Re-Thinking the Capabilities of Machines in Economics

May 2017 | 825

Authors: Daniel Susskind

In the past 15 years a ‘task-based’ literature has emerged, exploring the consequences of technological change on the labour market. This literature relies on a particular understanding of the capabilities of machines – known as the ‘ALM hypothesis’. However, this hypothesis has often led the literature to underestimate these capabilities. Tasks that were believed to be out of reach of automation can now be automated. In this paper I set out two distinct explanations for why these capabilities were underestimated – one that is explored in the recent literature and maintains the ALM hypothesis, and a new explanation that challenges it. I propose a new hypothesis that nests the ALM hypothesis as a special case.

JEL Codes: J20; J21; J23; J24; J30; J31; 031; 033

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