>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.)
if you dig into whats actual safe to distribute after inflation and taxes, or conservative FIRE mid-life recommendations, its around 1-2% of principal per year . From 14m, 10-20k/month, about the budget of the white collar household in a major metro. Which is nice but hardly opulent. Rent, healthcare, and kids (or some expensive hobbies) eat that up in hurry.
20k a month being the budget of a white-collar household? We obviously live in very different worlds.
>>> 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.
Different AIs will be optimized for different types of tasks, or have completely different capabilities e.g. huge data access versus physical bodies. It could be more efficient for different firms to optimize and specialize their hardware and software for these use-cases and exchange for use of the labor of the other rather than for everyone to have a fully generalized fleet. I imagine this will be true even for incredibly advanced AI but who knows.
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.
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...
It seems that Yarvin didn't realise -- accidentally or more probably intentionally -- that the society in Soylent Green was not supposed to be taken as a model to emulate. It's not supposed to be a documentary! To even joke about it is telling.
As a tech industry we'll probably be complacent on whatever is coming up in the future, no matter if it's something like this or something far more insidious. But hey, some of our class got very wealthy and got to enjoy material prosperity so it's all good, right? People would chase ever higher wages and shiny trinkets and end up working for Evil Megacorps because "one needs to be able to afford to live comfortably".
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
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.
What about human actors as a thinly veiled, formal, and not especially people-intensive front-end to AI? Something like a skeleton crew?
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.
Soon? Hasn’t this ship already sailed?
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.
“Maintain humanity under 500 million in perpetual balance with nature”
> 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.
Historically one pattern this took was patronage. Most famously associated with sponsoring artists, but historically it covered a wide variety of professions. The patron gets power, influence, the ability to call on a guy who can do the thing, and so on.
Of course the first thing we replaced with AI was artists, so expect more exclusively as the lower rungs of patronage clients fall off the economic ladder.
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.