Artificial intelligence: productivity, employment and power in the new industrial revolution
July 7, 2026
By Daniel Mayor
The rise of artificial intelligence is reminiscent, in some essential aspects, of the most turbulent moments of the Second Industrial Revolution. Back then, mechanization, population growth fueled by medical advances, and rural exodus increased the labor supply, contributing to low wages and precarious working conditions in an era when workers’ rights were still limited. This combination led to intense social tensions and the emergence of labor movements, workers’ parties, and new ideologies such as socialism and Marxism. However, those tensions also forced a rethinking of the foundations of the economic system itself. Over time, the idea that slavery is less profitable than capitalism took hold; a person who believes they can escape poverty through work is a far superior workforce to a demoralized slave, and this aspiration helped to increase productivity. Furthermore, social revolutions are avoided. Capitalism contains a fundamental internal tension: the worker is simultaneously a cost that companies try to minimize and, at the same time, a customer whose purchasing power must be sufficient to absorb production. Without consumers, capitalism simply cannot function.
Today, history seems to be repeating itself: AI not only threatens to replace physical jobs, as in the past, but is also encroaching on what has been, until now, the most protected domain: intellectual work. This could lead, at least temporarily, to a situation of labor oversupply similar to that of the early 20th century, where large segments of the population are displaced and forced to renegotiate their role in the economy. The usual response from economists is that all technological change is expected to destroy jobs in the short term, but ultimately generates new ones that replace the obsolete ones. Let us hope that, as has happened in the past, this transformation will ultimately create more opportunities than it eliminates and lead to a new surge in productivity. As Nobel laureate economist Paul Krugman said, «Productivity isn’t everything, but in the long run it’s almost everything.» A country’s ability to improve its standard of living depends almost entirely on its capacity to increase its productivity.
However, the most unsettling dimension of AI is not limited to the labor market. Simultaneously, we are witnessing the beginning of a new arms race, this time driven by the three pillars upon which this new technology rests: energy, chips, and data, with the United States and China competing for global technological dominance.
AI is not a neutral technology; it is an industrial revolution that defines present and future power. Its capacity to improve productivity and knowledge coexists with its potential to revolutionize warfare. From swarms of autonomous drones to advanced cyberattack capabilities, AI reduces the costs of confrontation and accelerates decision-making, increasing the risk of inadvertent or miscalculated conflicts.
Even more worrying is the potential erosion of existing strategic balances. If AI allows for the disabling of defensive systems, the manipulation of information on a large scale, or the anticipation of adversary movements with a decisive advantage, the foundations of traditional deterrence could be weakened. In that scenario, a technological advantage of just a few months could be enough to tip the balance of power, incentivizing preemptive or aggressive behavior.
With AI, decisions are being made today that will define the economy, and with it, the economic viability of our increasingly precarious welfare state. At the same time, the power structures of the coming decades are being shaped.
Artificial intelligence is not just another technology. As with the great technological revolutions of the past, its impact will transcend the economic sphere to transform social relations, the distribution of power, and the balance of power between nations. The challenge lies not only in developing this technology, but in ensuring that its benefits translate into greater prosperity and stability, and not into new forms of inequality or conflict.