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Will AI Destroy Capitalism? A Marxist Analysis

Against The Stream · 2026-04-30

Core Argument

The central thesis is that the AI "revolution" is not a genuine productive transformation but a speculative bubble that reveals the deepening crisis of capitalism. The hosts argue that AI represents a genuine technological advance with enormous potential, but under capitalist relations it is being deployed not to raise living standards or reduce labour, but as the centrepiece of a pyramid scheme that funnels workers' savings and pension funds into fictitious capital. The bubble is sustained by circular transactions between AI companies—buying each other's products and stakes—that create the appearance of growth while generating no new value. This is occurring alongside a structural crisis of overindebtedness, declining profitability in the real economy, and the long-term tendency for wages to fall as a share of GDP. The argument is that AI will not destroy capitalism; rather, capitalism will destroy the progressive potential of AI, while the proletarianisation of the middle classes and mass unemployment will create the conditions for revolutionary consciousness.

Theoretical Grounding

The analysis draws on several classical Marxist concepts, deployed with a clear sense of their interconnection:

The tendency of the rate of profit to fall is implicit throughout. The hosts argue that the shift from productive investment to speculation is driven by the declining profitability of real production. Capitalists invest in AI stocks and debt instruments because the returns from productive investment are insufficient.

Fictitious capital is the central concept. The hosts describe how AI company valuations bear no relation to underlying value creation—OpenAI's $852 billion valuation against $13 billion revenue, price-to-earnings ratios of 40+ against a historical average of 17. The circular transactions between Nvidia, OpenAI, and Oracle are presented as a pure circulation of fictitious capital with no new value entering the system.

The law of value is explicitly defended. The hosts explain that value is created by living labour, and that while the first capitalist to adopt AI may capture super-profits, the generalisation of the technology will drive prices down towards values determined by socially necessary labour time. This is connected to Marx's analysis of machinery in Capital, Volume I—the deskilling of labour, the creation of the industrial reserve army, and the degradation of the worker to an appendage of the machine.

The tendency towards the absolute general law of capitalist accumulation is invoked: the more capital accumulates, the worse the lot of the worker becomes, regardless of whether wages are high or low.

Proletarianisation is identified as an accelerating process. The hosts argue that AI is now deskilling intellectual and professional labour—software developers, accountants, legal professionals—collapsing the middle class into the proletariat, confirming Marx's prediction in the Communist Manifesto.

The analysis sits firmly within the Marxist tradition that understands technological development as a contradictory force: simultaneously creating the material conditions for communism and intensifying capitalist exploitation. It rejects both technological determinism and Luddism, insisting that the problem is not the machine but the social relations that govern its use.

Conjunctural Relevance

The episode is precisely situated in the current conjuncture, with specific data and named forces:

The AI stock bubble: AI and tech stocks now constitute 45% of the S&P 500. The Buffett Indicator (stock market capitalisation as a percentage of GDP) stands at 220%, almost double the "playing with fire" threshold of 120% and above the dot-com bubble peak of 200%. Nvidia alone is valued at $5.2 trillion—more than the GDP of every country except the US and China.

Circular speculation: The hosts detail how Nvidia bought a $100 billion stake in OpenAI, which then ordered $100 billion in Nvidia chips; Nvidia then ordered $300 billion from Oracle, which ordered Nvidia chips. No new money enters the system, but valuations rise.

Debt overhang: Global debt stands at 235% of GDP (some estimates say $350 trillion). Global interest payments in 2024 were $4.15 trillion; a broader study of 58 countries found $13 trillion—14.5% of their GDP—going to interest payments alone. 45% of OECD debt must be refinanced in the next two years at significantly higher interest rates.

Deindustrialisation: BASF's CEO describes European industrial capacity declining "at a speed we have never seen before." Europe's share of world GDP has fallen from 30% in 1980 to 13%, with predictions of 6-7%. Energy prices in Europe have tripled since the Ukraine war.

Wage compression: In the top 15 OECD countries, wages fell from 67% of GDP in 1970 to 57% in 2010—a decade-long squeeze that has been compensated for by credit expansion, now reaching its limit.

Job displacement: Goldman Sachs projects 300 million full-time jobs lost globally to AI over the next decade. In the US alone, AI is currently destroying 25,000 jobs per month while creating only 9,000.

Geopolitical dimension: The hosts contrast Western capitalism's speculative use of AI with China's "AI Plus" policy, which focuses on implementing AI in industry to genuinely increase productivity. This is presented not as endorsement of China but as evidence of capitalism's inability to rationally deploy technology.

Where the Argument Continues

The episode deliberately leaves open the question of what is to be done, ending with the claim that proletarianisation and mass unemployment will generate revolutionary anger but without developing the strategic implications. This thread is taken up in other Against the Stream episodes that address revolutionary strategy, the nature of the state, and the transition to communism. The Spectre of Communism series—also produced by the RCI—develops the theoretical foundations more fully, particularly on the law of value under socialism and the question of planning.

The hosts gesture towards Marx's analysis of machinery in Capital, Volume I, Chapter 15, which provides the theoretical underpinning for their argument about deskilling and the industrial reserve army. Lenin's Imperialism, the Highest Stage of Capitalism is implicitly present in the analysis of finance capital's dominance over productive capital.

Connections

  • Marx, Capital, Volume I, Chapter 15 ("Machinery and Modern Industry"): The direct theoretical source for the analysis of how machinery deskills labour, creates the industrial reserve army, and intensifies exploitation.
  • Marx, Capital, Volume III, Part III ("The Law of the Tendency of the Rate of Profit to Fall"): The underlying dynamic that drives capitalists from productive investment into speculation.
  • Marx and Engels, The Communist Manifesto: The prediction that the middle classes will collapse into the proletariat.
  • Lenin, Imperialism, the Highest Stage of Capitalism: The analysis of finance capital and the dominance of speculation over production.
  • RCI, Spectre of Communism series: For the positive case for communist planning and the use of technology under socialism.
  • Other Against the Stream episodes on the debt crisis and the decline of Western capitalism: These develop the empirical picture of the crisis that this episode situates AI within.

Key Quotes

  1. "It's an indication of the crisis of the system as a whole. And when I listen to things like this, I'm thinking there's the distancing from the production of real value and the speculative kind of investment, finance capital, making money from money, making money from debt and not actually investing in real production."

  2. "The problem is that people don't eat stocks. They eat bread. They wear shoes, they wear shirts, they drink water, they get on a bus. They need real production of real wealth. And that's where the system is breaking down."

  3. "All of these companies are trading with one another and it looks like there's lots of money going back and forth but actually no new money has been added to the pile. Their value goes up at the same time and they can come out and look at the stock markets and say 'look we're doing well' and they use that to attract more investment. It's like a pyramid scheme essentially."

  4. "The problem wasn't the machines. You can see the anger of the workers. The problem was the system. Your anger should be directed not against the machine itself but against who owns the machine and how they are using that machine because those machines can be both the source of absolute hell for workers. They could also be the source of a paradise on earth."

  5. "Capitalism constantly throws humanity into chaos and barbarism. It oppresses, it exploits, but at the same time, it creates the conditions, the tools and the people to take itself down as well. What's happening here is a massive proletarianisation taking place. This development will radicalise the working class. Out of that will come a revolutionary anger. And at the same time, this material is ready for the working class to wield for its own benefit."