Economist Per Bylund: AI, the End of Employment & the Rise of Entrepreneurship

Per Bylund (0:00)

What we're seeing with sort of the long-term perspective is a replacement of the employment economy with instead an entrepreneurship economy.

So this really goes to the core of what the economy is really about, but also what Austrian Economics teaches, namely that what we do in the economy is to create value, especially create new value. An AI can possibly just randomly try different things and try to maybe the whole scope of all different things that are possible, but that's a waste of resources.

Spencer Nichols (0:41)

Per Bylund, Senior Fellow at the Mises Institute. Welcome to the show. How are you doing today?

Per Bylund (0:44)

Thanks so much. It's good to be with you.

Spencer Nichols (0:46)

Excellent. Yeah. Likewise, really excited to dig in here. I think AI and the impact that it's having on just the microeconomics and the idea of innovation in our economy, I think is top of mind for so many people right now.

I think the Austrian perspective, given that it's so deeply focused on the individual level on entrepreneurship, could teach us some very interesting lessons at this moment in time. I guess to give our audience context here, what are you seeing now at this current moment in terms of just the technological context of innovation and entrepreneurship versus, say, a decade or two decades ago as so much has changed?

Per Bylund (1:24)

Yeah, it's a huge issue. And you're right, the Austrian Economics is probably the only school of economics that not only has a theory of entrepreneurship, but also places entrepreneurship at the very core. So the economy is not a static system. It's not an equilibrium or anything like that. It's really a process that is unfolding over time. So innovation is really core to it. With my economics hat on, the technology that is behind AI is really interesting and seems to be really disruptive too. But it's not really different from an economics perspective. So we've seen technological revolutions throughout history on all kinds of different types of technologies. I mean, the wheel is one, right? The automobile is another. And moving from agriculture to industry and things like that. And many of these revolutions, they seemed probably very much the same to people who were in the midst of them as AI does now.

And of course, people are going to claim that, well, this time is different. Well, it was different every time, right?

The steam engine or the automobile was not the same thing as the industrialization taking agriculture's role and things like that. But the thing is that the technology itself does not determine the economy. So it's just a shift in how we do things and what we do.

So entrepreneurship still has its role as being sort of the pursuit of creating new value. And I think it's important to realize that what entrepreneurs do is not simply figuring out what is it that people want already, but rather to step ahead of the curve and produce something that they think will benefit consumers so that they choose to buy it when they have those goods available. And it's sort of this imaginative role of the entrepreneur that is important. And therein, AI is important. And AI has an interesting impact potentially for the simple reason that AI, well, is it imaginative? Can it really do the entrepreneurship? Or is it really good at figuring out how to make the economy more efficient, given what we already know about it?

And my view, the way I understand technology, is that it's primarily the latter. So it's really good at sort of filling in gaps and maybe extrapolating a little bit from where we are. But it can't really produce more disruptive innovations.

Spencer Nichols (3:54)

Interesting. So you think that there seems to be, you know, obviously these like productivity enhancements, but in terms of the kind of imaginative economic process, you feel as though AI really is not a step change in terms of, or a change in type, in terms of how technology is interacting with, you know, the entrepreneur here. You think, you know, there still really is a role for the human being in that kind of economic production?

Per Bylund (4:23)

Yes. I think what we've seen is that machines of different kinds take over more and more of what sort of simple labor has been doing. So if we go back several hundred years, we all toiled in the fields and we all pulled the plow ourselves and then we used animals for it. And then there was the tractor that replaced us as doing this sort of manual tedious labor. And then we've come much further than that, of course, so that we have started to replace also white collar work. So a lot of the information creation, the pushing of papers back and forth, the control of processes and things like that, the figuring out of which way to go when we already have the alternatives.