In the AI era, humanities will determine the victor

Kim Byung-yeon

The author is a chaired professor of economics at Seoul National University. 

I recently spoke with an executive in London’s financial district. He had studied engineering as an undergraduate and business in graduate school. I asked what he would major in if he returned to university. Without hesitation, he said history. In a period of transformation like this, he explained, we must look back not decades but centuries to find comparable cases and learn from them.

That perspective may help explain why the Royal Swedish Academy of Sciences awarded last year’s Nobel economics prize to three scholars, including economic historian Joel Mokyr. Mokyr received half the prize, in recognition of his contribution to understanding the present through the study of the Industrial Revolution in a discipline often dominated by mathematical and quantitative approaches. Conventional theories and data from recent decades alone may not adequately illuminate today’s upheaval.

Our era most closely resembles Britain some 260 years ago, around the beginning of the Industrial Revolution. From the late 18th through the 19th century, machines replaced human power while Britain competed with continental Europe for supremacy.

Britain succeeded in that competition through three stages. From 1760 to 1780, it developed general-purpose technologies such as James Watt’s steam engine. From 1780 to 1830, those technologies then spread across manufacturing.

But the decisive third stage came from 1830 to 1870: institutional reform, including electoral reform, expanded education and improved working conditions. Average annual economic growth rose from 0.9 percent in the first stage to 1.6 percent in the second and 2.4 percent in the third. Without institutional reform, the conflict generated by political and economic inequality might have destroyed the earlier achievements. The Industrial Revolution began with steam technology, but reflection on humanity and institutional innovation completed it.

The greatest danger in periods of upheaval arises when people and institutions cannot keep pace with change. Russia’s transition after the Soviet collapse is a prime example. The International Monetary Fund and World Bank expected privatization of state assets and liberalization of prices and trade to establish capitalism quickly. Russian President Boris Yeltsin similarly expected human and institutional problems to resolve themselves. Instead, national income fell 36 percent during his presidency. Leaving office, he acknowledged that he had been too naive.

Korea’s 1997 financial crisis offered a similar lesson. By concentrating on rapidly repaying foreign debt, Korea underestimated the time required to build institutions protecting people. Society consequently failed to develop values beyond the old slogan of “Let’s live well” and entered an era of risk avoidance in which individuals increasingly fend for themselves.

The U.S.-China rivalry will also be decided in that third stage of institutional reform. The United States has an advantage in developing AI, while China excels at applying it to manufacturing.

But the ultimate outcome will depend on institutions capable of addressing inequality, unemployment and political conflict created by AI. America’s ability to maintain its position depends on preventing AI’s gains from being concentrated among the few and reducing severe political and economic polarization.

China’s future in turn depends on whether AI strengthens Communist Party surveillance, information monopolies and elite privileges or instead prompts restraints on those forces and more open institutions. Success in inventing and spreading technology can be overturned if a country fails to build fair, inclusive and efficient political and economic institutions. The ultimate winner will be the country capable of creating a new social consensus and institutions that can accommodate technology.

Korea currently focuses overwhelmingly on the first stage: technological development. Yet the decisive battleground of the AI transformation will be that third stage — people and institutions.

Humanities and social sciences must help society overcome the identity disruption AI may bring and prevent unemployment and inequality from intensifying social conflict. The humanities provide the intellectual imagination needed to consider how people can live meaningful lives in the AI age. When helplessness and distrust among society’s vulnerable and those on its margins risk being organized into political anger, social science can use evidence and reason to find workable social compromises. Designing rules for distributing the benefits of technological progress is ultimately a social science task as well.

Yet Korea pours enormous resources into hardware while paying little attention to the intellectual foundations needed to prepare people and institutions. The cheaper AI makes knowledge, the more valuable becomes our ability to understand human desires and social conflict and resolve them through institutions.

Beneath a geopolitical competition seemingly driven by technology lies another contest: the capacity of mun — the humanities and social sciences — to understand people and reform society. The AI era marks the true return of mun and the beginning of its age.