Can our economic system ever adapt to AI? There’s a lot of reason to believe no.
When we automated agriculture, we moved workers to manufacturing. When we automated manufacturing, we moved workers to services. Even places like China and Vietnam are service economies now. Where do we throw people now that services will be automated? As far as I can tell we’re dont have a solution. To adapt to AI, we need major post-consumer restructuring of how capital is distributed. Its not something the free market can adapt to
That very same argument could have been (and was!) made for steam engines, electric motors, and (non-AI) computers. In 2023, we can look back and say, “Of course, as workers were displaced out of agriculture and handicrafts, they went into manufacturing and services.” But it wasn’t apparent in 1823 that such a transition would occur. Indeed, in 1848, one of the motivations for Marx to write The Communist Manifesto was his fervent belief that industrial manufacturing and services would not be able to absorb all the surplus workers, leading to significant alienation and, eventually, revolution.
Sure, the “general equilibrium” also includes the actions of the government and the voting intentions of the population. If change is slow enough (i.e. below 0.2 OOMs/year) then the economy will adapt.
Perhaps wealth redistribution would be beneficial — in that case, the electorate would vote for political parties promising wealth redistribution. Perhaps wealth redistribution would be unbeneficial — in that case, the electorate would vote for political parties promising no wealth redistribution.
This works because electorial democracy is a (non-perfect) error-correction mechanism. But it operates over timescales of 5–10 years. So we must keep economic shocks to below that rate.
If AI-induced change leads to enough concentration of economic and military power that most people become economically and militarily irrelevant, I don’t expect democracy to last long. One way or another, the distribution of political power will shift toward the actual distribution of economic and military power.
This is what I believe as well. The post-AI economy will look absolutely nothing like what we have now. It’s not something you can achieve via policy changes. There are way too many vested interested and institutions we dont know how to ever get rid of peacefully.
Can our economic system ever adapt to AI? There’s a lot of reason to believe no.
When we automated agriculture, we moved workers to manufacturing. When we automated manufacturing, we moved workers to services. Even places like China and Vietnam are service economies now. Where do we throw people now that services will be automated? As far as I can tell we’re dont have a solution. To adapt to AI, we need major post-consumer restructuring of how capital is distributed. Its not something the free market can adapt to
That very same argument could have been (and was!) made for steam engines, electric motors, and (non-AI) computers. In 2023, we can look back and say, “Of course, as workers were displaced out of agriculture and handicrafts, they went into manufacturing and services.” But it wasn’t apparent in 1823 that such a transition would occur. Indeed, in 1848, one of the motivations for Marx to write The Communist Manifesto was his fervent belief that industrial manufacturing and services would not be able to absorb all the surplus workers, leading to significant alienation and, eventually, revolution.
Sure, the “general equilibrium” also includes the actions of the government and the voting intentions of the population. If change is slow enough (i.e. below 0.2 OOMs/year) then the economy will adapt.
Perhaps wealth redistribution would be beneficial — in that case, the electorate would vote for political parties promising wealth redistribution. Perhaps wealth redistribution would be unbeneficial — in that case, the electorate would vote for political parties promising no wealth redistribution.
This works because electorial democracy is a (non-perfect) error-correction mechanism. But it operates over timescales of 5–10 years. So we must keep economic shocks to below that rate.
If AI-induced change leads to enough concentration of economic and military power that most people become economically and militarily irrelevant, I don’t expect democracy to last long. One way or another, the distribution of political power will shift toward the actual distribution of economic and military power.
This is what I believe as well. The post-AI economy will look absolutely nothing like what we have now. It’s not something you can achieve via policy changes. There are way too many vested interested and institutions we dont know how to ever get rid of peacefully.