Thorny Roses: A Peep into the Robotised Economic Future

24 Pages Posted: 13 Jun 2018  

Siddhartha Mitra

Jadavpur University - Department of Economics

Mousumi Das

IFMR Trust; International Food Policy Research Institute (IFPRI)

Date Written: May 28, 2018

Abstract

This paper speculates about the impact of robotisation on the world economy in the next 20 years beyond which technological developments are difficult to anticipate. It is argued that though robotisation of sectors destroys jobs and thereby unleashes recessionary tendencies, Artificial Intelligence (AI) enables entrepreneurs, managers and workers to make more efficient use of their time (i.e. a given task can now be completed more quickly) and thereby leads to an increase in time available for consumption. We highlight that in any given sector (consisting of all firms producing a particular product or a class of similar products) robotisation spreads because of its greater cost efficiency as compared to conventional production. But this development by itself would lead to a decline in relative prices of products supplied by a sector and through income effects stimulate consumption of other products. Thus, in the wake of robotisation, the recessionary tendencies emerging from the destruction of jobs are pitted against the expansionary tendencies emerging from AI facilitated increase in consumption time and the mentioned fall in relative prices. Thus, all combinations of increased/decreased aggregate employment and increased/decreased national income are possible as economic outcomes. Generation of frictional unemployment with labour shifting from rapidly robotising sectors to others (reaping the advantages of enhanced consumption time) and possible burgeoning inequality would imply a need for national and global governments to provide succour to those rendered unemployed or impoverished through basic income schemes.

Keywords: automation, artificial intelligence, employment, jobs, labor, robots, wages

JEL Classification: J23, J24

Suggested Citation

Mitra, Siddhartha and Das, Mousumi, Thorny Roses: A Peep into the Robotised Economic Future (May 28, 2018). Available at SSRN: https://ssrn.com/abstract=3185964 or http://dx.doi.org/10.2139/ssrn.3185964

Siddhartha Mitra (Contact Author)

Jadavpur University - Department of Economics ( email )

Kolkata, 700032
India

HOME PAGE: http://www.jaduniv.edu.in/profile.php?uid=977

Mousumi Das

IFMR Trust ( email )

10th Floor IIT Research Park
Taramani
Chennai, Tamil Nadu 600113
India

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

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