Blog 8 - Polanyi’s Paradox

 Blog 8- Polanyi's Paradox 

In our final week of Business Perspectives, week 8, we learned of Polanyi's Paradox.  Polanyi’s Paradox, named after Michael Paradox, is the theory that, as humans, what we conceive regarding the capacity of the world is far beyond our comprehension (Polanyi's Paradox, 2022). The basic idea behind the theory is that there is so much we instinctively know, yet we cannot explain how we know it. It was in the book “Polanyi's Paradox and the Shape of Employment Growth” that author David Autor coined the theory, adding that "we can know more than we can tell" (Autor, 2014, para. 1). What he refers to is tacit knowledge. Tacit knowledge is information that we unknowingly adopt from experiences and stems mainly from implicit learning. Jasvin Bhasin (2023) explains this as knowing how to balance on a bike but not fully knowing the physics behind balance (Bhasin, 2023).

Is Polanyi’s Paradox a guarantee that AI cannot surpass human ability in the workforce? In the world of AI, David Autor (2022) argues that Polanyi’s Paradox is the very thing that hinders algorithms that try to replace human laborers. Activities are “ever-changing” and “unstructured”, which “presents intimidating challenges for automation” (Polanyi's Paradox, 2022, para. 8). What can be said by this is that AI can only be programmed to anticipate scenarios it has been given, but it cannot intuitively learn to function or determine reactions. In a world striving to implement AI, this paradox will pose a significant challenge.

There are those, however, who argue that AI technologies have surpassed the inhibitions of the paradox and is able to anticipate at a human level. Judgment is being built into AI to enable tacit learning, which helps overcome this hurdle. Proof of this was displayed when a program called AlphaGO, developed by DeepMind, was able to defeat one of the world’s top players in the game Go four times (Polanyi's Paradox, 2022).

What does this mean for employment? Tom Morris (2015) references David Autor, stating, “While workplace technologies may substitute for labor, any labor that cannot be substituted—and there are many examples—is generally complemented by technology (Autor, 2015). To date, this technology has been reserved for blue-collar work in the form of automation. Still, AI is becoming increasingly intelligent and infiltrating white-collar jobs through data analysis, financial reporting, and repetitive administrative tasks. The argument appears to persist over whether AI will be able to surpass the innate human abilities of “experiences, beliefs, and empathy” (Morrison, 2025, para. 10).

AI is just beginning to be integrated into the hospital setting for utilization review and securing payments from commercial payers.  Several programs, such as InterQual, Xsolis, and MCG, are attempting to emerge as a new way to fight denials and automate authorizations regarding medical necessity for status determination.  Currently, one of our sister hospitals has purchased this program. I am excited to see how AI can impact denials by utilizing predictive analytics to attempt to secure full financial reimbursement.  I am skeptical to this process but interested to observe. 

 

References

Autor, D. (2014). Polanyi's paradox and the shape of employment growth [Working Paper Series]. https://www.nber.org/system/files/working_papers/w20485/w20485.pdf

Autor, D. H. (2015). Why are there still so many jobs? The history and future of workplace automation. Journal of Economic Perspectives, 29(3). Retrieved July 21, 2025, from https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.29.3.3

Bhasin, J. (2023, September 3). What makes us human: The AI challenge to Polanyi's Paradox. Medium. Retrieved July 21, 2025, from https://medium.com/@jasvinbhasin/what-makes-us-human-the-ai-challenge-to-polanyis-paradox-cba5083c702b

Morrison, T. (2025, May 22). To fear or not to fear: AI and the future of work. MTI. Retrieved July 21, 2025, from https://www.heattreat.net/news/to-fear-or-not-to-fear-ai-and-the-future-of-work

Polanyi's Paradox. (2022, November 2). Scholarly Community Encyclopedia. Retrieved July 21, 2025, from https://encyclopedia.pub/entry/32479