Opinion: AI and Creative Destruction - What Should We Think About It?

Efficiency, productivity, and artificial intelligence. Better processes and fewer errors. Currently, high expectations are placed on AI, but it’s still premature to suggest that it will replace human labor entirely.

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Martti Asikainen, 21.10.2024

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At present, the threats associated with AI are perhaps being discussed more than ever. Many fear for their jobs, while others remain more optimistic. For instance, Nvidia’s CEO Jensen Huang argues that it’s not AI that will take away jobs, but rather the person who knows how to use it effectively (Koski 2023). Juha Kujala, the Chief Technology Officer of Sofigate, shares this sentiment.

According to technology company Accenture, every work role has the potential for renewal. In assessing the impacts of generative AI, the company identified up to 200 language-related tasks that can be enhanced or automated. Simultaneously, they estimated that AI will affect about 40% of work hours (Daugherty et al. 2023).

The World Economic Forum (WEF) published a study last year predicting that 14 million jobs will disappear globally over the next five years. In total, about 69 million jobs would be created worldwide, while approximately 83 million would vanish due to creative destruction. Most new jobs are expected to emerge in education and agriculture, while administrative tasks will see a decline (Battista et al. 2023).

The International Monetary Fund (IMF) has estimated that in developed economies like Finland, AI will affect about 60 percent of all jobs, and in about half of these cases, the impact will be positive (Cazzaniga et al. 2024). In practical terms, this means that in roughly a third of jobs, AI would enhance work, making it more profitable and productive.

Something Ends, Something Begins

The emergence of AI and the subsequent leap in development is not unprecedented in human history. This marks the fourth industrial revolution. During the first, humans harnessed steam and waterpower, mechanizing numerous jobs. The second industrial revolution saw the utilization of electricity and the shift to mass production. The third revolution combined electronics and information technology, giving birth to automation.

Industrial revolutions have consistently shown that while professions, jobs, and even entire industries may disappear, something new and more productive always emerges to replace them. Developed economies have long been moving towards selling services rather than goods, with products becoming just part of the service catalog. Concurrently, birth rates have fallen to record lows, which will inevitably affect the future workforce (Statistics Finland 2023).

Creative destruction is an unavoidable force. It is fueled by competition between companies, which essentially compels the development of products and production methods (e.g., Kauhanen et al. 2015). From a company’s perspective, falling behind in development can render operations economically unprofitable and, in the worst case, even lead to bankruptcy. Therefore, companies must adapt and identify the need for change promptly.

However, there’s also a risk that AI might go further than previous industrial revolutions in terms of creative destruction and its impact on employment. Instead of creating new professions and industries, it may primarily replace human tasks, potentially failing to provide sufficient counterbalance for the lost jobs (Trajtenberg 2018; Etelävuori 2023).

Out of the Game

Currently, it remains unclear who will emerge as the winners and losers in this evolving work landscape. The increased prevalence of AI demands resilience from employees. The ability to learn new skills and adapt to challenging changes will be crucial in the future job market. AI has already infiltrated institutions and companies. Translators were among its first victims, as AI can process language at speeds unattainable by humans.

For example, in the European Union, the number of translators has steadily declined over the past decade, decreasing by an average of about 50 employees annually, despite a significant increase in the volume of texts requiring translation (Sorgi & Di Saria 2023). Instead, individual specialists capable of guiding AI through prompts have been hired. Beyond translators, entry-level coders, data analysts, web service developers, corporate legal experts, customer service representatives, journalists, accountants, and proofreaders are also in the line of fire.

The German tabloid Bild, for instance, has announced plans to reduce personnel costs by approximately 100 million euros through AI implementation (Henley 2023). Computer giant IBM has declared its intention to replace up to 7,800 jobs with AI over the next five years (Asikainen 2023; Ford 2023). The Americ

an company Salesforce already replaced over 700 positions with AI at the beginning of the year (Ford 2024). Online financial services provider Klarna plans to substitute up to half of its staff with AI in the coming years (Ford 2024; Lehtonen 2024).

According to the IMF, highly educated women are more susceptible to AI-induced changes than men. However, they simultaneously possess superior tools to leverage AI in their work compared to older employees (Cazzanica et al. 2024). Securing one’s position may require even experienced experts to adopt AI early as part of their work methods and continuously develop their expertise.

The changes brought about by AI pose the greatest challenges for young people just starting their careers and older workers. Universities provide solid foundations for career initiation, but genuine expertise develops only through practical work experience. If entry-level knowledge workers are particularly vulnerable, there’s a risk that expertise may never fully develop. Conversely, entirely new types of tasks and job descriptions may emerge, potentially improving the competitiveness of new entrants in the job market.

Rapid development can be especially challenging for older individuals, as studies indicate that a person’s willingness and ability to learn new things diminish with age. Simultaneously, established ways of working become more deeply ingrained over time, potentially leading to behavioral rigidity (e.g., Matamales et al. 2016). Many question whether this constitutes a form of digital discrimination, where younger generations have created tools that better understand them and their needs compared to older generations.

AI Forces Society to React

While AI proves useful in everyday applications and enhances our work efficiency, as a societal change and a force permeating the entire working life, it compels us to grapple with questions of power and social responsibility. As work evolves and jobs disappear, society must find ways to prevent mass unemployment to ensure that social inequality doesn’t spiral out of control.

Simultaneously, universities are forced to adapt to ensure that the emerging experts from their institutions can meet future skill demands. Education must keep pace with AI-related developments, enabling newly graduated professionals to outperform AI in simpler entry-level tasks while effectively utilizing it in their work.

The rapid pace of development may necessitate a review of existing legislation. The accelerated rate of change, coupled with a general lack of long-term vision and rising unemployment figures, could lead to social unrest and widening inequality. The scales are weighed down by business development, efficiency, and bottom-line profits on one side, and ethical and social policy considerations on the other – issues for which sustainable solutions have yet to be found.

References

Asikainen, M. (2023). Tekoälyn tuleminen kirittää tietotyöläisen osaamisvaatimuksia. Published in eSignals 10.05.2023. Haaga-Helia University of Applied Sciences. Helsinki. 

Asikainen, M. (2023). Tulisiko ilman tekoälyä tuotettu sisältö sertifioida kuluttajansuojan nimissä? Published in eSignals 28.6.2023. Haaga-Helia University of Applied Sciences. Helsinki. 

Battista, A., Grayling, S., Hasselaar, E., Leopold, T., Li, R., Rayner, M. & Zahidi, S. (2023). Future of Jobs Report. Insight Report. World Economic Forum. Geneve.

Cazzanica, M., Jaumotte, F., Li, L., Melina, G., Panton, A. J., Pizzinelli, C., Rockall, E. & Taveres, M. (2024). Gen-AI: Artificial Intelligence and the Future of Work. SDN/2024/001. International Monetary Fund.

Daugherty, P., Ghosh, B., Narain, K., Guan, L. & Wilson, J. (2023). A new era of generative AI for everyone. The technology underpinning ChatGPT will transform work and reinvent business. Accenture.

Ford, B. & Bloomberg. (2024). Salesforce slashes 700 jobs, adding to brutal string of 2024 tech layoffs. Published in Fortune 27.1.2024.

Etelävuori, E. (2023). Tekoäly ja sen tuottavuusvaikutukset. Finland’s Ministry of Economic Affairs and Employment. Helsinki.

Kauhanen, A., Maliranta, M., Rouvinen, P. & Vihriälä, V. (2015). Työn murros. Riittääkö dynamiikka?. Taloustieto. Helsinki. 

Koski, A. (2023). Työtäsi ei vie tekoäly, vaan ihminen, joka sitä osaa käyttää. Published in Helsingin Sanomat 25.6.2023. Sanoma Pro. Helsinki. 

Kujala, J. (2024). Tekoäly korvaa ihmisen – ja kolme muuta myyttiä, jotka murtuivat vuonna 2023. Published in Kauppalehti 23.01.2024. Alma Talent. Helsinki.

Lehtonen, V-P. (2024). Maksu­palvelu­yhtiö Klarna aikoo irti­sanoa lähes puolet, syynä teko­äly. Published in Helsingin Sanomat 29.8.2024. Sanoma Pro. Helsinki.

Matamales, M., Skrbis, Z., Hatch, R. J., Balleine, B. W., Götz, J. & Bertran-Gonzales, J. (2016). Aging-Related Dysfunction of Striatal Cholinergic Interneurons Produces Conflict in Action Selection. Neuron, vol. 90, s. 362-373. Cell Press. Cambridge.

Sorgi, G. & Di Sario, F. (2023). Who killed the EU’s translators? Published in Politicossa 12.5.2023. Axel Springer SE. 

Tilastokeskus. (2023). Syntyneitä ennätyksellisen vähän alkuvuodesta 2023. Statistics Finland. Helsinki.

Trajtenberg, M. (2018). Artificial Intelligence as the Next GPT: A Political-Economy Perspective. National Bureau of Economic Research.

 

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