CHEAPENING THE FACTORS OF PRODUCTION

Technology illustrations by Storyset

Earlier today I was listening to the All-In podcast, a show about venture capitalism, business and technology. One of the major talking points on the show was how AI is going to cheapen business financing in America and across the globe and this cuts across different industries. This was something that had crossed my mind a couple of days ago while watching a series on Netflix.

We often hear about big budgets movies running into millions of dollars. The last Avenger movie cost about $365 million (this is over the cost of production, marketing, etc). Now imagine that cost is reduced to about $100,000 (or less) with the use of AI. There are a couple of AI models that do things such as script generation and animation, voice-overs that replicate popular actors' voices, etc Some of these tools are already accessible to the public on some scale and considering the rate of development of AI technology and its accessibility, it is fair to say that the cost of making such movies is going to drop significantly. This is obtainable not only in the movie industry but across industries with huge capital requirements.

The cheapening of capital has a lot of implications. First, it allows for wider capital allocation for venture capitalists. Investing in a startup becomes a low risk, thus, VCs can extend their portfolio almost infinitely. I foresee a situation where VCs beg to be part of certain businesses because founders will require less of their money and more focus would be placed on more important things like creativity, their product/service and the end-user.

Also, it eliminates the cost of financing very bogus start-ups. Millions of dollars and man-hours do not have to go down the drain to validate a service or product, which is quite common in the VC space. Even venture capital might become obsolete as capital becomes less important in the production process.

If the cost of innovation reduces significantly and becomes accessible to millions of people across the world, maybe we can dream of a world of abundance. We have four factors of production: Land, labour, capital and entrepreneurship. Technology is making the cost of labour go to zero. With the advent of robotics and AI human input in the cause of production has become almost insignificant. Entrepreneurial endeavours are in the surplus. With the possibility of interplanetary travel the cost of land (material resources and energy) might be near zero. Capital (which is artificially scarce) has always been the elephant in the room , however, with the increasing technological advancement this is becoming less important.

There are six things I think are crucial to the advancement of our specie. Namely:

• Artificial Intelligence
• Nuclear energy/ nuclear fusion
• 5G
• Inter-planetary travel
• Quantum computing
• Creativity

These aforementioned things already exist in some form in our world today, which makes me believe that we are a couple of decades away from unfathomable technological advancements that will solve issues of scarcity (of any form) on a global scale and will make innovation a thing of self-interest and preservation of our species, rather than a for-profit venture.

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