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3/4/2015 | 3 MINUTE READ

The “Second Machine Age”

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The first machine age complemented human labor, will the second completely replace it?

During the Industrial Revolution, machinery replaced muscle, complementing and augmenting human labor; today as machines increasingly replace minds in the workforce, and human obsolescence becomes possible in some areas, what are the implications for the economy if not our society?

 

Those insights and questions come from Erik Brynjolfsson, director of the Center for Digital Business at the Massachusetts Institute of Technology Sloan School of Management, who along with Andrew McAfee authored the “The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies”.

 

Brynjolfsson, McAfee and others came together in February to discuss the rise of “smart” machines and their implications for the economy at an event called The Future of Work in the Age of the Machine organized by The Hamilton Project.

 

Former U.S. Secretary of the Treasury, Robert Rubin kicked off the event with a question regarding that machine replacement of man:

 

If labor displacing technology does move at a rapid pace and with great potential for economic significance, and if dynamism continues such that technology is deployed, will new industries and new jobs develop that will replace those that have been lost, and will those new jobs be well paid?

 

A Paradox
Brynjolfsson began his presentation by noting a paradox of today’s economy: American workers have never been more productive with “much of this bounty coming because of some advances in technology” but median income is actually lower now than it was 15-20 years ago. Brynjolfsson and McAfee call this “the great decoupling,” which has been fueled in part by technology.

 

“We're now in the early stages of a second machine age where machines are also beginning to supplant minds as well as muscles and do a lot of the control functions that used to be integral and only done by humans,” Brynjolfsson said.

 

Back in 2005, Brynjolfsson noted that there were certain skills considered to be “Uniquely Human”, like:

 

  • Autonomous mobility and fine motor control
  • Language and complex communication
  • Pattern matching and unstructured problem solving

 

Fast forward 10 years and we’re in a new era of “machine intelligence”, marked by systems that can interact with the physical world, with vision and other senses as well as fine and gross motor control. In terms of language, machines offer voice recognition, natural language processing and the ability to create narratives.  In terms of problem solving, software platforms can now answer unstructured questions, utilize rule-based analysis and perform pattern recognition and classification.

 

To illustrate these advances, Brynjolfsson’s slides included everything from Baxter and Siri to Watson and a service called Narrative Science, which uses software to automatically generate news stories for things like company earnings reports.

 

“Free, Perfect and Instant”
This area of machine intelligence will be one to watch, according to Brynjolfsson, particularly as more and more jobs can be “codified.”

 

Digital technologies are quite different.  You can take a process and codify it and once you codify it you can digitize it, and once you digitize it you can make a copy or ten copies or a hundred million copies, and each of those copies have three very interesting characteristics.  They can be made at almost zero cost, they are perfect replicas of the original, and they can be transmitted anywhere on the planet more or less instantaneously. Free, perfect, and instant are three adjectives we didn't use to describe most goods and services historically, but they are standard for digital goods and they lead to some weird and sometimes wonderful economics. 

 

The weird and the wonderful is also widespread:

 

This isn't just in a few obscure corners of the economy; software is eating the world.  It's coming to retailing, to finance, to manufacturing, to media, more and more parts of the industry. 

 

Another Tool
Brynjolfsson ended on an optimistic note, however. After all, increased productivity can never be considered a bad thing, and if it comes from machines (designed by humans), those humans are now free to tackle bigger, better problems.

 

And at the end of the day the most important thing to remember is that technology is and always has been merely a tool.  Now we have more powerful tools than we ever have had before and they have the potential to create enormous wealth with much less need for work.  Some people see that as a bug.  I think we should see it as a feature.  It should be good news.  I think shame on us if we aren't using these amazing tools to create more shared prosperity. 

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