The two faces of progress: the macroeconomic impacts of Artificial Intelligence
James M
Introduction In his book, The Coming Wave , Mustapha Suleyman describes artificial intelligence (AI) as ‘the science of teaching machines to learn humanlike capabilities’. He considers the advent of AI a turning point ‘where the fate of humanity hangs in the balance’. 1 On the contrary, Robert Solow stated in 1987 ‘you can see the computer age everywhere but in the productivity statistics’, showing that not all technological change drives radical economic shift. 2 The rise of AI is widely regarded as the start of the fourth industrial revolution, a transformation that is unfolding at a pace far greater than all its predecessors. Like the technological revolutions of the past, AI gives the compelling prospect of economic growth and enhanced productivity but the disruptive potential in many facets of society casts a shadow of enormous concern. This essay will delve into the macroeconomic impacts of AI, exploring the immediate challenges —such as widespread layoffs, skill gaps and inequality — alongside the benefits it offers, new job types, productivity gains and leaps forward in technological creativity. By considering these two faces of progress, we can begin to understand the complex economic landscape that AI is shaping and what it means for the future. Part I: the disruptive potential and its macroeconomic consequences The most immediate and widely discussed macroeconomic consequence of AI's global implementation is labour market disruption. As AI systems become more adept at performing tasks traditionally executed by humans, the prospect of widespread layoffs and structural unemployment becomes a reality. The forecasts regarding the scale of job displacement vary but they all suggest a profound transformation. Labour saving technologies have previously increased US jobless by 0.3% for every 1% productivity gain, but the market impact disappears after two years. However, in a Goldman Sachs Economics Research Report from March 2023, it was estimated that AI could eventually replace the equivalent of 300 million full-time jobs globally permanently. 3 The August 2025 update continued, proposing the permanent displacement of 6-7% of the US workforce. Frontiers notes that estimates will vary, as while AI may perform a significant portion of a job’s tasks, it may not necessarily make the entire role obsolete but rather change its fundamental nature. 4 Similarly, the World Economic Forum’s Future of Jobs Report 2023 projects a net negative outcome forecasting that in the five years to 2027, 83 million jobs would be lost while 69 million new ones would be
1 Suleyman, M. (2023 The Coming Wave. London. 2 Solow, R. (1987) ‘We’d better watch out’, New Your Times book review, p. 36, July 12 1987. 3 How Will AI Affect the Global Workforce? | Goldman Sachs. https://www.goldmansachs.com/insights/articles/how-will-ai-affect-the-global-workforce. 4 AI: UBI Income Portfolio Adjustment to Technological Transformation. https://www.frontiersin.org/journals/human-dynamics/articles/10.3389/fhumd.2021.725516/full.
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