If you have read the self-published e-book, “Race Against the Machine,” by Erik Brynjolfsson and Andrew McAfee, then you’ll probably enjoy their reprise, “The Second Machine: Work, Progress, and Prosperity in a Time of Brilliant Technologies”.
The Second Machine offers an optimistic outlook at the economic financial crisis we have found ourselves in. Brynjolfsson and McAfee have based their optimism on their work at MIT’s Center for Digital Business and on the “new growth” theorists such as Brian Arthur, Paul Romer and Martin Weitzman.
The idea of exponential growth has shown staggeringly positive results in digital information being created and the computing powers of machines. The authors claim computers can now do what was once considered only possible in the science fiction realm. In reality we have observed the evolution taking place all around us – in our homes and work place.
Our cars and appliances are computerised, robots can now identify objects in a strange room allowing them to perform physical tasks. Computers can translate from one language to another and not because they have been programmed to, but because they recognise patterns in everything that has been written. Nowadays computers don’t only read and grade essays, they write them too.
Economic historians say it took several decades for breakthrough technologies such as the invention of electricity, to have an impact on people’s lives and how businesses operated. Information technology and digital communication, is now reaching that same inflection point. Brynjolfsson and McAfee argue that rather than approaching a period of mature decline, as Cowen and Gordon have suggested, these technologies are about to take off and change the economic climate as we know it.
Great wealth will be created for those who finance and create the new machines. Consumers will benefit the most as they will have access to a range of higher-quality goods and services at lower prices. Not to mention the displacement of workers by machines, ushering in an era of shorter workweeks and increased leisure.
The Luddite fear – that smart machines may inevitably reduce the overall demand for labour and jobs is rejected by Brynjolfsson, he argues there will be a shift in demand to different kinds of work due to the increased “bounty” that technology creates. The labour force is bound to drop away, but there will be a higher demand for special-needs teachers and high-level programmers instead.
Brynjolfsson and McAfee suggest, the transition could be easily done if our education system changes from its industrial-era focus on reading and math to a broader set of intellectual and personal skills required for working with the smart new machines.
“The Second Machine Age” weaves macro and microeconomics with insights from a broad range of disciplines into a comprehensible and credible story. In some ways, Brynjolfsson and McAfee practice an older style of economics, not one of mathematical models and data but based more on history, observation and logic. Their book pioneers a fundamentally new economics – instead of the old reality of scarcity we can embrace a new reality of abundance that we are only just beginning to realise.
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