This article was inspired by a conversation Raj, John and I (buddies from school) had this morning. We were discussing AI, the future of work, the rising cost of living and the possibility that we are approaching an economic transformation unlike anything we have experienced in our lifetime.
As always, the conversation
wandered into politics, economics and the occasional speculative detour. But
one question stayed with me, What if the economic disruption we are
experiencing today is not simply a consequence of technological progress, but
the painful beginning of a transition towards an entirely different economic
model?
Raj and John, I think we are
right to recognise that technological revolutions have always displaced jobs
while creating new opportunities. We have seen this happen repeatedly.
The Industrial Revolution
displaced agricultural labour and created factory work. The Information
Revolution automated clerical and administrative tasks while creating
opportunities in computing, telecommunications and data management. The digital
transformation that followed created entirely new industries, occupations and
business models.
Today, we are witnessing the
next stage of that evolution.
AI is already displacing certain
categories of work while creating new opportunities in fields that barely
existed a few years ago. The opportunities for reskilling are enormous, and
countries like Malaysia should be investing aggressively in developing the
talent needed to participate in this new economy.
But I think we need to be
careful about assuming that this transition will follow the same pattern as
previous ones.
Earlier technological
revolutions largely transformed the tools of human labour. AI, particularly
when combined with robotics, has the potential to transform the economic
necessity of human labour itself.
The question is no longer simply
whether new jobs will emerge. It is whether they will emerge quickly enough, in
sufficient numbers, and with accessible entry requirements to absorb those
displaced.
A highly productive economy does
not necessarily mean a prosperous population.
We can already see the
beginnings of this problem in Malaysia. Many workers are trapped in jobs that
offer little progression, while contract employment and gig work increasingly
provide income without the security or benefits traditionally associated with
permanent employment. For some, the available alternatives are limited to jobs
such as Grab driving and food delivery.
These are legitimate forms of
work, but they are not a substitute for a healthy economy that offers people
meaningful opportunities to develop their skills, build careers and improve
their standard of living.
If AI creates enormous wealth
but concentrates it among a relatively small group of technology companies,
capital owners and highly skilled workers, then we may end up with an economy
that is more productive but less equitable.
And this brings me to a more
speculative thought.
Could the economic disruption we
are experiencing today be the beginning of a transition towards a deflationary
economy?
I do not mean that the current
inflation is necessarily being deliberately engineered to prepare humanity for
some technological utopia. That would be an extraordinary claim, and I have no
evidence to support it.
But I do think we need to
distinguish between the inflationary pressures of the present economic system
and the deflationary potential of the technology being developed.
Today, we are still operating
within an economy in which production depends heavily on human labour, energy,
raw materials, transportation and capital. When these inputs become more
expensive, the cost of producing goods and services rises. Higher oil prices,
for example, can feed through into transportation, manufacturing, food
production and eventually the broader cost of living.
But imagine a future in which AI
and robotics dramatically reduce the labour required to produce goods and
services. Imagine autonomous systems managing farms, factories, logistics
networks and healthcare facilities, while advances in energy technology reduce
the cost of powering them.
In such a world, the marginal
cost of producing many goods and services could fall dramatically.
The important distinction is
that technological abundance does not automatically produce lower
consumer prices. The benefits depend on who owns the technology, how
competitive markets remain, and whether productivity gains are passed on to
consumers or captured as profits.
This is where the current
economic transition becomes particularly interesting.
We may be witnessing two
opposing forces operating simultaneously, an inflationary economy struggling
with the costs and constraints of the old system, and an emerging technological
economy capable of producing goods and services at radically lower costs.
The question is whether the
second will eventually overwhelm the first.
Perhaps, in the long run, the
cost of producing food, healthcare, education and other essential services will
fall so substantially that the relationship between income and living standards
will change.
Perhaps money will become less
important as a determinant of access to basic necessities, even if it remains
essential for scarce resources, ownership and influence.
But we should not confuse that
possibility with an inevitable outcome.
Abundance does not guarantee
equality. A world in which machines can produce almost everything could still
be a world in which a small minority owns almost everything.
And that is why the geopolitical
dimension matters so much.
The United States cannot afford
to slow down if China continues to accelerate. China cannot afford to slow down
if the United States continues to accelerate. Other countries face the same
dilemma, where the cost of falling behind in AI could be economically and
strategically devastating.
Even the AI companies themselves
have warned about the risks of moving too quickly. Yet the competitive
pressures are immense. No company or country can easily afford to step back if
doing so might allow a rival to gain a decisive advantage.
This creates a peculiar
situation in which everyone recognises the potential dangers, but everyone
feels compelled to continue.
The race is not simply about
building better technology. It is about determining who will shape the next
phase of human civilisation.
And this brings me to a
historical pattern that I find particularly compelling.
The Renaissance challenged
established religious and intellectual authority, placing renewed emphasis on
human potential, knowledge and individual inquiry. The Industrial Revolution
transformed production, concentrated economic power and helped establish the
foundations of modern capitalism. The Information Revolution transformed
communication, commerce and the global circulation of ideas, giving technology
companies unprecedented influence over how people consume information and
understand the world.
Each revolution changed not only
how people worked, but also how they thought.
Kipling's The White
Man's Burden, which I have written about previously, seems to fit multiple
narratives across these historical transformations. The language of civilising
the world has evolved, but the underlying assumption that those possessing
superior knowledge, technology or economic power have a responsibility to lead
humanity remains remarkably persistent.
During the colonial era,
imperial powers justified their domination through the supposed moral duty to
civilise the world. During the Industrial Revolution, the promise of progress
and prosperity helped legitimise the expansion of Western economic and political
influence. During the Information Revolution, American media and technology
companies became powerful instruments of cultural influence.
We grew up watching Mickey Mouse
and Donald Duck, drinking Coke at Highway Café (the go to café after school),
and embracing the promise of a better life shaped by Western consumer culture.
We saved money to participate in that world, often without questioning how
deeply our aspirations had been influenced by it.
Today, the same dynamic is
emerging around AI.
The countries that develop the
most powerful AI models will not merely control an important technology. They
will have an enormous influence over the knowledge, values and intellectual
frameworks through which future generations understand the world.
This is why the AI race is so
consequential. It is not simply about who builds the most advanced machines. It
is about who gets to define the future of human progress.
And perhaps this is where the
greatest irony lies.
The technologies that once
enabled the expansion of consumerist ideology may eventually undermine the
economic system that sustains it.
For decades, consumerism has
been driven by the promise that greater productivity, higher incomes and
endless economic growth will lead to greater human fulfilment. But if AI and
robotics eventually make goods and services abundantly available at dramatically
lower costs, then the relationship between consumption, employment and human
wellbeing may have to be reconsidered.
Perhaps the next great
transformation will not be about teaching people to consume more, but about
discovering what gives life meaning when consumption is no longer the primary
measure of success.
That, to me, is the real
challenge of the AI Revolution.
It is not simply whether
machines will take our jobs, whether inflation will eventually give way to
deflation, or whether the United States or China will emerge as the dominant AI
power.
It is whether humanity can move
from an economic system built around scarcity, competition and consumption to
one in which technological abundance genuinely improves the lives of the many
rather than merely enriching the few.
The potential is extraordinary.
But so are the risks.
And until we figure out how to
manage this transition, we will still be paying more for everything while
wondering whether the future being promised to us is actually going to
materialise.
Maybe it will. Maybe it won't.
But one thing seems increasingly
clear, the next great revolution will not simply change how we work. It may
force us to reconsider why we work, what we value, and what it actually means
to live a good life.
Cheers.
ravivarmmankkanniappan@1105041120263.15239°
N, 101.66924° E
