The problems that could be solved and created by productivity improvement

Productivity improvement has been a major issue for many developed countries as well as some developing countries. However, when we face a major productivity improvement led by technological improvement, some problems could be permanently solved while new problems will occur as well. The industrial revolution released the labour force in farms and caused many farm workers had lost their jobs and forced them to work in the cities. These workers' lives had been very poor. The establishment of welfare states in the West last century helped to improve these workers' living standards and narrowed the wealth gap at the time. Currently the technology progress has been taking place for a while and more technology development and inventions are taking place. Robots and AI development would allow companies to use technology to replace human labours that once such technology is fully mature, the labour force working in cities would be released. Then the problem occurs, where can these labours go? Moreover, even if these labours can find somewhere needs their work force, the wealth gap in the society will be widened. This is understandable because the technology and machine create more outputs than labour forces, the wages paid to the labour forces will be lower compared with the capital investment.

However, such technology improvement increases the productivity, which means the marginal cost of production in the whole world economy will be much lower. This can drag down the inflation rate in the world, and more and more goods and services will become affordable to the majority of the world population. Therefore, the average world living standard will improve. However, the class boundary will be more firm and unlikely to break up.