2017 Articles

The Coming Great Transformation

Stiglitz, Joseph E.

Over the past 300 years, the world has managed several great transformations, to borrow the title of Karl Polanyi's famous book. The society and economy of the United States and other advanced countries, for instance, have moved from being agrarian to manufacturing-based and from being rural to urban. Obtaining the necessities of survival, which used to consume all of a family’s efforts, now takes but a few hours a week. Many advanced countries have transformed from authoritarian regimes to democratic pluralistic societies. Seemingly similar societies have managed these transformations differently, and almost surely, different societies will respond to the challenges posed by this next transformation, which may truly be called “the Great Transformation,” differently. How countries respond will, however, have profound consequences for the nature of society in the twenty-first century. It will affect not only disparities in well-being (the degree of inequality) but also the magnitude of social tensions—and even the pace of innovation going forward. Economists do not have a crystal ball, so they cannot tell whether the pace of innovation will decrease (as some have suggested) or not. They cannot tell how fast and to what extent robots and artificial intelligence will replace humans. They cannot even provide clear links between the ways in which society responds to robotization and the future pace of innovation. But economic research in recent years has provided a framework for assessing alternative possibilities and policies—a rough guide to their likely consequences. We are not totally rudderless. Indeed, I will argue that the worst nightmares—a world run by and for robots in which humans become the servants of the machines—are science fiction. We have it in our means to make sure that such a world does not emerge.