The Economics of AI: Dispelling Fears and Embracing Entrepreneurship10/04/2025 • Mises Wire • Michael Matulef
Artificial intelligence dominates the headlines with equal measures of fascination and dread. Visionaries proclaim it will unlock human potential, while skeptics warn it will eliminate jobs, destabilize society, and force governments to provide sweeping handouts. Some believe it heralds a “post‑work” society in which billions are displaced. But fears that AI will “end the economy” are rooted, not in economics, but in misunderstanding basic Austrian principles. Technology changes how we arrange our resources—it does not abolish scarcity, value, or entrepreneurship. The principles of human action remain fixed. AI will disrupt occupations, but it cannot overturn the immutable laws of economics.
The Persistence of Scarcity
Austrian economics begins with the axiom of human action and the unavoidable reality of scarcity. As Ludwig von Mises demonstrates in Human Action,
Means are necessarily always limited, i.e., scarce with regard to the services for which man wants to use them. If this were not the case, there would not be any action with regard to them. Where man is not restrained by the insufficient quantity of things available, there is no need for any action.
This foundational insight reveals why AI panic is misguided. Even if artificial intelligence automates 99 percent of current tasks, scarcity persists because human wants are unlimited while means remain finite. Individuals must still economize—choosing among competing ends, allocating time and capital, prioritizing desires. Human action involves employing scarce means to achieve valued ends. AI may expand available means, but it cannot eliminate the fundamental economizing problem that gives rise to all economic phenomena.
The Austrian School’s emphasis on methodological individualism further clarifies this point. Each person faces unique circumstances, preferences, and constraints that no central authority can fully comprehend. AI amplifies this complexity rather than resolving it, creating new layers of choice and opportunity that require individual judgment and entrepreneurial discovery.
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Source:
https://mises.org/mises-wire/economics-ai-dispelling-fears-and-embracing-entrepreneurship
