The dead economy theory

This article reminds me of the issues raised in Technofeudalism by Yanis Varoufakis

We need to consider that by automating and replacing the work of people who have an income, those people stop consuming and no longer generate profit for capitalism.

How is this sustainable?

I agree with most of it, but I don't think these three turns are the end of it.

We see that as soon as companies can, they will drop support for end consumers like us and focus on B2B.

The only way to sustain some level of revenue is by turning into aggression levels which is ineffective, and obviously, imoral and unacceptable.

The way things are going we all be dead by hunger. This seems by design made up to seem unavoidable.

One of the authors of the linked article (https://arxiv.org/abs/2603.20617) is a computer scientist not an economist. Just bc something is published in arxiv economics does not make it written by an economist.

Can't we just tax tokens if that happens?

The former head of sales at Google once told me “we only focus on growth because you can only cut down 100% but you can grow 10,000%.”

This always stuck with me and baffles me why we aren’t listening to that now.

There is this bizarre math now where it’s for every person we cut the remaining with 5-10x with AI but I’m not seeing anything like that yet at all.

If human labor becomes 'uneconomical', what will happen? Obviously a great deal of social upheaval.

But human labor does not actually need to be as expensive as it is. How cheaply could you house, feed, and clothe people? There are parts of the world where people get by on very little income. Of course we could aspire to better living conditions than the world's poorest, but that's what the robot revolution promises: abundance.

Imagine if AI suddenly was in more demand than human labor, simply due to the price. Excellent quality output for cheaper than somebody with a degree. What would be the second order effects?

Human labor, being in less demand, would have to lower its price to compete. This is the death of the middle (and lower) class future we fear. But ironically the price of goods and services would lower as everything, even complex engineering, medicine, construction becomes affordable. With the right policy, human labor becomes cheap again. Maybe even competitive to machine labor in some niches. Improvements in machine labor could have a compounding effect on how affordable it can be for humans to survive.

So where's the gap here? Well, most wager earner's income worldwide goes towards housing. Food and water and medicine can be bottlenecked causing price gouging. Monopolies and lack of competition in the market can raise the prices of things until everybody is spending all of their disposable income on necessities. I think the price of human labor is currently very high (in the developed world) due rentier capitalism.

The transition will upend much of our economic investments and probably involve a great deal of human suffering until nations figure out the right mix of solutions.

Article: >There is only one market that large: the global labor market.

Dispute Owen's claim, the global felony and bullshit markets are bigger.

What's the endgame here? Like the group of psychopath capitalists own everything, automate everything, and devise ways to separate themselves from or un-alives the remainder of the population and live, trade, and war amongst themselves with their armies of robots?

Edit: Also this article has so many AI-generated images. I hate that I can't tell if the words themselves are AI-generated or not as well.

Here's my question:

Do you think it's more likely robots are cleaning shit out of toilets at the behest of their human masters, or do you think it's more likely that humans will clean the shit from the toilets for their robot masters.

I mean come on. We are *made* to clean shit out of toilets.

I think this essay is very solid in a lot of ways but long section at the end talking about how billionaires didn't read enough philosophy just strikes me as -- for lack of more diplomatic phrasing -- useless nerd rage.

Yeah, tech billionaires sometimes show large gaps in their education. But it doesn't matter. Reading the right books doesn't prevent people from chasing wealth and power, it just makes them more articulate while they do it.

When cars got better people just drove faster.

Don’t be the last buggy whip maker.

AI can’t take payment in cash or barter.

It’s very simple: AI is going to replace labor. White collar workers are already “Claudatooie-ing” where they are just a high-pass filter for AI outputs

"The dead economy is one where plenty happens and none of it requires you. Where the productive capacity of civilization has been captured by a system you have no stake in, no input into, and no vote on. Where the people who built it told you they don’t think you should have a say. Where they express alarm about the consequences in private and optimism in public. Where they publish white papers calling for radical redistribution while funding super PACs to destroy the politicians who propose it."

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Social control is foundational in human societies. Religions once told the poor that they would be rewarded in the afterlife for a lifetime of hard work and obedience to princes. Now politicians tell us to venerate billionaires for the jobs they create the the social programs their taxes fund. Produce. Consume. Obey.

If billionaires automate away all the jobs, dodge their taxes, and prevent politicians from picking up the slack with redistributive social programs, social control will break down. No sane billionaire should want to find out what that will be like.

We seem to live in a collective lie that people have to work. No other animal has to work.

"The economy has absorbed automation before; agricultural employment collapsed from ninety percent of the American workforce to two percent and civilization continued."

This automation happened between around 1910 and 1930. With WWI, the great depression, WWII, Communist Russia, failure of the gold standard, etc., some argue that is when civilization died.

This isn't a bad article by any means, but if I'm being honest, it's kind of embodying the "has philosophy ever actually answered any question" meme.

The author spends several pages complaining about how the evil masterminds behind AI haven't actually thought through what it'll do to society, haven't proposed any real way to handle its impacts. And then proceeds to not propose any real ways to handle its impacts.

Making fun of billionaires for being fake philosophers is all well and good, but the technology is here, like it or not. So is the proposal to get rid of it? Butlerian Jihad? If it is, just say that. That's genuinely fine! But as is, no such action is actually proposed.

I'm not expecting random bloggers to just solve what might be the defining issue of our generation, but come on, I'm really starting to get tired of this format of post that doesn't even try, while simultaneously complaining about and making fun of any existing "solutions". Yeah, I don't think UBI or the "leisure economy" is going to happen soon either, and if it does it's certainly got all the flaws that were mentioned, but it's better than literally nothing.

Can we at least admit that it's a genuinely hard problem, and beyond either managing to pull off the aforementioned worldwide Butlerian Jihad, or getting lucky and it turns out AI actually sucks and can't replace anyone's job, we don't really have any good solutions for it? Or would that be too uncomfortably close to admitting that between the "fake philosopher" tech bro bloggers and the ones that, I guess, did philosophy in undergrad, neither have any workable solutions to the problem?

>article complaining about AI destroying the economy >includes 2 dozen AI generated images in the article

Alternative theory: "AI" is Silicon Valley searching for a new "business model"

Because it knows the current business model is not likely going to stand the test of time. Reality has returned. While it was suspended, Silicon Valley went on an incredible run and was able to stockpile absurd amounts of cash

As so-called "tech" companies now shrink in face of reality, Silicon Valley wants people to believe this is because of "AI", not because of the unsustainability of their data collection, surveillance and ad services "business model", and that the same fate awaits non-"tech" businesses and professionals

Perhaps SillyCon Valley can keep reality away for a while with supersized spending and borrowing and 24/7 marketing. People will certainly go along for the ride. Bankers and lawyers are making a fortune, for example

But eventually reality will return

Will Silicon Valley have found a new business model. Time will tell

Meantime, the so-called "tech" industry is being downsized

CR4-DL

If AI or any of the means of production are too concentrated, societies around the globe have found a solution: tax or nationalise.

Even taxing might be enough to tilt the scale in favour of labor. If whole countries have their socio-economic fabric damaged because the means of production are locked elsewhere this constitutes a sovereignty issue and it will be dealt with.

The Industrial Revolution had the same pains, and it took a few centuries to get societies where we are today.

Power generation is also instrumental to almost all labor produced today, and thus utilities were born.

I think the pope is right and the AI bros are wrong. I am currently rooting for the open weights to give the power back to the people. For teachers and artists to work for their neighbourhoods and communities.

Do we really have to engage in this level of mental gymnastics before we just genuinely look at the banking system consolidating and producing money out of thin air? Does the explanation really need to get this complex?

Just in case, I think I will stock a few ammon boxes along with non-perishable food.

agree with many points in here.

one thing it missses, birth rates. soon there will be no humans left to participate on either side of the economy.

They failed to participate in our society. They belong on Mars, and driven off our planet.

This is why ethics matters. But when you fail to participate in the system that upholds them, your god is the capital market and not any culture or ideology.

I can't take anything seriously that talks about AI while also inserting needless AI generated images every few paragraphs.

There are obvious tells that this was heavily curated by AI, the very thing it criticizes in the opening paras and roasts throughout as a life-destroyer.

I don’t disagree with the premise, and I appreciate the roasts of the SV pseudophilosophers (he left out Ayn Rand tho).

> Who is the customer when the customer is the thing you’ve eliminated?

Seeing how US economy is K-shaped, the answer is the rich. Assuming of course the service is right.

>Last year, over half of new content on the internet was AI-generated.

Traffic != AI generated content.

It's not diseconomic, but it obviates a lot of constraints that required a person to manage a coordination problem, and those were a lot of jobs. Keynesian ideas about employment and GDP are just having an apocalypse. Like someone replaced the hole diggers and fillers with a conveyor belt and I would guess Keynes critics would have some predictive power here.

A couple developers can collaborate, but several need someone to specialize in coordination to yield additional value from more workers. Whether you call it management or orchestration, the need emerges at each threshold of additional complexity.

When AI collapses the productivity of 10 people into one, that's the disruption. The best AI user is going to suck all the opportunity out of the room for the others, and that's when layoffs happen. However, this assumes a fixed pie of opportunity. That's the real problem. As though there were only so much dirt to shovel.

FAANGs are old/mature and don't have exponential growth in front of them anymore, where opportunity within them is mainly about optimizing themselves but not growing in radical new directions. AI will indeed eat those optimization workforces alive. They resemble professions because law firms and doctors offices aren't growing either. They're mostly solving internal optimization problems, not finding net new growth opportunities.

The real effect is AI radically polarizing the difference between growing and dying in an org, where any firm that isn't growing fast enough will have its fixed opportunity pie collapse as AI disrupts this regulated oxygen supply. Whereas, growing firms without ceilings on the opportunity to deliver value will use AI to grow to the opportunity available.

Professionals can do fine if they re-orient themselves to new growth with different unit pricing, but yes, anything large and slow moving is probably going to get eaten.

A clearer look at the point about the internet being half/over-half AI generated content :

AI Now Writes as Many Online Articles as Humans

https://graphite.io/five-percent/ai-now-writes-as-many-onlin...

You can have all the GPUs in the world, and all the AI datacenters in the world, but when we are barreling towards a global energy crisis (first Russia/Ukraine, then the Strait of Hormuz shutdown, and in a few decades we will run out of fossil fuels altogether), what are all of those GPUs and AI datacenters going to do without energy? Nothing. I say this because I think this will have a far larger effect on the economy than anything else this article is talking about (AI replacing labor, a possible AI bubble crash, etc.)

What about The Dead Human Theory?

Puncuated by AI slop images that aren't even readable. What do you think that signals to the reader?

AI likely won't replace all jobs though. Hey, the progress in robots is great, but we're decades away from a robot HVAC tech who can crawl on an unfamiliar roof and maintain a patched-together system from 20 years ago. So like, there's that.

Then the other half of the puzzle is just techofetishists having a broken world model. If you replace even 25% of the jobs you will find AI companies taxed into the dirt to pay for UBI or social services. The government will step in and manufacture jobs. The techbros can clutch their Ayn Rand books until their fingers bleed but their fantasy land of the unfettered ubermensch is simply delusional.

Another hand waver saying “AI will replace all humans”. Is as much a theory as saying if the earth turns 3000c hot, everything will perish, and I don’t dispute that in a few billion years.

The problem with the theory is there are vast variables and unknowns in the timeline that matters, but they are just saying it will come very soon. The how is a simple “If AI replaced all cognitive work” which sounds exactly same as “If earth becomes 5000F hot”.

Is the same lazy posit they all make.

"It’s utterly desiccating to log onto spaces seeking a live mind to joust and think with, and find a relentless stream of slop"

Am I in the minority for going online to learn stuff, download stuff and having zero point zero zero zero interest in jousting and co-thinking?

As I'm scanning the rant (and tbh the last two paragraphs hoping for some TL;DR summarization-love) I'm thinking "mans will find universal basic income quite upsetting", then I text-search "universal" and wouldn't you know the assumption was proven correct with a straw-man shaped cherry on top ("They’ll paint. They’ll garden. They’ll finally write that novel.")

What's the value -- like the real-ass human satisfaction -- of debating and hand-wringing over inevitabilities to anyone outside of the set of all authors provoking debate and hand-wringing over inevitabilities?

I'd take this more seriously if it wasn't regularly punctuated by disgusting little slop images

Marx deacribed this with precision 150y ago

> The dead economy is not one where nothing happens. Plenty will happen. The GDP might even go up; AI-related investments are already propping it up. The dead economy is one where plenty happens and none of it requires you. Where the productive capacity of civilization has been captured by a system you have no stake in, no input into, and no vote on. Where the people who built it told you they don’t think you should have a say

Who cares what they think? If the people feel that the economy is bad, the economy is bad. Full stop. Unless the tech oligarchs remove human labor entirely, there will always be a mortal threat to them posed by a disenfranchised population.

That's where this article loses the plot. Even if the world is just AI buying and selling goods and services to itself, so what? That's not a "dead economy", in the "secretly dead but only the wealthy notice" that's "dead economy" as in "french revolution is ongoing so commerce has taken a pause".

Fully automated luxury communism etc etc.

I quit Reddit because it became infected with the delusion. Now, it appears, Hacker News has as well, and I think my days here may be numbered as the discourse here is not based on reality. LLMs are largely useless except for writing code and marketing copy, but everyone here seems to be convinced already that they're going to supplant all knowledge workers. Yet, no one can give me a body of examples of any companies that have successfully automated with them. The rift between fantasy and reality keeps growing to the point that even the critics seem convinced. It's truly amazing and dumbfounding. What we have to worry about is not AI taking over the world. It's the propagation of mass psychosis and a loss of social connection via shared reality.

Or alternatively, you fire all your staff for agent subscriptions. Then Anslopic realises they have you by the balls. They ratchet up your contract cost every month until they’ve choked every single bit of shareholder value out of your companies lifeless corpse.

And you can’t get your employees back or go back to how you used to do it, because all of your institutional knowledge is gone.

I call it "Drinking your own piss." America is drinking its own piss.

>There is only one market that large: the global labor market.

This isn't even close to true and it's kind of the central thesis of this article.

Saudi Aramco has consistently been a $2tn company in the oil market.

Walmart is a $1tn-ish company focusing on a fraction of US retail.

It also ignores the idea that the economy is not zero sum and companies create their own market/economic value all the time.

Leading with genAI slop art, prepared for a slop article.

I think the dead economy and dead internet is the closest real thing to the Matrix/Skynet. A mindless human-hating machine/entity virtual society that's stealing our ressources on behalf of a few very rich people who are bound for genetic bottle necking if they're not also figure out how to steal our gene pool for their transhumanist space empire.

The red flag for articles like this is the author's obsession with the failed ideals of democracy. It's as flawed as all other forms of horizontalism - including fascism and Marxism.

  The humans are still there, scrolling, but the thing they’re scrolling through has become a performance staged by machines for an audience that hasn’t yet realized the show isn’t for them.