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Production does scale with human labour input. At small increments it scales linearly, but you get scale efficiencies as you ramp up. Then you satisfy demand at
by simonh 3y ago
Production does scale with human labour input. At small increments it scales linearly, but you get scale efficiencies as you ramp up. Then you satisfy demand at a certain price point and reach equilibrium.
But if you can dramatically increase productivity per worker and for a given capital investment, your costs stay the same but your production is now higher and you can cut prices. That stimulates demand which mops up the available supply. Now very broadly several things can happen, it's more than the below but this isn't an essay.
One effect is the price of production drops, you raise margins a bit and cut prices which increases demand. The company makes more money and society gets more stuff at a cheaper price. If your product is itself productive, like it's a tool, then your customers can produce more with it more cheaply. Your company is more profitable, your society gets even more stuff. Your customers are better off, so they can hire more people, buy more products, pay people more. It's great all round.
Another possibility is demand goes up so much that in addition to the above your company can expand, increasing production further with more scaling effects, hiring more people, maybe also developing new products because it can invest more.
So productivity increases can wash through the economy raising all boats. That's partly what GDP growth is, and it's one reason why for example the lowest 10% by income in the UK now earns twice as much in purchasing power parity than they did in the early 80s. That sounds great, and it is, but middle incomes have stagnated the most and inequality has risen. Fairness matters, but raising all boats is worth doing. Let's not let the real social issues we do have blind us to economic reality.
- fnordpiglet 3y agoUntil AI comes into the scene. Then it scales independently.
- simonh 3y agoTrue human level AI yes, but we’re still a long way from that IMO. For the singularity to really kick in AIs need to start optimising and improving AIs faster than we can. Then we’ll be in a feedback loop that is beyond our ability to forecast.
- fnordpiglet 3y agoI don’t think that’s correct. There’s an awful lot of human intelligence that’s entirely orthogonal to productivity, despite all social and cultural constructs telling us our only purpose is to produce. All that has to happen is for AI to be able to expand its own production based on demand and improve in the tasks it’s got at hand. That doesn’t require the AI to improve itself - or be able get a girl to go to the prom with it. It just requires it adapt and observe it’s environment in a way that allows it to improve things. I think in some ways we already have that ability to develop into AIs. What we are missing until now was something that can navigate an abstract semantic space and interpret the environment in non trivial and in ways that can adapt to unexpected situations. LLMs lack agency, the ability to plan, the ability to optimize, reason concretely, etc. But we have already have that tools. LLMs can do the other stuff. By constraining and informing and putting them in the mix as a glue between different models and techniques, multimodal LLMs can provide much of what’s needed to build agent based AIs that can autonomously produce at increasing scale independent of human input. Certainly once AI takes the task of improving AI, things go off the rails. But there’s a lot of steps along the way and the materiality of human labor I think is an early thing to go.