PostIndustrial

Sometime in the past 50 years, the "developed West" chose "deindustrialisation". This was a terrible move for many reasons.

Industrialism is manufacturing is "making physical products" to sell.

And that's the main activity where new technologies afford productivity increases. Previously 20 workers made 20 widgets an hour. Now you buy a new machine and either make 20 widgets an hour with 10 workers or, more likely, 40 widgets an hour with 20 workers, and can sell them 20% cheaper, so your profit goes up and products get more widely accessible. If we ignore environmental issues (which shouldn't be ignored) this is a virtuous circle between technological innovation and economic welfare.

But once you become "post-industrial" many things go wrong. We talk about "services". But services are a mish-mash of completely different activities, each of which have different and problematic characteristics.

"Personal services" aren't amenable to productivity improvements through technology. (Apart from a bit of back-office admin.) You can't sell two hours of human contact in the time of one. That's why productivity increases are now so low in post-industrial economies.

Furthermore, personal services often rely on intangible soft skills that are rooted in culture and harder to teach formally. And so social mobility goes down. Diligent working class engineers can earn middle-class wages. But "wealth advisors" have to be born into the appropriate class.

Retail, advertising, marketing etc. increase local consumption, not production. So aren't good for exports and just help to increase your balance of trade deficit with countries that DO manufacture.

Art, design, education, software and other "information products" are not naturally scarce, so you need draconian laws to pretend they are saleable units. You face ongoing issues with piracy, competition from open-source software; and over-production : first because art is fun self-actualisation so lots of people want to do it; and second because generative AI.

So in a post-industrial economy, because productivity is down, and opportunities for meaningful investment are few, capital goes to three places :

• finance, which, however you dress it up, is largely zero-sum gambling.
• "cloud capitalism", ie. tech companies that try to capture a monopoly service through locking-in users, and then exploit that lock-in by mining those users for data and attention to sell.
• "asset management" / landlordism, which drives up the price of houses and land, leading to many people getting priced out of owning their own home which leads to homelessness, widespread precariousness, social dissatisfaction, resentiment and, ultimately, the rise of the far-right socially self-destructive politics.

None of this is good. And ALL of it, fundamentally stems from a political decision to give up on manufacturing as the basis of an economy.

I bring this up because EVERY public discussion and decision about "how does AI affect jobs?" should be had in light of this model.

In a manufacturing economy, AI can improve productivity enormously, and so we spiral upwards through the virtuous circle of increasing productivity to more wealth and opportunities. In a "post-industrial" economy AI will largely be a destructive force, reinforcing all the malign dynamics I'm describing above in a downward spiral.