The dead economy theory
owenmcgrann.com1046 points by WillDaSilva 20 hours ago
1046 points by WillDaSilva 20 hours ago
The article doesn't seem to take his train of thought quite far enough.
If AI suddenly makes it possible for a law firm to be run with a skeleton crew, then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market?
And ultimately, if AI gets to be so good that it can competently do a lawyer's job, what reason do big law firms even have to exist? Who is going to hire them if they can just hire AI?
The companies that are rushing so hard to replace their workers don't realise that AI is eventually going to replace them too.
I foresee a wave of entrepreneurship coming. AI will empower more people to provide useful services directly to other people, with less middlemen and menial work, and more direct problem solving.
> If AI suddenly makes it possible for a law firm to be run with a skeleton crew, then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market?
Money. They won't have the money to pay for the tokens, or the best models, because they'll be unemployed. They also won't have the connections to get the clients.
When you're playing a game of "who has the best capital," the scrappy underdog worker with vastly less won't win.
The idea that making the economy even more capital intensive will some how equalize things is an insane fantasy only a software engineer could swallow.
It has become a meme at this point but this sentence still stands: "The underlying purpose of AI is to allow wealth to access skill while removing from the skilled the ability to access wealth".
Taste and experience are so much more important than the raw talent. You can't fix this with money.
Money is exactly what got us to this point! Besides, I always thought taste, or at least 'popular' taste, was a market function, or something?
That's what people like Rick Rubin (Iovine, the Medici's, etc), deep down, need us to believe. Probably.
The whole "Taste makes all the difference" has been meme'd to death too: https://www.instagram.com/reel/DYuj_4dxVg2/.
Also... I won't add any details to avoid doxing myself, but trust me on this, Rick is the last person nowadays you'd want to listen to for anything taste-related, unless we're talking about feeding your own ego and carefully curating your own public image, and disappearing for weeks. I'd pay very good money to be around his ghost producers/writers/engineers again, though.
Sorry that's no realistic. People start businesses, including law firms, all the time with little to no capital.
Assuming token costs will be prohibitive assumes:
A) tokens will be really expensive and B) you need to fund tokens before you have revenue.
Your asserting AI makes the economy more capital intensive, when I think you'll see in practice it's the opposite.
> People start businesses, including law firms, all the time with little to no capital.
Those people are usually very talented and work 16/7. And they need to convince other similar people to work for them, usually at a lower-than-market rate.
The premise here is "talented humans working hard" will stop being a valuable thing due to AI.
People start businesses all the time yes.
But like 80% shuts down before reaching 2 years as they run out of money.
> Sorry that's no realistic. People start businesses, including law firms, all the time with little to no capital.
You're clinging past: what you is true when human capital counts for something, but what happens when it doesn't? Where the party who can spend the most tokens on the case wins (or has a much greater chance of success)?
Law might not be the best example of that, but (under current trends) a lot of areas will be.
> Your asserting AI makes the economy more capital intensive, when I think you'll see in practice it's the opposite.
You're claiming AI will make the economy more labor intensive? Huh?
> what happens when it doesn't?
It will never happen. Capitalism works when consumers can choose the best service provider. When there is only one universal service provide (AI), behind various "fronts", it would be catastrophic.
And all the consumers lose catastrophically.
So there should be at least some human component to differentiate between the various "AI" providers.
In the same way that you cannot compete against Ford at making cars without capital because Ford used their capital to automate manual labor at prices and speeds you'll never be able to reach.
"Intellectual" jobs, that require thought were yet spared, as the only way to use capital for that was just to pay for more meat: see Accenture, CapGemini, IBM, etc. You could carve yourself a spot for some people because it was hard for this capital to reach them. Now that AI, a literal machine that automates thought, is here, the costs for reaching bumfuck nowhere to take the clients away from you has dropped drastically for them, but not for you. They get economies of scale, already established patterns, tools, internal databases. You're starting with hopes, dreams and a $20 Claude sub that runs out at 10AM.
There is not infinite need for lawyers, there being more lawyers does not create more legal opportunities and cases past a certain point, and you're then dependent on other things like there being enough judges.
Robots transformed capital into manual actions and killed most manufacturing jobs save for precious few experts or things that are too expensive to automate still. AI will transform that capital into intellectual labor and crush you, take all opportunities away from you.
The price for legal work going down might very well create more demand, including for people operating "law machines". Not sure we know where future equilibria lie.
Demand for law related things isn't elastic. In fact, in an increasingly unemployed, AI first future, work law is a dead end, contract law is a dead end, and there will not be "AI law" jobs created.
"Price go down means more demand" applied blindly is a an economic theory so absurdly shit that even the most apeshit libertarians like Ayn Rand know it isn't true. Don't make me defend Ayn Rand.
What is an "AI first future"? Infinitely capable robots and AI? All current laws and regulations suddenly gone or changed?
Why would there be less demand for contract law or for privacy related law, for example? There is certainly some elasticity in law related things from my own experience.
Where have I applied elasticity blindly?
Eventually AI-run banks will refuse credit to non-AI customers, directly or indirectly
The price of their work will go down and it might not be economical to do it at all. Theirs skills (as also many IT skills) will not be needed at that scale. In the same way as typing on a typewriter was a skill that gave economic opportunity not so long time ago. Now everything is an email and part of it is speech to text. When something becomes a commodity, the skilled providers need to find something new to sell on the market.
About the law firms, part of the job of a law firm is to give the corporate employee a "guarantee" that he won't be held accountable for doing something legally stupid. So a new lawyer is at great disadvantage if he don't have the contact he has build trust with. From a freind's law company with 50+ lawyers I know that junior lawyers fresh from uni need at least 4-5 years to build their client base. Then, they can leave and start their own taking part of that client base with them. This limits the number of people who can start their own company and most of them won't risk it in the age of AI, because it will be sales and marketing that will feed them, not their legal wizardry, especially when tasks like "check this agreement" won't be billed at the current insane rates.
Great example. Typewriter skill is computer typing skill. You no longer have to return the carriage. The typing is the same. It's not obsolete.
> I foresee a wave of entrepreneurship coming.
why would anyone pay anyone else for anything when they could just get an AI to do it? any service would now be worthless, there will be people with hardware and people without. 3 futures:
one where the hardware is shared.
one where it is not.
one where the first person with enough of it kills everyone else.
Why would everyone want to do everything themselves? No comparative advantage at all and infinitely capable robots?
That wave has been coming for a while but AI and the tons of layoffs of competent folks are accelerating that wave. It takes more than just tech to make it work and banding together helps. That's what we're doing at Scalebrate. Its a network and community of small team founders scaling big together: https://scalebrate.com
We can take your train of thought further still. If AI ever becomes super good at lawyering, why would we even need law firms and lawyers at all?
We could feed legislation and constitution into the model and have it argue against other lawyer bots in court in front of a judge bot.
Because you need a human lawyer to appear before a jury. AI can fill in forms but not appear in person.
Brand value of the ‘prestigious’ law firms will still count for something in the minds of C suite executives (who of course will ensure they themselves are not trampled on by AI). The same dynamic will likely happen with high-powered consulting, big 4 audit/accounting firms and so on, even if inside those companies it’s just a shell of its former self.
Not buying the judge not part. A human being judged by a non-human will be very far in the future. Bots can’t be held accountable. It’s also an “us vs. them”, for some people it’s hard to accept being judged by a different gender, ethnicity, etc. A bot telling you to go to prison? Tough sell.
I can easily see a two tiered justice: a human judge for those who can afford it, and AI judge for rest of us plebs.
For some reason AI is able to replace engineers, doctors, lawyers but can do CEO’s and PR specialists. (!)
Every time these AI discussions happen, it’s my first thought, they even talk about the 1 person billion $ company concept but for some reason it’s never the CEO’s replaced and it’s never their industry taken over by the 1 person unicorn.
It’s very weird, it’s just obvious that once you are made redundant you just fill the gaps with AI and become the competitor.
Maybe they imagine that they have the X factor(unlike those engineers or musicians that are being replaced) and the people they laid off were low tier players anyway.
It simply doesn’t compute. The only possible way is to AI companies steal all the businesses of everyone and then unless they find a way to run a system where everyone is happy enough and occupied the “permanent underclass” overruns the AI folks and it becomes a public domain and the concept of intellectual property ownership disappears and other forces like vanity take over and after some conflict a brand new society emerges that runs like a cult with self imposed limits so that they can maintain a structure and healthy competition.
but just imagine the brave new world, where a law firm has super-duper-frontier model and you're trying to argue with it in a court with your latest best local oss model (only 6 month behind the bestests ones).
Interestingly, I have a conflict with my municipality. I fed the articles of law and their arguments of why and how they apply to notebooklm and asked it for fallacies. It not only gave me the fallacies in their reasoning, but also an excellent counter argument and motivation why they are interpreting this law incorrectly. The result is now that they are handing over the entire case to an independent third party to evaluate which interpretation is valid.
So, best make sure the court has a significant internet outage on the day your case is scheduled, while you have your model running in your pocket? :)
Here's another train of thought because you don't seem to understand how incentives or even lawyering works.
> then what's stopping all those people you fired from starting new law companies, where AI also does most of the work, and competing with you for the same market?
Your thinking is similar to the someone saying you can use LLMs to "research" stock market edges. The rub lies in knowing what research to do and what inputs to provide.
Big law firms are not big because they create similar outputs and that can be done using AI. They are "big" because they have connections and also know how to create better outputs.
Still to your point:
> I foresee a wave of entrepreneurship coming. AI will empower more people to provide useful services directly to other people, with less middlemen and menial work, and more direct problem solving.
If this was true then what you are saying is every thing is going to be commoditized due to AI. There is no quality difference.
That will drive prices down in the short term and in the long term people will form cliques like "Forum for AI enabled lawyers" or something similar to OECD and drive prices up. Thereby delivering even lesser value for increased cost. Enshittification at its finest. Not exactly the utopia you seem to be picturing.
> what's stopping all those people you fired..
Reputation, (or lack of it) and the big clients that come with it.
Isn't that obvious?
You realize that the limit of this is that the only people worth existing is the people with capital?
> I foresee a wave of entrepreneurship coming. AI will empower more people to provide useful services directly to other people, with less middlemen and menial work, and more direct problem solving.
Why do I need to buy products/services from this startups when I can just reverse engineer their product and use all my capital to make them?
> only people worth existing is the people with capital? replying to this with my thoughts
IMO The missing link is that, as long as humans still have political power, that is the basis of their economic power under the new system. The reason is that it is a continuation of the dynamic we see now in western decadence - politicians bribe the populace for votes. So on one side you have the market for political support, balanced with the market for capitalist robot operations, on either side of the political arena.
Historically when people had no power they held violent riots to reassert that they do. Happened as recently as Jan 6 2021 (unsuccessfully that time).
By your logic, aren't the entreprenuers also middlemen?
straight to the point. users will do it themselves, thanks to God-like Google Gemini super-app that does everything and owns whole internet.
The big picture can be extended to all economic branches, where steady competition drives down profit margins to near zero, like it is the case for eg. grocery chains already. Functioning markets are solving distribution problems and maybe, some day we will even consider something like algorithmic/HF trading not as a margin siphon but as a (public) service of automated distribution. The bigger picture has to go beyond the How/Who into the the Why/When, which opens up the end conditions of profit driven enterprise and capitalism itself.
I agree in the short term. But in the long term, the owners of the compute will become disgustingly rich without a wealth tax, nationalization, or local AI becoming competitive and ubiquitous. There are still problems to solve; the alternative is an absolute oligarchy.
what do you mean short term? We aren't even in the short term yet (has the AI revolution truly begun?) and the owners of compute are already disgustingly rich.
Law firms are useful because they have connections to the prosecution and judges. You can't just open up a law firm without that.
Not many people see that the end result is that when ordinary people stop earning money, and stop buying products, all the money will be used purely for B2B transactions.
Money will still exist, but people will not see hardly any of it. To break out of being just a person and start a business you will still need money, but be unable to get any.
Thus, the endgame is revealed. You don't need to form a dictatorship, you don't need to have a war, you just need to remove all real choice from people, and then you have complete control over what they are able to do by simply making it cost too much. There will be a firewall between ordinary people, and the people who own businesses where all the money sits.
We see the start of it already, when just two individuals have a combined wealth on the order of a trillion dollars. That inequality is not going down, only upwards.
Sure, you may get universal basic income, have a nice house, car (food, clothing etc of course) but there will be a massive air gap between what you could obtain in a lifetime and the minimum you would need to move from that situation into the world where the real money is.
Corporate saving rose by nearly 5 percentage points of global GDP between 1980 and 2013, and since the 2000s the corporate sector flipped from net borrower to net lender in many advanced economies — the "corporate saving glut." Much of it just piled up as cash reserves. Currently, 10–15% of GDP per year flows into corporate retained earnings never to leave. Think about the long term ramifications of that for you and your purchasing power.
AI didn't make this situation, it is just speeding it up.
> That inequality is not going down, only upwards.
This was talked about 15+ years ago when I was a young student. I saw the writing on the wall and made it a priority to live below my means and aggressively invest.
Unfortunately, many of my friends think I am crazy for not "enjoying life" more... We shall see what happens I guess.
The point was it does not matter if you only eat rice and beans for your whole life, no amount of salaries will get you into the "club".
I think the point is that it is his OPs opinion and they cannot read the future. Nobody here can, so the reply has just as much weight as the original.
So saving and living below means is a great strategy either way.
> Unfortunately, many of my friends think I am crazy for not "enjoying life" more
then, in 30-40 yrs time, those same friends all want gov't bailouts for their pensions, and higher taxation of people like yourself, to fund it (because, you know, you're rich enough to be able to spare it of course!).
This article, like Citrini research's scenario before it, misses much of the economics.
AI is unlikely to be as revolutionary as is presumed. It's definitely going to lead to increased productivity, and will probably render some jobs redundant, but it's unlikely to have a significant effect on wages/employment [1], and as of now there isn't one [2]. When it does effect workers (which is still uncommon), AI mostly leads to task reallocation.
Right now, AI's massive valuations seem more like a reflection of the typical speculation that accompanies major technological innovations (thinking IoT, railroads, automobiles) than of its real economic value [3].
The "dead economy" scenario would only be possible in the event of extraordinary, and extraordinarily-unlikely levels of AI-driven unemployment.
[1] https://economics.mit.edu/sites/default/files/2024-04/The%20...
[2] https://www.nber.org/papers/w33509
[3] https://www.foreignaffairs.com/reviews/capsule-review/2003-0...
I think the point is that even if AI returns don't materialise, there is a dangerous implicit political project among AI moguls to get to this state. Even if we get 10% the way there, there could be serious damage done to the system as part of that pursuit: the regulatory capture loop will tighten, inequality will rise [0], capital will be locked up in data centres. The economy is a big path-dependent system. We can hope, if AI is as middling as your sources suggest, that it collapses back to economic equilibrium. But plenty of past societies have had inefficient and politically captured economic systems. Movement towards equilibrium requires liberal institutions, the foundations of which might be under threat.
[0] Really as a continuation of existing trends rather than its own unique thing.
Sorry but AI is already revolutionary.
It is not AGI but current SOTA/Frontier models can do stuff that was never possible before. Even like 2 years ago AI was starting to disrupt whole industries.
I think you might have higher expectations to call something “revolutionary”. But for me revolution is already happening right here right now.
Revolutionary in the Internet sense, not revolutionary in the Skynet sense.
Tell that to copywriters and translators, all those tech workers that were fired in thousands.
The current wave of tech layoffs is much like those that preceded it (e.g. after the pandemic), except this time AI is used as a scapegoat.
This article puts into words a lot of things that had been on my mind as missing in AI discourse. Most significantly, actually considering the _systemic consequences_ of the promised AI future, how it interacts with political economy, an actual critical look (instead of accepting the "Western meta-narrative of modernity" at face value).
And maybe more importantly, it articulates really clearly how damaging the restructuring of the economy by AI moguls and the tightening of the capital–political feedback loop can be, even (maybe _especially_) if the returns of AI do not materialise as promised.
There is plenty of disorganised diffuse anti-AI sentiment. If intellectuals are able to get together behind a common cause, there might be a political movement in the making.
I'm not sure why we have had such different experiences, but I feel like people have been saying those things repeatedly.
Let's do it.
What policies to propose?
There are at least 4 in the article:
> The interventions that could matter are known. Public ownership stakes in AI infrastructure. Aggressive antitrust enforcement. A genuine tax regime on automated labor. Branko Milanovic’s prescription is characteristically direct: spread capital ownership more widely, tax the highest capital incomes more aggressively
Let's start with laws which mandates that copyleft in LLM inputs transfer to LLM outputs
>The US horse population grew from nine million in 1840 to twenty-one million by 1900, seemingly immune to technological change. Within sixty years of the internal combustion engine, the population collapsed by eighty-eight percent.
I think this is a very interesting and chilling point, especially if you draw the parallel literally. For quite some time, I was pondering the question:"Who is buying though?". I.e if you automate workers out of labor, who are we selling these AI services to?
I guess if global population drops by 80-90℅ you suddenly get a "sustainable" economy, as everything is repriced the economy of scale needs a much smaller scale.
(Not speculating this is a plan, just a thought that occurred to me when reading about horses example)
This is already to some extent a solved problem. The top 10% of households in the US for example are 50% of spending, the "horses" to a large extent already don't matter to the economy. This is similar to the relationship between US consumers and workers in undeveloped nations during globalization. Historically this tends to be resolved when it creates an unsustainable level of political instability, but there are many new ways of managing this.
https://libertystreeteconomics.newyorkfed.org/2026/05/tracki...
How many of these top 10% of households will have their breadwinners be replaced with AI? The LLM boom is aimed at them, professionals, knowledge workers, not at landscapers and plumbers.
90% of the 10% will be doomed. The remainder, the 1% overall lives off capital not labor, they’ll be fine.
that is incorrect, the 0.1% (>50m) live purely off capital. the 1% are still mostly highly paid specialized labor and despite high savings their capital would not sustain their lifestyle outside a brief retirement.
In the US, 99th percentile household wealth is ~$14M, which at historical rates of return is enough to live opulently indefinitely. (Of course although we're discussing a scenario where capital holds most of the cards, who knows if those returns would be dependable.)
>>> I guess if global population drops by 80-90℅ you suddenly get a "sustainable" economy, as everything is repriced the economy of scale needs a much smaller scale.
> How many of these top 10% of households will have their breadwinners be replaced with AI? The LLM boom is aimed at them, professionals, knowledge workers, not at landscapers and plumbers.
The point of AI is to make inequality even more extreme. A well-off worker is still a worker, and it's the dream of every capitalist to not have to pay any of them a dime.
For supposedly smart people, software engineers are really dumb. We should have unionized a decade ago, at the height of our power. Instead too many of us inhaled libertarian propaganda and identified with our bosses instead of our own class.
I keep reading this idea and I think something is missing.
Lets take this to the extreme: only 2 people remain with capital and AI all the rest are replaced.
Now these two people how do they make money? they pay each other so there is no extra value created thus the amount of money as value symbol remains constant.
But here is an even more interesting question: As their AI can create anything why would they pay each other? So why do they need money?
> Now these two people how do they make money? they pay each other so there is no extra value created thus the amount of money as value symbol remains constant.
The money just circulating around is actually more or less how a normal economy works. If you have a two person world where one person makes food and the other makes tools, the money just bounces back and forth between the two people as they trade tools and food. It facilitates trade by acting as an IOU in case the first person doesn't need to trade tools at the exact moment the other needs to trade food.
AI and robotics will one day be able to produce food and tools without human labor. So there could be plenty of wealth created. The question is how do we distribute that wealth when humans aren't needed to make it? We need a new distribution system that isn't based on pay for labor. A lot of people suggest UBI.
UBI only works if the technology advances to a level where there is zero scarcity. I dont believe AI will produce that level of abundance.
It's pretty obvious: once automation and wealth concentration get so extreme, the economy will get weird and stop being "capitalist" as we understand it.
For instance: it'd expect money to become near-meaningless, and the economic activity of the trillionaire class will consist mostly of direct extraction and consumption of resources (basically a personal autarky). There may be some barter of things like energy, raw materials, and maybe a small amount of proprietary items.
Given the lack of need to pay labor and the direct control of more resources than they'll ever need, the trillionaire will direct the world enonomy to towards pet projects (e.g. an Elon Musk commanding his robot army to build a giant steel pyramid on the moon in his honor, because why not? It'll be cool!).
That sounds off intuitively. The lowest earners are the base making higher earner possible both through their labour and consumption.
Business to business I guess. But there will be collapse for sure of industries that serve the consumer directly, such as agriculture. Meanwhile industries that power and arm the state will be expanded: military drone production to secure compute sites from the human savages, rare earth mining to support technological expansion, rerouting of water resources from public drinking and agricultural irrigation purposes to industry and manufacturing supporting the seats of power, power generation.
With such a population reduction(very polite name for what it actually is) I guess AI will become effectively the only holders of most of the human knowledge
Anecdotally the businesses I am involved with have gone from "use AI everywhere at any cost" to "use it everywhere but use token proxies to save cost" at the same time in the last few weeks
Curtis Yarvin, who pals around with Peter Thiele posted in 2008 on how to deal with "non-productive" people:
"convert them into biodiesel, which can help power the Muni buses."
Of course, he was "just joking" and it is a "humane alternative" to genocide...
These are the people shaping politics, tech and the economy...
The pitch from some people is the wealth will lift all of the boats, etc. Rich people have fewer kids.
Reality is 1984 style. You’ll have the party, soldiers and a proles. A modern version of what the Romans or some medieval societies did.
What we too easily forget is that for millennia we had societies where an infinitesimally amount of people (a dozen of families, at best) held almost all the wealth, another thousands ensured that order was maintained throughout the kingdom/empire by force, and everyone else lived by subsistence economy.
Such societies were terrifyingly stable, lasting hundred of years before slowly collapsing. We're not immune to going back to this.
> Such societies were terrifyingly stable, lasting hundred of years before slowly collapsing. We're not immune to going back to this.
They were very vulnerable to succession crises. This is the main problem that representative democracy fixed.
In the early 1900s the majority of Americans were self-employed. The equilibrium will likely shift back towards this, because AIs cannot be business owners, cannot have a bank account, cannot be held liable for their mistakes. And AI are unlikely to be given economic rights any time in the near future, because doing so would facilitate an overwhelming amount of crime; an AI that can make hundreds of copies of its weights all over the globe cannot be jailed or executed, so has no incentive to follow the law.
The US already has a legal concept of personhood for companies. We are soon going to lose control to these “people” and businesses overrunning the economy, the internet and our culture.
> I.e if you automate workers out of labor, who are we selling these AI services to?
Those who were formally workers? Remember, money is debt. It is an IOU that, sometime in the future, allows you to receive something of value (e.g. food, shelter, etc.) that was previously owed to you.
Profit occurs when you give more than you receive. That's okay in the short term because you still might exercise calling the debt over the a slightly longer timeline. However, when a business is continually profitable year after year, decade after decade, they are no longer receiving any direct value in exchange for the good/service they gave away. In other words, they start giving the good/service away for free.
It might seem counterintuitive at first that anyone would give something away for free, but I noted "direct value" above because there is also an indirect value to consider: Social influence. The stakeholders in businesses that show continual, large profits become admired by the people and get put on a pedestal. In that, they start to get to do things other people can't (see Epstein files, for example). So if the workers were automated away, not much would change. Those who have the goods and services still wanted will still want to buy, if you will, the social influence from the population at large.
Of course, the flaw in thinking that jobs will be automated away is that those who seek social influence also want a social setting, so they will employ people simply to keep them around as friends. Most jobs in today's economy are already just that. For what "real" jobs still remain nowadays, if automation automates them away the people will simply transition into "friend" work.
The horse analogy fell very flat for me. Those horses were bred and maintained as single purpose machines. There isn’t really an analogy to humans with self-determination and broad abilities, other than they both have a heartbeat.
In a way I think we've been seeing the horse analogy play out for a while, with declining birth rates in developed countries. When people are pessimistic about the future, they have fewer children. Perhaps it's not as dramatic as the decline in horses, but I think there's a bit of a parallel there.
> When people are pessimistic about the future, they have fewer children.
I can think of many reasons why people have fewer children for reasons other than pessimism about the future.
One can also argue that, besides lack of contraception, pessimism about survival of your offspring drove some amount of creating descendants.
> When people are pessimistic about the future, they have fewer children.
But also, statistically, the richer you are, the fewer children you have. Why do you think those who are seemingly in the best position to be optimistic about the future are those most pessimistic about it? It is quite counterintuitive on the surface. Is it because the rich feel they have nowhere else to go, whereas those who are poor can still envision becoming rich themselves someday, giving them hope about a brighter future?
Regardless of the exact mechanics, the human state is self-correcting. Being rich is unsustainable without a lot of people around you. When births decline too much, those who are rich will become poor, and thus will start producing more children again. Humans will not echo horses based on this.
I don't think economic dynamics described in the blog post particularly care about self determination. They care that needed labor roles get filled. And if your broad abilities can be bought elsewhere for cheaper, your mere possession of them counts for little. Do forces of capital think of humans as special for the same reasons you do?
When you work at Put-Screws-In-A-Box Co. or Weld-Metal-Pipes Inc., your boss doesn't see you as a "human with self determination", you're just a meat machine that puts screws in the box and welds metal pipes. He sees you so much as this that he overworks you, breaks your body before you turn 40 and underpays you so much you get to choose between quitting and starving until you get hired at Weld-Screws-In-A-Pipe Intl, or being stuck there because you have neither the time or the energy to learn something else to leave your condition. Alienation is a real thing.
AI will accelerate the decline in the world’s population. No job, no marriage and no kids will be the norm for most people. For many years to come. Some will say it’s good for the planet and especially for other species of vertebrates. Others will see it as a personal failure to not have any living offspring when they get old.
In ancient Greece, Diana was the goddess of hunting, wildlife and personal freedom and Venus was the goddess of love, family and domestic life. The Greeks had stories and plays about how those two goddesses never seemed to get along very well. If you feel like you’re a follower of Diana, then the future will be bright. If you feel like a follower of Venus, then rough times are ahead.
Anthropic employees: I believe many of you actually do think your work is for the betterment of humanity. That’s great! If you truly do believe that, it’s time to start demanding your leadership lobby for real, structural solutions to unemployment that leave everyday people with a say in how companies like yours operate. “The market will find new jobs” is not as strong of a historical pattern as “the concentration of power harms the people without it.” It’s true that AI might not in fact automate the majority of labor in the near term. But if it does (and working at Anthropic implies you likely think it could), then work towards a version of that future that’s actually palatable. It would be easy to let your comp upside soften your objective evaluations. Don’t. Think you’re working for a better future? Put your money where your mouth is, and ask your leaders to do the same.
Betterment of humanity and betterment of the economy are not the same thing. Our existing economic structures leave much to be desired.
I don't think it's productive to single out a specific company that's in this area. If they closed someone else would do it. If they don't execute well someone else will. It's the same mentality as people who smashed up looms to keep people employed at spinning wheels.
I’m not saying they should stop building things (I doubt any argument in that direction would land anyway). But more that they should follow through on the whole picture of the future they’re working on. Anthropic’s brand leans a lot more on trying to be the good guys than other big labs, which is why I think they’re worth addressing in particular.
> OpenAI, Anthropic, Google DeepMind, Meta AI, Microsoft: the combined investment in large-scale AI infrastructure now runs into the hundreds of billions of dollars, with projections into the trillions over the next decade. These numbers need an addressable market large enough to justify them. There is only one market that large: the global labor market.
It's getting tiring hearing this alarmist view unchallenged honestly. What if instead of replacing a market, it's augmenting a market?
When it becomes cheaper to produce things, we tend to consume more. That is, our consumption is endless. If one day everyone can afford a yacht because automation has reduced the production cost to next to nothing, we'll all be buying yachts. Then it will become who owns the nicer yacht, the branded limited edition yacht. The goal posts will simply shift.
Meanwhile, businesses still need to compete. If they're all using the same AI models to replace labor, AI is no longer their competitive advantage. It's simply a baseline necessity of production.
There will be pain in the jobs market, yes, as old ways of doing things are replaced by new ways with AI. But humans will continue to be the ones consuming endlessly and businesses will continue to need humans to differentiate. It's a relationship that has survived all other times automation has changed how we work.
If they (AI) able to compete with even 30% of workforce, that alone is a big enough leverage over the already powerful companies. At minimum it will cause another phase of wealth inequality, which is already a big problem atm.
Open model with affortable computing power can be the alternative, but we don't see it soon.
> businesses will continue to need humans to differentiate.
Honestly, why? If AI actually becomes capable of replacing large sections of the workforce, why wouldn’t a business composed entirely of AI “employees” outcompete their rivals?
I don’t see this happening at all. Even today, a person + AI is vastly better than just an AI. Context is really important.
Because they would all be using the same AI model (in reality a fixed set of them, but let’s say it’s just one for the sake of argument). That isn’t differentiation [0]
It’s like if every company hired the same guy named Karl. If everyone is relying on Karl, and Karl is making the same stuff for all these businesses, how is one business going to outcompete another?
At that point you need something else to drive differentiation. Branding, strategic partnerships, patents, IP, influencer endorsements, real estate, government licensing, etc. These are either influenced, controlled, or regulated by humans at the end of the day. At the very least you’ll need humans aligning the models for human needs. Humans are the ones being served, they’re the taste makers
0. https://www.mckinsey.com/capabilities/quantumblack/our-insig...
> would all be using the same AI model
i think this is a very large assumption.
What if in the future, AI models are as guarded as nuclear weapons? Because why doesn't this argument apply for nuclear weapons, but does for AI?
and why would they need human customers to thrive? They have other machine customers! This is the even more dystopian step two that the essay doesn't explore...
It kinda seems like you are just stating the implied argument this article is targeted towards? Or something else? Do you disagree with, e.g., Daron Acemoglu's position here? Or is there some truism somewhere we are all missing?
Not the OP but I think there is something to the notion that whatever is scarce but in demand is what will be expensive and of course the inverse would be true as well. What this means is humans however they do get resources will be able to put those resources to use abundantly frankly nearly for free on things like digital intelligence but other things will become scarce.. one could speculate about what those things are but even if they're not scarce today they could become scarce in a relative sense where they become relatively valuable and that's what people will be getting selling to each other
I know this isn't exactly related, so maybe a low value comment, but it itches in my mind. Years ago I talked with a recruiter at Facebook and they bragged about how many floors of developers they had working on Messenger in just one location (Seattle).
What on earth do you do with that many devs on a project like Messenger? I mean, really?
I feel like in a way, AI just adds to that weird situation of overcapacity. Maybe we were already oversupplied with talent. In which case why the heck were we still hiring more, more, more developers? Before the AI craze, Musk chopped an awful lot of headcount at Twitter, right, and proved it was overkill, has that panned out?
I just struggle to imagine how the economics of SWE really work in reality, outside of the niche that I am in. I have never worked for a pure software company on products that ship directly to outside customers, I've always been an internal developer. Maybe that is why I have such a big blindspot.
I won't be surprised if the net result of this wave of LLMs is ... not much. A change in tooling, but otherwise not revolutionary. On paper it should be revolutionary, but the more I use it (for both coding and non-coding tasks) the more I think it isn't anywhere near magic enough for that. It does have its moments though.
I thought about that a lot too, and in the end I think it just comes down to stupid economics: What do you want them to do with all this money?
1) Most top US tech companies are flooded of money. Everyone dumps money in the SP500.
2) This money has to go somewhere. You can't just redistribute it as dividends, otherwise it's an admission that you won't grow and giving you more money would be a 0 sum game.
3) So you have to invest it somehow, somewhere.
4) Obviously you can spend that money buying whatever company you can.
5) Once you've bought realistically enough, you just hire more, and people will think that there should be some kind of linear relationship between resources spent and revenue growth.
6) You can also do grand projects, like the metaverse, convert all you software to blockchains, become AI native, etc. and dump billions on these.
So essentially it's all about projecting growth and potential.
Money that people “dump” into the S&P isn’t going to the company’s bank account. It’s purchasing shares on the market that were owned by other third party shareholders.
For example, in 2025 Meta was a net purchaser of their own stock ($26 Bn).
These companies are awash in cash because they’re generating revenue in excess of their costs. Nothing to do with the amount of money people put into the S&P 500.
Secondarily, this is exactly why I agree that LLMs likely won’t have the impact OP believes it will. Companies hire not just for output, but for
1. Training (future management, future architects, future bankers, future developers) 2. Generally adding smart people to their teams, capturing a cornered resource 3. Showing governments and shareholders that they have created “jobs”
And a plethora of other reasons that I can’t think of.
John D. Rockefeller (pioneer of the modern corporation) is quoted as saying: “Nobody does anything if he can get anybody else to do it. As soon as you can, get someone who you can rely on, train him in the work, sit down, cock up your heels and think out some way for the Standard Oil to make some money.”
Well, when the company issues shares, then the money goes into their account, right?
Meta was a $26 Bn net purchaser (opposite of issuer)
Buying back shares it sold at a lower price, right? The lifecycle of a share starts with the transfer of money to a company in exchange for a share. It ends with a buy back, ideally at a higher price.
But still, at the beginning it is a transfer into the company’s coffers.
The life cycle of a share starts at IPO. The S&P 500 does not add companies to its index until at least 12 months after IPO.
Also, Meta issued 180 MM new shares at $38/share at IPO. That’s ~$7 Bn. Which is less than 1/4th of what they repurchased just last year.
Between share repurchases and dividends, S&P 500 companies are putting money into the markets, not pulling it out.
> The S&P 500 does not add companies to its index until at least 12 months after IPO.
Unless you're SpaceX [0], then the rules have exceptions...
[0] https://finance.yahoo.com/markets/stocks/articles/elon-musks...
Markets can and do change rules from time to time. This rule change would apply to any new listing, not just SpaceX.