The Age-Old Debate of Technological Unemployment: Lessons from the Past for the Future of AI and Jobs

Saturday - January 27 2024, 16:18 UTC - 10 months ago

As worries about the impact of artificial intelligence on jobs grow, a look back at the debate over technological unemployment in 1930s helps to put things into perspective. While new technologies have led to job loss for individuals, overall they have also created new industries and expanded markets, resulting in more jobs overall. Instead of fearing the unknown, we should approach the future with an understanding of economics, rather than conjuring up genies and monsters.

It was 1938, and the pain of the Great Depression was still very real. Unemployment in the US was around 20%. Everyone was worried about jobs. In 1930, the prominent British economist John Maynard Keynes had warned that we were "being afflicted with a new disease" called technological unemployment. Labor-saving advances, he wrote, were "outrunning the pace at which we can find new uses for labour." There seemed to be examples everywhere. New machinery was transforming factories and farms. Mechanical switching being adopted by the nation’s telephone network was wiping out the need for local phone operators, one of the most common jobs for young American women in the early 20th century.

Were the impressive technological achievements that were making life easier for many also destroying jobs and wreaking havoc on the economy? To make sense of it all, Karl T. Compton, the president of MIT from 1930 to 1948 and one of the leading scientists of the day, wrote in the December 1938 issue of this publication about the "Bogey of Technological Unemployment." How, began Compton, should we think about the debate over technological unemployment—"the loss of work due to obsolescence of an industry or use of machines to replace workmen or increase their per capita production"? He then posed this question: "Are machines the genii which spring from Aladdin’s Lamp of Science to supply every need and desire of man, or are they Frankenstein monsters which will destroy man who created them?" Compton signaled that he’d take a more grounded view: "I shall only try to summarize the situation as I see it." .

His essay concisely framed the debate over jobs and technical progress in a way that remains relevant, especially given today’s fears over the impact of artificial intelligence. Impressive recent breakthroughs in generative AI, smart robots, and driverless cars are again leading many to worry that advanced technologies will replace human workers and decrease the overall demand for labor. Some leading Silicon Valley techno-optimists even postulate that we’re headed toward a jobless future where everything can be done by AI. While today’s technologies certainly look very different from those of the 1930s, Compton’s article is a worthwhile reminder that worries over the future of jobs are not new and are best addressed by applying an understanding of economics, rather than conjuring up genies and monsters.

Uneven impacts .

Compton drew a sharp distinction between the consequences of technological progress on "industry as a whole" and the effects, often painful, on individuals. For "industry as a whole," he concluded, "technological unemployment is a myth." That’s because, he argued, technology "has created so many new industries" and has expanded the market for many items by "lowering the cost of production to make a price within reach of large masses of purchasers." In short, technological advances had created more jobs overall. The argument—and the question of whether it is still true—remains pertinent in the age of AI. Then Compton abruptly switched perspectives, acknowledging that for some workers and communities, "technologic unemployment, both partial and total, has led to severe economic hardship." He gave some striking examples. In the telephone industry, the 30,000 young women who had manned the nation's switchboards were virtually all replaced by machines in about a decade. "No other industry has experienced a comparably precipitate drop of such a major activity." For telephone operators and others displaced by technological advancements, Compton wrote, "the pathos of modern progress is strongly exemplified." .