About three years ago, MIT launched the Initiative on the Digital Economy (IDE), a major effort focused on the broad changes brought about by the relentless advances of digital technologies. As its website explains:
“While digital technologies are rapidly transforming both business practices and societies and are integral to the innovation-driven economies of the future, they are also the core driver of the great economic paradox of our time. On one hand, productivity, wealth, and profits are each at record highs; on the other hand, the median worker in America is poorer than in 1997, and fewer people have jobs. Rapid advances in technology are creating unprecedented benefits and efficiencies, but there is no economic law that says everyone, or even a majority of people, will share in these gains.
The future of work and jobs is one of the major areas being addressed by IDE. What will the workforce of the future look like?; Where will jobs come from in the coming years?; Will the nature of work be significantly different in the digital economy?; How can we accelerate the transformation of institutions, organizations, and human skills to keep up with the quickening pace of digital innovation?
To help come up with breakthrough answers to these very challenging questions, IDE just launched its first annual Inclusive Innovation Competition. The competition aims to identify, celebrate and award prizes to “organizations that are inventing a more sustainable, productive, and inclusive future for all by focusing on improving economic opportunity for middle- and base-level income earners.”
The competition is open to for-profit and non-profit organizations of any size, age or type, in any nation around the world. It seeks creative solutions in four major categories:
- Skills: Prepare members of the workforce for opportunities of the future, including the necessary education to help them acquire new kills as well as improve their existing ones.
- Matching: Help qualified unemployed or underemployed individuals gain access to meaningful, productive and engaging work by improving the matching of labor supply with demand.
- Humans + Machines: Use technology to augment human labor so that the outcome is greater than either human or machine could achieve alone, and develop innovative offerings that improve the human capacity for effective physical or cognitive work.
- New Models: Come up with innovative jobs, business models and operational practices that will revolutionize the labor markets, help create new economic opportunities, and enable workers to succeed in meaningful ways.
A total of $1 million will be awarded. In each of the four categories, the grand prize winner will receive $125,000, and four runner-ups will each receive $25,000. In addition, a handful of additional awards will be given to organizations deemed by the judges to be uniquely inventive.
Let me briefly discuss why I think that the Inclusive Innovation Competition is such an important initiative.
Few topics are as critical, - and as challenging to anticipate, - than the future of jobs in the digital economy. Along with its many benefits, the digital revolution has resulted in enormous dislocations in labor markets and a sharp polarization in job opportunities over the past several decades.
Jobs requiring expert problem solving and complex communications skills have significantly expanded, with the earnings of the college educated workers needed to fill such jobs rising steadily. But, opportunities have significantly declined for middle-skill jobs dealing with the kinds of routine physical or cognitive tasks that can be well described by a set of rules and have thus been prime candidates for technology substitution. Low-skill jobs involving physical tasks have been growing, but their wages have been stagnant or declining. Moreover, as intelligent machines become more capable and less expensive, they will increasingly compete with and replace unskilled human labor all around the world.
Harvard economics professor Larry Summers noted in a 2014 article that, from time immemorial, the greatest economic problem had been coping with scarcity, as humanity could not produce enough to satisfy everybody. But the problem has now been changing, initially in advanced economies, and over time in most of the world. “The economic challenge of the future will not be producing enough. It will be providing enough good jobs.”
Technology has been replacing workers and improving productivity ever since the advent of the Industrial Revolution in the second half of the 18th century. In past technology-based economic revolutions, the periods of creative destruction and high unemployment eventually worked themselves out. Over time, these same disruptive technologies and innovations led to the transformation of the economy and the creation of new industries and new jobs.
“Previous technological innovation has always delivered more long-run employment, not less. But things can change,” notes a 2014 Economist article on the future of jobs. “Nowadays, the majority of economists confidently wave such worries away. By raising productivity, they argue, any automation which economises on the use of labour will increase incomes. That will generate demand for new products and services, which will in turn create new jobs for displaced workers… Yet some now fear that a new era of automation enabled by ever more powerful and capable computers could work out differently.”
The machines of the industrial economy made up for our physical limitations, - steam engines enhanced our physical power, railroads and cars helped us go faster, and airplanes gave us the ability to fly. The machines of the digital economy are now making up for our cognitive limitations, augmenting our intelligence and our ability to process vast amounts of information. They are now being increasingly applied to activities requiring intelligence and cognitive capabilities that not long ago were viewed as the exclusive domain of humans. These technology advances are truly pushing the boundaries between human and machines.
Many workers are learning to co-evolve with our intelligent machines, and as has been the case in the past, they will be ready for whatever new jobs are created. But, our fear is that this time is different and the long predicted era of technological unemployment is finally upon us. Technology advances are running so far ahead that large numbers of people may not be able to keep up, and the future will bring even more serious economic disruptions.
Just before the launch of the Initiative on the Digital Economy, I participated in an MIT roundtable on the future of jobs that discussed many of the issues IDE is now addressing. After listening to a number of experts throughout the day, the main conclusion I took away from the roundtable is that, - while having lots of ideas, hypotheses and hopes, - we truly don’t know where jobs will come from in the coming years, particularly for the middle- and low-level income earners being left behind by the digital revolution.
In the three years since IDE was launched, technology advances have continued their dramatic pace. Examples abound. Having conquered chess 20 years ago, an AI program recently won a round of Go, -a much more complex game than chess, - against one of the world’s top players. Our robots keep getting smarter and more capable. And, while we’re not quite sure when they’ll be all around us, self-driving vehicles keep achieving milestone after milestone.
That’s why it’s particularly heartening that MIT, which has been at the forefront of many of these technology innovations, is also seriously addressing their painful impact on so many, and searching for breakthrough innovations that will improve the economic prospects of workers everywhere.
The deadline for submitting application for the Inclusive Innovation Competition is June 15. The winners will be announced toward the end of September. I’m truly looking forward to the creative solutions they all come up with.