Former Google X head says AI will undermine capitalism

Gawdat, who spent many years in Big Tech and held leadership positions at Microsoft and Google X, believes that as machines displace humans from jobs, the economic model supporting modern capitalism is beginning to crack.

«The very foundation of capitalism is labor arbitrage: hiring you for a dollar and selling the result of your work for two. This will come to an end,» he said in an interview with Business Insider.

In his view, AI isn’t just automating specific tasks. It’s gradually eliminating the need for human labor altogether, and eventually, for human decisions on a massive scale. And if employment, wages, and consumption collapse, then the pillars supporting the system crumble as well.

According to Gawdat, the system relies on paying people less than the value of what they produce, selling at a higher price, and keeping the difference. This works as long as human labor remains the key factor. But as machines do more work, production costs will decrease. «AI is pushing the cost of production closer and closer to zero,» he says.

When costs drop to almost nothing, conventional ideas about price, profit and scarcity begin to operate differently. The problem is that an economy can’t be sustained by productivity alone. If people aren’t earning wages, they can’t buy goods. If people aren’t earning wages, they can’t buy goods — without consumption, the economy collapses, he emphasizes.

Gawdat is quite direct in his predictions. He expects massive waves of unemployment—affecting both manual laborers and office workers. According to him, lawyers, analysts, writers, and executives are all at risk. «We will live to see times when unemployment in certain sectors will be 20%, 30% or 50%,» he says.

He’s skeptical of executives who celebrate layoffs for efficiency gains. «These CEOs forget that, sooner or later, AI will replace them too. AI is better than humans at many tasks — including the CEO’s,» he warns.

If jobs rapidly disappear while the system is built around employment, the question becomes: what’s next? In his opinion, without some form of guaranteed income, consumption will collapse. This means governments will need to reconsider how money circulates in society. «They will have to provide people with some income to keep everything working,» he says.

Different regions, Gawdat believes, will experience this transformation differently. Western economies, which are heavily tied to productivity and individual achievement, may face the most serious difficulties.

It’s not you, it’s me

Gawdat doesn’t consider AI itself evil. Intelligence, he says, is neutral—a powerful tool without its own morality. The danger emerges during the transition period, when very powerful systems continue to operate according to human incentives—greed, competition, power struggles. «Humanity’s problem today isn’t the growth of AI, but the growth of AI in an era when humanity’s morality is at its lowest point,» he says.

In the long term, Gawdat even suggests that machines might make more rational decisions than current politicians and corporate leaders—potentially making the system fairer.

According to Gawdat, capitalism in its current form won’t survive — but this could also present opportunities. «This is an invitation to change. And if you change, you’ll get not only a chance to survive, but a chance to thrive,» he says.