The literature shows that AI could affect occupations and industries differently than previous waves of automation. Recently, we have seen the loss of “middle-skill” jobs due to automation, resulting in large clusters of high-paying and low-paying jobs at either pole of labor markets. While it is far from certain that such sizeable gains will be realized, it is probably safe to say that when it comes to maximizing efficiency, Adam Smith would be wary of stifling the artificial hand of AI.Īside from the gains in productivity, AI could shake up the labor market in unprecedented ways. That is more than the combined size of the economies of India and the United Kingdom. Goldman Sachs has forecast that AI could increase global output by 7%, or roughly $7 trillion, over a decade. If such dynamics hold on a broad scale, the benefits could be vast. Imagine how productive a company could be if every employee performed at the level of its best employee! Why? The study suggests that AI can help spread the knowledge of more experienced, productive workers. It's interesting to note that the greatest productivity impact was on newer and lower-skilled workers. The study found that productivity rose by 14% with the use of this technology. The AI assistant monitored customer chats and gave agents suggestions for how to respond. A recent study examined how customer-service agents worked with a conversational assistant that used generative artificial intelligence. With machines taking care of routine and repetitive tasks, humans could spend more time on what makes us unique: being creative innovators and problem solvers.Įarly evidence suggests AI could substantially raise productivity. AI could raise productivity by automating certain cognitive tasks while giving rise to new higher-productivity tasks for humans to perform. We could foresee a world in which it boosts economic growth and benefits workers. This idea is especially relevant today because global productivity growth has been slowing for more than a decade, undermining the advancement of living standards.ĪI could certainly help reverse this trend. To explore this question, I’d like to start with his most famous work, The Wealth of Nations. A seminal idea in this work is that the wealth of a nation is determined by the living standards of its people, and that those standards can be raised by lifting productivity, that is the amount of output produced per worker. Given the parallels between Adam Smith’s time and ours, I’d like to propose a thought experiment: If he were alive today, how would Adam Smith have responded to the emergence of this new “artificial hand”? Today, we find ourselves at a similar inflection point, where a new technology, generative artificial intelligence, could change our lives in spectacular-and possibly existential-ways. It could even redefine what it means to be human. The Wealth of Nations, for example, was published the same year James Watt unveiled his steam engine. The Industrial Revolution was ushering in new technologies that would revolutionize the nature of work, create winners and losers, and potentially transform society. Smith grappled with how to advance well-being and prosperity at a time of great change. He wasn’t afraid to push boundaries and question established thinking. Yet, at the time when he was writing, these ideas went against the grain. We take for granted many of his concepts, such as the division of labor and the invisible hand. Nowadays, it’s almost impossible to talk about economics without invoking Adam Smith. And thank you to the University of Glasgow, not only for the incredible honor of this degree but also for inviting me to participate in this celebration of Adam Smith and his legacy. Thank you, Professor Sir Muscatelli, for that kind introduction. Speech to commemorate 300th anniversary of Adam Smith’s birth By Gita Gopinath, First Deputy Managing Director, IMF
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