Post‑AGI Economics Part 1: When Labor Disappears

How will the economy work after AGI?

Introduction: A Morning Without Work

You wake up, yawn and stretch your arms wide. It seems like any other day, but today, something feels a bit off. You open your laptop, just like always. But this time, the screen delivers a quiet punch in the gut: the job you once had is… uhm… gone. Not because you messed up. Not because someone outcompeted you. You’re not even fired per se. There’s just no reason for you to be there.

You were replaced by Fred—the latest, most powerful AI model on the market. For good reason too, Fred is faster, cheaper, safer, and better than you at your (now previous) job. It doesn’t need emotional validation. It doesn’t need coffee to function. And as the weeks progress, your absence is barely noticed. The company is running smoother than ever.

You check your bank balance… it’s quietly shrinking. You scroll the job boards… *crickets*. You call your friend Seb, the most competent financial analyst you know. Turns out, the exact same thing has happened to him.

That’s when it hits you: this isn’t some black swan event. It’s the new standard. No one needs your labor, but you still need food. You still need rent. You still want to matter and you’re just there, behind your laptop, wondering:

How on Earth did this happen and how did I not see it coming?

The Labor-Capital Contract is Broken

For as long as most people can remember, there was a deal. You work, you get paid. Labor generated value, value earned wages, wages bought you a life. It wasn’t perfect, but it was consistent and reliable. Most importantly, if you, and enough people alongside you, were really upset about your contract, you could subtract your labour from the labour force, and the market, usually combined with some government intervention, would usually have to change to do something about that.

Now, thanks to damn Fred, that socioeconomic agreement is broken.

Because Fred isn’t just replacing factory hands or cashiers. He’s now replacing knowledge workers – analysts, designers, engineers.

We’re already seeing this unfold. Between 2019–2024, firms deploying AI copilots report double‑digit productivity gains and have begun trimming entry‑level headcount to reinvest in more automation. (McKinsey & Company, McKinsey & Company)

Historically, technology has had a reliable track record of creating new jobs, but this is not a fundamental law of economics. Better technology doesn’t guarantee better jobs for humans, just like it didn’t guarantee better jobs for horses during the Industrial Revolution (CGP Grey). And even if AI creates new roles, who says they’ll be filled by people? However, what AI automation will do is free up capital, which can be used to create new work—if and only if someone decides to use the capital in that way. But odds are, it will just get reinvested into more AI and more automation.

Of course, not every industry will be automated. Many tasks will still require human oversight, creativity, or care. But even if 10% of the existing global working population becomes economically obsolete, the consequences will still be dire:

• Increased crime and unrest. (IDEAS/RePEc)

• Rising political instability. (Harvard Kennedy School)

• Mental health collapse. (PMC, PLOS)

And now, with the labor-capital contract being fractured, what follows isn’t just the loss of income, but the ability to shape the system we used to have a say in.

Collapse of Economic Agency

With the automation of labour, something deeper starts to slip: our economic agency. We stop being participants in the economy and start becoming observers, watching the economy run without us.

It is important to note that a fully-automated economy could make food, housing, and healthcare radically more affordable. However, “cheaper” isn’t the same as “accessible,” especially when your income is disappearing faster than the prices are dropping. This transition won’t be evenly distributed, automation doesn’t arrive everywhere at once. In elite urban centers, it might take months; in the Global South, it might take decades. (IMF)

So while some people may enjoy a golden age of abundance, others may find themselves stuck in limbo—priced out of the old world, not yet invited into the new one. With the economy quietly reconfiguring itself around fewer and fewer people, one thing will become painfully clear:

Our political systems were built for a world that no longer exists.

Conclusion: High Tech, Low Life

The future isn’t arriving with a bang. It’s creeping in… through silent layoffs, seamless interfaces, and systems that quietly stop needing us.

AI advances. Productivity soars. Fewer people are involved. As power concentrates, the rest of us drift further from the driving wheel.

This is the story of the classic video game Cyberpunk. The machines run the show. The systems scale. But the quality of life declines. This is the real danger of a post-labour world: not that it fails, but that it works without us.

If we want something better, if we want a future that includes agency, dignity, and meaning, we’ll need to design for it, because it won’t happen by default.

In Part 2 of this series, we’ll explore how we can start to build that future. Through collective ownership. Decentralised power. Transparent governance. And systems that give people a voice, even when their labour is no longer required.

🙏 Acknowledgements

This article was shaped by the work of David Shapiro, whose YouTube videos on post-AGI economics deeply influenced this piece.

▶️ Post AGI Economics I
Watch on YouTube

▶️ Post AGI Economics II
Watch on YouTube

Explore more of his work:
🔗 David Shapiro’s YouTube Channel

📚 References

• Harvard Kennedy School. The Future of Work and Political Stability (2023)

• IDEAS/RePEc. Automation and Crime: Evidence from the U.S. (2022)

• International Monetary Fund (IMF). AI’s Impact on Emerging Economies (2023)

• McKinsey & Company. The Economic Potential of Generative AI: The Next Productivity Frontier (2023)

• PMC (PubMed Central). Unemployment and Mental Health: A Global Meta-Analysis (2020)

• PLOS One. Automation, Unemployment, and Mental Well-being (2021)