The question everyone seems to be asking these days with respect to AI is: if it's so impactful as claimed, why is it not showing up in any economic stats?
It is not the first time that such a paradox has shown up in the deployment of a new technology. In 1987, Robert Solow remarked that you can see the computer age everywhere except in the productivity statistics. Erik Brynjolfsson later coined the term "productivity paradox" in 1993 to describe this very phenomenon. The massive investment in information technology through the 1970s and 1980s produced no measurable uptick in productivity growth. It took nearly a decade of organizational restructuring before the gains showed up in the late 1990s. We may be in a similar lag period with AI.
One answer to why this delay happens may lie in how early technology develops through the under-studied activity of kit-making.
A kit is a set of components that are meant to be tinkered with and have no single “correct” method of usage. Steam engines were famously kits. In 1763, James Watt was asked to repair a scale-model Newcomen steam engine at Glasgow University. The job led him to see how wastefully the Newcomen design used steam, and a year and a half later he hit on the idea of a separate condenser — building his first prototype using a brass surgical syringe as the cylinder. When he partnered with Matthew Boulton to commercialize the design, they didn't produce finished steam engines. Instead, they sold engineering kits with extensive instructions that required on-site assembly. Boulton & Watt made a killing and transformed their age. Someone even named a startup incubator after them.
This rough template has foreshadowed technological revolution ever since. Whether in radio, automobiles, aircraft, electronics, or personal computers, communities of talented kit-building amateurs have disproportionately influenced early innovation. Michael Schrage, a research fellow at MIT's Sloan School, puts this well: kitonomic innovation doesn't follow the money, the money follows the kits. The proliferation of cheap kits signals a market sector ripe for revolution more reliably than the presence of expensive cutting-edge products. On the influence of kit-making on the information age, he writes:
So while there may be no “Steve Jobs of Kits” yet, there is surely no Steve Jobs without kits. There’s no Bill Gates or Akio Morita without kits either. Their market-transforming entrepreneurial leaps all emerged from kit-enabled cottage industries. The two Steves — Jobs and Wozniak — literally built Apple from kits. Gates and Paul Allen started Microsoft as a software systems supplier for DIY computer kit builders. Morita and Masaru Ibuka launched Sony with kits to turn AM radios into shortwave receivers. From the prewar “cat’s-whisker” playfulness of crystal radio kits to postwar floods of surplus electronics, kits became a medium, mechanism, and marketplace for next-generation invention.
Even within kits there is an important difference between amateurs tinkering to make money directly from the technology itself, and users repurposing kits to interpret a technology in a way that fits their own context. The first kind of kit-builder is someone like Wozniak at Homebrew, building computers because the computer itself is the product. The second kind is a farmer in 1915 Iowa jacking up the rear wheel of his Model T to run a corn sheller. He doesn't care about the car as a product. He cares about shelling corn.