The development of AI is accelerating at an increasing pace. I believe we're seeing the beginning of the biggest disruption to our society and economy in history. Already companies are talking about not hiring new people but rather using AIs instead to fill new roles or roles of people who leave. An example of a role where this already is feasible is entry level business analysts and developers. Instead of hiring one of these junior positions to your team, you can ask ChatGPT o1 to analyze a few business documents, or ask Cursor to add a feature to your code base. Within a few minutes and not days you'll have the results. As with people the output might not be perfect the first time, you might need to proof read and ask a few follow-up questions before it's good to use. So from a time, quality and cost perspective it makes more sense to use an AI for it. And this is just the beginning.

I believe established companies will accelerate this behavior and growing startups will scale up with very few employees and have AI and machines do a bulk of the work. It will make their lives easier because they can focus on the product and not on an organizational chart. It will vastly increase the profit per employee for both startups and enterprises over time. Capital will become increasingly important as input to the production of value.

I think this transformation will take place over the next 1-2 decades. It will be a shift where the portion of knowledge workers in the economy will become tiny, and where capital is king. The amount of leverage capital will be able to give to the best knowledge workers will be insane. We are already seeing this shift in some of the big tech companies who are aggressively increasing their CapEx and revenue while maintaining or slowly shrinking their workforce. Meta is an example of this.

I expect this trend to continue and the number of employees to keep going down while total revenue and revenue per employee will go up. When this has played out the knowledge workers that still remain will earn salaries that are many orders of magnitude higher than what they are today. The nature of the new knowledge work might lead to a winner takes all scenario where a relatively small portion of humans work with knowledge work, and they produce tons of value through their AI agents and capital assets, while the rest will have to find something else to do. It is difficult to estimate what this distribution will look like, but I would not be surprised if it can reach 1 knowledge worker per 1000 people.

One key question is; what will everyone else be doing to earn a living? The majority of people will have to look for something else to do. Luckily, arguably anyone who can do something that another person or company needs or values better than machines can do it (or do something the machines can't do at all) will be able to earn money. Will there be enough demand for this? I believe so. It might be that human-to-human services will increase in importance in the economy as more people get freed from knowledge work. Who would you prefer to give you a massage, a robot or a human? Other jobs could include dog walker, home cook, servant, singer and actor, the list goes on. The examples are silly, but this is just a portion of all the human centered jobs that could be created. Most jobs will be unqualified, or require apprenticeship and training to master, but all of them will have in common that people prefer other people to do them rather than machines, so there will be a demand for it.

On the flip side a majority of things will be extremely cheap to produce in this new society given all of the efficiency gains from AI and machines, so even though it on first glance might look like a dystopian future, it will be an age of abundance. Everyone will afford most things they want. Even the servants could have a higher living standard than most people today can dream of.

To round off, the net effect could be positive. Health, security, wellness, happiness, and more of the metrics people value could be higher than ever for the population at large. But the fabric of the AI and machine powered society will be unrecognizable from what we know today. I believe it will be a more social society with a higher focus on human connection. Any boring monotonous and lonely tasks will be done by AI and machines. People will be interacting with other people when they work as servants, they will be able to choose from a wide array of interactive jobs, they can delve into any creative pursuits they want and the market for what they create will be local, in reality, and not digital, because that's where they can beat the machines.