Digital technologies, including the latest advances in AI, promise disruptive transformations, heralding both remarkable progress and inevitable winners and losers. But, could this be an opportunity for governments and private businesses to work together to ensure innovations can deliver for the benefit of all? Diane Coyle writes for the Herald Business.
What will future historians make of the early 21st century? The global economy has seen a succession of extraordinary shocks. The boom of the early 2000s, which saw annual GDP growth in the advanced economies reach almost 3% and in low- and middle-income economies more than 8%, gave way to the 2008 financial crisis. The lacklustre 2010s were followed by the global pandemic and then the most serious armed conflicts for years with Russia’s invasion of Ukraine, and now a tragic escalation of Middle East tensions, along with other potential geopolitical flashpoints.
The International Monetary Fund is forecasting slow but steady growth for the next few years, but there are immense uncertainties and the risks must be for more significant economic and political upheaval. Its most recent World Economic Outlook set out a daunting list of potential downside risks: China’s real estate crisis, volatile commodity prices, still-high inflation, and an absence of fiscal buffers. This was written before the recent events in the Middle East and the Houthi attacks on Red Sea shipping. The additional uncertainty due to electoral events – such as a possible Trump victory in the US in November – will surely further dampen the economic outlook for 2024.
But perhaps this perspective is too gloomy. Another view of the past two decades is that it has been a period of extraordinary innovation. It was as recently as January 2007 that Steve Jobs theatrically revealed the iPhone at the MacWorld Expo in San Francisco. The smartphone revolution, the combination of powerful handheld devices, wireless connectivity and app design, has transformed lives and businesses around the world. In countries like the US and UK people spend hours a day using their smartphones for news, travel, banking, entertainment, messaging and even phone calls. The technology has enabled the platform business model, adopted by some innovative companies to create new markets.
Beyond digital technologies, there have been other impressive innovations. Biomedical examples leap to mind, not least the rapid development of Covid vaccines and the mRNA platform for future discoveries. Other include lab grown cells for organ repair, advances in robotic surgery and telemedicine, and most recently a new class of antibiotics that could help defeat antimicrobial resistance in current medications [https://www.bbc.co.uk/news/health-67881289]. Spanning both digital and health has been DeepMind’s astonishing AlphaFold Protein Structure Database, speeding up the process of drug discovery by saving researchers many years of slow exploration of how proteins are structured, greeted in the science media as the solution to one of the biggest problems in drug development.
Perhaps the historians of tomorrow will reflect that there has often seemed to be an overlap between episodes of technological advance and widespread political unrest. The spread of the printing press in the 16th century coincided with widespread conflict in Europe. The Industrial Revolution saw massive social upheaval even as it created a prosperous middle class able to enjoy new, and newly affordable, consumer products. The 1920s and 1930s brought huge technological advances ranging from radio and TV to the spread of the internal combustion engine and indoor plumbing.
The most disruptive technologies are those economists term ‘general purpose technologies’ because they eventually affect the whole of the economy and society. They are used everywhere, in the process rearranging established patterns of business and everyday life. Digital technologies certainly fit this description, and the latest advances in AI seem sure to continue the process of disruption. While eventually enabling astonishing progress in everyday life, to start with there are always winners and losers. While this competition is healthy in the world of business, it can spill over into politics if the benefits of advances seem only to benefit a wealthy few, and into geopolitics if national economic interests seem to be at stake.
Both of these risks loom large. The technology boom has combined with the premarket ideology of the early 21st century to create a class of global super-rich, adrift from the concerns and experiences of their fellow citizens struggling with the cost of living crisis. There are few signs yet that the impressive technical advances are benefiting ordinary people. If anything, they are perceived as new ways of exploitation, by people who are monitored constantly at work or by freelance or administrative workers seeing their livelihoods torpedoed by new forms of AI.
When it comes to geopolitics, the technologies are in danger of triggering a new arms race. The US and China race for supremacy in AI, in drone technology, and even in genetic technologies. International scientific co-operation and international flows of investment are both endangered by the turn to scientific nationalism.
Looking back at previous historical episodes makes it hard to be optimistic about prospects for 2024, even without taking into account the all-too-apparent disruption of climate change and extreme weather events, or about the possibility of another pandemic wave. Could a retreat from international links, causing a global economic downturn, be on the cards again because of political tensions?
Yet thinking this is inevitable would be a serious error. The widespread sense that the economy is not working well for ordinary people, which has contributed to the uncertain political environment, is also an opportunity for governments and private businesses to work together to ensure innovations can deliver for the benefit of all. This will require regulation – as in all previous technological revolutions – and international co-operation, not easy in such polarised and uncertain times, but certainly not impossible. History also offers examples of times when leadership and co-operation succeeded, creating common prosperity. This New Year will be a key test for those with the power and influence to shape economic and political events.
Original source: Herald Business, Korea
The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.