Income distribution during the technological revolution

Today, in the West, the subject of income redistribution arouses heated debates with strong ideological overtones - essentially because 'redistributing', in this context, primarily implies taxing. It would therefore perhaps be preferable and less confrontational to focus on distribution: that is, on how to create conditions that allow everyone to benefit from the new wealth generated, as it is generated, without having to redistribute it forcibly through taxation.

The issue of income distribution has been central to the theories of classical economists, from Smith to Ricardo and beyond. Ricardo, for example, analysed the clash of interests between classes: famous was the debate on the Corn Laws, the restrictions on the import of grain from Europe introduced in 1815, which for Ricardo would have harmed both workers and factory owners by increasing the share of income taken by large landowners.

It seems obvious to ask who will benefit from future economic development. Yet, today the focus tends to be on growth as such. The implication is that promoting economic growth is enough, because everyone will benefit: growth would be 'a tidal wave that lifts all boats', as US President J.F. Kennedy said in 1963. Unfortunately, this is not the case, or at least there is no reason, based on historical evidence, to argue that this will happen in the short or medium term. Going back to Ricardo's time, i.e. the First Industrial Revolution, we now know that the working classes had to wait about a century before they really began to benefit from progress.

The Industrial Revolution is a good example of a phase of economic growth, induced by a profound technological transformation, that left behind, in whole or in part, large strata of the population for a very long time. Since today we are perhaps at the beginning of a new technological revolution, triggered by artificial intelligence, we must ask ourselves under what conditions we can expect an equitable distribution of the new wealth that will be created. To be clear, such conditions are currently lacking: history suggests as much. At the end of the 19th century, the Industrial Revolution had ended up producing an unprecedented concentration of wealth, not least because of the emergence of large companies or cartels with monopolistic ambitions. Beginning in the United States, there was widespread concern about how to defend consumer interests from the rapacity of monopolies: in fact, a clash of interests was being re-proposed in a new form, between the workers (who constituted the majority of consumers) and the narrow economic elite that controlled much of the industrial and financial capital. The solution was the progenitor of modern anti-monopoly legislation, the Sherman Act of 1890, passed with overwhelming bipartisan support. In the decades that followed, all the major monopolies were forcibly fragmented to prevent the benefits of growth from being concentrated in a very few hands.

Unfortunately, the United States of today does not have the same concerns. The turning point was the year 2000, when Microsoft, convicted of violating the Sherman Act itself, got off almost scot-free. It was a clear signal to all aspiring 'Big Tech' companies: they were free to grow into de facto global monopolists.