William Stanley Jevons, author of the Jevons Paradox
“The Jevons Paradox attacks again!” Readed on DeepSeek. But what paradox is this 1865 and that has almost always forgotten?
Deepseek, a recently created Chinese company, has shook the world of Artificial Intelligence (IA) when it launched its chatbot, equivalent to chatgPT but much cheaper.
When he realized the impact of DeepSeek, the Microsoft Executive Director wrote in: “The Jevons Paradox attacks again!”.
“As it was going to become more efficient and affordable, its use will jump, making it something we simply cannot do without,” added the Microsoft official.
But a lot of people got stuck in the first part: the Jevons paradox. What is that?
Coal accounts
It is an economic concept with about 160 years. And its origin is related to the coal: At the time, the upper English responsible were concerned about the possible end of coal, a central piece in the Industrial Revolution.
It was in this context that a young man of just over 20 years, William Stanley Jevonsit appeared with a novelty: apply mathematics and statistics in economics.
The question of coal: an inquiry into the progress of the nation, and the likely exhaustion of our coal mines – It is the title of yours that stirred thoughts in 1865.
The vast majority of English thought at the time that, with best technologies, machines, with technological advances, the consumption coal would be more effective and controlled, would be smaller. That is, new technologies would postpone or even cancel the end of coal.
William Stanley Jevons presented the opposite idea in this book: greater efficiency of coal -driven technologies would lead – paradoxically – to higher coal consumption; and no less.
Your idea: with greater efficiency, it is obtained more for less. In that case, more energy of each piece of coal. And this actually reduces the cost of coal energy. With better technologies, you can burn the oven or make the factory machines work longer and cheaper. Lower prices mean (much) higher demand.
That is, in his macro view, Jevons suggested that more efficient use of coal would stimulate economic growth, increasing coal consumption throughout the economy.
I.e: greater efficiency increases consumption, does not decrease it. This is the Jevons paradox.
Applied to IA… and jobs
And now, after being forgotten over so many decades, the Jevons Paradox is back because of the AI - which is “Obsedated” With this thesis, it summarizes a.
A lot of people start to believe that, As Ia becomes more efficient and cheaper, the demand for AI will explode. Competition can be fierce, production costs can decrease a lot, but the profits will not stop.
But the paradox of Jevons can also be relevant in the domain of AI for another reason: to realize what can happen to some job If I was going to revolutionize them and made the workers more productive.
That is, as Ia makes it more efficient certain jobs, this can increase the demand for human work – and not originate mass discharge.
But for this, there are three essential points that have to be met: the workers become more productive Thanks to AI (the opposite may happen – an amazing AI or need humans); greater workers’ productivity translates into lower prices; Finally, the search consumer needs explode in response to lower prices.
In an ideal scenario, employment grows and wages increase.
But the contrary: Either the boss does not divide the profits, or the AI really replaces the person, or makes the job easier to do and more people can do it… Then wages can lower and there may be mass discharge. It depends.
Back in 1865…
… In your book, Jevons also wrote about the application of your paradox to the job market.
The then young economist argued that New machines they would at first increase workers’ productivity, but then leave other temporarily unemployed.
“No Entanto, a seeks to increase in such a way for the products that were cheaper, than the Employment sphere is greatly expanded. Often, workers themselves whose work is saved discover that their most efficient work is more required than before, ”reads in a book chapter-a book that has not foreseeing an essential point: England would find other sources of energy to feed your industry.
