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Original source: Garys Economics
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The ongoing debate about AI's potential to transform society often focuses on technological advancement, but historical lessons suggest that the real impact on your economic well-being will depend on who controls the technology and whether ordinary people unite to demand a fair share.
AI's Economic Impact Depends on Collective Action and Ownership, History Shows
The economic impact of artificial intelligence on wages and living standards hinges on collective action and who ultimately owns the technology, according to a recent analysis. The presenter argues that improved technology has the capacity to both harm and help, noting that historically, technological advancements have often caused immense suffering for many while enriching a small elite. Without recognizing this pattern, societies risk repeating past injustices, leading to widespread poverty.
However, history also offers an inspirational lesson: despite enduring centuries of profound inequality and poverty, particularly during the Industrial Revolution and pre-World War II eras, labor movements and wealth redistribution after World War II ultimately led to significant improvements in living standards for ordinary people. This suggests that the future impact of AI—whether it creates a better or worse life—is not predetermined by the technology itself, but rather by the choices societies make to build movements and fight for a fair share of its benefits.
"It is very important that you recognize improved technology has the capacity to hurt you as much as it has the capacity to help you."
British Industrial Revolution Displaced Global Artisans, Causing Widespread Poverty and Famine
The Industrial Revolution, spearheaded by Britain in the 1700s and 1800s, created a unique global economic situation where advanced British factories, backed by colonialism, rapidly displaced artisans worldwide. The speaker details how British manufacturing, such as a single matchstick factory in East London producing 300 million matches daily, achieved a technical superiority that rendered traditional methods uncompetitive. This led to mass unemployment for artisans across the globe, particularly in India, contributing to widespread famines and millions of deaths.
This global displacement, combined with British imperial power, allowed British industrialists to accumulate extraordinary wealth while the majority suffered. The phenomenon highlights how the benefits of technological progress during this era were concentrated among a small, wealthy elite, at the expense of artisans and populations in colonized regions, challenging a Eurocentric view of the Industrial Revolution's impact.
"artisans all over the world, all over the entire world lose their jobs."
Economic Inequality Blocks Technology from Improving Living Standards or Reducing Work Hours
Despite significant technological advancements, improved living standards and reduced working hours have not materialized for the majority, primarily due to deepening economic inequality, according to the speaker. While most economic models implicitly assume a perfectly equal society where everyone owns a share of productive resources like AI or factories, reality is far different. In an idealized equal society, increased productivity would offer individuals a choice between earning more or enjoying more leisure time.
However, in highly unequal societies, a small, wealthy elite owns the vast majority of productive assets, including natural resources, factories, and housing. This concentration of ownership forces the majority to work continuously to pay for basic necessities like food, housing (rent or mortgage), energy, and transport, as these resources are controlled by the elite. Consequently, the fundamental need to work for survival in an unequal system overrides any potential for technology to offer more leisure or inherently raise living standards for most people.
"The only way for you to get access to the resources that you need and they own is you have to work for them."
Poverty Persisted in Britain for Two Centuries After Industrial Revolution, Challenging 'Things Resolve Themselves' Narrative
The notion that technological progress inevitably resolves social and economic issues is a naive assumption, as widespread poverty persisted in Britain well into the 20th century, according to the speaker. For example, the presenter's grandmother, born in London in 1927, grew up seeing siblings die from tuberculosis, a disease associated with poverty, highlighting the extreme conditions common for a majority even 150 years after the Industrial Revolution began in the heart of the capital.
Significant improvements in living standards for ordinary British workers did not emerge until after World War II, nearly two centuries after the Industrial Revolution started. These gains were not an automatic outcome of technological advancement but the culmination of approximately 200 years of workers' movements and substantial wealth redistribution, including a significant decrease in inequality. This historical trajectory challenges the idea that societies can simply wait for technology to self-correct societal problems.
"this idea that you look back and you say well you know things work out in the end is pretty naive... it took 200 years... do you want 200 years of hell?"
Labor Movements, Not Technology Alone, Drove Worker Gains During Industrial Revolution
Despite enormous increases in productivity during the Industrial Revolution, the wages and living standards for British factory workers remained dismally low, a situation that ultimately gave rise to powerful labor movements. While British elites amassed "unbelievably enormous amounts of money" from factories producing goods for a global market, the workers in these concentrated urban environments were horrifically underpaid and endured terrible conditions. This stark disparity, however, created a unique power dynamic: workers had the leverage to strike and shut down production, which was immensely profitable for owners.
It was not until these labor movements became established, fighting collectively for better pay and conditions, that any improvements in living standards began to appear. The most significant gains, including substantial wealth redistribution, only materialized in the immediate aftermath of World War II. The speaker concludes that the naive assumption that technological progress inherently guarantees improved living standards is refuted by this history, emphasizing that organized worker action was crucial for securing a fair share of the wealth generated by industrialization.
"It isn't really until these labor movements start to become established... that you start to see any improvements in living standards at all."
Early Industrial Revolution Brought Century of 'Hellish' Conditions for British Workers
The initial impact of Britain's Industrial Revolution on workers was far from positive, leading to roughly a century of what the speaker describes as "hellish" living and working conditions. Starting in the late 1700s, enclosure laws displaced vast numbers of farmers, creating a massive pool of impoverished, unemployed individuals who subsequently flooded burgeoning cities. This surplus of labor allowed factory owners to hire workers at "incredibly low" wages, facilitating the construction of large factories.
These new urban environments were overcrowded, dirty, and polluted, while factories themselves were incredibly unsafe, with deaths and debilitating illnesses being common—such as matchstick factory workers experiencing jaw decay from white phosphorus. Workers endured incredibly long days, often 14 to 16 hours, six days a week. This period of severe human cost and social disruption challenges any simplified or romanticized view of early industrial progress, highlighting the immense suffering experienced by ordinary people during this foundational era.
"at the very least for the first sort of you know maybe a hundred years of the industrial revolution people were living in like pretty hellish environments."
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