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Capitalism demands fast gains in productivity. Capitalism seeks revolutionary change. But it’s not clear whether a revolution in machine intelligence leads to a deflationary boom, per Schumpeter, or a deflationary bust.

Writers such as Paul Krugman have perhaps moved too quickly, too easily, to conclude that a massive increase in production from such technology leads sustainably to large growth in GDP without severe consequences. Indeed, in a recent essay responding to Robert Gordon's paper on the end of growth, Krugman takes the view that (positive) returns from technology are just beginning to unfold.

I conclude that Krugman is actually concerned about and open to the possibility that an enormous wave of disruption to manufacturing from robots could produce higher GDP initially and also problems thereafter. What happens to wages in the broader economy?

One does not have to be a Luddite about technology to fear yet another huge new round of wage deflation. The West has already been treated to an era of “cheap, quickly manufactured goods that enhance people’s lives” during the past two decades. And it’s not clear that a flood of goods has necessarily improved well-being.

While I certainly wouldn’t make the curmudgeon's case that electronic devices have reduced well-being, it’s not clear that the I.T. revolution has accomplished much in the way of delivering to consumers cheaper and better quality energy, food, or health care.