In an economy built on wages, money flows from paychecks into stores, services and taxes. But as AI and robots replace paid work, that engine stalls—and suddenly our greatest strength (manufacturing capacity, logistical networks, technological prowess) becomes a liability if no one can afford to buy what’s produced.
1. Wages as the Engine of Demand
- Paychecks translate labor into purchasing power—fueling everything from grocery aisles to movie tickets.
- When wages disappear, aggregate demand collapses: empty shopping carts, vacant restaurants, idle factories.
- Consumer confidence plunges, triggering a self-reinforcing slump where even essential goods sit unsold.
2. Automated Gluts and Price Deflation
- AI-powered factories and distribution systems can crank out goods at near-zero marginal cost.
- But with incomes evaporating, overproduction drives prices downward—and revenues with them.
- Deflationary cycles punish producers and investors, deepening bankruptcies and credit freezes.
3. The Vanishing Tax Base
- Payroll taxes fund social services, infrastructure and debt servicing.
- As jobs vanish, governments lose their primary revenue stream—forcing cuts or explosive deficits.
- Austerity measures in a depressed economy compound hardship, undermining social cohesion.
4. Corporate Overcapacity Meets Demand Drought
- Companies optimized for scale slash prices to move inventory—yet still can’t find buyers.
- Desperate cost-cutting accelerates further layoffs, creating a vicious circle of shrinking markets.
- Markets fragment: luxury and niche survive, mass-market goods see historic contraction.
5. The Illusion of “Free” Production
- Advancements in 3D printing, open-source design and automated supply chains promise abundance.
- But “free” output only matters if people have the means to access it—servers and networks cost money, even if units don’t.
- True affordability requires deliberate redistribution of access, not just technological capability.
6. Rethinking Demand in a Post-Work World
- Guaranteed Services Model: treat essentials—housing, energy, healthcare—as public utilities, not retail goods.
- Data & Commons Dividends: channel AI’s productivity gains back into universal credits redeemable for public and private services.
- Community Purchasing Pools: aggregate buying power in cooperatives, mutual aid networks and localized currencies.
Next up: Minimum Viable Reorganization →