# By default, capital will matter more than ever after AGI

***This post is crossposted from my Substack. Original*** [***here***](https://nosetgauge.substack.com/p/capital-agi-and-human-ambition)**.**

***A modified version of this essay is now part of a much more comprehensive essay series,*** [***The Intelligence Curse***](https://intelligence-curse.ai/)***.***

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**Edited to add*****:** The main takeaway of this post is meant to be: **Labour-replacing AI will shift the relative importance of human v non-human factors of production, which reduces the incentives for society to care about humans while making existing powers more effective and entrenched.** Many people are reading this post in a way where either (a) "capital" means just "money" (rather than also including physical capital like factories and data centres), or (b) the main concern is human-human inequality (rather than broader societal concerns about humanity's collective position, the potential for social change, and human agency).*

I've heard many people say something like "money won't matter post-AGI". This has always struck me as odd, and as most likely completely incorrect.

First: labour means human mental and physical effort that produces something of value. Capital goods are things like factories, data centres, and software—things humans have built that are used in the production of goods and services. I'll use "capital" to refer to both the stock of capital goods and to the money that can pay for them. I'll say "money" when I want to exclude capital goods.

The key economic effect of AI is that it makes capital a more and more general substitute for labour. There's less need to pay humans for their time to perform work, because you can replace that with capital (e.g. data centres running software replaces a human doing mental labour).

I will walk through consequences of this, and end up concluding that labour-replacing AI means:

1.  The ability to buy results in the real world will dramatically go up
2.  Human ability to wield power in the real world will dramatically go down (at least without money); including because:
    1.  there will be no more incentive for states, companies, or other institutions to care about humans
    2.  it will be harder for humans to achieve outlier outcomes relative to their starting resources
3.  Radical equalising measures are unlikely

Overall, this points to a neglected downside of transformative AI: that society might become permanently static, and that current power imbalances might be amplified and then turned immutable.

Given sufficiently strong AI, *this is not a risk about insufficient material comfort*. Governments could institute UBI with the AI-derived wealth. Even if e.g. only the United States captures AI wealth and the US government does nothing for the world, if you're willing to assume arbitrarily extreme wealth generation from AI, the wealth of the small percentage of wealthy Americans who care about causes outside the US might be enough to end material poverty (if 1% of American billionaire wealth was spent on wealth transfers to foreigners, it would take 16 doublings of American billionaire wealth as expressed in purchasing-power-for-human-needs—a roughly 70,000x increase—before they could afford to give $500k-equivalent to every person on Earth; in a singularity scenario where the economy's doubling time is months, this would not take long). Of course, if the AI explosion is less singularity-like, or if the dynamics during AI take-off actively disempower much of the world's population (a real possibility), even material comfort could be an issue.

What most emotionally moves me about these scenarios is that a static society with a locked-in ruling caste does not seem dynamic or alive to me. We should not kill human ambition, if we can help it.

There are also ways in which such a state makes [slow-rolling, gradual AI catastrophes](https://nosetgauge.substack.com/p/a-disneyland-without-children) more likely, because the incentive for power to care about humans is reduced.

**The default solution**
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Let's assume human mental and physical labour across the vast majority of tasks that humans are currently paid wages for no longer has non-trivial market value, because the tasks can be done better/faster/cheaper by AIs. Call this labour-replacing AI.

There are two levels of the standard solution to the resulting unemployment problem:

1.  Governments will adopt something universal basic income (UBI).
2.  We will quickly hit superintelligence, and, assuming the superintelligence is aligned, live in a post-scarcity technological wonderland where everything is possible.

Note, firstly, that money will continue being a thing, at least unless we have one single AI system doing all economic planning. [Prices are largely about communicating information](https://www.econlib.org/library/Essays/hykKnw.html). If there are many actors and they trade with each other, the strong assumption should be that there are prices (even if humans do not see them or interact with them). Remember too that however sharp the singularity, abundance will still be finite, and must therefore be allocated.

**Money currently struggles to buy talent**
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Money can buy you many things: capital goods, for example, can usually be bought quite straightforwardly, and cannot be bought without a lot of money (or other liquid assets, or non-liquid assets that others are willing to write contracts against, or special government powers). But it is surprisingly hard to convert raw money into labour, in a way that is competitive with top labour.

Consider Blue Origin versus SpaceX. Blue Origin was started two years earlier (2000 v 2002), had much better funding for most of its history, and even today employs almost as many people as SpaceX (11,000 v 13,000). Yet SpaceX has crushingly dominated Blue Origin. In 2000, Jeff Bezos had $4.7B at hand. But it is hard to see what he could've done to not lose out to the comparatively money-poor SpaceX with its intense culture and outlier talent.

Consider, a century earlier, the Wright brothers with their bike shop resources beating Samuel Langley's well-funded operation.

Consider the stereotypical VC-and-founder interaction, or the acquirer-and-startup interaction. In both cases, holders of massive financial capital are willing to pay very high prices to bet on labour—and the bet is that the labour of the few people in the startup will beat extremely large amounts of capital.

If you want to convert money into results, the deepest problem you are likely to face is hiring the right talent. And that comes with several problems:

1.  It's often hard to judge talent, unless you yourself have considerable talent in the same domain. Therefore, if you try to find talent, you will often miss.
2.  Talent is rare (and credentialed talent even more so—and many actors can't afford to rely on any other kind, because of point 1), so there's just not very much of it going around.
3.  Even if you can locate the top talent, the top talent tends to be *less* amenable to being bought out by money than others.

(Of course, those with money keep building infrastructure that makes it easier to convert money into results. I have seen first-hand the largely-successful quest by quant finance companies to strangle out all existing [ambition](https://space.ong.ac/escaping-flatland) out of top UK STEM grads and replace it with the eking of tiny gains in financial markets. Mammon must be served!)

With labour-replacing AI, these problems go away.

First, *you* might not be able to judge AI talent. Even the AI evals ecosystem might find it hard to properly judge AI talent—evals are hard. Maybe even the informal word-of-mouth mechanisms that correctly sung praises of Claude-3.5-Sonnet far more decisively than any benchmark might find it harder and harder to judge which AIs really are best as AI capabilities keep rising. But the real difference is that the AIs can be cloned. Currently, huge pools of money chase after a single star researcher who's made a breakthrough, and thus had their talent made legible to those who control money (who can judge the clout of the social reception to a paper but usually can't judge talent itself directly). But the star researcher that is an AI can just be cloned. Everyone—or at least, everyone with enough money to burn on GPUs—gets the AI star researcher. No need to sort through the huge variety of unique humans with their unproven talents and annoying inability to be instantly cloned. This is the main reason why it will be easier for money to find top talent once we have labour-replacing AIs.

Also, of course, the price of talent will go down massively, because the AIs will be cheaper than the equivalent human labour, and because competition will be fiercer because the AIs can be cloned.

The final big bottleneck for converting money into talent is that lots of top talent has complicated human preferences that make them hard to buy out. The top artist has an artistic vision they're genuinely attached to. The top mathematician has a deep love of elegance and beauty. The top entrepreneur has deep conviction in what they're doing—and probably wouldn't function well as an employee anyway. Talent and performance in humans are surprisingly tied to a [sacred bond to a discipline or mission](https://www.benlandautaylor.com/p/looking-beyond-the-veil) (a fact that the world's cynics / careerists / Roman Empires like to downplay, only to then find their lunch eaten by the ambitious interns / SpaceXes / Christianities of the world). In contrast, AIs exist specifically so that they *can* be trivially bought out (at least within the bounds of their safety training). The genius AI mathematician, unlike the human one, will happily spend its limited time on Earth proving the correctness of schlep code.

Finally (and obviously), the AIs will eventually be much more capable than any human employees at their tasks.

This means that *the ability of money to buy results in the real world will dramatically go up once we have labour-replacing AI*.

**Most people's power/leverage derives from their labour**
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Labour-replacing AI also deprives almost everyone of their main lever of power and leverage. Most obviously, if you're the average Joe, you have money because someone somewhere pays you to spend your mental and/or physical efforts solving their problems.

But wait! We assumed that there's UBI! Problem solved, right?

### **Why are states ever nice?**

UBI is granted by states that care about human welfare. There are many reasons why states care and might care about human welfare.

Over the past few centuries, there's been a big shift towards states caring more about humans. Why is this? We can examine the reasons to see how durable they seem:

1.  Moral changes downstream of the Enlightenment, in particular an increased centering of liberalism and individualism.
2.  Affluence & technology. Pre-industrial societies were mostly so poor that significant efforts to help the poor would've bankrupted them. Many types of help (such as effective medical care) are also only possible because of new technology.
3.  Incentives for states to care about freedom, prosperity, and education.

AI will help a lot with the 2nd point. It will have some complicated effect on the 1st. But here I want to dig a bit more into the 3rd, because I think this point is unappreciated.

Since the industrial revolution, the interests of states and people have been unusually aligned. To be economically competitive, a strong state needs efficient markets, a good education system that creates skilled workers, and a prosperous middle class that creates demand. It benefits from using talent regardless of its class origin. It also benefits from allowing high levels of freedom to foster science, technology, and the arts & media that result in global soft-power and cultural influence. Competition between states largely pushes *further* in all these directions—consider the success of the US, or how even the CCP is pushing for efficient markets and educated rich citizens, and faces incentives to allow some freedoms for the sake of Chinese science and startups. Contrast this to the feudal system, where the winning strategy was building an extractive upper class to rule over a population of illiterate peasants and spend a big share of extracted rents on winning wars against nearby states. For more, see [my review of *Foragers, Farmers, and Fossil Fuels*](https://nosetgauge.substack.com/p/review-foragers-farmers-and-fossil-fuels), or my post on the connection between [moral values and economic growth](https://nosetgauge.substack.com/p/growth-and-civilisation).

With labour-replacing AI, the incentives of states—in the sense of what actions states should take to maximise their competitiveness against other states and/or their own power—will no longer be aligned with humans in this way. The incentives might be better than during feudalism. During feudalism, the incentive was to extract as much as possible from the peasants without them dying. After labour-replacing AI, humans will be less a resource to be mined and more just irrelevant. However, spending fewer resources on humans and more on the AIs that sustain the state's competitive advantage will still be incentivised.

Humans will also have much less leverage over states. Today, if some important sector goes on strike, or if some segment of the military threatens a coup, the state has to care, because its power depends on the buy-in of at least some segments of the population. People can also credibly tell the state things like "invest in us and the country will be stronger in 10 years". But once AI can do all the labour that keeps the economy going and the military powerful, the state has no more *de facto* reason to care about the demands of its humans.

Adam Smith could [write](https://oll.libertyfund.org/quotes/adam-smith-butcher-brewer-baker) that his dinner doesn't depend on the benevolence of the butcher or the brewer or the baker. The classical liberal today can credibly claim that the arc of history really does bend towards freedom and plenty for all, not out of the benevolence of the state, but because of the incentives of capitalism and geopolitics. But after labour-replacing AI, this will no longer be true. If the arc of history keeps bending towards freedom and plenty, it will do so only out of the benevolence of the state (or the AI plutocrats). If so, we better lock in that benevolence while we have leverage—and have a good reason why we expect it to stand the test of time.

The best thing going in our favour is democracy. It's a huge advantage that a deep part of many of the modern world's strongest institutions (i.e. Western democracies) is equal representation of every person. However, only about [13% of the world's population lives in a liberal democracy](https://ourworldindata.org/grapher/people-living-in-democracies-autocracies), which creates concerns both about the fate of the remaining 87% of the world's people (especially the 27% in closed autocracies). It also creates potential for [Molochian](https://slatestarcodex.com/2014/07/30/meditations-on-moloch/) competition between humanist states and less scrupulous states that might drive down the resources spent on human flourishing to zero over a sufficiently long timespan of competition.

I focus on states above, because states are the strongest and most durable institutions today. However, similar logic applies if, say, companies or some entirely new type of organisation become the most important type of institution.

### **No more outlier outcomes?**

Much change in the world is driven by people who start from outside money and power, achieve outlier success, and then end up with money and/or power. This makes sense, since those with money and/or power rarely have the fervour to push for big changes, since they are exactly those who are best served by the status quo.

Whatever your opinions on income inequality or any particular group of outlier successes, I hope you agree with me that the possibility of someone achieving outlier success and changing the world is important for avoiding stasis and generally having a world that is interesting to live in.

Let's consider the effects of labour-replacing AI on various routes to outlier success through labour.

**Entrepreneurship** is increasingly what [Matt Clifford calls the "technology of ambition" of choice](https://medium.com/entrepreneur-first/tech-entrepreneurship-and-the-disruption-of-ambition-4e6854121992) for ambitious young people (at least those with technical talent and without a disposition for politics). Right now, entrepreneurship has become easier. AI tools can already make small teams much more effective without needing to hire new employees. They also reduce the entry barrier to new skills and fields. However, labour-replacing AI makes the tenability of entrepreneurship uncertain. There is some narrow world in which AIs remain mostly tool-like and entrepreneurs can succeed long after most human labour is automated because they provide agency and direction. However, it also seems likely that sufficiently strong AI will by default obsolete human entrepreneurship. For example, VC funds might be able to directly convert money into hundreds of startup attempts all run by AIs, without having to go through the intermediate route of finding a human entrepreneurs to manage the AIs for them.

**The hard sciences**. The era of human achievement in hard sciences will probably end within a few years because of the rate of AI progress in anything with crisp reward signals.

**Intellectuals.** Keynes, Friedman, and Hayek all did technical work in economics, but their outsize influence came from the worldviews they developed and sold (especially in Hayek's case), which made them more influential than people like Paul Samuelson who dominated mathematical economics. John Stuart Mill, John Rawls, and Henry George were also influential by creating frames, worldviews, and philosophies. The key thing that separates such people from the hard scientists is that the outputs of their work are not spotlighted by technical correctness alone, but require moral judgement as well. Even if AI is superhumanly persuasive and correct, there's some uncertainty about how AI work in this genre will fit into [the way that human culture picks and spreads ideas](https://nosetgauge.substack.com/p/ai-and-wisdom-3-ai-effects-on-amortised). Probably it doesn't look good for human intellectuals. I suspect that a lot of why intellectuals' ideologies can have so much power is that they're products of genius in a world where genius is rare. A flood of AI-created ideologies might mean that no individual ideology, and certainly no human one, can shine so bright anymore. The world-historic intellectual might go extinct.

**Politics** might be one of the least-affected options, since I'd guess that most humans specifically want a human to do that job, and because politicians get to set the rules for what's allowed. The charisma of AI-generated avatars, and a general dislike towards politicians at least in the West, might throw a curveball here, though. It's also hard to say whether incumbents will be favoured. AI might bring down the cost of many parts of political campaigning, reducing the resource barrier to entry. However, if AI too expensive for small actors is meaningfully better than cheaper AI, this would favour actors with larger resources. I expect these direct effects to be smaller than the indirect effects from whatever changes AI has on the memetic landscape.

Also, the real play is not to go into actual politics, where a million other politically-talented people are competing to become president or prime minister. Instead, have political skill and go somewhere outside government where political skill is less common (c.f. Sam Altman). Next, wait for the arrival of hyper-competent AI employees that reduce the demands for human subject-matter competence while increasing the rewards for winning political games within that organisation.

**Military** success as a direct route to great power and disruption has—for the better—not really been a thing since Napoleon. Advancing technology increases the minimum industrial base for a state-of-the-art army, which benefits incumbents. AI looks set to be controlled by the most powerful countries. One exception is if coups of large countries become easier with AI. Control over the future AI armies will likely be both (a) more centralised than before (since a large number of people no longer have to go along for the military to take an action), and (b) more tightly controllable than before (since the permissions can be implemented in code rather than human social norms). These two factors point in different directions so it's uncertain what the net effect on coup ease will be. Another possible exception is if a combination of revolutionary tactics and cheap drones enables a Napoleon-of-the-drones to win against existing armies. Importantly, though, neither of these seems likely to promote the *good* kind of disruptive challenge to the status quo.

**Religions**. When it comes to rising rank in existing religions, the above takes on politics might be relevant. When it comes to starting new religions, the above takes on intellectuals might be relevant.

So on net, sufficiently strong labour-replacing AI will be on-net bad for the chances of every type of outlier human success, with perhaps the weakest effects in politics. This is despite the very real boost that current AI has on entrepreneurship.

All this means that *the ability to get and wield power in the real world without money will dramatically go down once we have labour-replacing AI.*

**Enforced equality is unlikely**
---------------------------------

*The Great Leveler* is a [good book](https://rudolf.website/short-reviews-nonfiction-1/#section-3) on the history of inequality that ([at least per the author](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4939891)) has survived its critiques fairly well. Its conclusion is that past large reductions in inequality have all been driven by one of the "Four Horsemen of Leveling": total war, violent revolution, state collapse, and pandemics. Leveling income differences has historically been hard enough to basically never happen through conscious political choice.

Imagine that labour-replacing AI is here. UBI is passed, so no one is starving. There's a massive scramble between countries and companies to make the best use of AI. This is all capital-intensive, so everyone needs to woo holders of capital. The top AI companies wield power on the level of states. The redistribution of wealth is unlikely to end up on top of the political agenda.

An exception might be if some new political movement or ideology gets a lot of support quickly, and is somehow boosted by some unprecedented effect of AI (such as: no one has jobs anymore so they can spend all their time on politics, or there's some new AI-powered coordination mechanism).

Therefore, even if the future is a glorious transhumanist utopia, it is unlikely that people will be starting in it at an equal footing. Due to the previous arguments, it is also unlikely that they will be able to greatly change their relative footing later on.

Consider also equality between states. Some states stand set to benefit massively more than others from AI. Many equalising measures, like UBI, would be difficult for states to extend to non-citizens under anything like the current political system. This is true even of the United States, the most liberal and humanist great power in world history. By default, the world order might therefore look (even more than today) like a global caste system based on country of birth, with even fewer possibilities for immigration (because the main incentive to allow immigration is its massive economic benefits, which only exist when humans perform economically meaningful work).

**The default outcome?**
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Let's grant the assumptions at the start of this post and the above analysis. Then, the post-labour-replacing-AI world involves:

*   Money will be able to buy results in the real world better than ever.
*   People's labour gives them less leverage than ever before.
*   Achieving outlier success through your labour in most or all areas is now impossible.
*   There was no transformative leveling of capital, either within or between countries.

This means that those with significant capital when labour-replacing AI started have a permanent advantage. They will wield more power than the rich of today—not necessarily *over* people, to the extent that liberal institutions remain strong, but at least over physical and intellectual achievements. Upstarts will not defeat them, since capital now trivially converts into superhuman labour in any field.

Also, there will be no more incentive for whatever institutions wield power in this world to care about people in order to maintain or grow their power, because all real power will flow from AI. There might, however, be significant lock-in of liberal humanist values through political institutions. There might also be significant lock-in of people's purchasing power, if everyone has meaningful UBI (or similar), and the economy retains a human-oriented part.

In the best case, this is a world like a more unequal, unprecedentedly static, and much richer Norway: a massive pot of non-human-labour resources (oil :: AI) has benefits that flow through to everyone, and yes some are richer than others but everyone has a great standard of living (and [ideally](https://nosetgauge.substack.com/p/death-is-bad) also lives forever). The only realistic forms of human ambition are playing local social and political games within your social network and class. If you don't have a lot of capital (and maybe not even then), you don't have a chance of affecting the broader world anymore. Remember: the AIs are better poets, artists, philosophers—everything; why would anyone care what some human does, unless that human is someone they personally know? Much like in feudal societies the answer to "why is this person powerful?" would usually involve some long family history, perhaps ending in a distant ancestor who had fought in an important battle ("my great-great-grandfather fought at Bosworth Field!"), anyone of importance in the future will be important because of something they or someone they were close with did in the pre-AGI era ("oh, my uncle was technical staff at OpenAI"). The children of the future will live their lives in the shadow of their parents, with social mobility extinct. I think you should definitely feel a non-zero amount of existential horror at this, even while acknowledging that it could've gone a lot worse.

In a worse case, AI trillionaires have near-unlimited and unchecked power, and there's a permanent aristocracy that was locked in based on how much capital they had at the time of labour-replacing AI. The power disparities between classes might make modern people shiver, much like modern people consider feudal status hierarchies grotesque. But don't worry—much like [the feudal underclass mostly accepted their world order](https://nosetgauge.substack.com/p/review-foragers-farmers-and-fossil-fuels) due to their culture even without superhumanly persuasive AIs around, the future underclass will too.

In the absolute worst case, humanity goes extinct, potentially because of a [slow-rolling optimisation for AI power over human prosperity](https://nosetgauge.substack.com/p/a-disneyland-without-children) over a long period of time. Because that's what the power and money incentives will point towards.

**What's the takeaway?**
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If you read this post and accept a job at a quant finance company as a result, I will be sad. If you were about to do something ambitious and impactful about AI, and read this post and accept a job at Anthropic to accumulate risk-free personal capital while counterfactually helping out a bit over the marginal hire, I can't fault you too much, but I will still be slightly sad.

It's of course true that the above increases the stakes of medium-term (~2-10 year) personal finance, and you should consider this. But it's also true that *right now* is a great time to do something ambitious. Robin Hanson calls the present ["the dreamtime"](https://www.overcomingbias.com/p/this-is-the-dream-timehtml), following a concept in Aboriginal myths: the time when the future world order and its values are still liquid, not yet set in stone.

Previous upheavals—the various waves of industrialisation, the internet, etc.—were great for human ambition. With AI, we could have the last and greatest opportunity for human ambition—followed shortly by its extinction for all time. How can your reaction not be: ["carpe diem"](https://en.wikipedia.org/wiki/Carpe_diem)?

We should also try to preserve the world's dynamism.

Rationalist thought on post-AGI futures is too solutionist. The strawman version: solve morality, solve AI, figure out the optimal structure to tile the universe with, do that, done. (The actual leading figures have far less strawman views; see e.g. [Paul Christiano at 23:30 here](https://www.dwarkeshpatel.com/p/paul-christiano)—but the on-the-ground culture *does* lean in the strawman direction.)

I think it's much healthier for society and its development to be a shifting, dynamic thing where the ability, as an individual, to add to it or change it remains in place. And that means keeping the potential for successful ambition—and the resulting disruption—alive.

How do we do this? I don't know. But I don't think you should see the approach of powerful AI as a blank inexorable wall of human obsolescence, consuming everything equally and utterly. There will be cracks in the wall, at least for a while, and they will look much bigger up close once we get there—or if you care to look for them hard enough from further out—than from a galactic perspective. As AIs get closer and closer to a Pareto improvement over all human performance, though, I expect we'll eventually need to augment ourselves to keep up.