Can Artificial Intelligence Lead To Prosperity?

Can artificial intelligence contribute to our prosperity? Can AI and automation reduce our workload? Can AI provide us with more time to focus on the finer aspects of life?

Some harbor concerns about AI due to its perceived threat to job security and displacement.

Over time, automation has become increasingly sophisticated, enhancing our productivity and enabling us to achieve more with fewer resources.

“In a free market, prices tend to decrease as productivity increases.”

In the industrial revolution, for instance, the introduction of machinery reduced the need for labor and shortened the time required for agricultural tasks such as planting and harvesting. Consequently, farms could produce more with fewer resources, leading to lower production costs per unit. This trend aligns with the natural progression of a free market, where prices decline as productivity rises. Typically, these benefits are passed on to consumers.

Productivity gains, characterized by achieving more with less, extend to various sectors of the economy:

• E-commerce leverages automation to disrupt traditional brick-and-mortar businesses, making goods and services more accessible to customers.
• Manufacturing utilizes robots for repetitive tasks like welding and assembly.
• Transportation and logistics automate processes such as picking and sorting goods, reducing delivery times significantly.

Automation’s inherent nature is to make operations cheaper and faster across the board.

In a free and competitive market, the most productive entities reap the greatest rewards. This incentivizes producers to seek innovative and efficient methods of delivering high-quality goods and services at lower costs, which is inherently attractive.

Given the substantial gains in productivity, the idea of a shorter workweek, such as a four-day workweek, becomes feasible.

However, one might ponder who benefits most from these productivity gains over time. In theory, we should be working less, and goods and services should cost less, aligning with the marginal cost of productivity. Yet, inflation persists. Are we witnessing a scenario where the lion’s share of these gains accrues to owners and investors, leaving the productive few—scientists, workers, inventors, and others—with a smaller share of the pie?

#austrianeconomics #deflation