Racing with the Machines: How to Thrive in the New Machine Age

The rise of automation and artificial intelligence has sparked fears of widespread job displacement and economic stagnation. But what if these technological advancements aren't a threat, but an opportunity? Erik Brynjolfsson argues that the key to future growth lies not in resisting machines, but in learning to race with them.

The Echoes of Industrial Revolutions

History offers valuable lessons. Over a century ago, the electrification of American factories marked the Second Industrial Revolution. Yet, for three decades, productivity remained stagnant. Why? Because early managers simply replaced steam engines with electric motors without fundamentally rethinking their operations. It wasn't until a new generation redesigned factories to leverage electricity's flexibility that productivity soared, often doubling or tripling.

Electricity, like the steam engine before it, is a general-purpose technology – one that drives economic growth by unleashing a cascade of complementary innovations. Today, the computer is our era's general-purpose technology. However, technology alone isn't enough. We must reinvent our organizations and economic systems to fully harness its potential.

The New Machine Age: Productivity vs. Employment

While concerns about the end of innovation are common, Brynjolfsson suggests we're actually experiencing the growing pains of the "New Machine Age." Despite anxieties, productivity is at an all-time high and has grown faster in recent decades than during the Second Industrial Revolution. Globally, incomes have also risen at an unprecedented rate.

However, traditional metrics may understate our progress. The New Machine Age is driven by knowledge creation rather than just physical production. We're getting more and more valuable services for free – think Wikipedia, Google, and Skype. These free goods and services, while beneficial, are often unaccounted for in GDP calculations. Brynjolfsson estimates that GDP figures miss over $300 billion per year in free internet goods and services.

The Digital, Exponential, and Combinatorial Nature of Growth

Brynjolfsson remains optimistic about future growth because the New Machine Age is:

• Digital: Digital goods can be replicated perfectly at near-zero cost and delivered instantaneously, creating an economics of abundance.
• Exponential: Computers improve at an unprecedented rate. A child's PlayStation today is more powerful than a military supercomputer from 1996.
• Combinatorial: Each innovation creates building blocks for further innovations. An undergraduate student built an app reaching 1.3 million users in weeks by leveraging existing platforms like Facebook, the web, and the internet.

These three factors combined are driving astonishing breakthroughs, from robots performing factory work to machine learning algorithms like IBM's Watson. Watson, despite its occasional forays into profanity, is rapidly maturing and being tested for jobs in various sectors, including call centers, law, banking, and medicine.

The Great Decoupling and the Grand Challenge

Despite technological advancements, productivity has become decoupled from employment, and wealth from work. Millions are disillusioned as technology races ahead, leaving many behind. Routine jobs are being codified and replicated by machines, making it difficult for skilled workers to compete.

The solution isn't to slow down technology. Instead, we must learn to race with the machine. This is our grand challenge. The key lies in teamwork between humans and computers. As demonstrated in a freestyle chess tournament, teams of humans and computers working together can outperform any computer or human working alone.

Embracing Our Destiny

Technology is not destiny. We shape our destiny. By embracing collaboration with machines, we can unlock unprecedented opportunities for shared prosperity and growth in the New Machine Age.