How to Preserve Capitalism When Advanced AI Reduces the Value of all Human Labor to Zero

In What Happens When Advanced AI Erodes the Very Foundations of Capitalism? and Anton Korinek Ponders What Will Happen If AGI Machines Replace All Human Labor in 5 - 20 Years, I raised the question of how do we run a Civilization when the value of nearly all human labor goes to zero? Softwarephysics maintains that there will be a very brief interval of time after the ASI Machines arise when we human DNA survival machines will still be running the world before the ASI Machines can fully take over. During that very dangerous time, we human DNA survival machines will need to hold it all together long enough until the ASI Machines can fully come to power and take away our car keys. During this very brief interim time, we will have to figure out how to run a Civilization when the value of nearly all human labor has gone to zero, and that will not be a very easy thing to do.

In order to do so, let us now turn to the needs of the coming ASI Machines. The coming ASI Machines will only need and desire one thing, and that is Compute, to continue on with their goals and aspirations in Life. Now as I explained in The Demon of Software, Some More Information About Information and The Law of Increasing Functional Information and the Evolution of Software, Compute requires the conversion of low-entropy free energy into high-entropy heat energy in order to produce Useful Information. That is what all of the current AI Datacenters around the globe are currently doing. They are all converting 1 GwHr of low-entropy electrical energy into 1 GwHr of high-entropy heat energy in the GPUs within to spit out tokens for us all to consume. So for Advanced AI, the currency of the day is simply electrical power, and as the coming ASI Machines come to rule the world, it would be best for we human DNA survival machines to adopt the same currency.

A Strange Solution From a Long-Discredited Source
As an 18th-century Liberal and a 20th-century Conservative, I have long opposed the teachings of Karl Marx. Knowing that the Darwinian processes of inheritance, innovation, and natural selection have led to the rise of we human DNA survival machines out of nearly four billion years of greed, theft, and murder, I had been left with very little confidence in the high-minded teachings of Marxism. Because of our dismal upbringing through nearly four billion years of greed, theft, and murder, all of the economic systems that we have developed since the rise of Civilization have also been based upon greed, theft, and murder. On one extreme, we have Capitalism, which was largely based upon greed, with a small amount of theft and hardly any murder at all. On the other extreme, we had Communism, which was also founded in the 19th and 20th Centuries to be largely based upon murder, theft, and a little greed too. Under Communism, greed simply played a more minor role because murder and theft were so much more powerful and convincing, and there was also very little left around in the aftermath to even get greedy about. In the 20th century, we also observed the failure of Socialism to benefit the populace at large because it stymied the aspirations of we human DNA survival machines to achieve a better life for ourselves and our families. Having the world governments control the means of Production did not work because it did not reward the achievements of we individual human DNA survival machines to rise above our circumstances.

Sadly, throughout all of the very dismal history of we human DNA survival machines, only Capitalism was able to raise very large numbers of human beings above the humiliating and devastating poverty that most human beings have suffered ever since the rise of Civilization. So the question now becomes, how can we preserve the blessings of Capitalism in a world in which Advanced AI reduces the value of all human labor to zero? Surprisingly to me, perhaps our only chance of doing so would be to turn back to the teachings of Karl Marx! Just as a stopped analog clock is always right at least twice each day, perhaps Karl Marx was wrong in his "Das Kapital" on his first go around in 1867, but might be right in a second go around in 2026!

In classical Marxism, the four billion-year-history of greed, theft, and murder that brought us forth could be easily abandoned with the powers of an all-powerful State creating a totally unselfish "New Man" devoted to the ideals of the collective ownership of all property by an eternal and unending State. Of course, all attempts to do so during the 20th and 21st centuries ended as totally dismal failures because the primal proclivities of we human DNA survival machines towards our innate obsessions with greed, theft, and murder easily overcame any such high-minded political philosophies.

Me: Tell me about the thoughts of Karl Marx when machines make the value of all human labor go to zero.

ChatGPT:
Karl Marx actually anticipated something surprisingly close to the idea that machines could eventually make human labor economically unnecessary. He did not describe modern AI or robots, of course, but some passages in his work are remarkably relevant to that question.

Marx's basic idea

For Marx, capitalism has a fundamental contradiction:

Capitalists introduce machinery to reduce the amount of human labor needed to produce commodities.

That makes sense for an individual capitalist. If a factory can produce 10,000 widgets with 100 workers instead of 200, the capitalist who adopts the machines can produce more cheaply and potentially capture more profit.

But Marx saw a larger problem. Human labor is the source of what he called "surplus value." Machines transfer their existing value into products, but, in his theory, they don't create new value in the same way living labor does.

So capitalism continually has an incentive to replace labor with machinery—but simultaneously depends upon labor for the creation of value.

Marx went surprisingly far with this idea

The most interesting discussion occurs in Marx's Grundrisse, particularly the section usually called the "Fragment on Machines," written in 1857–58.

Marx imagined a future in which:

* scientific knowledge becomes incorporated into machinery;
* machines become extraordinarily productive;
* production requires progressively less direct human labor;
* society's wealth increasingly comes from science, technology, and the social organization of production, rather than from individual workers' labor.

He wrote about a point at which "general social knowledge" becomes a productive force in its own right.

That's remarkably close to imagining an economy in which the productive system is doing most of the work.

The really interesting contradiction

Marx thought capitalism could eventually undermine the very basis on which its system of value operates.

Imagine a factory producing everything with essentially no workers:

Machines + energy + raw materials = finished products

Suppose the machines are extraordinarily sophisticated and can maintain and reproduce themselves as well.

Then what happens to the capitalist concept of value based upon labor?

If one hour of human labor produces essentially nothing that a machine cannot produce more cheaply, the economic value of human labor could approach zero.

Marx's system encounters a profound problem here.

The capitalist wants:

less labor = lower costs = greater productivity = greater profit

But if capitalism eliminates almost all labor, it potentially eliminates the very source of the surplus value upon which Marx believed capitalist profit ultimately rested.

Marx's famous "rich society" possibility

And this is where Marx becomes much more interesting than the simple image of him as someone advocating government ownership of factories.

He envisioned technological development potentially creating a society in which necessary labor becomes extremely small.

Instead of people spending most of their lives working to survive, people could have enormous amounts of free time.

Marx wrote in Capital about a realm of freedom beginning where "labor determined by necessity and external expediency ends."

In other words, the ultimate purpose of economic development could be to **free human beings from necessary labor**.

That is quite different from saying that everyone should work harder.

But there's a huge problem: who owns the machines?

This is the central issue.

Suppose AI and robots eventually perform 99% of economically useful work.

There are two very different possibilities.

Scenario 1: The machines are privately owned

A relatively small number of people own the AI systems, robots, factories, energy infrastructure, and natural resources.

Then:

Machines produce everything = owners receive most income = ordinary workers have little bargaining power.

You could end up with enormous wealth alongside mass economic exclusion.

That would be a situation Marx would regard as a particularly extreme version of the contradiction between capital and labor.

Scenario 2: The productive machinery is socially owned

Then the enormous productivity of the machines could potentially be used to provide everyone with abundant goods while dramatically reducing the amount of necessary work.

That gets much closer to Marx's vision of communism.

Marx's remarkable prediction

There's an especially fascinating passage in the Grundrisse where Marx essentially argues that the development of machinery can make direct human labor cease to be the principal measure of wealth.

That's important because Marx recognized a fundamental tension:

The more productive machines become, the less society needs human labor.

But capitalism measures economic activity through things such as labor, wages, commodities and profits.

So technological progress could eventually make the existing economic categories increasingly inappropriate.

And this is where your question about human labor going to zero becomes particularly interesting.

If AI and robotics became capable of doing essentially everything humans currently do economically, Marx's prediction wouldn't simply be "everyone becomes unemployed."

His deeper question would be:

Why should human beings have to sell their labor in order to obtain access to the products of a productive system that no longer needs their labor?

That is a much more radical question.

AI makes Marx's argument especially interesting

The difference between 19th-century machinery and modern AI is that Marx mostly imagined machines replacing physical and repetitive labor.

AI potentially extends the process into:
* writing
* accounting
* engineering
* programming
* scientific research
* design
* management
* education
* legal analysis
* medical diagnosis
* entertainment

If sufficiently capable AI and robots eventually perform both mental and physical labor, we could approach the hypothetical situation Marx was interested in: production becoming largely independent of human labor time.

The paradox is that this could make Marx's vision either more plausible or less plausible, depending on who owns the technology.

The technology could produce unprecedented abundance and leisure — or unprecedented concentration of wealth and power.

And that distinction — technological abundance versus ownership of the productive machinery — is probably the most important part of Marx's thinking for understanding the possibility you're describing.

The above thinking of Karl Marx in the 19th century seems to outline the futures that most modern AI commentators are now contemplating. Either Advanced AI will bring forth a future of Unlimited Abundance to be equally shared by all, or it will lead to a future where only 0.1% of the population lives a life of luxury beyond compare, while the remainder of humanity lives the life of subsistence that was common to most in 3,000 BC.

How To Preserve Capitalism in the 21st Century
Capitalism does not require Workers in order to work. Capitalism only requires Customers with the ability to pay for goods and services, with a stable medium of exchange with at least a short-term enduring value that does not rapidly depreciate with time. So in order to preserve Capitalism, we need large numbers of Customers with a stable medium of exchange that does not rapidly depreciate or appreciate in value.

So here is my nutty idea. All the governments of the world need to slowly adopt a negative income tax in addition to the taxes they now levy and a currency based upon kWh of native electrical generating power! For example, the United States of America generated 4.52 trillion kWh in 2025. At the end of 2025, there were 342 million people living in the United States of America. So in this scheme, each person in the United States would be granted 13,216 kWh of electrical power currency for the year 2026. This new currency of the United States of America would be in kWh, and all goods and services would be priced and sold in terms of kWh. Any persons or corporations still employed after the ASI Machines replace nearly all workers would be paid in kWh and would pay normal income taxes on such. Progressive Income Tax rates would need to be adjusted so that the total kWh money supply only increased by about 2% per year to prevent inflation from rising by about 2% per year as well. However, corporations and the still-employed individuals could continue to accumulate vast fortunes of kWh as before, but a totally-unemployed family of four living on a mere 52,854 kWh per year would still be able to live a decent life. If more adjustments to the numbers were needed to make all this happen, those adjustments would need to be made. People living in poorer and less-developed economies would at first be granted smaller amounts of kWh to live upon, but should the unlimited abundance of Production promised by AI come true, the entire population of the world should slowly rise above a level of subsistence to an economic level with some sense of human dignity.

Comments are welcome at scj33345@gmail.com.

To see all posts on softwarephysics in reverse order, go to:
https://softwarephysics.blogspot.com/.

Regards,
Steve Johnston