ARTIFICIAL INTELLIGENCE IN THE GLOBAL ECONOMY

In May 2024, we published an analysis on the structure, nature and implications of artificial intelligence (hereinafter: AI) in the political context. Here, we outlined that the technological possibilities are to be viewed as a huge advancement in processing data and arriving at more accurate results in research, which is, naturally, also increasing the quality of policymaking within technocratic contexts. However, we also pointed to structural deficiencies that will likely arise from the advancement of artificial intelligence systems and their proliferation in the free market. Largely, we correctly predicted that within the context of contemporary capitalist democracies with relational free markets, AI systems will lead to a massive corporate shift towards mass production of content, reducing the quality of output, while altering consumer behaviour to further optimise profit maximisation. Further, we indicated that this is due to a lack of normative alignment of these systems, meaning that with AI systems being primarily directed towards profit maximisation, they will produce results that exploit human psychological weaknesses to achieve this. By doing so, normatively important properties are undermined, such as art, music, literature and other fields of human creativity. Finally, we forecasted that in devletist systems, artificial intelligence can inform policymaking to optimise societal advancement, while this technology will lead to more disastrous policy outcomes in contemporary political systems because they are not informed by normative goals but material ones. Whether this forecast has come true, we cannot tell due to the confidentiality of policy processes in many nations. When looking at the increase in wars and the nature of warfare, which is highly technologised already, there is a strong case for the hypothesis that the use of AI systems in politics is producing negative policy outcomes; not because the technology is harmful in itself, but because its normative structure and the environment it operates in are pushing it towards these outcomes.

However, what we have not included in the analysis back then was the emerging dynamics between labour markets, consumption and societal goals. These three aspects are intricately linked with each other in the context of the proliferation of AI. As consumer-oriented AI systems are more in use than ever and the technical capacity of this technology threatens many professions, and even sectors, there is now a clearer view of how this capacity, and the pace at which it is evolving, affects market dynamics. As market dynamics are affected, this leads to altered consumer behaviour. Finally, because political systems are highly financialised and commoditised, altered consumer behaviour has, unfortunately, direct implications for societal structures and development paths. In this article, we are exploring these newly visible dynamics that could amount to threats. While our predictions from our 2024 work remain valid for the political realm, this work aims to inform about future developments in the economic realm.

AI, The Labour Market And Consumption

In non-devletist systems, the common citizen makes a voting decision informed by his own interests and not the societal interest. Similarly, a company operates in its own interest and not the interest of the economy it is operating in, the so-called organisational interest. Its interest is maximising profits. As long as this goal is pursued without creating negative side effects on society, it is legitimate. Then, there is a huge grey zone for corporations which is filled with many situations that could harm society, ranging from ethical issues over technical ones all the way to those that directly contribute to societal decline, without being illegal. For example, there are legal ways for corporations to avoid taxation, but some of them do raise the question of whether they are ethical. In other cases, corporations apply advanced psychological manipulation methods in advertising. Depending on the perspective, these and endless other cases can be assessed as either harmful or neutral. Either way, these actions are legitimised by corporations arguing that if they do well, referring to their organisational interest, the whole economy is better off.

In terms of artificial intelligence, there are certainly grey areas in the application of the technology, but one development cannot be directly assessed as being negative: labor cost reduction. Currently, classical software developers, who were among the best-earning and structurally most important professions some years ago, are nearly completely replaceable by AI. Similarly, marketing and administrative professions no longer need ten people to run a certain set of tasks, as an AI system can do them under the supervision of two humans. Naturally, this is a lucrative opportunity for many companies to cut costs while generating the same, and often more and better, output. In the creative realm, we already assessed in our 2024 work that the output quality is reduced due to a lack of creative involvement; but where numbers reign, AI systems produce better results than humans.

In the past two years, layoffs, especially in technology-related and automation-based industries, rapidly increased as corporations sought to increase profit margins, which is their organisational interest, and the number is expected to rise. There are some arguments that defend the idea that the operating cost of AI systems nearly matches the cost of employing people, but this technology operates constantly and with fewer errors. What is more striking here is that many people lose their employment in sectors where their skills were very valuable just a few years ago. Accordingly, they invested much of their careers to develop themselves in this field and build a stringent professional profile. While people in tasks that require less specialisation, such as warehouse workers, can more easily transition to similar jobs because of a more generalist skill set (predominantly in the physical domain), highly specialised people will have it harder to find new employment, as their sector is quickly taken over by artificial intelligence. Yet in addition to that, the number of sectors where professional profiles are replaced by artificial intelligence is growing due to the rapid development of the technology, leading to the emergence of more use cases almost every day. Consequently, more people lose their employment in a growing number of sectors.

This has two implications. First, this means that corporations save costs on personnel, but as the mass layoffs increase, the purchasing power in the economy drops. This has also implications for consumption preferences. As artificial intelligence systems are more prominently used in the production of digital goods and services that are often not essential to consumers, these are the goods and services that move down on the priority list of consumers. This means that the mass layoffs in companies to achieve cost efficiency are based on the assumption that purchasing power and consumer preferences remain sticky. In other words, if people lose their jobs on a large scale, there are fewer consumers to buy products from companies. Second, there is also a structural shift. As mentioned above, creative and exceptionally specialised professions are threatened by the use of AI in the economy. Since employment is necessary to survive in modern capitalised societies, the reduction of humans in production leads them to seek employment in sectors where humans are rather irreplaceable today, such as construction. This means that younger generations will also adapt by building their skill set around these themes; they will seek to become electricians, plumbers, construction workers and related professionals. This is, in itself, not negative, but when whole societies are driven into a few remaining specific sectors, pay in those sectors will further decrease, leading to declining consumption, which, in turn, poses a huge threat to capitalist economic systems. Also, these professions are in themselves less innovation- and curiosity-driven. Innovations in construction are centred around efficiency but not around creativity. Surely, an architect can add to society with creative projects, but a corporation might opt for letting an AI system create a project blueprint to avoid the high pay of an architect. This is the main argument: The structure of the capitalist system drives corporations to make such profit-maximising decisions that forego human creativity and boundary-expanding curiosity. The only thing that would prevent that is the intrinsic motivation of corporate leaders to normatively channel their business to remain innovative and creative at the risk of being driven out of business.

It follows that a real dilemma unfolds in the labour market. Corporations are bound to use artificial intelligence to rationalise their businesses to remain competitive. This leads to layoffs and reduces the “human touch” in production. People have less purchasing power, which endangers businesses nonetheless. Also, people are driven into less creative and transactional professions, where competition increases, which pushes wages further down. This again harms businesses. Only land, machine and stock owners profit within such a system, which reminds us strongly of wealth distribution in the Industrial Revolution.

Implications For Society

What has already been established in the scientific realm is that human brain activity is heavily impaired by the use of AI programmes as the thought process is heavily outsourced to these very programmes. That in itself shows that if the use is intensified and stretches over a long period, the use of AI will have biological implications. We can already see this in the use of social media, where the long-term effects of social media consumption corrupt norms, values and distort public opinion. In the economic context, however, the analysis above underlines this development. When people are structurally driven out of creative and innovation-oriented professions, they can no longer invest their full time and power into furthering these fields, while newer generations do not even attempt to enter these professions. This is due to the non-devletist capitalist structure that forces us to adapt to market conditions for survival and societal status. We should not make the mistake of thinking that this only applies to writers, architects, designers, filmmakers and other creative professions. Biologists, physicists and other scientific professions are threatened as well. As computing power increases, AI systems take over hypothesising and testing, while humans will move towards merely building and maintaining the physical infrastructure. This is effective and efficient to a point where all unresolved questions of today are resolved by artificial intelligence, but because artificial intelligence is inherently backwards-oriented, meaning that it can only operate effectively based on a set of existing knowledge, we will be less likely to stretch our knowledge boundaries beyond the answering of existing questions because humans, who ask these questions, are out of the loop.

If we suppose that our predictive model unfolds in more or less the outlined way, there will be major societal repercussions. The knowledge boundary will be less flexible, and the application of AI systems will dominate economic conduct within these boundaries. Of course, within those boundaries, many unresolved questions of today will be answered, but afterwards we will enter a mode of transactionality; only human-induced disruptions could break this. Currently, our economic systems are flawed too, and we at Essydo have argued many times that the current capitalist setup has already led us into a situation where further innovation is more difficult to achieve, due to the exhaustion of the market and the pure profit-driven structure of the economy. However, we showed that this is the case today. Economic conduct, especially in capitalist terms, is also extremely valuable in pushing innovation and creativity in the first place. It is only if the necessary transition to a more normatively structured economic system fails that we begin to experience societal decline.

The proliferation of AI can accelerate this development and, even worse, bring us into a situation where getting out becomes almost impossible. When the labour market is incentivising transactional professions and the rest of the economy is rationalising and profit-optimising every step, our biological and cognitive attributes will adapt to become transactional as well. With fewer cognitive capabilities, we lose the tools and the vision to further creative and innovative endeavours. In other words, we will not be able to be curious, but will not even be mad about it, because we can no longer perceive the need to be curious.

Concluding Remarks

In the past, many of our forecasts became true, due to the power and sophistication of our prediction model that is mainly structure-based. Here, too, we are confident that the global economy will develop into the described scenario if all factors remain the same, although we personally hope that this will not be the case. Of course, this scenario requires much more AI proliferation than today. Also, we should not forget that the vast majority of the world is working independently of artificial intelligence. Nonetheless, this is the logical chain of events that will unfold if we do not consciously choose to restructure societal conduct around devletist values. There are many advantages of artificial intelligence, but only if it is applied in devletist terms. Ideally, the economic system will be restructured to go beyond financial power and value scientific progress and creative endeavours more, so that artificial intelligence can support us in pursuing this. In this realm, it cannot overtake the economic system because it is bound to the human asking knowledge boundary-transcending questions, while the AI system is answering them; it is a completely different structural setting. To achieve this, however, political systems need to be redirected. In many works, we outline the power and necessity of Devletism to become the guiding principle of statecraft. As the founder and knowledge leader of this political school, Essydo is working to improve politics to the point where Devletism is also widely perceived as the only logical next step in the evolution of societal organisation.