The speed of capital being deployed by the U.S. private sector on the artificial intelligence front is happening at a dizzying pace. Four U.S. companies—Meta, Amazon, Alphabet and Microsoft—are investing $320 billion this year alone in AI technologies.
If experts are correct, this revolution will transform work, and life, in America. And in highly unpredictable ways. There will be winners and losers in the workforce. And the nation that wins this race will be gunning for economic and military supremacy as well.
To understand how America will make it through this transformational age, it's worth looking back at America's experience during an even bigger transformational period: the industrial revolution.
That story begins as America had just slogged through the worst man-made disaster in our history: the Civil War.
"The war's cost in every single aspect of American life is something we can hardly overestimate," said Bill McClay, a professor of history at Hillsdale College and author of Land of Hope. "The costs were profound—in human and economic terms, marking the dividing line between early America and what might best be called modern America."
Seismic economic and cultural changes were also underway.
"What was once a sparsely settled, mostly agrarian nation was transforming into a bigger, more densely populated, more diverse and mightier industrial nation," McClay said. "These big changes in American life were exhilarating to some and frightening to others. But one thing was certain: industrialization was coming."
There were many open-ended questions that troubled Americans? Was a way of life about to be supplanted? And was there anything anyone could do about it?
There were big geopolitical fears, too. Would powerful cities like New York and Chicago overrun states without large industrial centers? Would this transformation disrupt the moral and civic foundations of the nation?
The industrial age wasn't waiting for answers.
"America's industrial output didn't rival a single European nation in 1865," McClay said. "By the end of the 19th century, America had leapfrogged them all."
And the engine that drove America's economic growth was one that powered everything else: the railroad.
"In 1865, America had 35,000 miles of railroad track. By 1900, that number had grown six-fold—to nearly 200,000 miles, more railroad than all of Europe," McClay said.
America had the ideal conditions for this revolution.
"We had great natural resources—coal, iron ore, copper, timber," McClay said. "And a rapidly growing population, filled with workers and consumers. And America possessed a culture of invention and innovation, too."
The railroad propelled growth in other industries, most notably the steel industry.
"In 1870, America produced 77,000 tons of steel. By 1900, that had skyrocketed to 11.4 million," McClay said. "Stronger than iron, steel became essential for rails, bridges, and skyscrapers—the foundations of industrial America."
One man more than any other was responsible for the rise of the steel industry: A Scottish immigrant from Pennsylvania named Andrew Carnegie, whose wealth would rival any of the technology billionaires today.
Like it or not, those businesses helped created more sophisticated markets, and at scale.
"Businesses could move any good or product anywhere—and quickly," McClay said. "This increase in transportation speed and scale led to increased production for the expanding national market, creating what economists call a virtuous economic cycle."
Examples abounded everywhere, including the rise of the mail-order business. The early adopter was Montgomery Ward, but Sears and Roebuck—the Amazon and Walmart of their day—would soon dominate the business. Its catalogue, the "Big Book," had massive reach, and at its peak, consisted of more than 1,000 pages with 100,000 items. Even houses were bought and sold there.
"Customers could rifle through catalogs, order whatever they needed and have it shipped to their doors," McClay said. "And thanks to the railroad, it happened fast."
This was transformative, especially for customers in rural America, who finally had access to goods previously available only to customers living near big cities. Railroads transformed rural America in other ways, too.
"They helped settle the less-developed parts of the country, as settlers were lured to places where the tracks already were or were scheduled to be."
There were other technological breakthroughs alongside the rise of the rails.
"George Westinghouse's air brake was a game-changing innovation, allowing every car on a train to brake simultaneously. Before that, you could only stop the lead car," McClay said. "This invention meant trains could be longer, faster and safer."
And then there was the development of the central nervous system of the railroad: the telegraph, without which railroads couldn't have functioned.
"It was the railroad tracks that allowed the telegraph to happen, creating almost instant communication over vast distances," McClay said.
The railroads even impacted time itself.
"Time used to be a local thing, with every town setting its clock by the sun," McClay said. "So came the invention of standard time zones. Clocks across the nation were soon synchronized—and local time became a relic of America's past. Suddenly, you were on the clock—and so was the whole country."
But the most overlooked aspect of the industrial revolution were innovations in business law and finance, because the railroad and steel industry required vast sums of capital to become viable businesses.
"It cost $36,000 per mile to build a railroad at a time when the average annual salary was about $1,000," McClay said.
The scale of this investment outgrew the family business model, which gave rise to a new financial and legal instrument to meet the challenge: the modern corporation.
"Unlike traditional partnerships, corporations offered limited liability—protecting investors from being personally responsible for debts or lawsuits," McClay said.
This protection induced investment at a scale needed to finance the industrial revolution. With the creation of modern corporations also came the rise of modern management systems to run these massive enterprises.
And then there was the major innovation in finance.
"Local banks didn't have the capital to fund the industrial age, and so rose the age of the investment bank, and no one symbolized it more than J.P. Morgan," McClay said. "He worked to consolidate industries and bring stability to the economy. And almost overnight, that word—consolidation—once seen as dangerous, became common practice."
It didn't take long, thanks to Morgan's acumen, for U.S. Steel to become the world's first billion-dollar company.
The rapid industrialization of America caused disruption and raised profound questions.
"The way big business reorganized society around its own image, the loss of traditional rhythms of life, and the winners and losers created by rapid change were a few of the big questions raised by this rise of concentrated wealth and power," McClay said.
The industrial revolution reshaped almost every aspect of local American life.
"Where once time was measured by the seasons and the church bell, now it was dictated by the demands of a national economy," McClay said. "Whether people liked it or not, they were plugged in—part of a machine that had its own logic and momentum."
The story of the industrial revolution is worth studying and examining as America hurtles forward in this AI and new technology revolution. The parallels are too similar to ignore.
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