A few people no one asked anything of are leading and cheerleading the building of a technology that no one asked for and no one even needed. The result? A few gain infinite wealth while the lives hundreds of millions worked hard to build evaporate before their eyes.
Net benefit? Not a chance. A society with 20-30% unemployment is a terrible place to live. A society where people are paid transfers to sit around all day with free time and no purpose, even worse.
There was zero logical explanation or reason why humanity needed AI. At some point the majority will realize that. They're not going to respond well. The civil unrest will likely turn hot.
The world would be a much better place if AI was treated the same as nuclear weapons, non-proliferation. It will never happen, but one can dream.
Really enjoyed the section about Mastercard and Visa. I see no scenario in which these companies can survive when AI agents can use crypto like SOL based stablecoins to pay each other for near 0 fees instantaneously, a point I had not reckoned with much before.
One thing I’m unsure about in this scenario is how much broad-based price deflation shows up as abundance. If AI drives the marginal cost of many services toward zero, shouldn’t a lot of the consumer basket get cheaper, raising real purchasing power for anyone with income or transfers? It feels like the memo assumes prices stay sticky while incomes fall, rather than prices falling fast enough to partially offset the demand shock. While indeed debt holders will struggle, everything in nominal terms should in theory get cheaper.
However, I guess this is provided that those cost savings etc. don't go straight back into financing GPUs/AIs consuming their own cost savings. Hopefully we'll all still be here in 2030 as our ASI overloards start terraforming the earth to see how all this shakes out.
It’s funny to consider that much of the economy exists because of inefficiency and friction. Wealth distribution itself may largely be a byproduct of those frictions like information gaps, transaction costs, regulatory barriers, and coordination problems.
If AI meaningfully reduces those frictions, competition should intensify, driving costs down and benefiting consumers. That same dynamic could reshape the labor market: some roles will compress, but entirely new industries, previously economically infeasible could emerge as viable also helping the labor market. Lower input costs and higher productivity expand what’s possible.
From a global perspective, countries that fail to adopt AI aggressively risk losing competitiveness. If productivity gains concentrate in AI-forward economies, capital and economic influence may flow toward them. Nations that hesitate out of fear could fall structurally behind, while countries like the U.S. could disproportionately benefit from absorbing global inefficiencies.
At a high level, it’s difficult to accept that doing more with less would leave society worse off overall.
It does if all the wealth creation and capital flows into the U.S. all end up in a few pockets while millions are displaced and see their lives completely destroyed. I've always been a capitalist / libertarian. But the scenario described in the piece is one of the few that could change my mind, given the structural issue that might not find a way to self correct.
The social contract has been completely obliterated. Grow up, work hard, get good grades, major in something valuable, network, get a job adding value, buy a house, have children, save, invest, retire. Millions that did the right thing, held up their end of the bargain, now are at risk of losing everything they worked for.
I use it every day to augment my work, but from day one have been a believer society would be much better off in 2050 without AI than we will be with it.
The movement will not succeed but there will be an ever growing roar, louder and louder, from society to put the genie back in the bottle. When that movement decides to become violent is when the real collapse will take place.
That’s the opposite of competition though. The economy could just as easily get more diverse when scale isn’t needed to provide a service based on inference cost. The economy could look vastly different and different groups or talents might be selected for in the new economy but people’s appetite for more or better is infinite.
There are hundreds of new industries that can be built on AI. It could very easily be the greatest time for SMBs of all time and that doesn’t necessarily mean mass job loss. The marketplaces could be booming. The public markets might be led by capital, scale could stop being a moat. It could easily be a job refactor rather than mass layoffs.
The future looks different but that doesn’t necessarily mean bad
Trust me, I pray your version of events is what plays out, and I can see it happening for sure. I hope so mostly for the sake of my children.
However, my faith in humanity is not what it used to be. Particularly government and its ability to act fast and intelligently -- or even in the best interest of the humans it serves. Government seems there these days to protect capital, and that protection, at the expense of the citizenry may hammer the ability for SMBs to act, access tools, grow, and hopefully hire to offset the labor destruction from large firms.
My view is one of major consolidation, all industries approaching oligopolies based on access to compute, SMBs disappearing, government refraining from any attempt to enforce anti-trust or monopoly laws, and a fast descent into a dystopian corporatist Feudalism.
Whoever did not have the opportunity to build wealth prior to AI will be banished to the bottom rungs of society, forever dependent on subsistence government transfers that are not large enough to allow for saving or capital accumulation.
For the first time the probability is quite high that we provide our children a world where social mobility and high standard of living is more difficult to achieve than it was for prior generations --- and a couple people at a few AI labs are to blame for creating a tech no one actually needed in the first place, IMO.
I think social mobility changes given the opportunity set. If the opportunity set stays the same or shrinks social mobility is curtailed. Thus in order to increase those things, we need innovation. I agree the rules of the game are probably changing, but the rules are changing for everyone.
Imo there is going to be a ton of social mobility due to AI but like all innovation there will be winners and losers.
The scenario paints an incomplete picture of AI-driven economic collapse. Its strongest insight — that AI both replaces cognitive labor directly and destroys business models built on human friction — is self-referentially incomplete. Not all friction is information-solvable; much of economic life involves strategic interaction, preference discovery, and irreducibly human judgment. Where AI does eliminate commodity friction, it simultaneously lowers the barriers for individuals to build economic activity and businesses around the very human qualities that machines can't replicate — individual tastes and the authenticity of human involvement. Influencers are going to influence. The essay also treats policy paralysis as a given when the mechanism for redistribution (taxing the compute surplus) is economically straightforward, even if politically contested at the moment. But the deepest flaw is that the essay frames AI as a pure destroyer of livelihoods without recognizing that the same technology can subsidize and facilitate the search for new ones. The real policy challenge isn't compensating people for lost jobs through transfers — it's using the enormous surplus AI generates to lower the cost and risk of every person finding their own meaningful, human-premium contribution. The problem and the solution are the same technology. The real question is whether we can use it collectively as both.
True! I used a Claude dialog to clarify my thinking and to create a compact summary of my critique, which I edited slightly because it seemed pretty clear and complete. "Influencers are going to influence" is pure human-generated content. :-)
2400 years ago Plato made the argument that writing is a cheat that mimics true human intellectual capacity only manifest through oratory. Writing replaces humans too!
That said, your piece sparked some thinking and writing on my part about a general ethical framework for AI collaboration, so thanks for the impetus!
Without the financial incentive to become intelligent and educated, and by proxy have an intelligent and educated society, the movie Idiocracy becomes reality.
Depression, hopelessness, drug abuse, poverty, ignorance -- incentives in all the wrong places. Social mobility becomes a long lost feature of the past. Neo-Feudalism reigns supreme.
Such a wonderful place to live and raise children 🙄
It won't be long before the majority narrative on AI labs shifts from award winning innovators to candidates for potential imprisonment.
Utterly depressing… and utterly brilliant. Well done Citrini and team. The optimistic part of me says all of this will take longer to play out. I know this is more of a tail risk scenario, but I generally think many companies and industries will be much slower to adapt and many, many jobs will be hard to replace with AI that quickly. But certainly over a longer time scale, intelligence/knowledge work can and will be replaced with AI. Hopefully like with past major technological advancements, those with the intelligence will create whole new industries and opportunities. But I wouldn’t rule out this scenario, as scary as it sounds.
Yes the absolute crux of this scenario is the speed at which it happens. Technology is normally great - 95% of the population used to work in agriculture, now that’s 5% and we’ve dealt with the transition smoothly. But it happened over the course of a hundred years. Can the technological productivity miracle also be a curse if a) the technology is recursively self improving without human guidance and b) continues exponential improvement as we’ve seen so far?
If it happens over 30 years, it’s fine. Humans will adapt gradually as we always have. If it happens over 3, well…we will still adapt. But the transition will be abrupt and likely painful.
I found it interesting that WSJ, Barrons, lots of people on X, every podcast felt like they had to comment on this article. And from what I recall, every single one dismissed the scenario. I’m not saying it’s likely, but it’s the fastest moving technological change in human history. The odds of the doom scenario isn’t 0%. I don’t think it’s necessarily likely and I hope it doesn’t come true. But it seems silly to just dismiss it.
This is a very good post but it isn't the scenario that concerns me. If JUST this happens, we raise taxes on capital and redistribute them to labor, problem solved.
What I keep thinking about is: what if from now on, the technological landscape changes faster than society can adapt? E.g. what if this happens, and it takes a year to work out, and in that year we get fully functional humanoid robots etc.
'By early 2027, LLM usage had become default. People were using AI agents who didn’t even know what an AI agent was, in the same way people who never learned what “cloud computing” was used streaming services.'
I highly doubt this will happen. There is just not enough energy/compute available for this to happen.
“The gains from the productivity boom accruing almost entirely to the owners of compute and the shareholders of the labs that ran on it has magnified US inequality to unprecedented levels.”
The solution to the inequality problem is make more people the shareholders of the companies making and selling the machines that are doing the work
Discretionary spending doesn’t collapse if everyone is shareholders of the ai companies receiving dividends and loans backed by shares.
The problem is many of these companies are staying private. Big investors are jostling to get a piece of the ai labs and paying a pretty penny.
The scary outcome is a tiny percentage of people owning the rights to the profits of the machines that humans can’t compete against.
InvestAmerica is a small step by the government to make more Americans shareholders. But not enough. Rather than heavy taxation and $ redistribution to people made obsolete, it’s better to help workers become shareholders before they are made obsolete.
Also - if the ai is extremely capable it should be able to help train and retrain humans to be useful, as the in-demand skillset shifts.
We’ll see if Super-Intelligence on tap can resolve the quandaries it creates
Congrats on the best analysis I have probably ever read. I understand the points that Peter is making but there is no underplaying this, the developments of the past 2-3 months have been close to a paradigm shift for me.
I have been developing with the help of some LLM model or other (mainly Claude lately) ever since that became possible. I used to routinely edit what the model produced and I used to hold its hand and I used to be very specific and try to narrow the scope. Now it feels like I am the product manager and I am talking to my lead developer...If the chain of thought and what the LLM's edits were completely hidden from me and I delivered my prompt via say a messaging interface and I got the report back via an email along with the build the illusion would be complete. This is different on another level and the capability is astonishing. From this point of the evolutionary curve it feels like the next pieces are falling into place like the ones in the endgame of a jigsaw puzzle. The picture is clear now as well as to how to get there.
On the business side of course the declaration of software's demise and the "SaaSapocalypse" are maybe premature and hyperbolic because these companies would adapt and bank on their creditability and customer relations. But there is absolutely no doubt that their margins are going to be compresed and that their prices will go down. There is no way whatsoever that they are going to avoid that. And the research brilliantrly builds the case that even the less bad case scenario will have significant economic consequences especialy in the US and susbequently the world.
That being said I can't help but feel hope for humanity's future as well. The piece itself is testament to that. The brilliant cinematic scrtipt like way that Citrini builds his thesis is in my mind testament to our individuality and creativity. The main strentgth of the piece is the way that it emotionaly connects with the reader and takes him through a journay that I think is something irreplacable. Unless of course Citrini discloses that this was Claude's suggestion and crushes our hopes completely..
Excellent piece, thanks. And wow, this is scary - especially from here in Europe. Europe doesn't want to build AI models - energy costs are prohibitive and the "best" AI regulation world-wide makes investing in AI unattractive in Europe. So, Europe will stay dependent either on the US or Chinese models and thus won't be able to tax AI....
There will be break away societies that run a circular economy and live and work without AI. To tell you the truth, those societies will probably have a much higher level of overall satisfaction with life when it is all said and done and will be a better place to live and raise a family -- a place where humans are still valued.
I don't agree at all - if productivity gets a boost in the USA, then nations depending on trade cannot afford to fall behind and will have to adapt. We are not going back to living in straw huts and doing farming with ox and horse, and labor costs are so high in Europe that the only way forward is more automation.
How? EU will have to be thankful if the USA lets them use the USA AI models without too many restriction. They are not in the position for negotiations. Of course, they won't frame it like that.
Thought provoking but infinitely depressing.
A few people no one asked anything of are leading and cheerleading the building of a technology that no one asked for and no one even needed. The result? A few gain infinite wealth while the lives hundreds of millions worked hard to build evaporate before their eyes.
Net benefit? Not a chance. A society with 20-30% unemployment is a terrible place to live. A society where people are paid transfers to sit around all day with free time and no purpose, even worse.
There was zero logical explanation or reason why humanity needed AI. At some point the majority will realize that. They're not going to respond well. The civil unrest will likely turn hot.
The world would be a much better place if AI was treated the same as nuclear weapons, non-proliferation. It will never happen, but one can dream.
This is one of the most thought provoking pieces I have ever read. Great work guys!
10:30pm UK time - am I supposed to shit my underwear this late at night?
Really enjoyed the section about Mastercard and Visa. I see no scenario in which these companies can survive when AI agents can use crypto like SOL based stablecoins to pay each other for near 0 fees instantaneously, a point I had not reckoned with much before.
One thing I’m unsure about in this scenario is how much broad-based price deflation shows up as abundance. If AI drives the marginal cost of many services toward zero, shouldn’t a lot of the consumer basket get cheaper, raising real purchasing power for anyone with income or transfers? It feels like the memo assumes prices stay sticky while incomes fall, rather than prices falling fast enough to partially offset the demand shock. While indeed debt holders will struggle, everything in nominal terms should in theory get cheaper.
However, I guess this is provided that those cost savings etc. don't go straight back into financing GPUs/AIs consuming their own cost savings. Hopefully we'll all still be here in 2030 as our ASI overloards start terraforming the earth to see how all this shakes out.
Fantastic article as always Citrini and team.
P.S: Go long $HY9H SK Hynix
It’s funny to consider that much of the economy exists because of inefficiency and friction. Wealth distribution itself may largely be a byproduct of those frictions like information gaps, transaction costs, regulatory barriers, and coordination problems.
If AI meaningfully reduces those frictions, competition should intensify, driving costs down and benefiting consumers. That same dynamic could reshape the labor market: some roles will compress, but entirely new industries, previously economically infeasible could emerge as viable also helping the labor market. Lower input costs and higher productivity expand what’s possible.
From a global perspective, countries that fail to adopt AI aggressively risk losing competitiveness. If productivity gains concentrate in AI-forward economies, capital and economic influence may flow toward them. Nations that hesitate out of fear could fall structurally behind, while countries like the U.S. could disproportionately benefit from absorbing global inefficiencies.
At a high level, it’s difficult to accept that doing more with less would leave society worse off overall.
It does if all the wealth creation and capital flows into the U.S. all end up in a few pockets while millions are displaced and see their lives completely destroyed. I've always been a capitalist / libertarian. But the scenario described in the piece is one of the few that could change my mind, given the structural issue that might not find a way to self correct.
The social contract has been completely obliterated. Grow up, work hard, get good grades, major in something valuable, network, get a job adding value, buy a house, have children, save, invest, retire. Millions that did the right thing, held up their end of the bargain, now are at risk of losing everything they worked for.
I use it every day to augment my work, but from day one have been a believer society would be much better off in 2050 without AI than we will be with it.
The movement will not succeed but there will be an ever growing roar, louder and louder, from society to put the genie back in the bottle. When that movement decides to become violent is when the real collapse will take place.
That’s the opposite of competition though. The economy could just as easily get more diverse when scale isn’t needed to provide a service based on inference cost. The economy could look vastly different and different groups or talents might be selected for in the new economy but people’s appetite for more or better is infinite.
There are hundreds of new industries that can be built on AI. It could very easily be the greatest time for SMBs of all time and that doesn’t necessarily mean mass job loss. The marketplaces could be booming. The public markets might be led by capital, scale could stop being a moat. It could easily be a job refactor rather than mass layoffs.
The future looks different but that doesn’t necessarily mean bad
Trust me, I pray your version of events is what plays out, and I can see it happening for sure. I hope so mostly for the sake of my children.
However, my faith in humanity is not what it used to be. Particularly government and its ability to act fast and intelligently -- or even in the best interest of the humans it serves. Government seems there these days to protect capital, and that protection, at the expense of the citizenry may hammer the ability for SMBs to act, access tools, grow, and hopefully hire to offset the labor destruction from large firms.
My view is one of major consolidation, all industries approaching oligopolies based on access to compute, SMBs disappearing, government refraining from any attempt to enforce anti-trust or monopoly laws, and a fast descent into a dystopian corporatist Feudalism.
Whoever did not have the opportunity to build wealth prior to AI will be banished to the bottom rungs of society, forever dependent on subsistence government transfers that are not large enough to allow for saving or capital accumulation.
For the first time the probability is quite high that we provide our children a world where social mobility and high standard of living is more difficult to achieve than it was for prior generations --- and a couple people at a few AI labs are to blame for creating a tech no one actually needed in the first place, IMO.
I think social mobility changes given the opportunity set. If the opportunity set stays the same or shrinks social mobility is curtailed. Thus in order to increase those things, we need innovation. I agree the rules of the game are probably changing, but the rules are changing for everyone.
Imo there is going to be a ton of social mobility due to AI but like all innovation there will be winners and losers.
The scenario paints an incomplete picture of AI-driven economic collapse. Its strongest insight — that AI both replaces cognitive labor directly and destroys business models built on human friction — is self-referentially incomplete. Not all friction is information-solvable; much of economic life involves strategic interaction, preference discovery, and irreducibly human judgment. Where AI does eliminate commodity friction, it simultaneously lowers the barriers for individuals to build economic activity and businesses around the very human qualities that machines can't replicate — individual tastes and the authenticity of human involvement. Influencers are going to influence. The essay also treats policy paralysis as a given when the mechanism for redistribution (taxing the compute surplus) is economically straightforward, even if politically contested at the moment. But the deepest flaw is that the essay frames AI as a pure destroyer of livelihoods without recognizing that the same technology can subsidize and facilitate the search for new ones. The real policy challenge isn't compensating people for lost jobs through transfers — it's using the enormous surplus AI generates to lower the cost and risk of every person finding their own meaningful, human-premium contribution. The problem and the solution are the same technology. The real question is whether we can use it collectively as both.
You used AI to write about why AI won’t replace humans?
True! I used a Claude dialog to clarify my thinking and to create a compact summary of my critique, which I edited slightly because it seemed pretty clear and complete. "Influencers are going to influence" is pure human-generated content. :-)
2400 years ago Plato made the argument that writing is a cheat that mimics true human intellectual capacity only manifest through oratory. Writing replaces humans too!
That said, your piece sparked some thinking and writing on my part about a general ethical framework for AI collaboration, so thanks for the impetus!
where's the basket? ;)
Being early is being wrong, and Cit knows this, which is why his prompts caused AI to write that the canary is still alive. ; )
Are we short white shirt factories?
Without the financial incentive to become intelligent and educated, and by proxy have an intelligent and educated society, the movie Idiocracy becomes reality.
Depression, hopelessness, drug abuse, poverty, ignorance -- incentives in all the wrong places. Social mobility becomes a long lost feature of the past. Neo-Feudalism reigns supreme.
Such a wonderful place to live and raise children 🙄
It won't be long before the majority narrative on AI labs shifts from award winning innovators to candidates for potential imprisonment.
Utterly depressing… and utterly brilliant. Well done Citrini and team. The optimistic part of me says all of this will take longer to play out. I know this is more of a tail risk scenario, but I generally think many companies and industries will be much slower to adapt and many, many jobs will be hard to replace with AI that quickly. But certainly over a longer time scale, intelligence/knowledge work can and will be replaced with AI. Hopefully like with past major technological advancements, those with the intelligence will create whole new industries and opportunities. But I wouldn’t rule out this scenario, as scary as it sounds.
Yes the absolute crux of this scenario is the speed at which it happens. Technology is normally great - 95% of the population used to work in agriculture, now that’s 5% and we’ve dealt with the transition smoothly. But it happened over the course of a hundred years. Can the technological productivity miracle also be a curse if a) the technology is recursively self improving without human guidance and b) continues exponential improvement as we’ve seen so far?
If it happens over 30 years, it’s fine. Humans will adapt gradually as we always have. If it happens over 3, well…we will still adapt. But the transition will be abrupt and likely painful.
I found it interesting that WSJ, Barrons, lots of people on X, every podcast felt like they had to comment on this article. And from what I recall, every single one dismissed the scenario. I’m not saying it’s likely, but it’s the fastest moving technological change in human history. The odds of the doom scenario isn’t 0%. I don’t think it’s necessarily likely and I hope it doesn’t come true. But it seems silly to just dismiss it.
This is a very good post but it isn't the scenario that concerns me. If JUST this happens, we raise taxes on capital and redistribute them to labor, problem solved.
What I keep thinking about is: what if from now on, the technological landscape changes faster than society can adapt? E.g. what if this happens, and it takes a year to work out, and in that year we get fully functional humanoid robots etc.
'By early 2027, LLM usage had become default. People were using AI agents who didn’t even know what an AI agent was, in the same way people who never learned what “cloud computing” was used streaming services.'
I highly doubt this will happen. There is just not enough energy/compute available for this to happen.
“The gains from the productivity boom accruing almost entirely to the owners of compute and the shareholders of the labs that ran on it has magnified US inequality to unprecedented levels.”
The solution to the inequality problem is make more people the shareholders of the companies making and selling the machines that are doing the work
Discretionary spending doesn’t collapse if everyone is shareholders of the ai companies receiving dividends and loans backed by shares.
The problem is many of these companies are staying private. Big investors are jostling to get a piece of the ai labs and paying a pretty penny.
The scary outcome is a tiny percentage of people owning the rights to the profits of the machines that humans can’t compete against.
InvestAmerica is a small step by the government to make more Americans shareholders. But not enough. Rather than heavy taxation and $ redistribution to people made obsolete, it’s better to help workers become shareholders before they are made obsolete.
Also - if the ai is extremely capable it should be able to help train and retrain humans to be useful, as the in-demand skillset shifts.
We’ll see if Super-Intelligence on tap can resolve the quandaries it creates
Congrats on the best analysis I have probably ever read. I understand the points that Peter is making but there is no underplaying this, the developments of the past 2-3 months have been close to a paradigm shift for me.
I have been developing with the help of some LLM model or other (mainly Claude lately) ever since that became possible. I used to routinely edit what the model produced and I used to hold its hand and I used to be very specific and try to narrow the scope. Now it feels like I am the product manager and I am talking to my lead developer...If the chain of thought and what the LLM's edits were completely hidden from me and I delivered my prompt via say a messaging interface and I got the report back via an email along with the build the illusion would be complete. This is different on another level and the capability is astonishing. From this point of the evolutionary curve it feels like the next pieces are falling into place like the ones in the endgame of a jigsaw puzzle. The picture is clear now as well as to how to get there.
On the business side of course the declaration of software's demise and the "SaaSapocalypse" are maybe premature and hyperbolic because these companies would adapt and bank on their creditability and customer relations. But there is absolutely no doubt that their margins are going to be compresed and that their prices will go down. There is no way whatsoever that they are going to avoid that. And the research brilliantrly builds the case that even the less bad case scenario will have significant economic consequences especialy in the US and susbequently the world.
That being said I can't help but feel hope for humanity's future as well. The piece itself is testament to that. The brilliant cinematic scrtipt like way that Citrini builds his thesis is in my mind testament to our individuality and creativity. The main strentgth of the piece is the way that it emotionaly connects with the reader and takes him through a journay that I think is something irreplacable. Unless of course Citrini discloses that this was Claude's suggestion and crushes our hopes completely..
Excellent piece, thanks. And wow, this is scary - especially from here in Europe. Europe doesn't want to build AI models - energy costs are prohibitive and the "best" AI regulation world-wide makes investing in AI unattractive in Europe. So, Europe will stay dependent either on the US or Chinese models and thus won't be able to tax AI....
There will be break away societies that run a circular economy and live and work without AI. To tell you the truth, those societies will probably have a much higher level of overall satisfaction with life when it is all said and done and will be a better place to live and raise a family -- a place where humans are still valued.
I don't agree at all - if productivity gets a boost in the USA, then nations depending on trade cannot afford to fall behind and will have to adapt. We are not going back to living in straw huts and doing farming with ox and horse, and labor costs are so high in Europe that the only way forward is more automation.
EU will just sue for anticompetitive practices and be awarded settlements. Clearly they’re experts at this.
How? EU will have to be thankful if the USA lets them use the USA AI models without too many restriction. They are not in the position for negotiations. Of course, they won't frame it like that.
Credit Card companies don't stand a chance much longer.
Grateful to master the points game and travel the world on the banks' dime for so long.
It was a helluva ride!