terms of employment, revenue and market share. This supports the conclusion that AI''s utility is growing, and at an exponential rate. It is reaffirmed by US economic projections which predict a 21% lift in GDP by 2030, largely powered by the massive compound annual growth rate of AI (36.6%), as listed by Forbes Advisor.

Thus, as the global economy stands on the precipice of near-unprecedented growth, you may ask why I am concerned. "Growth is good!" you might be thinking, and I won''t dispute that fundamental maxim. But I will add a caveat: who does that "good" go to?

Lessons from Britain

To understand the modern outlook, it is best to look through a historical lens, and for that I will pivot to another era in which growth was rampant and the world economy was booming: the Industrial Revolution.

In the mid to late 18th century, a sequence of innovations shook Britain''s economy at its core. Inventions like the spinning jenny (1764) improved industrial efficiency, while Watt''s steam engine (1769) reshaped energy supply, replacing water and animal power to run factories and paving the way for the steam train and transport infrastructure as a whole.

This monumental efficiency leap transformed the British economy from an agrarian, hand-craft system to mechanised, factory-based production, lifting real GDP from £76 million (in 1700 prices) to £765 million in 1870 (also in 1700 prices), as estimated by Stephen Broadberry of Oxford University.

This example shares many similarities with the current state of the world: both hover on the precipice of near-unprecedented economic growth powered by major innovations in efficiency and industrial productivity. However, it is not the Britain of the 1760s that should elicit concern. It is the stark economic realities and inequality of the Britain of the 1800s that follow, which call for careful political preparation.

Much like today, growth during the Industrial Revolution was driven by the progress and optimisation of privately owned firms, so the wealth and proceeds of that growth were concentrated within the owning class, the "bourgeoisie". This gave employers complete autonomy over whether the proceeds of industrial innovation would reach their employees and, spoiler alert, they overwhelmingly decided no.

It also created considerable unemployment, as mechanical efficiency replaced human labour and badly damaged traditional hand-craft sectors and everyone superseded by new technology. All the while it brought unreasonable working hours, encouraged child labour and facilitated the spread of chronic disease through cramped, unsanitary living conditions.

As a result, wealth inequality in Britain reached staggering levels. By 1900, the EINITE research project found, the top 1% of the population owned nearly 70% of total wealth, while the bottom 50% owned virtually nothing.

The Industrial Revolution didn''t only exaggerate wealth inequality nationally, it also widened the global divide like never before. Technological and military superiority allowed Britain to amass a 31.8% share of the world''s industrial production with only 2.4% of the world''s population, sourced through a vast global network of colonial extraction and existing economic advantage.

This economic hegemony enabled Britain to embark on a worldwide course of exploitation and geopolitical aggression, threatening both the sovereignty of less advanced states and their relative industrial standing. The World Inequality Lab reports that the top 10% came to hold around 60% of global income, concentrating the dividends of remarkable technological progress in the hands of an extreme minority and enabling further colonial exploitation.

Hence the Industrial Revolution serves as a poignant reminder of the impact of growth, when distributed unevenly, on an unprepared society. Some of the past''s worries are less prevalent today, since the welfare state and union movements safeguard the working class against such thorough exploitation. But heightened unemployment, the decline of traditional industries and foreign exploitation remain deeply modern concerns in the face of AI''s rapid and unequal innovation.

What can we do?

So, what can we actually do to avoid and mitigate the pitfalls of AI development? We should take another page from the history books: socialise.

The burden of redistributing the proceeds of innovation falls on the employer, but without state interference the working class is likely to grow more impoverished despite overarching economic progress, in a fashion very similar to 1800s Britain. It is therefore imperative that the state become more involved in private affairs, otherwise risking the unequal concentration of wealth that characterised the Industrial Revolution and, increasingly, characterises the present.

This sentiment, too, has a precedent in 1800s Britain. The Chartists (1838–1848) advocated democratic rights as a route to a socialist agenda, and the emergence of unions and labour-protection movements culminated in the 1900 founding of the modern Labour Party, which is in power today.

This does not yet answer the question of global exploitation, or the market interference AI-powered economies may impose on more vulnerable economies, a form of economic "neo-colonialism", if you will. To address that there must be a renewed emphasis on protectionism, built on pacts and conventions that safeguard developing economies from being stifled further.

The risks of the cure

Even then, a more socialist state is not without risks. A pervasive reminder is the more radical response to 19th-century industrialisation, namely communism, a movement sparked by German intellectuals Marx and Engels, who were horrified primarily by British working poverty while Engels lived there from 1842 to 1844, culminating in the Communist Manifesto (1848).

This ideological reaction sparked some of the most turbulent political upheaval in historical memory, subjecting populations in Eastern Europe and parts of Asia to state oppression and a complete restriction of individual liberties during the Cold War, more than 200 years after the initial technological catalyst.

It is therefore of paramount importance that states remain within the bounds of socialist redistribution and avoid the corrupting and oppressive mantle of a fully state-run economy, avoiding extremist reaction.

In conclusion, it is necessary for the states of today to prepare for the economy of tomorrow with a more socialist, redistributive approach, to address the looming national inequalities and to moderate the emerging geopolitical divide and the exploitation it could enable, drawing on the innovations of the past to prepare for those of the future.

Sources

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  • Bairoch, P. (1982), "International industrialization levels from 1750 to 1980," Journal of European Economic History, 11(2), 269–333
  • Broadberry, S., Campbell, B.M.S., Klein, A., Overton, M. and van Leeuwen, B. (2015), British Economic Growth, 1270–1870, Cambridge University Press
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