Institute for Institute for New Economic Thinking New Economic Thinking Capitalism in an Age of Robots Adair Turner Chairman Institute for New Economic Thinking Resurrecting the Public Lecture Series Azim Premji University Bangalore, October 2, 2017 ineteconomics.org | facebook.com/ineteconomics USA 300 Park Avenue South, 5th Floor, New York, NY 10010 | UK 22 Park Street, London W1K 2JB Automation of everything? When not If The Solow paradox: explicable and inevitable? Challenges for advanced economies: “Average is over”? Challenges for emerging economies: ending the demographic denial Limits to markets: implications for economics Institute for 2 New Economic Thinking ICT – not just another technology Moore’s Law • doubling every two years • = 1000 times in 20 years, 1 million in 40 • in processing speed, memory, bandwidth • infinitely replicable at almost zero Software marginal cost Artificial intelligence super intelligence Big data analysis Machine learning and robotics Institute for 3 New Economic Thinking Current automation capability versus humans performance Automation capability Sensory Sensory perception Below median perception Median Cognitive Recognising known patterns /categories (supervised learning) 7 capabilities Top quartile 1 Generating novel patterns/ categories 0 2 ,t Logical reasoning/problem solving r o p e R Optimisation and planning e t u tit Creativity sn C I la Informationretrieval pa b a o b lG Coordination with multiple agents i l y ti e y s Output articulation/presentation n l iK ve cM Natural Natural language generation e l s , k language r o Natural language understanding W processing t a h t Social and Social and emotional sensing e r u emotional t u F Social and emotional reasoning A capabilities e : Social and emotional output c r u o S Physical Fine motor skills/dexterity capabilities Gross motor skills Navigation Institute for 4 New Economic Thinking Mobility Automation potential by type of activity % of time automatable with current technology % of time in all US occupations Predictable physical 81 18 Process data 69 16 Collect data 64 17 Unpredictable physical 26 12 Interface 20 16 Expertise 18 14 Manage 9 7 Source: McKinsey Global Institute, A Future that Works, 2017 Institute for 5 New Economic Thinking Automation potential by occupation % of specific activities automatable Example occupations % Sewing machine operators, graders and sorters o f s of agricultural products p e c i f i c r o Stock clerks, travel agents, watch repairers el s a n d t i m Chemical technicians, nursing assistants, e w Web developers h i c h c a n Fashion designers, chief executives, statisticians b e a u t Psychiatrists, legislators o m a t e d Source: McKinsey Global Institute, A Future that Works, 2017 Institute for 6 New Economic Thinking Potential to automate by sector % of time automatable with current technology Accommodation and food services 73 Manufacturing 60 Transportation and warehousing 60 Retail trade 53 Construction 47 Finance and insurance 43 Real estate 40 Health and social care 36 Professionals 35 Management 35 Education services 27 Source: US Bureau of LaborStatistics McKinsey Global Institute Analysis Institute for 7 New Economic Thinking Scenarios for automation Technical automation Early scenario potential Late scenario s k r o w t n e r r u c o t n e p s e m i t f o % Source: McKinsey Global Institute , A Future that Works, 2017 Institute for 8 New Economic Thinking Automation of everything? When not If The Solow paradox: explicable and inevitable? Challenges for advanced economies: “Average is over”? Challenges for emerging economies: ending the demographic denial Limits to markets: implications for economics Institute for 9 New Economic Thinking Productivity growth in the US % per annum 3 2.82 2.5 2.41 2 1.84 1.79 1.77 1.62 1.5 1 0.5 0 1870-1920 1920-1970 1970-2014 Output per person output per hour Source: Robert Gordon, The rise and Fall of American Growth(Princeton University Press, 2016 Institute for 10 New Economic Thinking