Increases in capital and labour are no longer driving the levels of economic growth the world has become accustomed to and desires.
Fortunately, a new factor of production is on the horizon, and it promises to transform the basis of economic growth for countries across the world.
Due to a number of economic and political factors, businesses have been struggling to increase capital investment and labour to propel growth.
Traditionally, investment and labour levers have been driving production however, they are no longer able to sustain the steady march of prosperity enjoyed in previous decades in most economies.
But long-term pessimism is unwarranted. With the recent convergence of a transformative set of technologies, economies are entering a period in which artificial intelligence (AI) has the potential to lead in the new era and overcome the physical limitations and open-up new sources of value and growth.
According to Accenture’s Technology Vision 2017, AI has the potential to double annual economic growth rates by 2035. To avoid missing out on this opportunity, policy makers and business leaders must prepare for, and work toward, a future with artificial intelligence.
They must do so not with the idea that AI is simply another productivity enhancer. Rather, they must see AI as the tool that can transform our thinking about how growth is created.
Across the globe, rates of gross domestic product (GDP) growth have been shrinking. Moreover, this has been true for three decades.
Key measures of economic efficiency are trending sharply downward, while labour-force growth across the world is largely stagnant.
It is even in decline in some countries. Given this poor outlook, commentators say that a stagnant economy is the new normal.
On an even more pessimistic note, a prominent economist argues that productivity growth over the next quarter century will continue at the sluggish pace.
He believes that the past two centuries of Great Inventions, such as the steamship and telegraph, are unlikely to be repeated. And this deficit of innovation, combined with unfavourable demographic trends, flagging educational attainment and rising wealth inequality, will slow economic progress.
So, are we experiencing the end of growth and prosperity as we know it?
We are witnessing the take-off of another transformative set of technologies, commonly referred to as AI. Many see AI as similar to past technological inventions.
If we believe this, then we can expect some growth, but nothing transformational. But what if AI has the potential to be not just another driver of total factor productivity, but an entirely new factor of production? How can this be? The key is to see AI as a capital-labour hybrid.
AI can replicate labour activities at much greater scale and speed, and to even perform some tasks beyond the capabilities of humans. Not to mention that in some areas it has the ability to learn faster than humans, if not yet as deeply. For example, by using virtual assistants, 1000 legal documents can be reviewed in a matter of days instead of taking three people six months to complete.
Clearing the path to an AI future
Entrepreneur Elon Musk has warned that artificial intelligence could become humanity’s “biggest existential threat.” The more optimistic view of futurist Ray Kurzweil is that AI can help us to make “major strides in addressing the world’s grand challenges.” The truth is, it all depends on how we manage the transition to an era of AI. To fulfil the promise of AI as a new factor of production that can reignite economic growth, relevant stakeholders must be thoroughly prepared – intellectually, technologically, politically, ethically, socially – to address the challenges that arise as AI becomes more integrated in our lives. The starting point is understanding the complexity of the issues.
Prepare the next generation for the AI future
Successfully integrating human intelligence with machine intelligence, so that they coexist in a two-way learning relationship, will become more critical than ever. As the division of tasks between man and machine changes, policy makers need to re-evaluate the type of knowledge and skills imparted to future generations. Currently, technological education goes in one direction: people learn how to use machines.
Increasingly, this will change as machines learn from humans, and humans learn from machines. For example, customer services representatives of the future will need to act as “role models” to their digital colleagues, and potentially vice versa. Technical skills will also be required to design and implement AI systems, exploiting expertise in many specialties including robotics, vision, audio and pattern recognition. But interpersonal skills, creativity and emotional intelligence will also become even more important than they are today.
Encourage AI – powered regulation
As autonomous machines take over tasks that have exclusively been undertaken by humans, current laws will need to be revisited. In other cases, new regulation is called for. For example, though AI could be enormously beneficial in aiding medical diagnoses, physicians avoid using these technologies, fearing that they would be exposed to accusations of malpractice. This uncertainty could inhibit uptake and hinder further innovation. AI itself can be part of the solution, creating adaptive, self-improving regulation that closes the gap between the pace of technological change and the pace of regulatory response.
Advocate a code of ethics for AI
Intelligent systems are rapidly moving into social environments that were once only occupied by humans. This is opening-up ethical and societal issues that can slow down the progress of AI. These range from how to respond to racially biased algorithms to whether autonomous cars should give preference to their driver’s life over others in the case of an accident. Given how prevalent intelligent systems will be in the future, policy makers need to ensure the development of a “code of ethics” for the AI ecosystem.
Address the redistribution effects
Many commentators are concerned that AI will eliminate jobs, worsen inequality and erode incomes. This explains the rise in protests around the world on the introduction of a universal basic income. Policy makers must recognise that these apprehensions are valid. Their response should be twofold. First, policy makers should highlight how AI can result in tangible benefits. Beyond the workplace, AI promises to alleviate some of the world’s greatest problems, such as climate change (through more efficient transportation) and poor access to healthcare (by reducing the strain on overloaded systems). Benefits like these should be clearly articulated to encourage a more positive outlook on AI’s potential.
Second, policy makers need to actively address and pre-empt the downsides of AI. Some groups will be affected disproportionately by these changes. To prevent a backlash, policy makers should identify the groups at high risk of displacement and create strategies that focus on reintegrating them into the economy.
Willie Schoeman, Accenture Technology Managing Director