“Digital technologies will bring the world into an era of more wealth and abundance and less drudgery and toil. But there’s no guarantee that everyone will share in the bounty. The outcome—shared prosperity or increasing inequality—will be determined not by technologies but by the choices we make as individuals, organizations, and societies.”
Society has long operated on a simple bargain: we contribute our labor and, in return, gain income, security, and a stake in the economy. Governments tax our wages to fund public services; corporations rely on human workers to create value; and in return, workers expect their efforts to be rewarded with opportunity and security. This centuries-old implicit bargain will soon come under strain.
There is significant evidence to suggest that artificial general intelligence (AGI) systems capable of directly replacing much of human labor are right around the corner. Leading AI researchers are not just predicting that these systems will be better at performing tasks than today’s AI - they are suggesting that human intelligence will no longer be unique. Some suggest that we are on the threshold of a major inflection point akin to the Agricultural or Industrial Revolutions.
If these claims turn out to be true, they will force us to completely reevaluate how we organize labor throughout the economy. Historically, technology has mainly increased the productivity of workers, automating repetitive tasks and increasing the efficiency of human effort. In contrast, AGI represents something fundamentally different – a technology capable of exceeding human performance across virtually all cognitive domains. Such a system could potentially substitute for workers entirely across countless professions, performing nearly any task with equal or superior skill to the average human.
Inarguably, these types of systems could supercharge the overall economy. We could see growth rates and productivity soar, as the costs to scale digital organizations and services could plummet. We could see incredible technological advances and biomedical research conducted in years, instead of decades¹.
However, such AI systems could simultaneously undermine the fundamental economic bargain that has structured our society, causing pervasive negative outcomes for workers:
Instead of augmenting and benefiting labor, these systems could simultaneously replace skilled workers across many sectors of the service economy, leading to massive labor displacement and nowhere for workers to go². Studies from Oxford and the IMF estimate that between 30% - 47% of jobs could be directly replaceable by AI systems.
The wealth generated from such systems could flow directly to a small set of capital owners, bypassing human workers and leading to skyrocketing wealth inequality and economic power concentration.
Already, the richest 1% already own more wealth than the bottom 95% of the world’s population. An acceleration could see individuals or corporations with greater wealth than the GDP of major countries.
Superstar firms with 10x fewer human workers could dominate the new technological frontier and capture a sizable portion of growth.
Labor-replacing technological change could lead to another Engels' Pause, where GDP per capita rapidly expands despite wages for the working class stagnating or falling. Falling wages or a reduced share of labor income could lead to a collapse of the tax base: for example, income & payroll taxes make up 84% of US federal revenue, whereas corporate taxes account for a mere 9%.
We could see an increase of downward social mobility for workers, as traditionally “high-skilled” service jobs become cheaply performed by AI, but manual labor remains difficult to automate due to the marginal costs of deploying robotics. These economic pressures could reduce the bargaining power of workers, potentially forcing more people towards gig economy roles or less desirable (e.g. physically demanding) jobs.
If AGI systems are developed, evidence across the board points towards the conclusion that the majority of workers could likely lose out from this coming economic transformation. A core bargain of our society – if you work hard, you can get ahead – may become tenuous if opportunities for advancement and economic security dry up.
We risk moving towards a world where wages could fall below living standards as human labor supply outstrips demand; where prospects for the lower-class become scarce; where the wealth generated by AI flows almost entirely to those who own the means of production.
This may not happen all at once, as some AI researchers are suggesting. These massive shifts will take years to propagate through the economy, and longer to impact developing countries and manual labor³. But due to increasing digital interconnectedness, it will also happen much faster than previous economic revolutions – measured in years, not decades.
Crucially - we do not have to accept these negative externalities of progress. These downsides are not inherent to AI, or technological progress⁴ – they arise as a result of the societal and economic frameworks that we have collectively chosen to operate within. These challenges will be problems of our own making.