The Agentic Paradigm: How Artificial Intelligence Demobilizes Labour and Redefines the State

Forecasting the economic implications of artificial intelligence (AI) is a challenging feat. As a general-purpose technology, AI promises to reshape and reconfigure not only how work is done, but the very nature of work itself. On one side of the spectrum, it is a force multiplier for productivity and value creation. On the other hand, it disrupts and redefines those competitive moats that protect existing producers and value creators in the legacy economy.

For all of economic history, value creation was defined through the interplay of land, labour and capital. Long before Marx and von Mises debated the nature of materialism, the role of the state, and the axioms that drive human behaviour, these fundamental elements mixed and mingled to contextualize livelihoods. Modern theories include a fourth factor, entrepreneurship, which provides the coordinating role that synthesizes these three factors of production into profitable enterprise. Ultimately, it is the combination of these first three inputs that determines the tangible conditions of our daily lives. AI is likely to collapse the value of human labour as a primary building block.

It is a strange twist of irony that we busy ourselves to create an economic machine that is designed to, at its very core, replace human labour. On the supply side of the equation, AI promises to create a plethora of content, from audible and visual media to groundbreaking scientific and medical research. When successfully paired with robotics, a cornucopia of physical goods and services is destined to emerge. On the demand side of the equation, AI has already begun to compete for scarce resources — energy, water, and even the attention of the humans it threatens to replace. And while still only a drop in the proverbial bucket of global finance, the capital market activities of AI "hyperscalers" have entered a direct, historic competition with sovereign debt issuance for global investment capital. The agentic economy is upon us. AI agents will be both producers and consumers, crowding out both the supply of and the demand for human labour along this path.

The age of abundance is not guaranteed for all of humanity. Instead, AI threatens to deepen existing disparities across and within nations, as well as among the people that comprise them. The inequality between labour income and capital income is likely to emerge as a significant point of contention for the political system. Balaji Srinivasan famously declared that AI will do to "blue" America what China did to "red" America. To further distill this point: the wave of outsourcing that replaced blue-collar jobs for the working-classes of the Global North is now coming for their white-collar counterparts. Knowledge workers no longer wear meat suits; they come packaged and shipped as lines of code with a subscription fee or an agentic paywall. While these disruptions begin in the core of the global economy, they will inevitably find their way to the periphery. Developing nations that already lag, from a standpoint of human and infrastructural development, are ill prepared for this new reality. The traditional debt-financed service-led growth model — that places human labour at its centerpiece — is being dismantled before these economies can climb the ladder. This paradigm shift will likely force emerging markets to rapidly change course in order to build wealth.

As physical labour becomes demobilized, entire economies may be demonetized. Those sovereign buffers of democratic self-determination, political autonomy, and the ability to issue and maintain a national currency may become disintermediated by this new world order. Calls to pace the frontier will likely fall on deaf ears in Washington, Beijing, and other power centres of the world. And so the very concept of sovereign equality among states that has ensured a fragile peace for the last four decades may find itself at irreconcilable ends in this new international political economy.

And yet there is hope beyond this clouded horizon. History has shown that although new technologies concentrate power in the hands of early adopters, the remainder catch up in quick succession. From the discovery of fire to the invention of gunpowder; from the printing press to the internet; and across every domain, we have seen power projection capability disperse and disseminate over borders and through boundaries — particularly in this age of technology.

Declarations about the permanent retreat of globalization appear vastly overstated. While political pendulums swing periodically toward nationalism, the macro-trajectory of human organization leans toward decentralization. And just as sprawling empires yielded to regional powers and to nation-states, so too will Pax Americana eventually transition. Pax Decentralia is rising and legacy institutions must adapt or step aside.

Scribed - 2026/09/29