Automata & Paradox

What an economic theory suggests about AI and the future of education

Swoon, Kiki Smith (credit)

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This week’s essay runs long, so I’ve broken it into two parts—part one explores an economic theory about AI automation in society generally, part two drills into the paradoxical implications of this theory for education in particular.

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The Economics of Desire

What if the AI enthusiasts are right? What if we see widespread AI-driven automation across huge swaths of the economy in the next several years? What does our future look like then—and what might it mean for education?

No small questions these. But I take them seriously and today I want to offer you some thoughts on how our world may change if AI is truly transformative to our way of life. Before we get into that, however, some background on my intellectual history with economics.

As I’ve hinted previously, I was a libertarian in my youth. It started with reading Ayn Rand in high school (me and Hillary Clinton both) before hitting its apex in my undergraduate years at the University of Washington. I’d fallen under the sway of Dr. Paul Heyne, an economist who, oddly for an academic, preferred teaching undergraduates to conducting research. As such, he proved to be a wonderful teacher as well as friend and mentor to me and many others. He cultivated a small group of acolytes who would gather with him on a near-weekly basis to talk about the ideas of “classical liberalism,” wherein we’d read Frederich Hayek, Ludwig von Mises, Frank Knight, all the people that give Peter Thiel a hard-on.

It was as intellectually stimulating as any period in my life has ever been. And Heyne cultivated not only my academic progress but also my career—after my junior year, he sent me straight into the world of the Koch Brothers through a fellowship with the Institute for Humane Studies, a think tank of sorts at George Mason University devoted to cultivating libertarian academics. (The Kochs may be evil, but unlike the vast majority of philanthropists in America today, they have always understood that political change is downstream of ideological transformation. Ideas matter.)

I’m sharing this as long-winded way of saying, there was a period of my life where I thought about economics constantly. Over time, my views have shifted significantly, and nowadays I am far more wary about our ability to reduce complex social phenomena to simplistic models, especially when such models are more theoretical than empirical. Nonetheless, I believe economics remains a useful discipline for generating insight into large-scale systems, particularly when it’s used to explain historical shifts in human behavior.

Last week, while investigating whether AI-generated writing detection tools are rapidly improving—more on that in a future post—my research led me to an essay from Dr. Alex Imas titled, “What will be scarce?: The economics of structural change and the post-commodity future of work.” According to his online bio, Imas is currently serving as “director of AGI economics” for Google DeepMind, and is academically affiliated with the University of Chicago—warning signs, I grant you, but his essay resonated immediately, for reasons I’ll now go into at some length.

Ok, so. The first prong of Imas’s two-part argument is grounded in the history of structural changes to economies, and specifically, how capitalistic industrialization leads to commodification. Prior to the Industrial Revolution, most goods were supplied in what we might call artisanal fashion—“the weaver who made your shirt, the baker who made your bread: you personally knew them, and their skill and reputation were tied to the product that they sold.” This shifted with industrial practices that mechanized the production of goods—technology plays a major role here of course, but so too does the atomization of human labor such that we become mere cogs in the goods-producing machines.¹ As Imas notes, this gave Marx heart palpitations, but for others, then and now, industrial commodification was a major driver of prosperity, as numerous products became cheaper and more plentiful.

We need not pick a side in that fight here, nor in the comments please, that’s not what I’m driving toward. What’s important instead is Imas’s historical claim that, as the production of various items became commodified, and as incomes broadly rose, patterns of human demand shifted. Consider food. The automation of agriculture dramatically shrunk the proportion of the American workforce devoted to farming (from 40% in 1900 to 2% today), while making basic food more plentiful and cheaper. But because there’s only so many calories we can consume, when basic food ceases to be scarce, our demand shifts from quantity to quality—those who can afford to do so will spend more on going to nicer restaurants, buying organic fruit and (supposedly) sustainable meat, etc.² In short: “As people get richer, they want fundamentally different things.”

So far this is all pretty standard Econ 101 stuff, but then Imas introduces his second main argument, the one that’s burrowed straight to the center of my brain: when basic needs are met, our desires increasingly become shaped by wanting what others cannot have. Imas decribes this as mimetic desire (citing French philosopher René Girard), and explains it as follows, with my emphasis added³:

Economists typically model demand as if preferences are formed in isolation; the “utility” I get from a good, service, or experience is determined by its hedonics (e.g., how good did the coffee taste, how quickly did I get the coffee after ordering it). This makes sense when people’s budget constraints bind when it comes to meeting basic needs, e.g., for food, shelter, and clothing.

But once those needs are met, a different force starts to shape what people want, and even becomes dominant. René Girard called it mimetic desire: the idea that we don’t desire objects only for their intrinsic properties, but because other people desire them as well. We want what others want, and we want it even more when they can’t have it—for status, social capital, reputation, etc. Desire is not just a relationship between a person and an object; it is also a function of what other people desire.

Now let’s bring AI into the picture. As I’ve said tirelessly for years, crediting François Chollet (also French), AI is a tool of cognitive automation. The entire point, the trillion-dollar vision that our entire economy precariously rests upon, is whether we can automate and thereby commodify a large swath of cognitive activity involved in economic production. The CEOs of AI hyperscalers explicitly contend they can drastically lower or even eliminate the marginal “per unit” cost of intelligence. The CEO of Cloudfare just took to the Wall Street Journal to declare that, despite his company’s record profits, he’s firing middle managers and other back office “measurers” as fast as he can due to AI automation. Or as this unhinged Silicon Valley start-up called Mechanized puts it, “our long-term goal is the full automation of valuable work across the economy.”

That’s it, that’s the future they want. It’s not a secret.

What happens if they get it? What if I’m wrong that applications of agentic AI will be relatively narrow in scope, limited mostly to coding and accounting and other deterministic tasks? What if instead AI really does manage to automate a great deal of so-called knowledge work and broad swaths of our economy generally?

In such a world, Imas offers this conjecture: it will “trigger the emergence of something new: a post-commodity economy, where a growing share of expenditure goes toward goods and services whose value is inseparable from the human who provided them.” Demand for services will shift to demand for better human relationships, creating what he calls the relational sector. In such a world, “the human being is not just an input into the production process. Their judgment, attention, memory, warmth, or presence is an integral part of the value.”

Does that sound like anything we cover around here? Does that sound like…dare we call it…teaching?

That’s where we turn now.

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The AI Education Paradox

Can education be commodified?

For the past several decades (and beyond, really), the answer by powerful and influential people in American society has been a resounding “yes, absolutely.” Whether in the form of test-based accountability or big-data analytics or value-add metrics or personalized learning, the explicit goal has been to quantify and automate the provision of education, and thereby improve it.⁴

I know this world well, because I once worked in the heart of “ed reform,” and I remain friends with many who are still committed to its ultimate vision. You’ll have to trust me when I say, most of ‘em are true believers. That is, they genuinely think that if we can just figure out the “key performance indicators” for teaching and learning, we’ll have the means to drive to system-wide performance improvement in schooling (sorry, the jargon is unavoidable). What’s measured is what matters. Welcome to life as a Gates Foundation program officer.⁵

AI of course is the latest iteration of this enduring effort of cognitive commodification. “The promise of personalized learning never delivered,” wrote John Bailey in 2023 (an advisor to Jeb Bush and numerous education philanthropies), but “today’s AI is different.” Maybe so, maybe so. But now let’s bring Imas’s economic analysis back into frame so as to imagine two possible future states:

1. AI is successfully used to automate a great deal of economic activity, but we discover yet again that the provision of education itself is fundamentally relational, and therefore impervious to such automation. In this future world, assuming AI generates new wealth (or “abundance” if you prefer), we would expect to see demand for “artisanal education experiences” to increase rapidly. The delivery of education becomes increasingly bespoke.

2. Conversely, suppose we discover instead that core aspects of education really can be automated by AI. In this world, B.F. Skinner’s behaviorist fever dream of “teaching machines” is finally realized, and every student is matched with an “infinitely patient, infinitely loving” robot tutor. Here’s the ironic twist: in this future world, the demand for artisanal education experiences should still increase rapidly. Remember, when something becomes commodified, mimetic desire kicks in—the yearning to have something that that others can’t possess. If everyone has access to an AI tutor, unique experiences with other human beings will become the class differentiator. Schools become restaurants.

This is what I’m calling the AI Education Paradox: The more that AI automates the service economy outside of education, the more this will lead to people to want highly humanistic educational experiences for themselves and their children. And yet, to the extent that AI automates aspects the provision of teaching within education, this too will result in parents wanting differentiated and bespoke educational experiences. All roads lead us to education at the center of a new relational economy, rife with mimetic desire.

Squint, and you might start to see signs of this transition already underway. While I have vowed to spend as little of my life as possible thinking about the pedagogical horror show that is Alpha School, it might just be a canary in the coal mine (an industrial-era metaphor I invoke deliberately). What is Alpha School promising? To parents who can afford its $40,000 to $75,000 annual tuition, they offer an automated experience of core academics, but also a highly curated set of fun stuff for kids to do. Michael Pershan clocks it perfectly here (quote slightly paraphrased, my emphasis added):

I just watched like three dozen promotional videos from Alpha School. I saw young kids fencing, knitting, rock climbing, biking, jogging, petting a horse, talking to Dr. Phil, golfing, painting, training with Navy SEALs, playing piano, playing guitar, doing pullups, squatting, giving TED talks, kayaking, lighting stuff on fire, baking, running in a parking lot, and recording a podcast. But I struggled to find footage of a student reading a book.

What’s most novel about Alpha School is its fundamental orientation towards K-12 schooling. The goal, quite expressly, is to minimize it and move on. Move on to what? For Alpha School it’s life skills like “Grit” and “Entrepreneurship” which are inculcated by biking, jogging, and—to tease just a little bit—petting a horse.

Move on to what, that is indeed the question. Wearing our most optimistic rose-colored glasses, we might fantasize that AI automation points us toward a renaissance of human-centered education. The current “techlash” might be short lived, but it might just as well be an early indication that technological intrusion into our lives has reached saturation, and parental demand preferences are shifting in structural ways. This is why, in the near future, I predict we’ll see more schools “of choice” promising they are tech-lite, or even tech-free. Luddite Charter Academy, coming soon.

But there’s a looming educational nightmare that’s just as visible, one that we’re already partially living in. For one thing, to the extent AI automation generates new wealth, we know—we know—this will be concentrated in the hands of a select few. There will be parents who have the means to place their children in artisinal schools of choice, while the remainder continue to attend underfunded public schools that buckle from dwindling student attendance. For another, the Balkanization of the American education system reflects the broader epistemic collapse manifesting across our society, where we no longer have any real shared sense of common reality—those who sacked Congress on January 6 are traitors to some, soon-to-be-very-wealthy heroes to others. These competing histories will be reflected and directed by competing curriculums. And just as democracy and public education—emphasis on public—rose hand-in-hand together over the past several centuries, so too may they fall apart in tandem. Christian Nationalist Academy, also coming soon.

The AI Education Paradox is thus a paradox-within-a-paradox (do you ever just stop and look at your hands, man?). If AI-driven automation becomes prevalent, it should lead to broadly renewed interest and demand for human teaching, while simultaneously exacerbating existing trends of institutional education stratification. Economic progress, educational progress, and democratic progress will no longer function as interlocking gears (if they ever have). Things will grind to a halt.

What then becomes of the nation-state? What then becomes of America?

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Sounds grim, I know. But this essay, all 2,500-plus words of it, has been a thought experiment, an exploration of what might happen if AI-driven automation upends the economic (and educational) fabric of society, as so many predict it will. In reality, my bet remains that once the hype subsides, the tranformative power of AI will be relatively circumscribed. I often liken it to email, something ubiquitous in our professional lives yet hardly revolutionary to our experience of the world. John Gruber offers a similar and perhaps better analogy:

AI is pervasive. It can’t be ignored. But it’s just technology. Wireless networking is pervasive too…There’s not going to be one “killer AI device”. Everything is going to be an AI device, to some extent, just like how everything today is a wireless connectivity device, to some extent.

We can survive a new form of wifi, don’t you think?

1. Italian philosopher Matteo Pasquinelli contends in his book, The Eye of the Master: A Social History of Artificial Intelligence, that we should fundamentally see AI arising not as the result of efforts to emulate human cogniton, but rather to automate human labor: “The current form of AI, machine learning, is the automation of the statistical metrics which were originally introduced to quantify cognitive, social, and work-related abilities…As with any previous form of automation, AI does not simply replace workers but displaces and restructures them into a new social order.”

2. Did you know that restaurants didn’t really exist in the US until the mid-19th century?

3. Imas considers mimetic desire in the context of economic activity, but as a quick and fun digression, it applies to more fundamental human activities that resist commodification, such as, ahem, erotic longing. Years ago, Tim Kreider wrote an insightful and hilarious essay about the busyness of modern life wherein he quoted his friend who “ruefully summarized dating in New York” as follows: “Everyone’s too busy and everyone thinks they can do better.” We want what others want, and we want it even more when we can’t have it. I believe the Rolling Stones wrote a song about this.

4. Writing in Aeon, sociologists Marion Fourcade and Kieran Healy contend that the computer is bound up with the creation of what they call the Ordinal Society, one wherein data and rankings promise individual liberation against a backdrop of widespread digital surveillance and social engineering: "The resulting social order is a sort of paradox, characterised by constant tensions between personal freedom and social control, between the subjective elan of inner authenticity and the objective forces of external authentication. It gives rise to a certain way of being, a new kind of self, whose experiences are defined by the push for personal autonomy and the pull of platform dependency.” Personalized learning is the pedagogy of the Ordinal Society.

5. It’s not just Gates, of course. In a recent interview, Arne Duncan, secretary of education during the Obama Administration, summarized the education-as-commodity vision neatly by arguing that education needs just four things: “You need goals, you need strategies to achieve your goals, you need metrics to measure them and you need public transparency and accountability.” Gotcha. Relatedly, in the same interview he reiterated his support for the Trump Administration’s Education Freedom Tax Credit program, de facto federal school vouchers.