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Learning From Ricardo and Thompson: Machinery and Labor in the Early Industrial Revolution and in the Age of Artificial Intelligence

Author

Listed:
  • Daron Acemoglu

    (Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA)

  • Simon Johnson

    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA)

Abstract
David Ricardo initially believed machinery would help workers but revised his opinion, likely based on the impact of automation in the textile industry. Despite cotton textiles becoming one of the largest sectors in the British economy, real wages for cotton weavers did not rise for decades. As E.P. Thompson emphasized, automation forced workers into unhealthy factories with close surveillance and little autonomy. Automation can increase wages, but only when accompanied by new tasks that raise the marginal productivity of labor and/or when there is sufficient additional hiring in complementary sectors. Wages are unlikely to rise when workers cannot push for their share of productivity growth. Today, artificial intelligence may boost average productivity, but it also may replace many workers while degrading job quality for those who remain employed. As in Ricardo's time, the impact of automation on workers today is more complex than an automatic linkage from higher productivity to better wages.

Suggested Citation

  • Daron Acemoglu & Simon Johnson, 2024. "Learning From Ricardo and Thompson: Machinery and Labor in the Early Industrial Revolution and in the Age of Artificial Intelligence," Annual Review of Economics, Annual Reviews, vol. 16(1), pages 597-621, August.
    • Handle: RePEc:anr:reveco:v:16:y:2024:p:597-621
    DOI: 10.1146/annurev-economics-091823-025129
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    More about this item

    Keywords

    Industrial Revolution; working conditions; automation;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)

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