Artificial intelligence (AI) promises social and economic change on a par with the industrial revolution. However, this profound change will be squeezed into a single generation, rather than the several generations over which society was able to adapt to the impacts of the first industrial revolution.
This is according to Andrew Howard, Head of Sustainable Research at global asset manager, Schroders, who says that while the world has barely begun to see the effects of AI, the range of consultants and industry experts who have explored the topic thus far are almost unanimous in the view that AI will deliver significant economic benefits for those who are prepared.
“It is predicted that we could see an additional $16 trillion worth of output from AI alone by 2030, helped by significant rises (between 11% and 40%) in labour productivity. If these numbers play out, the implications will reach far beyond niche technology sectors.”
In order to enjoy these economic benefits, however, Howard says that companies need to acknowledge and embrace the labour force disruption and social adjustment that is likely to transpire with the AI revolution. “Technology that is able to form decisions autonomously could revolutionise jobs that have relied on judgement, knowledge and insight. As such, companies and their labour force will need to retool with technology skills and adapt to the different roles people will play in a newly-networked economy.”
Artificial intelligence is also likely to create self-reinforcing positions of dominance for incumbent leaders, says Howard. “The largest companies will accumulate more data, providing a competitive advantage. If exploited wisely, it will allow them to develop more powerful insights and actions, bolstering their scale and strengthening their competitive positions
“For the foreseeable future, technology leaders look likely to maintain their dominance, with corporate power concentrated in the hands of a few, it will be increasingly important that companies emphasise the benefits their use of data and AI can deliver, rather than focusing on their control of both as a source of competitive advantage,” he advises.
Lastly, Howard predicts that income will become even more concentrated in the hands of fewer individuals or companies, creating greater challenges for governments trying to tax them. “Looking forward, more revolutionary tax reform and greater international cooperation is likely to be necessary to address the threat of shortfalls, which might otherwise undermine governments’ abilities to provide the services societies expect.
“It will be more important than ever that companies focus on business models that deliver social benefits and profitability, without relying on aggressive tax strategies to support earnings,” he adds.
While drawing concrete conclusions on the impact of artificial intelligence - which remains in the infancy of its potential impacts - can only be conjecture, Howard believes the companies that are most likely to succeed are those that are quick to adapt and embrace the AI revolution as it unfolds.
“Social challenges are unavoidable and we expect governments and regulators to become increasingly focused on action to address the resulting difficulties. For companies, however, it is important to remember that this adjustment process is likely to be bumpy and the opportunities brought about by AI might ripen faster than governments’ ability to address their downsides.”