Art and artificial. We look for the first in museums. We don’t want the second in our soup. Why is that, actually? Do we see art as something that elevates us above nature, while artificial refers to tampering with what we consider natural? Artificial intelligence—human-made, non-human intelligence—sharpens that tension even further. And it raises some economic questions as well.
Artificial intelligence can code, solve accounting puzzles, and even make songs. It’s well known that enormous amounts of AI-generated music are being produced—estimates run into the tens of thousands of new tracks on Spotify per day. And about 90 percent of it is barely heard—artificial art, apparently.
Still, people in the creative sector—screenwriters, advertising creatives, musicians—feel threatened by creative destruction. Is that sector secretly less creative than we think? Artificial intelligence is extremely good at recognizing—and reproducing—patterns. And much of what we call creative is really the application of a tried‑and‑true success formula. Hollywood stories build on the ancient Greeks: tranquility is disrupted, a hero battles through adversity, and ultimately triumphs. And on to the next story…
For economists and investors, the question is whether AI will boost productivity. If an app spits out a song in a few seconds, is that productivity growth? It is for the engineer or central planner who thinks in quantities: tons of grain, pairs of shoes, numbers of songs. Economists ask whether that output actually meets a need. All those extra songs nobody listens to? That’s not productivity growth. That only emerges when someone is willing to pay for that new music.
So, does artificial intelligence get us anywhere? I think so, despite the inevitable production of “junk.” New technology allows us to produce more with the same number of people. That doesn’t make us poorer—it makes us richer. The big issue is how the gains and losses are distributed. If demand doesn’t rise along with the increasing supply in a sector, jobs will be lost there. Workers might be able to switch to sectors desperate for staff, but the transition is still disruptive. It takes time, it creates uncertainty, and people prefer to choose their own path. Not every screenwriter wants to become a teacher.
Financial markets have been reacting quite sharply in recent days to a blog outlining a negative scenario for AI’s impact (Citrini: the 2028 global intelligence crisis). The report sketches rising unemployment and falling consumption alongside surging AI investment. An unlikely story. As noted, technological advances make us richer in principle. Why wouldn’t demand—eventually—rise along with supply, perhaps supported by fiscal or monetary stimulus? It’s a misconception to think that demand in an economy is fixed. If anything, demand is much more flexible than supply. Moreover, AI cannot replace all tasks performed by workers, and new products and services will undoubtedly emerge. On net, employees may even end up busier than before, but they will focus more on real human work.
So why are investors reacting so strongly? Well, they’re not responding to economic logic—they’re reacting to uncertainty. Artificial intelligence provides answers all day long, but it also presents investors with difficult questions. About future profitability: have expectations climbed too high? About winners and losers: which companies will benefit and which business models will be disrupted (many software firms took hits)? Could it be that artificial intelligence intensifies competition in markets so much that—perish the thought!—consumers end up benefiting more than companies, and therefore more than investors? In these confusing times, a dystopian narrative can apparently make some investors nervous.
Back to art. What does all this mean for artists? What does artificial abundance do to the value of culture? Economists immediately think of relative prices. If we’ll soon be drowning in algorithmically produced work, then the relative price of human work will rise. So we must look to the things people can do that machines cannot. And what can we do that artificial intelligence cannot? Create meaning. That is the art. In the end, that’s where the value lies.
Charles Kalshoven is Expert Strategist at APG.