AI, Automation & Surplus Value: Is Modern Capitalism Growing Its Own Seeds of Destruction?

In 1867, one of the most famous (and important) contributions to the field of humanities was made by Karl Marx, a German philosopher, political theorist, economist, journalist, revolutionary socialist, and honestly? A lot more professions. That man didn't waste a single day of his life. The contribution we're talking about, as you might have guessed, is the book titled 'Das Kapital'.

That book, in addition to other things, mentioned something about an economic theory, the Theory of Surplus Value. And I, a wannabe intellectual and a full-time Economics student, find it hard not to write about it. (I have my final worth 75% of my grade coming up in two days, but this train of thought had to be written down somewhere.)

Ricardo's cameo and Marx's action scene:

While the theory in itself is not something that you and I, as chronically online children of the internet, would have any problem understanding (think of all the eat-the-rich memes and capitalism-kills-humanity threads you've engaged with), it's one of the modern-day interpretations of this theory that led me to write this blog tonight. But, before I dive into the spoiler of why the theory applies to you and me, and what the point of this blog is to begin with, I just want to familiarise you with his theory first.

To do that, I'd like to go a little further back in the timeline, about the time when David Ricardo was writing his 'On the Principles of Political Economy and Taxation' in 1817, 50 years before Das Kapital. Now, our guy Rick (he's cool with the nickname, don't worry), he gave this theory where he proposed that the value of any commodity is determined by the labour employed in its production. Sounds absolutely logical and cool, right? Well, Marx thought so too. He built on this theory to give the concept of capitalistic exploitation of labour. How? Well, this is where the fun begins.

So Marx, in his theory, states that there are two classes of people in our society. The 'haves' and the 'have-nots'. The 'haves' are obviously the ones with the money, so they're the capitalists, while the 'have-nots' are the poor labour class (cough. you and me, bro.) The capitalists aim to maximise profit while the labour class' aim is... well, survival. So the capitalists employ the labour class at subsistence wages (because the labour class is convinced that's all they need and that's all they'll get.) This gives us a very convenient little mathematical equation. Trust me, it gets better.

The equation:

w = c+v+s

w - total product

c - fixed capital

v - variable capital

s - surplus

Now, this equation looks scary, but it makes sense (trust). What he basically wanted to say was that the cost of a commodity depends on three factors, namely, the fixed cost or the cost incurred for increasing labour productivity, for example, modern machinery and technological upgradation. The second is variable cost, which is directly proportional to the labour wages. You want to reduce costs? Lower your wages. (Alarm sound: exploitation) And the rest of it goes to the entrepreneur in the form of surplus or profit. Now, earning profit isn't the problem here. The problem is exploiting the labour class to maximise those profits.

Wow, that sounds bleak!

Karl Marx proposed that capitalism would lead to a situation where capitalists exploit the 'have-nots' to such an extent that it forms a 'reserve army' of the unemployed section of the workforce. There will come a point where there is extremely high unemployment, extremely low wages and an even lower purchasing power. This will lead to a 'bloody revolution' where the reserve army will demand government intervention and thus, capitalism will end with a rise of socialism. This roller-coaster ride proves that 'capitalism bears its own seeds of destruction.'

Chills, am I right? Well, fast forward to this day and age. I recently heard Geoffrey Hinton's Nobel speech (for those not aware, he's considered the Godfather of AI and was awarded the Nobel Prize in Physics in 2024). Among other things, what stayed with me the most was his take on the future of AI, where he said:

"This new form of AI excels at modelling human intuition rather than human reasoning, and it will enable us to create highly intelligent and knowledgeable assistants who will increase productivity in almost all industries. If the benefits of the increased productivity can be shared equally, it will be a wonderful advance for all of humanity."

https://www.youtube.com/watch?v=-f5WQAk3dYo

Geoffrey Hinton's Nobel Speech 2024

AI, Productivity and the New Face of Exploitation

No more testing your patience, I'll come to the point. What he said about creating 'highly intelligent and knowledgeable' AI assistants sounds very utopian, but what lies underneath is the inevitable misuse of this intelligence by profit-driven, exploitative capitalists who make it their life's purpose to make AI "better and better" even if this better proves to be harmful to mankind. It's in the environmental impact, the artistic loss, the cognitive decline and the psychological and emotional distance that human connection has now developed. So, his cautionary "if the benefits... can be shared equally" is too good to be true. And even though I agree when people say that AI will not cause job loss because people will adapt to the new technology and the ever-evolving job market requirements, I also understand the flip side of it, where, as quickly as it appears in theory, it takes years for the labour to acquire new skillsets that are employable.

Marx's warning: Where are we headed?

The education system still hasn't adapted to the present needs of the job market. Are we so optimistic to think it will match the pace of the technological progress made by the artificial intelligence industry? Additionally, what happens to people who don't want to adapt to this fast-changing world? What about creatives who won't benefit from delegating their jobs to an assistant? What about people who don't have the resources to upskill themselves? It does, in effect, lead to disguised unemployment. The only question now is, will this unemployment be so large-scale that Marx's reserve army breaks out? Are we heading towards the end of capitalism? And most importantly, does AI harbour its own seeds of destruction?

If technology is the next great revolution, its outcome depends on whether we treat it as a tool for progress or another weapon for exploitation. The seeds have been planted, all that matters now is who controls the soil.

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