So many companies cut their workforce as much as 10-15% citing that those jobs can be fully automated by the use of AI but I am still waiting to see any meaningful price cuts of their products from the said companies, etc.
Otherwise this will mean that they are doing this just to increase their profit margins and please their shareholders and don’t care about their customers or workforce.
If you were to follow Adam Smith to the letter, it will Eventually® get cheaper: lower production cost leads to increased supply, and unemployment leads to decreased demand. Both forcing the prices down.
In practice, though, there are at least two problems with this reasoning:
- The hand of the market has Parkinson’s. Sure, it might “eventually” put things in place, but before that the hand will keep shaking things up and down, while people still need to live.
- Smithsonian supply and demand assumes an infinitely competitive free market. There’s none - and specially not in this current situation, where you got oligopolies everywhere, and plenty services+goods have huge natural costs of entry.
In those situations I’d simply ditch Smith and look at Marx instead.
Got any book recommendations on this topic?
Capital. It’s the biggest and best for a reason.
If that’s too daunting, read Wage Labor and Capital as well as Value, Price, and Profit. Both combined are far shorter than 1 volume of Capital.
Once the labor force is truly laid off en masses as AI gets better, then competition will force prices lower, dramatically reducing margin for profits. It’s the Tendency for the Rate of Profit to Fall, you just have to wait a few years for the full effects.
10-15% cuts are nothing compared to what may come.
You are so very naive
How so? This is basic Marxist analysis.
