Artificial intelligence and its continuous controversial rise are thought of in this post-modern era in big and bold words: revolutionary, transformative, unparalleled. The growing presence of AI is surpassing the boundaries of the tech world and is becoming a new resident in economics and the political decisions that shape society. How will capitalism, the backbone cog-driven machine of our lives, be shaped by a new cognitive machine? Will inequality deepen and wealth accumulate in fewer hands? Will Marx’s hopes for socialism in the United States finally come to fruition? Will it continue to merely adapt as it has since its infancy in the arms of Adam Smith?
A September 2024 article from the Harvard Business Review classifies stances on AI into three general camps: the optimists, the skeptics, and the pessimists. Optimists encourage us to trust AI’s potential to guide us toward a new, prosperous era, marked by new jobs and a post-scarcity economy. Skeptics see AI merely as a tool to increase efficiency in our prevailing system. Lastly, pessimists fear the inevitable disposition of labor, a decrease in wealth accumulation, and the destabilization of our present economic system. Capitalism has adapted throughout history, but with AI’s accelerating development, will it persist, or will it ultimately collapse?
The Economic Disruptions of AI
As we observe in ecosystems, evolution is brought about by pressure. Over the last two centuries, changes, such as industrialization, automation, and digitization, have altered the processes of labor and production in economies. However, AI is different. It is not just a replacement of human efforts, but it is an imitation of our intelligence.
A report from Goldman Sachs (2023) projects that AI has the potential to disrupt 300 million jobs around the world, and the World Economic Forum (2023) predicts that by 2025, 85 million jobs will be taken over by AI. Despite the 97 million new jobs AI is projected to create, this economic transition will create profit distribution imbalances. A study from MIT found that automation has accounted for 50-70% of wage inequality growth in the US since the 80s. An increase in jobs will not be proportional to prosperity.
Who Benefits from AI’s Productivity Gains?
AI is being advertised as a tool to change the world for the better, but who actually enjoys AI’s economic benefits? Renowned economist Daron Acemoglu details that with each additional robot for 1,000 workers, there will be a 0.2% drop in employment and a following 0.42% decline in wages. Unchecked, this trend may destabilize our economic system, impacting the consumer economy and exacerbating the wealth concentration among top capital owners. The famous aphorism of “the rich get richer and the poor get poorer” will become a reality.
The Role of Big Tech and Policy Interventions
The trajectory of AI will be shaped by those who will try to call it their own. The obvious major tech players like Apple, Amazon, Google, and Microsoft are not only influencing AI progression but also its economic realities. Bill Gates is proposing a robot tax, where businesses that use machines over humans compensate by funding reskilling programs. Social psychologist Shoshana Zuboff forewarns us of the threat of corporate feudalism emerging alongside AI, with tech giants holding power over actual national governments.
What Can We Do?
A variety of ideas have been proposed for when the dominance of AI becomes a present reality rather than a future problem. Universal basic income, like programs tested in Finland, has been proposed to help with mass job displacement, providing a safety net but not necessarily addressing employment. Gates’s robot tax and reskilling programs, alongside shorter workweeks and an expansion of job guarantees and portable benefits, have also been recommended.
The Future of Capitalism in the Age of AI
A lot could change in the coming decades, but one thing is certain: AI will be crucial in shaping our professional and personal lives by the turn of the century. An AI-controlled authoritarian state is not impossible to imagine or predict, where monopolies will consolidate wealth. Though we have seen plenty of rises and changes in monopolies and automation, the capitalist system has yet to be dismantled. But who is to say whether or not AI could render capitalism into a state that is unrecognizable from that in which we are familiar?
A New Economic Order?
With AI comes great risk and reward. It stands as the existential question and challenge of the future. Capitalism has thrived even during the rise of technology, but I do not know how strong it is in the presence of AI. Inequality and the pummeling of our very foundation are seemingly inevitable without the right policies and adaptations. Do we have the foresight to shape it before it shapes us? As AI evolves, so must capitalism.
