The march of the machines has started, but it will take them some time to arrive
Robots in space. Intelligent machines in the freezing deeps of the North Sea. Automatons within the most toxic chambers of nuclear power plants, or plunging into the harshest mines. The future for artificial intelligence is exotic, alien and powerful.
At least, that is the vision bought into by the Business Department last week when it ploughed an extra £84m into a series of new projects at a series of universities and corporate research and development labs.
Cutting edge research into the artificial intelligence, robotics, 3D printing and other barely-out-of-sci-fi fields holds plenty of promise but has yet to completely upend the world in which we live.
For the past decade business investment appears to have been sluggish. Productivity growth has slowed and real wages are under the cosh, which does not fit with the idea that we are in an age of incredible technologies. Visions of the future can be inspiring or daunting, depending on your job right now.
Airbus last week claimed it can have driverless flying cars on the market in five years’ time – a fantastical vision and the stuff of movies so far.
In perhaps a more grounded forecast, John Cryan, the chief executive of Deutsche Bank, said half of the bank’s almost 100,000 jobs could be replaced by robots in the next 20 years.
So far, the practical gains have been more modest, but are important in specific areas.
Daniel Hegarty founded and runs Habito, an online mortgage broker which uses artificial intelligence as part of its system to process applications and match borrowers with loans.
“Humans are really, really bad at doing arithmetic and filling out forms and holding 80 different credit policies in their heads and matching them to the right customer,” he says.
There is still a human element – he found customers are unwilling to conduct such an important transaction through a clever machine alone, and value the chance to talk to a living, breathing adviser. “We use machines for sorting and humans for talking,” he says. Nonetheless, Hegarty believes he is four or five times more efficient than a traditional broker, with the capacity to grow much further using the technology he already has.
However, he is aware these are early days in what is sometimes called, rather grandly, the fourth industrial revolution.
“We are super early on. We have essentially mechanised a manual process. That is interesting and it provides a tangible consumer benefit. But the real transformation in financial services is still some way off,” he says.
That belief is based on his concern that right now, people must shop around on a regular basis for new loans or savings accounts with imperfect information, leaving them reliant on the marketing power of big finance firms, rather than finding the best product out there.
“When machines pick the products it is not about the marketing budget, it is about the best product,” he says, hoping it will force firms to compete on value. “That will be a transformational point.”
It is not only services which could be revolutionised by new technology. Manufacturing, too, faces a wave of much-hyped new tech which is yet to fully hit home.
Economist Raoul Leering at ING has studied the potential of 3D printing and sees several factors holding it back so far.
“Current 3D printers are really slow, so they are not competitive with regard to traditional capital goods,” he says. “For the time being, they are only competitive when making customised products in a complex shape,” he says, citing medical parts printed to match an individual’s body. “But for mass production of traditional products, 3D printers are too slow. We are waiting for a new generation to speed up the tempo.”
Advances are quick – the latest models are as much as 1000-times faster than their predecessors – but speed, price and reliability all have to combine to make them a worthwhile purchase.
His observations in that market can be applied to all radical new tech.
Firstly, companies are not going to abandon any expensive relatively modern equipment immediately just because the latest tech has marginally outclassed it.
Second, engineers with decades of experience are not always keen to abandon all of the systems with which they have expertise, switching to a revolutionary new system overnight.
And third, he sees a network effect holding investment back.
To use the example of the internet, the technology took time to grow because the first person with it could communicate with nobody.
Going back further in time, a lone telephone is useless with nobody to call. It was only as more people gained access that it became worth anybody’s while to connect to the internet. And as more people did, access itself became more valuable and, in time indispensable.
This slow adoption has raised comparisons with previous eras of slow productivity and wage growth in British history.
“There has been a period, a 10-year period in the UK, when you hadn’t had any productivity growth, but you have to go back to some time in the 1860s or 1870s to see this,” says Ben Broadbent, deputy Governor at the Bank of England.
“When people talk about that period, they talk about the pause between two big technologies. We were moving away from steam to electricity.”
Ian Stewart, Deloitte’s chief economist, says the adoption of electricity into the workplace took far longer still than just that decade.
“Productivity does not proceed at a stable rate over time. After the First World War particularly there was a mass deployment of electrification in factories, so there was an extraordinarily long lag from the inventions [in the 19th century] to their application in factories,” he says. “The whole production process had to be redesigned, buildings had to be redesigned. And as that happened there was a surge in productivity.”
“It may be the case that we haven’t really fully exploited current technologies, let alone the next generation.”
That is echoed by the CBI in a new report which notes that the UK has a small group of highly productive, cutting-edge firms, but a long tail of underachievers.
Almost 70pc of employees in the UK work in companies with belowmedian productivity, it notes, as too many firms have failed to adopt even well-established technologies.
While the slow pace of the AI revolution and the rise of the robots may be a drag for sci-fi fans, at least it means the most dire predictions of mass redundancies and endless poverty for swathes of the population are unlikely to come true as workers have time to adapt.
“It doesn’t replace jobs, it frees workers up to do more high-value activity, say in innovation,” says Lee Hopley, chief economist at manufacturing industry group EEF.
The process is a slow one in any case, because “this isn’t a big bang event where suddenly these new technologies are available off the shelf to apply in your business,” she says.
Marion Amiot at Oxford Economics says: “I don’t think the net effect will be to destroy jobs.”
There is a clear desire to speed up investment and the adoption of productivity enhancing technology. The Chancellor, Philip Hammond, is under pressure to find ways to raise investment and boost the economy in both the short and long-term.
But although there is no shortage of proposals sent his way, it is difficult to find any perfect answers. Broadbent warns that the historical record is not helpful.
“It is not evident that policymakers can flick a switch and change this.
“If you ask most economists they’d talk about sensible tax regimes, openness to the rest of the world, healthy public sector investment, good education,” he says.
Deloitte’s Stewart also notes a different lesson from history: expectations can be hopelessly wrong. He sees productivity growth as a process which comes in waves, pointing to the terrible crunch in the Seventies, strong improvements as the economy was revitalised by the end of the Eighties and early Nineties, over-optimism with the dotcom bubble and now another flat period.
If this assessment is correct, it may be that current pessimism about the long-term future is severely overdone.
At least we can comfort ourselves with that thought while we wait for space robots to become a regular feature of our lives.
A 3D Printer makes a plastic bowl, above; Airbus believes it will produce driverless flying cars, below, in five years’ time, but the so-called fourth industrial revolution will take time