Economist slams AI doom predictions, ‘replacing humans is not innovation’

Dan Davies, an economist and writer, argues that artificial intelligence will not result in widespread job losses because he refutes claims that AI will replace millions of workers. 

Davies, through his widely circulated opinion piece, demonstrates that people who fear AI-related job losses fail to understand the actual workings of economic systems and investment processes and business technology implementations.

Will AI replace humans from job market?

His central point is simple: if AI’s main purpose is to replace workers with machines doing the same tasks, that is not real innovation.

Davies stresses that large-scale unemployment cannot persist as a long-term equilibrium. If millions of capable people are jobless, businesses would eventually find ways to employ them profitably. He notes that economic downturns can happen, but they are not new problems created by AI.

He also argues that investment depends on profit expectations. If automation truly wiped out consumer income on a massive scale, demand would collapse. In that scenario, companies would stop investing in new technology, including AI.

According to Davies, productivity tools such as large language models may speed up tasks, but that does not automatically eliminate jobs. Organisations will keep increasing their production capacity until they reach their newest operational limitations.

When one bottleneck disappears, another emerges, which needs human operators to handle the situation. The researcher shows how artificial intelligence technology helps to accelerate work processes by presenting financial model development examples. The organisation needs to hire more employees because their operational requirements have increased and their output needs to be more sophisticated.

Davies suggests AI may make office jobs less tedious rather than obsolete. Routine administrative work could become faster and more efficient. However, time saved does not automatically translate into fewer roles, as labour is not easily interchangeable.