Beyond automating tasks, Emad Mostaque's "Intelligence Theory" suggests AI's deepest impact is shifting the foundational axiom of economics. Instead of scarcity, the new core principle is persistence: how complex systems (like firms or AIs) maintain themselves by accurately modeling and predicting reality.
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The math used for training AI—minimizing the gap between an internal model and external reality—also governs economics. Successful economic agents (individuals, companies, societies) are those with the most accurate internal maps of reality, allowing them to better predict outcomes and persist over time.
The potential for an AI-driven, post-capitalist world of abundance is real. However, the path there will likely be as destructive as a world war, as the rapid upending of the economic order will throw society into chaos before stability is achieved.
The price mechanism in capitalism is a successful but lossy compression of complex economic information into a single number: money. AI agents can operate on the uncompressed, real-time data of supply and demand across the economy, creating a more efficient system that avoids the waste inherent in capitalism's information loss.
Emad Mostaque proposes that the math behind generative AI can describe economic systems. In this framework, Adam Smith's theories map to "gradient flows" (scarcity), Marx's to "circular flows" (compounding intelligence), and Hayek's to "harmonic flows" (structural rules).
Historically, humans moved from manual to cognitive labor as technology automated physical tasks. Emad Mostaque argues AI now automates cognitive work, creating an "intelligence inversion." There's no obvious higher-value domain left for human labor to escape to, unlike previous technological shifts.
As AI commoditizes execution and intellectual labor, the only remaining scarce human skill will be judgment: the wisdom to know what to build, why, and for whom. This shifts economic value from effort and hard work to discernment and taste.
AI agents, powered by GPUs, don't need to eat, sleep, or consume goods. This "metabolic rift" breaks the traditional economic loop where labor's earnings fuel consumption, creating a system where production is divorced from human needs and participation.
Emad Mostaque argues that as AI makes intelligence abundant (e.g., free expert medical advice), our economic system, which is built on scarcity, interprets the resulting job displacement and disruption as poverty, even if overall well-being improves.
While AI may make energy and labor nearly free, it cannot eliminate all scarcity. Finite resources like physical space (e.g., Malibu real estate) and time will always exist. This ensures that economic principles and competition will remain relevant in any future.
Capitalism values scarcity. AI's core disruption is not just automating tasks, but making human-like intellectual labor so abundant that its market value approaches zero. This breaks the fundamental economic loop of trading scarce labor for wages.