Capitalism in the Age of Robots

April 10, 2018

Lord Adair Turner, Chair, Institute for New Economic Thinking (INET)
Moderated by John Lipsky, Peter G. Peterson Distinguished Scholar at the Henry A. Kissinger Center for Global Affairs and Senior Fellow at the Foreign Policy Institute

The school hosted a presentation by renowned author and economist Adair Turner as part of its series Evolution or Revolution? which explores restructuring finance for a new global economy. Turner made the case that new technologies like artificial intelligence and machine learning will lead to most forms of human work being automated away in the near future. In fact, Turner said, the analysis shows 50 percent of labor in the US economy could be automated today using existing technologies, and this is projected to reach nearly 100 percent by 2050. To successfully manage this changing world, policymakers will need to adapt to the new economic realities of technological change.

Turner recommended a set of positions that seemed to conflict the commonly held wisdom about how to address the challenges of automation: Skills are not the all-purpose answer to the problem of inequality;
Increasing productivity growth is not a high priority of policymakers in developed economies; aging and low fertility are not major concerns of policymakers in developed economies but the rapid demographic growth of developing economies are very concerning for their labor force. These points are important for determining what will be the shape of the economy and the workforce in a world where jobs will become increasingly automated, Turner said.

Going into deeper detail, Turner said that it's a matter of when, not if automation happens and the automation is inevitable because of the Baumol effect, by which labor costs go up for jobs that have experienced no increase in productivity. The result could mean that in a world where everything is automated, the primary measurement of economic output, gross domestic product (GDP), would be meaningless. Furthermore, GDP will become less useful as a measure because GDP cannot tell us about the growth of human wellbeing. Following the presentation, questions from the audience touched on issues such as inequality and determining which sectors people should shift to in order to avoid losing to automated work.