Warnings on AI from the Industrial Revolution
The mechanisation of weaving in the 19th century didn’t just affect jobs, it led to years of political unrest culminating in the Peterloo Massacre. Leaders had better be ready for what’s coming with AI, says Paul Ormerod
Last week the US AI company Anthropic released a tool which it says can automate legal work such as contract reviewing compliance workflows and templated responses.
The software does not provide legal advice. Rather, it enables fairly routine tasks to be carried out much more cheaply.
Major law firms themselves have already been investing in this type of analysis. As a result, employment is being cut. Clifford Chance, for example, announced in November that they were reducing their business support staff by 10 per cent.
This brings into sharp focus the key question as to whether revolutionary new technology destroys or creates jobs.
On the positive side, by making particular goods and services cheaper, consumers and firms in general have more money to spend on other things. In addition, the technology may generate types of jobs which did not previously exist.
But, as with the legal services example, new technology has the immediate and direct impact of replacing workers.
The question is as old as the Industrial Revolution itself.
The first industry to bear the brunt of a wave of revolutionary inventions in the late 18th century was the textile industry.
In the mid-18th century it took around 50,000 person hours to spin 100 pounds of raw cotton into a form which could then be weaved. By 1800, this could be done in 300 hours.
The textile industry experienced a massive boom. But what about the workers?
The great English economist David Ricardo – a self-made millionaire in early 19th century money – thought about this in the various editions of his magnum opus, The Principles of Political Economy.
His initial thinking reflected what have become the classic positive points mentioned above. But he became gloomier and began to argue that “machinery”, as he called the new technology, would destroy jobs.
Ricardo’s views were influenced not so much by what happened to the spinners of cotton because the growth in the industry was so huge that it created jobs. It was the second wave of new technology in the early 19th century which destroyed the jobs of the weavers of the spun cotton.
Weaving was a skilled trade, often carried out from home on handlooms. Initially, the workers prospered as the huge increase in the production of cotton yarn increased the demand for their services.
But they were soon driven into appalling poverty by the introduction of power looms into factories.
In the newly industrialising areas of the North where textiles were made, and especially in the Greater Manchester home of the Industrial Revolution, there was widespread and prolonged civil unrest.
The Handloom Weavers Lament
A poem, widely known at the time, captured the problems. Entitled “The Handloom Weavers’ Lament”, it is full of references to wages being “pulled down” and to the dire poverty being endured.
But it also denounces both the mill owners and the government as “tyrants”.
At a mass gathering in Manchester in 1819, militia fired upon and killed members of a huge protesting crowd in what is known as the Peterloo Massacre.
Throughout the 1820s, the British government carried out repressive domestic policies
These were resisted in several places. For example, Oldham was essentially in a revolutionary situation. Although the positions of magistrates and poor law supervisors in the major textile town were still held by the local gentry, they were so terrified of local sentiment that in practice they carried out the demands of the militant working class.
Gradually things quietened down. The handloom weavers died off, real wages began to rise and economic growth generated jobs. But the process took at least a couple of decades.
The government, whoever is leading it, needs to be planning now for the possibility of big redundancies in the next few years.
Paul Ormerod is an Honorary Professor at the Alliance Business School at the University of Manchester. You can follow him on Instagram @profpaulormerod