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Is Artificial Intelligence going to bring about an economic disruption?

Is Artificial Intelligence going to bring about an economic disruption?

By Prateek Lohiya

Capitology is capitalism using technology as a tool to grow the profits.

Is this really a word? The answer is not yet. And yet, the idea itself is disruptive. Over time, human capital will give way to technology and soon, there will be little need for humans.

Will there be any jobs left?

As per the recent study released at Davos, it is claimed that disruptive labour market changes, especially the rise of robots and artificial intelligence (AI), will result in a net loss of 5.1 million jobs over the next five years in 15 leading countries. Women will be the biggest losers as their jobs are often concentrated in low-growth or declining areas. These include sales, front office and administrative roles.

The recent increased attention on AI in the service industry presents a more alarming trend. This is especially harmful for growing economies, like India, where service industry accounts for almost 50% of its GDP. A recent study by HfS Research has said that nearly 6.4 lac “Low-Skilled” jobs in the IT sector will be lost to automation by 2021.

Carnegie India states that the real breakthrough in artificial intelligence is not any singular event but the impressive advances in artificial intelligence based computer programs. Now, they are at the point that they can learn and intelligently respond across a wide range of domains.

In his book, ‘The McDonaldization of Society’, George Reitzer notes that technological innovation under a hierarchical system soon results in “increased control and the replacement of human with non-human technology”. In fact, this is motivated by a desire for greater control, which relies on the need for profit-maximization.

With a changing economic environment, it will be a doomsday scenario, not only for economists but also for the politicians.

Millions of people will be jobless. This is the issue that will be faced by the future policy makers, but, it’s going to come too soon for everyone’s comfort.

Dependent on Artificial Intelligence

The more AI penetrates in our daily lives, the more humans will become dependent on it. Further, this will become the selling point for a capitalist to derive higher profits. From air conditioners to air purifiers, all becoming ‘smart’, more and more companies are using it as a USP to lure customers.

Artificial Intelligence

Stock Market decisions are already being taken by computers. | Source: BBC

Thus, AI is not only making inroads in the process of creation, but also, in the process of selling. We sell the idea of automation to the customers and project it as something far superior to human creation.

Thus, the more the system becomes intelligent, the greater is the number of people who become redundant.

Stock market decisions are already being taken by computers. Here, trillions of dollars get traded daily on the basis of software. This is the next step of AI evolution, where a majority of financial decisions are taken by computers. With machine learning, the algorithms will re-write themselves and become even more efficient. A capitalist wants ever greater returns and it’s the job of computers to generate those returns. After all, the shareholders need more than they have invested. Thus, the more the system becomes intelligent, the greater is the number of people who become redundant.

The majority will suffer

It can be argued that if there will be no jobs, there will be no money for the consumers to spend and it will lead the death of capitalism. But as Keynes said “In the long run we are all dead,” and thus, the capitalist will see the short term impact. The long run result will not affect the decision-making of the capitalist.

In the end, a few will become rich and the majority will be worse off.

It will be the most gruesome face of capitalism, which we are now trying to name as capitology.

We can’t stop this juggernaut and neither can we reduce its speed, we can only sit and watch for the disruption to take place.

Prateek Lohiya works with Sumitomo Corporation in the Risk Management Department.
Featured Image Source: Tech Emergence
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