1 month, 2 weeks ago - horiblocks
· 5
dakika za kusoma
A Memo about the Future of Capitalistic Markets
This is a rather informal entry to mark my predictions about 2026 and the years that follow.
I will start by outlining some premises (hard truths) about AI:
- It will keep getting better, in other ways, today is the worst that AI will ever be.
- It will cause accelerated knowledge acquisition and productivity with software such as brainful.
- There will be an inflated learning curve to effectively adopting AI not only for personal productivity but business efficiency.
Given the above, and current market conditions, I envision a few things.To better understand this position, I will outline economic advancement.
Economies are never perfectly efficient at any point of time. I conceptualise this as a staircase.
The Falling Economic Staircase
Institutions, corporations, startups, individuals, and visionaries each lag behind the next, with the ultimate pace-setter being a higher power or divine inspiration.
The larger the economic entity, the slower and less agile it becomes not only due to larger workforce management and bureaucracy, but also lower propensity to innovate which I attribute to a difference in strategic direction. Furthermore, larger entities also tend to face more scrutiny and often necessitate more regulation which naturally slows business growth. Larger entities tend to dominate and persist in economies due to an influence-based moat, whereas smaller entities must grow and thrive on a rather innovation-based moat due to lower market reach and presence. Hence, it is usually only the smaller entities that are the first adopters of any new technology, and which allows them to remain ahead of the curve.
The higher up the staircase, the more innovation and agility entities have to resist economic downturns. Based on my post Technicality is No Longer Business , it is apparent that it is only a matter of time where the rate of AI automation outpaces the labour market's ability to provide a higher net value that exceeds current AI ability.
The Evolution of Revolutions
For context, here is the level of peak unemployment during prior revolutions:
The First (Machine) Industrial Revolution: 1760-1840: ~40%
The Second (Electrical) Industrial Revolution: 1870 - 1914: ~30%
The Third (Digital) Industrial Revolution: 1969-2015: ~12%
The Fourth (AI) Industrial Revolution: 2023-present: ~5%
We are already witnessing mass layoffs from the top tech firms, and this is slowly permeating throughout the global economy, either a hiring slowdown or freeze altogether. To add further tailwinds, the labour market is witnessing increased noise in the talent pool available, where a lot of skilled workers are adding to the competition, to an already saturated market, especially in STEM.
Whilst businesses will continue to have a lot on their plate to achieve, it is unlikely that most of the labour market will meet or exceed the talent threshold that would make hiring a human more economically efficient than a highly skilled worker who can output more than the sum of two or more individuals with AI. This gray area between the work to be done and the skill gap of the labour market to achieve it is likely to widen into the near future without a radical structural institution-driven change.
I believe that AI will single-handedly lead to a global economic recession if the government does not intervene through fiscal means such as universal basic income (UBI) or tax relief/unemployment benefits. Whilst it is possible to empower the population to be able to handle the demands of the future, this is an impending fourth industrial revolution, an AI revolution that would take years, not weeks or months, to overcome.
No prior revolution has the capacity to be as consequential as the AI revolution for the simple fact that in all prior revolutions, anyone could leverage new technology to be a more valuable asset to the economy to drive more output. And whilst AI might seem similar in this sense, it only holds true for a small minority of the economy because of the skill barrier to becoming competent enough such that AI becomes an additive asset rather than a wholesale replacement.
Examining for example, the UK economy by broad industry group based on data from the Office for National Statistics, 2023, reveals professional, scientific, and technology, business administration, information and communication, and finance account for 25% of the workforce, and are also the most vulnerable industries to AI automation.
Whilst we are at the beginning of hard AI technology, it is in the making to shift manufacturing, military, transport and storage. No industry will be safe at some point in the future, the bet cannot be made on industry, but whoever leverages the totality of what's possible with current technology.
References
[1] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/datasets/broadindustrygroupsicbusinessregisterandemploymentsurveybrestable1
1
2
133
anonymous_58d6a
The staircase model is quite solid, especially the gray area between work needing to be done and people skilled enough to do it, we're creating this weird situation where companies have endless AI-augmented work possibilities but most workers can't leverage AI well enough to justify their salary. I doubt its about mass unemployment rather than a skills mismatch that's growing faster than our ability to close it...