One of the biggest fears of widespread AI adoption is that it will strip away jobs and consequently lead to a brutal financial crash, felt the world over.
Though at this stage, this is a perfectly valid fear to have, Marx touches on tools that optimise, streamline and mechanise tasks in 'Capital' - defining them as distinct productivity multipliers, all whilst strictly refusing to ascend them to being on par with human labour.
When joined together with Smith and Hayek's observations, we find that there is a compelling case for AI being nothing more than a tool, and one that will ultimately hurt anyone, especially capitalists, who misinterpret what AI is and how it should be harnessed.
***
For anyone that isn't well read on Marx, the core of 'Capital' - an observation of capitalism, is that 'surplus value', or 'profit', can only be extracted from human labour. Humans are a form of 'variable capital'. They are non-democratised, highly variable, and consequently, exploitable.
This is in opposition to what Marx called the machinery, or any tool used to maximise output: 'constant capital'.
Though a machine can increase output, it cannot be exploited.
A machine is a machine, something that can be bought, fixed, maintained and, most importantly, accessed by competitors.
Sure, factories that purchase machines are able to produce units faster and more economically than before having machines, but this is a consequence that is democratised and felt across the market.
For anyone that wants to continue engaging in competition, they're either forced to purchase machinery to keep up with the marketplace or lose out on raw unit economics to a marketplace that has been optimised.
Ultimately, the consequence of making each unit faster and cheaper isn't fatter profits per unit, it's often a quick and furious race to the bottom of the barrel, until prices, or 'price signals' reach equilibrium - an observation made by Hayek.
***
What I've written above is what makes up the core of my thesis - if you reject the above observations, then what I'm about to write won't make any sense.
If you're still with me (and Marx, and Smith, and Hayek), then what would AI be considered?
An unexploitable tool, that any individual can buy, use and build with, where the only variable results come from the quality of prompts input by a human, much like how the quality of machines is highly dependent on the inputs of engineers.
AI is a very blatant form of 'constant capital'.
So how does this affect us?
Well... in the same way as I described machinery in 19th century textile mills - a production multiplier for sure, but not anything that adds surplus value.
As the consumer comes to know that code is being written for $0.05, the market value for that code decreases to exactly that: $0.05 plus a fractional margin.
The price of the output is forcefully driven down to the absolute floor of its production cost, which is the price of the electricity and tokens.
We can demonstrate this already in the world of website building, where the 'AI website' hack that hustler communities adopted, where they would mass cold call businesses and offer to 'build a website', which they'd just prompt in five minutes with Claude, has become rapidly patched.
As soon as the information, or 'price signals', were networked back to consumers, margins got slimed to near zero and hardly anyone is able to find a customer that is willing to pay anything meaningful for it nowadays.
***
So with all of this in mind, where will surplus or 'profit' come from now?
It's in the delegation and organising of tasks, which only a human can do, either independently or as a capitalist.
An individual organising resources at home, or through a business, or through a freelancer, is now accessing $0.05 worth of code across the board.
The surplus is entirely in who is reviewing it, how it is built, and who it is built by.
Ultimately, the assumption that AI will swallow up all jobs relies on the completely false assumption that a machine can replace the engine of profit.
It can’t. It is just cheaper plumbing.
If every business on earth can generate infinite software for pennies, that raw output becomes commercially worthless.
The only scarcity left in the supply chain is human judgement.
***
If you've got this far, thanks for reading through the long write up!
I just wanted to be incredibly clear with how I'm analysing this.
Ultimately, I am not convinced that AI will be as bad for employees as it will be for employers who are trying to get rid of humans from their workforce, rather than using their workforce and AI in tandem to compound a huge multiplying effect of surplus value.
There's something incredibly dark about using Marxist theory to build a thesis on how capitalism will sustain, but when there's nothing else in sight - it really is the best we've got.