Today’s AI hype has echoes of a devastating technology boom and bust 100 years ago

The electrification boom of the 1920s set the United States up for a century of industrial dominance and powered a global economic revolution.

- THE CONVERSATION CAMERON SHACKELL

But before electricity faded from a red-hot tech sector into invisible infrastructure, the world went through profound social change, a speculative bubble, a stock market crash, mass unemployment, and a decade of global turmoil.

Understanding this history matters now. Artificial intelligence (AI) is a similar general purpose technology and looks set to reshape every aspect of the economy. But it’s already showing some of the hallmarks of electricity’s rise, peak and bust in the decade known as the Roaring Twenties.

The reckoning that followed could be about to repeat.

A century ago, when people at the New York Stock Exchange talked about the latest “high tech” investments, they were talking about electricity.

Investors poured money into suppliers such as Electric Bond & Share and Commonwealth Edison, as well as companies using electricity in new ways, such as General Electric (for appliances), AT&T (telecommunications) and RCA (radio).

It wasn’t a hard sell. Electricity brought modern movies, new magazines from faster printing presses, and evenings by the radio.

It was also an obvious economic game changer, promising automation, higher productivity, and a future full of leisure and consumption. In 1920, even Soviet revolutionary leader Vladimir Lenin declared: “Communism is Soviet power plus the electrification of the whole country.”

Today, a similar global urgency grips both communist and capitalist countries about AI, not least because of military applications.

Like AI stocks now, electricity stocks “became favorites in the boom even though their fundamentals were difficult to assess.”