AI is is fast becoming another control tool of capitalism

My friend Alan Kohler, who is the finance presenter at the ABC, wrote an interesting article today about AI (January 19, 2026) – AI platforms like Grok are an ethical, social and economic nightmare — and we’re starting to wake up – in which he argued that while he thought climate change was “humanity’s biggest problem” at the onset of 2025, he now considers “AI is more pressing” and outlines the case where “problems — ethical, social and psychological — would still be horrendous.” I have been researching this question as part of the work I am doing on degrowth and its compatibility with a Capitalist economic logic. Regular readers will know that we will not be able to achieve environmental sustainability – getting the ecological footprint down to regenerative capacity – within a Capitalism mode of production. The logic of the aim and the logic of the accumulation system contradict each other. I also consider that AI inserts yet another contradictory logic, which will reinforce the economic crises that are endemic to Capitalism. If we are to broadly benefit from AI, then a new mode of production based on collective sharing will be required. That sort of system would also allow for a successful transition to a degrowth economy. Here are some preliminary thoughts on the AI issue as I research the topic more extensively.
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Capitalism is a control system.

The urgency of maintaining control stems from the fact that the system is inherently conflictual.

Capital relies on the conversion of labour power (a potential) into labour (actual work) to produce surplus value and desires to offer the workers as little of the product produced as possible (the real wage).

The workers have other ideas.

They know they must work to live because, unlike capital, they do not have an independent means of survival without offering their labour power to a capitalist.

However, because they would rather be writing poetry or surfing down the beach, they desire to earn as much as they can while working as little as possible.

Hence the logic of Capitalism leads to a control function being necessary to ensure that the surplus value extracted each working day is as large as possible.

The early shift from cottage ‘putting out’ production to factory production was not about improved technology but about reducing the losses from workers operating out of decentralised working sites, where the workers had more discretion over what they did and for how long they would work.

The problem for capital though is the operation of this control system superimposed on the underlying logic to accumulate ever increasing wealth for the capital owners renders it susceptible to crises.

The surplus value is latent profit but only becomes realised when the production is sold for more than the costs of production.

And given that the workers comprise the vast majority of the population, that profit realisation process requires them to have sufficient means to actually buy the finished goods and services.

It also relies on capitalists continually reinvesting, which presents a further dilemma.

Capitalist investment adds to current expenditure and sales but also adds productive capacity which then requires further expenditure growth in the next period to absorb the extra production.

If the capitalists become uncertain about the future and stop investing, while they assess the situation and/or consumers reduce their expenditure because they fear unemployment or are trying to pay down debt accumulated from a previous period of overspending, then a crisis emerges.

Suppressing worker pay, which is a standard motivation under this control system, jeopardises the realisation process and then sets of a chain reaction where business investment is also stifled because capitalists realise that they have sufficient productive capital in place to meet the current sales demand.

An ‘overproduction’ crisis arises – capitalists expected sales to be greater than they turned out to be and hence overproduced final goods and services and once they discovered the reality they cut back production, laid off workers and used a range of other tactics within their ‘control suite’ to minimise the losses.

Enter AI.

An individual capitalist not only faces the conflict with the workers they hire but they are also in competition with other capitalists for market share and supremacy.

Over time, the weaker capitalists have gone broke and overall capital is increasingly concentrated in the hands of a few.

The problem though is that this competition between the individual capitalists blurs their focus on the macroeconomy and one of the defining features of the work of John Maynard Keynes in the 1930 was the recognition of the fallacy of composition when applied to economic thinking.

What an individual capitalist will think is good for them, may turn out to be disastrous when all of the capitalists employ the same strategy.

We have the famous example of an individual firm cutting its wages and increasing its profit rate because the reduction in costs was not offset by any lost sales resulting from the workers have less income.

The example abstracts from any morale issues that the firm might face – including sabotage, costly exit, etc.

But if all the firms cut their wages, then costs per unit might decline overall but so will sales because wages are both an element of cost and a crucial element of income, which defines the capacity of workers to consume.

So what might apply at the firm level will not translate into being applicable at the sectoral or economy-wide level.

That observation led to Keynes’s devastating critique of neoclassical economics and is still something that the dominant approach to macroeconomics (New Keynesian paradigm) fails to come to terms with.

It is why the mainstream profession really doesn’t have a coherent macroeconomic framework.

But the point of relevance here is that while an individual capitalist might see that deploying AI tools will reduce costs, perhaps increase productivity, and replace the irksome need to hire as much labour as before, if all capitalists pivot to this model, troubles will emerge.

In a capitalist system, labour creates value.

At present, AI systems are essentially building capacity based on past value created.

So I notice quite often now if the topic of the AI query is Modern Monetary Theory (MMT), then it will cite my work in its summaries.

But its responses to those queries relied on me doing that work.

Thus as it stands the AI technology is running on past value.

And knowledge comes from research.

Yes, AI is capable of conceiving and executing complex statistical research analysis – but only as an assistant.

Why?

The reason that human oversight is required is to validate outcomes and ensure that the research process followed was not just GIGO (Garbage-In, Garbage-Out).

But it is becoming clearer that AI can eliminate significant swathes of labour, particularly in the process or routines ares of activity.

Alan Kohler wrote:

It’s not a question of whether AI and robots will replace human jobs, but how many.

The question then is where will the value come from.

Further, and of crucial relevance to this discussion, is where will the demand for goods and services come from?

For an individual capitalist, the incentive to reduce their wage bills by deploying as much AI as possible may not if isolated dent total spending capacity in the economy much.

But given all of them are competing with each other and introducing all the latest technologies as fast as they can, without much thought for the longer-term implications, then under current institutional arrangements for income distribution, a problem is going to emerge relatively quickly.

AI probably will provide capitalists with a mega sort of wage cutting capacity but in that context introduces a further contradiction to the underlying logic of the system.

Individual capitalists will have to innovate AI as quickly as they can (and we are seeing the early manifestations of that).

But the overall system will not be able to maintain stability as that innovation unfolds.

The stability of the capitalist system requires that profits be realised.

But social stability requires that workers are rewarded adequately so they can live a reasonable life.

AI will concentrate income further to the top, given the control that a few IT companies seem to have on the technology.

The open source movement was able to provide excellent access to best-practice technological developments to the common folk for free, which in the early days of the Internet, before capital took control, generated signficant potential for a new era that could move us beyond capitalism to a more cooperative, sharing society.

However, the investment required to develop the AI technology is at a larger scale that the sort of innovations that were common in the early days of the Internet.

Sure enough, a lot of that AI investment has used the work of others (including my own) without payment, so it is hard to compute exactly what the scale has been.

But I don’t see open source AI becoming the norm.

I see a lot of progressives seeing this dilemma as being a further justification for their advocacy of a basic income system.

Thus, AI displaces labour at multiple levels of each organisation and the workers go off and learn to do art of play harmonica while living it up on their basic income payment from government.

Quite apart from the indecency of the ‘privatise the gains, socialise the losses’ implication of this – that is, capitalism only could survive if subsidised by the state – I have seen no credible basic income proposal that would allow for the state to cover the complete wages bill that would be required to maintain economic activity levels and allow the profit expectations of the capitalist class to be realised.

Putting workers on some minimal basic income will not cut it I am afraid.

The question then is can the capitalist distribution system function to ensure profit is realised as AI runs through employment?

My guess is that it cannot produce a stable outcome where all parties are sufficiently rewarded to forestall social instability.

Alan Kohler responded to comments from the CEO of OpenAI who said a “new economic model” would probably be required:

In other words, the leading AI person hasn’t got a clue about the harm of what he’s doing, he’s guessing, while acknowledging that it’s going to require a mysterious new economic model.

A related issue is how AI fits into the ‘control’ aspect of capitalism.

Clearly, capitalists see AI as a new tool for further consolidate their power vis-a-vis labour.

It is being used to intimidate labour into increased compliance to the needs of capital rather than a liberating force for humanity.

We are now becoming increasingly aware of the way AI is being used to manipulate reality.

I sometimes consult YouTube to learn about how to do something – like yesterday, the cistern at our house malfunctioned and I spent 4 minutes studying a tradesperson instructing me on the problem and solution.

This is the educational Internet.

But I now observe so much fake Internet, driven by AI and pathetic ‘influencers’ trying to garner attention with tawdry videos.

It is nigh on impossible for the common folk to differentiate reality from fake.

And like advertising was used by capitalists to manipulate our consumer preferences and in many cases outrightly deceive us into purchasing things we would normally not purchase had we had the correct information, AI is accelerating that manipulation in the hands of the capitalists.

Further, it is being used to tilt the political process to advance the lobbying interests of the few, which distorts the decision-making of those who are unable to differentiate fact from fiction.

Apropos of my blog post last Thursday – Curbing the freedom of writers will not advance human rights (January 15, 2026) – there has been so much AI-generated manipulation from both sides of the conflict that distort the perceptions in the public space.

The case of US-firm Clock Tower X being hired by the Israeli government to manipulate ChatGPT and YouTube among other platforms to frame the genocidal actions of the government in a particular (positive) light (Source).

An expert on media analytics told Al Jazeera that:

What companies like Clock Tower X are promising is that, if they can flood the information space with sites and content sympathetic to Israel – what’s called RAG poisoning – there’ll be enough there to at least muddy the waters around what others see as a clear-cut genocide.

Conclusion

I am continuing to research this question in order to integrate these issues in the broader degrowth framework I am putting together.

It is clear to me that AI, while it has the potential to be a powerful force to advance humanity, is fast becoming another control tool of capitalism, which will reinforce the inherent contradictions of that system.

The problem is that the damage done while the system internally combusts will, likely, be massive.

The fake nudes and the rest of the slime are just part of this damage.

That is enough for today!

(c) Copyright 2026 William Mitchell. All Rights Reserved.