How Capitalism Will Keep AI From Destroying The Things We Love

Artificial intelligence (AI) is white hot right now. Companies everywhere are bullish on the promise of taking mountains of data, processing it, and producing cost-effective goods and services that are on par with or better than what could be made by humans.

Some jobs are expected to become obsolete while new jobs are created. And the improved productivity is expected to bolster margins and drive profit growth for companies, which is good news for the stock market.

But all this talk mostly focuses on financial benefits, and it conjures up images of a bleak dystopia where the human touch is gone after its intangible value has been taken for granted.

The good news is that history says emerging technologies don’t mean the end of whatever they were meant to improve on.

“As the ubiquity of technology increases and individuals increase their reliance on technology as they communicate via networks, the value they place on ‘authenticity’ and human connectivity – which can evoke a nostalgic image of a simpler, pre-digital life – is likely to grow,” Goldman Sachs’ Peter Oppenheimer wrote. “This is true across many product categories, including food.”

In a research report exploring AI, Oppenheimer highlights examples of hand-crafted, low-tech, “retro” goods and services that survived technological progress. From his note:

…The growth of artificial immersive entertainment may also boost demand for experiences in the real world. This might reflect the growing popularity of goods and services that are seen as ‘authentic’ or nostalgic. Retro ‘crafts’ are growing in popularity, whether it be the growth reality TV programmes where contestants compete in baking, spelling, sowing or even ballroom dancing competitions.

These fashions are spreading into retail. According to Grand View Research, for example, the market for so-called ‘artisanal’ bakery products was valued globally at $95.13 billion in 2022 and is likely to grow at a compound rate of 5.7% from 2023 to 2030. The focus on sustainability and interest in the past together create new consumer markets. According to research conducted by GlobalData for ThredUP, a US second-hand store, the resale clothes market is growing at 15 times the rate of traditional retail. According to a report by Statistica, as of 2021, 42% of millennials and Gen Z respondents stated that they were likely to shop for second-hand items.

You might assume the broad uptake of the wide array of ridesharing options means demand for modes of transport that you own would fall apart. That’s not been the case. From the note:

A similar trend has emerged in transport with the growth in the ‘sharing’ economy and the growth of cycle, scooter and car sharing. Few would have predicted the steady growth in the bicycle market a decade ago; the global bicycle market was valued at over $64 billion in 2022 and is expected to grow at a compound rate of 9.7% from 2023 to 2030. Perhaps even more striking is how the bicycle is outselling the car. Analysis of 30 European countries by the Confederation of the European Bicycle Industry (CONEBI) and the European Cyclists Federation (ECF) suggests that, at the current trajectory, 10 million more bikes will be sold per year in Europe by 2030, representing a rise of 47% compared with 2019. On this basis, the 30 million bikes sold annually in Europe would be more than double the annual sales of cars.

As the world moves forward, it’s interesting to think about the value consumers place on the past. From the note:

In the 21st century, in a highly digitalised world where almost everyone is connected to the internet and the cutting edge of technology threatens to displace jobs and companies, it is meaningful that one of the biggest companies in Europe is LVMH. This is a company that sells the value of heritage in historic brands. It was formed in 1987 through the merger of two old companies: Louis Vuitton (founded in 1854) and Moet Hennessey, which itself was a merger in 1971 between Moet & Chandon, the champagne producer (founded in 1743) and Hennessey, producer of cognac (founded in 1765). According to its website, the company develops the brands that ‘perfectly encapsulate all that they have embodied for our customers for centuries.

Intangible value is a kind of value. And people are finding it in goods and services that have arguably been improved on.

It’s not easy to explain why we value this stuff. But the point is we do.

And we demand this stuff.

And when enough people demand something, there’ll be businesses to supply that thing. It’s just basic economics and capitalism at work.

A version of this post was originally published on Tker.co.