sgiath.dev

There are only two futures for AI and the economy that actually make sense. Both are fine. Most economists are panicking about a third one that can’t exist.

Future A: AI does literally everything. Every need met, every problem solved, total abundance. Paradise. Nothing to worry about, nothing to redistribute.

Future B: AI is extremely capable but doesn’t cover everything. Humans still contribute, exchange continues, work transforms like it always has. The economy adapts. Economics still applies, just with different inputs.

There is no stable state between these two. But that impossible middle is exactly where most post-labor economic thinking lives.

The Impossible Middle

David Shapiro is finishing his Post-Labor Economics Treatise right now. I follow his work and find him genuinely interesting - fairly intelligent, willing to go against mainstream narratives, unafraid of big ideas. I also think his central framework has a hole in it you could drive a truck through.

Shapiro talks (correctly, in my opinion) about the AI revolution as the most disruptive economic transformation we’ve ever seen. More disruptive than industrialization, more disruptive than the internet. I agree with this. Where he loses me is what he does next: he accepts our current monetary and economic system as a given and tries to figure out how to fit AI into it.

He doesn’t question the US dollar. He doesn’t question central banking. He doesn’t question whether the concept of money itself survives the scenario he’s describing. He takes the most radical premise imaginable - that human labor becomes worthless - and then writes chapters about monetary policy (metaphorically, the book is not out yet).

If the AI revolution is more disruptive than the industrial revolution, shouldn’t we analyze the current monetary and economic systems too? Shouldn’t we ask whether they survive at all?

Let’s take his premise seriously and follow it where it goes.

Why People Work

Start simple. Do chimpanzees work? They spend most of their awake time trying to obtain food to survive, if they stop, they starve. That’s work. Did cavemen work? Of course - they hunted, gathered, made tools, built shelters. They worked most of their waking hours.

Why? Because they had needs and work was the way to fulfill those needs. That’s it. There is no nobility in hard work, no deeper meaning, nothing moral or amoral about it. Work is a process to obtain things that fulfill your needs.

If all of your needs were met, you would not work. And there would be nothing wrong about that.

But here’s the catch: have you ever met anyone with all their needs met? No. Can you imagine having all your needs met? Probably yes, but ask yourself: what would an average person in 1880 consider “all needs met”? Do you think more TikTok followers would be on that list? What were the needs of a caveman?

Our needs are infinite. Once some are met, new ones appear that we didn’t even know we had. This isn’t “consumerism” in the pejorative sense. This isn’t a moral failing. That is just how people are and it is fine.

This also explains something that puzzles a lot of people: why we work roughly the same number of hours as people did a century ago, despite our productivity being orders of magnitude higher. We have more needs. If you would be fine living in the same conditions as an average person in 1880, you would have to work a few hours a month.

What Even Is Money

Money is not wealth. Money is not value. Money is a coordination mechanism for exchanging goods and services. That’s it.

Before money, there was barter. Barter has an obvious problem: the double coincidence of wants. I have fish, you have wood. I want wood, you want fish. Great, we trade. But what if you don’t want fish? What if you want leather? Now I need to find someone with leather who wants fish, trade with them, then come back to you. This is insanely inefficient.

Money solves this. It’s a medium that lets us coordinate exchanges without requiring both parties to have exactly what the other wants at exactly the right time. That’s the entire reason money exists.

Not because governments declared it. Not because banks invented it. Money emerged spontaneously across dozens of unconnected civilizations because the coordination problem is universal. The form changes - shells, salt, gold, paper, digits on a screen - but the function is always the same: facilitate bilateral exchange.

Hold that thought.

Following the Premise

Now let’s go back to Shapiro’s premise: in a post-labor world, humans have nothing to contribute. AI and robots do all the work. Human labor has zero economic value.

If we accept this premise, what happens to money?

Money exists to coordinate bilateral exchange. Bilateral exchange requires both parties to have something the other wants. If humans have nothing to contribute - no labor, no skills, no services that AI can’t do better - then there is no bilateral exchange. One side of the transaction is empty.

No bilateral exchange → no need for a coordination mechanism → no money.

This isn’t a prediction. It’s a logical consequence of Shapiro’s own premise. If you truly believe human labor becomes worthless, you must also believe money becomes meaningless. You can’t have one without the other.

Yet Shapiro spends his treatise discussing how to redistribute money. Which money? The money that has no reason to exist in the world he’s describing? He’s writing monetary policy for an economy where money has no function.

That’s the shallow analysis I’m critiquing. He accepts the most radical technological premise imaginable and then refuses to follow it through to the most basic economic conclusions.

The Fork

So which future do I actually think we’re headed for? Honestly - I don’t know. And neither does anyone else.

I can imagine a world where AI does literally everything. Every human need met before you even know you have it. “Work” as foreign a concept as “hunting mammoths for dinner.” That would be paradise. Nothing to redistribute because nothing is scarce. No economic problem to solve.

I don’t dismiss this possibility. But I don’t see it coming any time soon, not even on the most optimistic AI timelines.

What I think is far more likely - at least for any future worth planning for - is that human needs will keep expanding faster than AI’s ability to satisfy all of them. This is what has happened through every previous technological revolution. The industrial revolution didn’t end work. It ended certain kinds of work and created entirely new kinds that would have been incomprehensible a generation earlier. A medieval farmer couldn’t have imagined “software engineer” as a job. We can’t imagine what jobs will exist when AI handles everything we currently call work. But they’ll exist, because needs expand to fill available capability.

In that world, humans still contribute. Exchange continues. Money persists. The economy transforms and economic principles still apply, just with different inputs.

The Point

Two endpoints. In one, AI solves everything and we live in paradise - no economic problem to discuss. In the other, humans still contribute and the economy adapts like it always has.

The scenario post-labor economists worry about - where AI is powerful enough to make human labor worthless but not powerful enough to satisfy all human needs - doesn’t hold together. It requires AI to be simultaneously all-capable and insufficient.

If AI can replace every human capability, it can meet every human need. If it can’t meet every human need, there are still things humans can contribute. Pick one.

Shapiro is a smart guy writing about an important topic. But his framework starts from a premise and doesn’t follow it where it leads. He bolts 1971-era monetary policy onto a world that, by his own description, has moved beyond it.

If we want to think about AI and economics clearly, we need to start from first principles - why people work, what money actually is, what exchange requires. Not from the assumption that the current system is permanent and just needs adjustments.