In this blog post, I delve deep into the theories of Marx and their relevance in the current era. I explore the shift from manufacturing to a service-driven economy, drawing parallels between Marx's emphasis on cost-effectiveness in a fledgling industrial society and today's focus on AI and automation accuracy.

Karl Marx and the Dawn of the Industrial Revolution: A Focus on Efficiency

Karl Marx penned Das Kapital in 1867, not with a focus on what we think as obvious: price determined by matching demand and supply; isntead he emphasized on efficiency - and it was in the arena of cost-effective manufacturing that Marx's ideas found the most resonance. His tone throughout his book is as if we knew exactly what we wanted.

In his days in UK, the industrial revolution was at its dawn and humankind seemed to have a clear vision of what it desired: unprecedented speed and efficiency, household automation, accessible food and clothing, and cutting-edge modes of transportation. In this period, cheaper goods would undeniably secure victory and capital was hypothesized to migrate to the cheapest and most productive means possible.

However, as we moved into the 20th century, the rise of service economy brought about a complex measurement dilemma. While automation in the service sector continued to hold promise, the challenge lay in creating accurate and worthwhile metrics for what was deemed worthwhile service. We came back to pricing as the signalling mechanism to measure intrinsic value.

This was evident with the increase in service sector employment from 31% in 1900 in the US to 78% by 1999, where the service sector overtook manufacturing in terms of employment numbers in 1950 in the US.

Similarly, the UK also experienced changes in its service sector. Already in 1841, 36% of UK jobs were in manufacturing and 33% were in services. By the 1960s, the focus of the UK workforce had shifted towards reducing costs.

This shift from manufacturing to service took about a hundred years and this change has resulted in slow productivity gain in developed countries in the last 50 years, which raised the consensus among economists that it's only a matter of time BRICS will overtake the west.

Service Sector Automation

At the same time, in the west many new jobs were created in the post manufacturing era. Higher educations led people to go into so-called professional occupaitons, namely doctors, lawyers, accountants, managers, financial analyst,  educators, and communication professionals.

Those are the values humans created in the developed countries have discovered during the 20th century, all of which did not exist during the agricultural era.

Future with AI

After 100 years of expanasion in the service sector employment, we're ready for another era for Marx.

At our current days, AI companies such as OpenAI, Google, Meta will focus on improving accuracy taking advantage of ever larger computation avaialability. Nvidia is increasing investment into GPU ever more.

But that trend will reverse at some point.

Ray Kurzweil, a well-known futurist, has predicted that computers will be able to match human intelligence by 2029. Beyond this milestone, there's a journey towards achieving cost-effectiveness that could last until 2060. This begs the question: what might the world look like after 2060?

We can say this without price determination and ride on Marx notion on capital, because we know exactly what we want today. In other words, the consensus about human demand has caught up. We want cheaper doctors, cheaper lawyers, cheaper everything. As long as AI is accurate, we don't need the human professionals that are prohibitively expensive anymore.

The Shift Towards Creativity

It's important to separte the conventional service sector with creative industry. Creative industry is very hard to monetize and make a living today. With 11 million artists on Spotify, only 1% makes $10,000 or more. More than 10 million people are just starving artists.

No amount of schools will prepare you for this creative industry.

We as humans will find a way to explore this new frontier throughout the 21st century similar to how we've discovered service economy in the last. That's the era more than 70% of the people are working in the creative industry. It'll be a gradual process that'd take much more than the immediate boom of YouTubers.

Today, there are 1.2 million people employed in the Performers & Creative Artists industry in US. That is less than 1% of the total employment.

I've found a similar analogy of sectorial shift from Japanese data. In 1910, manufacutring sector employed 1.6% of the total workforce. By 1945, that number increased by 2 folds but still at meager 2.9% of the total. That number went up to 10% in 1964.

So this transition will be exponential progress in the span of 55 years, until well into 2070s. Considering Japan leaped frogged into manufacturing, the transition process in the new global frontier would likely take longer.

Final Mark

As we move beyond Marx's era and strive to adapt to a rapidly evolving future, it is crucial that we find a way to localize our efforts and focus on developing methods to monetize creativity and innovation effectively. The shift in focus from manufacturing to the service sector was a journey that took nearly a century. And we're entering the era of automating service sector because we now know exactly what we want to achieve.

It is essential to remember that the march towards the future might be slow, but it is relenting and unstoppable. All we can do is adapt, learn and strive to make the most of the opportunities we encounter.