Hey everyone,
I think we're living through the modern Industrial Revolution. I believe AI will be remembered the way we remember the steam engine and electricity: as a general-purpose technology that reorganized how work gets done and, over time, made ordinary life better. I also believe the people who thrive will be the ones who embrace it with their eyes open. Embrace it, with some caution.
This is my take, not a forecast. History doesn't repeat, but it does rhyme, and the last time the world went through something like this, it's worth looking at what the rhyme sounded like.
Why the comparison fits
The first Industrial Revolution wasn't one invention. It was a cluster of them, including steam power, mechanized textiles, and iron and railways, that together changed what a person could produce in a day. A second wave, built on electricity and the assembly line, did it again.
What made those eras different from ordinary progress is that the technology was general purpose. Steam didn't just improve one industry, it improved almost all of them. AI looks similar: the same underlying capability can write, analyze, translate, code, diagnose, and design. When one tool touches nearly every kind of work at once, you get the big, messy, society-wide shift that we associate with the Industrial Revolution.
The other parallel is the money. Railways in the 1840s pulled in enormous waves of investment, and a lot of it was lost in speculation. Today's AI buildout, and the trillion-dollar valuations we've been writing about, have a familiar feel. A real technology and a financial bubble can exist at the same time. Railways were real and the railway mania was also a bubble.
The benefits history points to
- Higher productivity, which is how living standards rise. Machines let one worker do the work of many, which made goods cheaper and eventually raised incomes and life expectancy far beyond anything before 1800.
- Cheaper, more widely available things. Cloth, light, transportation, and information all went from luxuries to ordinary. AI could do the same for expertise: tutoring, basic legal and financial guidance, and medical information for people who never had easy access to it.
- New kinds of jobs. In 1850 about two-thirds of Americans worked in agriculture. Today it's about 2%, and we didn't end up with 60% unemployment. We ended up with jobs nobody in 1850 could have named.
- Faster progress. Better tools speed up science and engineering, which gives us better tools. If AI helps with drug discovery, materials, and energy, the payoff compounds.
U.S. workers in agriculture, share of workforce
The risks history warns about
The honest version of the story isn't "everything worked out." It worked out eventually, and the transition was rough for the people living through it.
- The gains weren't shared quickly. Economic historians describe a stretch in early industrial Britain, sometimes called "Engels' pause," when output per worker rose but wages barely moved for decades. The benefits did arrive, but late, and not evenly.
- Specific people got hurt. The Luddites were skilled textile workers whose livelihoods were undercut by machines. They were right that the change was costing them, even though they were wrong to think stopping the machines would help them.
- Conditions got worse before rules got better. Child labor, dangerous factories, and crowded, polluted cities were real. Laws like Britain's Factory Act of 1833 came after the harm, not before it.
- The payoff takes time. Economist Paul David found that electric power took roughly 40 years to show up fully in factory productivity, because businesses had to redesign how they worked, not just swap in new motors. Expect AI's biggest effects to arrive later than the hype suggests, and then arrive all at once.
- Concentration. Early industrial fortunes were built by a small number of owners. Today a handful of companies control most of the leading AI systems and the computing they run on. That's worth watching.
AI adds some worries the steam engine didn't. It can also affect white-collar and creative work, which earlier machines mostly left alone. It can produce convincing falsehoods at scale. And the people building it openly warn that these systems can behave in unexpected ways, a caution that shows up in the risk factors of the leaked Anthropic prospectus we covered in a previous post. Those are good reasons for caution. I don't think they're reasons for pessimism.
Why I'm optimistic anyway
Every general-purpose technology has come with a version of the same fear: that this time the machines really will replace us. So far that fear has been wrong about the long run, mostly because human wants don't run out. When things get cheaper to make, we find new things to want, and new work appears to supply them.
The difference this time, I think, is that we have the benefit of hindsight. The 1830s didn't have the lessons of the 1830s. We do. We know that transitions go better when people are retrained, when safety rules arrive early instead of late, when gains are shared through wages and not just profits, and when the technology is widely available instead of locked in a few hands. None of that is automatic, but it's within our power.
What this means for you
- Learn to use the tools. The person who learns to work well with AI will most likely do better than the person who ignores it or the person who is replaced by someone who didn't.
- Invest in what's hard to automate. Judgment, trust, communication, and knowing your field deeply stay valuable when everyone has the same tools.
- Keep your finances flexible. An emergency fund and low fixed costs make it far easier to change careers or learn a new skill if your industry shifts.
- Be skeptical of hype and doom alike. The railway mania had both real railways and ruined investors. Own diversified investments, and don't put money into a story you can't explain.
The Industrial Revolution made the modern world possible, and it was not painless. I think AI could do something similar for the next century, if we pay attention to what went wrong last time. If you want the basics of how these systems actually work, our free AI Explained course is a good place to start.
More soon,
Learn to Love Money
NOT FINANCIAL ADVICE. This post is an opinion piece for education and discussion. It is not a prediction or a recommendation to buy or sell any security or to make any career or financial decision. Historical figures are approximate. Do your own research or talk to a licensed advisor before investing.