Throughout history, capital and labor have been interdependent forces driving economic growth. Capital relies on labor to generate returns on investment, while labor depends on capital for wages. Despite historical fluctuations in their balance of power, classical economics suggests a theoretical long-term equilibrium where both parties benefit—capital sees growing returns, and labor enjoys rising wages. But is this equilibrium sustainable in the face of rapid technological advancements?

The post-World War II era, particularly from the late 1940s to the early 1970s, exemplifies the mutual benefit of capital and labor. This period saw unprecedented economic growth and a significant rise in the standard of living for the baby boomer generation in North America. However, starting in the 1970s, the balance of power shifted towards capital. This shift was marked by productivity gains increasingly benefiting returns on investment while wages stagnated. As a result, the once-synchronized growth of productivity and wages decoupled, favoring capital over labor and increasing income inequality and social stratification.

This was a substantial quantitative change with proportionally substantial quantitative social implications. Today, we are approaching a qualitatively different watershed moment that will fundamentally shift the balance of power and have profound social and political implications.

For the first time in history, technological advancements like AI and robotics enable capital to create labor rather than hire it. This shift disrupts the traditional labor-capital relationship, leading to ‘technological unemployment,’ where machines and AI replace human labor across various industries. The longstanding relationship of mutual co-dependence between capital and labor will be profoundly altered, and the equilibrium taught by classical economics will no longer hold, even in theory. The incentive for paying wages diminishes as technologies like AI and robotics increase productivity while reducing costs. It’s like having workers who produce more and more while getting paid less and less. The best part for capital is the ability to create and multiply its own ‘labor’ force or cut it when needed, increasingly faster and cheaper. Humans are not required.

Some argue we have heard similar Luddite concerns before, and historically, technological advances have worked out for the better. However, today’s technological unemployment fundamentally differs from past labor disruptions, such as those during the Industrial Revolution. In the past, displaced workers transitioned from one type of manual job to another, as capital still needed human labor to operate machines, oversee production, and manage resources. Today, machines can autonomously perform these tasks. Production is monitored by sensors, and resource allocation and management are handled by AI, reducing the need for human labor to the point of potential obsolescence.

The speed and depth of change we are experiencing today, combined with an accelerating pace, means we will witness much more happen in a much shorter timeframe than during the Industrial Revolution. This is not simply about replacing some manual jobs with others; it’s about making most human jobs obsolete across all industrial levels—from cashiers and production-line workers to accountants, brokers, lawyers, insurance and real estate agents, consultants, doctors, and even CEOs. Such a fundamental change, occurring over a few decades, will have revolutionary political and social implications, similar to how the Industrial Revolution spawned various social movements, uprisings, and political revolutions...

Read the rest of the article and watch the original video here: https://www.singularityweblog.com/tech-unemployment/

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From Mutual Dependence to Obsolescence: The Future of Labor in an AI-Driven Economy

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