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The Second Machine Age
The document discusses the transition to the "Second Machine Age", where computers, software, big data, and machine intelligence are increasingly able to perform tasks that were previously only doable by humans. This represents a shift from the first Industrial Revolution where machines augmented physical human power. The automation of mental work could both complement and substitute for human labor. While digital technologies create economic growth, they also risk widening inequality between high-skilled workers and those with mid- or low-skills, between capital and labor, and between "superstar" companies and others. Addressing these challenges will require reinventing society and the economy to keep up with accelerating technological change.
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The Second Machine Age
- 1. 1 The Second Machine Age Erik Brynjolfsson MIT Sloan School Director, MIT Initiative on the Digital Economy @erikbryn 1 MIT Initiative on the Digital Economy The Second Machine Age Changing the world requires two things: • Physical Power: move or transform things • Mental Power: decide where and how Industrial Revolution = Physical Power • Steam engine (and Internal combustion engine, Electricity) • Mostly a complement to humans Second Machine Age = Mental Power • Computers, Software, Big Data, Machine Intelligence • Complement or substitute? 2 MIT Initiative on the Digital Economy
- 2. 2 State ofUnderstanding, 2004 Uniquely Human Abili5es -‐ Autonomous mobility and fine motor control -‐ Language and complex communica5on -‐ PaCern matching and unstructured problem solving 3 MIT Initiative on the Digital Economy 4 MIT Initiative on the Digital Economy
- 3. 3 Machine Intelligence 5 MIT Initiative on the Digital Economy Interacting with physical world • Fine and gross motor control • Vision and other senses Language • Voice recognition • Natural language processing • Creating narratives Problem Solving • Answering unstructured questions • Rule based analysis • Pattern recognition and classification ØW e’re in the midst of the greatest “one-time” event in history! 6 MIT Initiative on the Digital Economy
- 4. 4 7 MITInitiative on the Digital Economy Machine Intelligence 8 MIT Initiative on the Digital Economy Interacting with physical world • Fine and gross motor control • Vision and other senses Language • Voice recognition • Natural language processing • Creating narratives Problem Solving • Answering unstructured questions • Rule based analysis • Pattern recognition and classification
- 5. 5 9 MITInitiative on the Digital Economy Siri Voice recognition Lionbridge Transla/on Narra/ve Science Authoring News Stories 10 MIT Initiative on the Digital Economy
- 6. 6 11 MITInitiative on the Digital Economy Machine Intelligence Interacting with physical world 12 MIT Initiative on the Digital Economy • Fine and gross motor control • Vision and other senses Language • Voice recognition • Natural language processing • Creating narratives Problem Solving • Answering unstructured questions • Rule based analysis • Pattern recognition and classification
- 7. 7 The DigitalFrontier 13 MIT Initiative on the Digital Economy Accuracy and Questions Answered on Jeopardy! 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% 20% 30% 40% 50% 60% 70% 80% 90% 100% 10% Percent Answered Accuracy 11/2010 04/2010 10/2009 05/2009 12/2008 08/2008 05/2008 12/2007 12/2006
- 8. 8 The DigitalFrontier 15 MIT Initiative on the Digital Economy The Digital Frontier 16 MIT Initiative on the Digital Economy
- 9. 9 17 MITInitiative on the Digital Economy 18 MIT Initiative on the Digital Economy
- 10. 10 What doesthis mean for the economy? 19 MIT Initiative on the Digital Economy 20 MIT Initiative on the Digital Economy The Bounty
- 11. 11 $300 BILLIONPER YEAR 21 MIT Initiative on the Digital Economy GDP, Profits, Investment, and Employment 22 MIT Initiative on the Digital Economy
- 12. 12 GDP, Profits,Investment, and Employment 23 MIT Initiative on the Digital Economy WHAT’S GOING ON? 24 MIT Initiative on the Digital Economy
- 13. 13 “Digital technologieschange rapidly, but organizations and skills aren’t keeping pace. As a result, millions of people are being left behind.” 25 MIT Initiative on the Digital Economy Our View 26 MIT Initiative on the Digital Economy
- 14. 14 The GreatDecoupling 27 MIT Initiative on the Digital Economy 28 MIT Initiative on the Digital Economy The Hard Truth Digital progress makes the economic pie bigger. But there is no economic law that everyone, or even most people, will benefit.
- 15. 15 Three Setsof Winners and Losers 1. High Skilled vs. Low & Mid Skilled Workers 29 MIT Initiative on the Digital Economy 30 MIT Initiative on the Digital Economy Skill Disparities
- 16. 16 Polarization ofthe Labor Market Mid-‐wage workers have been hit hardest in both employment and wages 31 MIT Initiative on the Digital Economy Three Sets of Winners and Losers 1. High Skilled vs. Low & Mid Skilled Workers 2. Capital vs. Labor 32 MIT Initiative on the Digital Economy
- 17. 17 120 117 114 111 108 105 102 99 33 MIT Initiative on the Digital Economy Capital vs. Labor Corporate Profit as % of GDP Labor Share of GDP 96 10 8 6 4 2 0 1947 1958 1969 1980 1991 2002 2013 Labor Share (2009 = 100) Corproate Profits as % of GDP Corporate Profits AKer Tax as % of GDP & Non-‐Farm Labor Share, 1947-‐2013 Source: research.stlouisfed.org Three Sets of Winners and Losers 1. High Skilled vs. Low & Mid Skilled Workers 2. Capital vs. Labor 3. Superstars vs. Everyone Else 34 MIT Initiative on the Digital Economy
- 18. 18 35 MITInitiative on the Digital Economy Superstars WHAT IS TO BE DONE? 36 MIT Initiative on the Digital Economy
- 19. 19 37 MITInitiative on the Digital Economy The New Grand Challenge • Digital technologies will continue to accelerate. • Our skills, organizations and institutions are lagging. • Business as usual won’t solve this problem. ØW e need to reinvent our economy and society to keep up with accelerating technology 38 MIT Initiative on the Digital Economy
- 20. 20 The Initiativeon the Digital Economy 39 MIT Initiative on the Digital Economy The New Landscape • What challenges and opportunities do you see? • What are your concerns and questions? 40 MIT Initiative on the Digital Economy
- 21. 21 41 MITInitiative on the Digital Economy To learn more, visit: http://digital.mit.edu/erik http://digital.mit.edu/ide http://secondmachineage.com