The dead economy theory

The "Dead Economy Theory" posits that the AI industry's immense investments (hundreds of billions, projecting trillions) are only justifiable by one market: the global labor market, making mass labor replacement its inherent business model. This article, an extension of the "dead internet theory," contends that companies adopting AI will trigger a three-phase economic collapse: initial cost savings and stock surges, followed by a contraction in consumer demand as displaced workers cut spending, ultimately undermining the very markets AI-driven companies serve.

Key arguments include:

• The deployment of AI is characterized as a "prisoners' dilemma" where individual firms gain from automation but collectively destroy their market, leading to "excessive automation" for stock price over genuine productivity.
• Past technological transitions (agriculture, industrial revolution) took decades or centuries for wages and employment to recover, implying significant, prolonged societal pain, but AI's impact is expected to be far swifter and more comprehensive, targeting cognitive labor across all industries simultaneously.
• The post-labor economy poses an unprecedented political crisis: traditional democratic leverage from labor, tax revenue, and consumer spending erodes, concentrating wealth and power among a few AI owners who benefited from publicly funded foundational research.
• The article critiques Silicon Valley's "broligarchy" for their shallow philosophical understanding (e.g., misreading Nietzsche, naive utilitarianism) and their political strategies to circumvent democratic oversight, even aligning with autocratic governments for unfettered adoption.
• Proposed solutions like Universal Basic Income (UBI) are deemed insufficient, as people seek purpose, not just checks; moreover, AI is shown to actively "deskilling" new workers.
• The ultimate concern is not superintelligent AI, but "so-so automation" – adequate but cheap AI aggressively deployed for short-term stock gains, causing massive displacement and social instability by making human economic participation obsolete.

In conclusion, the author argues that the architects of this AI future are deliberately ignoring historical lessons and ethical considerations, engineering conditions for widespread societal upheaval under the guise of progress, with potentially catastrophic consequences for democratic governance and human agency.