In early 2023, as tech giants announced mass layoffs and Wall Street cheered their stock bumps, a grim quip made its rounds among economists: “Welcome to wither up economics.” The phrase is a dark play on the old promise of “trickle-down” prosperity. Instead of wealth trickling down to the masses, it seems the base of the economic pyramid is withering, even as riches pool ever higher up. This isn’t a conspiracy hatched in smoke-filled rooms, but rather an emergent alignment of incentives – a structural shift in which capital relentlessly advances and labor recedes. Its hallmarks are all around us: ballooning asset prices alongside stagnant wages, rising productivity coupled with thinning workforces, demographic populations peaking then shrinking, and an economy increasingly catering to an elite’s experiences while the broader populace is edged out. This essay explores Wither Up Economics as a probable paradigm of our time – a culmination of neo-liberal trends intensified under the pressures of demographic decline and technological acceleration.
We live in an age when crises no longer unite capital and labor in shared sacrifice; instead, each shock seems to further tip the balance toward capital. Consider the COVID-19 pandemic: even as it devastated livelihoods, it paradoxically enriched the billionaire class at an unprecedented pace. According to Oxfam, the world’s ten richest men doubled their wealth to $1.5 trillion during the pandemic, buoyed by surging stock and property prices (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian). In the same period, 163 million people were pushed below the poverty line (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian). By late 2021, 99% of the world’s population had seen their incomes fall, even as those top ten billionaires were gaining $1.3 billion per day (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian). Government stimulus meant to stave off collapse ended up further widening the gap between rich and poor – not by malicious design, but through the very mechanics of a financialized economy. Central banks slashed interest rates and unleashed trillions in quantitative easing, which sent stock markets and other assets soaring (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian). The result was a windfall for those who held capital going into the crisis, while those living off wages faced layoffs, lockdowns, and a rising cost of living. The incentives of the system virtually guaranteed this outcome: when push came to shove, protecting balance sheets took priority over protecting paychecks. In effect, capital not only survived the crisis – it triumphed.
This pattern is not a one-off anomaly; it is the latest chapter in a decades-long story. To understand Wither Up Economics, we must first trace the broader history of neoliberalism’s evolution and intensification.
Neoliberal ideology came to dominate global economics in the late 20th century, preaching free markets, minimal government, deregulation, and the primacy of shareholder value. Starting in the 1980s, leaders like Ronald Reagan and Margaret Thatcher ushered in an era of privatization and globalization, arguing that unleashing capital would spur innovation and lift all boats. For a while, it seemed to work – growth was strong, and millions were lifted from poverty worldwide through trade. But as time wore on, cracks in the narrative appeared. Productivity kept rising, yet wages stagnated. The gains of growth increasingly accrued to owners of capital – investors, shareholders – rather than workers.
Over the last 40 years, labor’s share of income has steadily declined. In the United States, for example, labor’s share of corporate value-added fell from about 63% in the early 1980s to about 58% in recent years (Rise of Pass-Throughs Understates Labor’s Share of Income | NBER). This may sound like a small shift, but in an economy of trillions, it represents enormous wealth diverted from wages to profits. Corporate profit margins reached historic highs; by 2021 U.S. corporate profits were at record levels despite a pandemic and “labor shortages” (U.S. corporate profits jump 25% in 2021 to record high as economy rebounds from pandemic - MarketWatch). In fact, many companies seized the opportunity of a tight labor market to raise prices far beyond their own cost increases – one analysis found that since 2019, corporate profits have contributed a disproportionately large share of inflation, far above the normal ~11% contribution seen in prior decades (Corporate profits have contributed disproportionately to inflation ...). In other words, companies used their pricing power to maintain and fatten margins, even as workers struggled with rising costs. Neoliberalism’s promise that wealth and efficiency gains would be broadly shared has faltered; instead, wealth has concentrated and economic power has tilted heavily toward capital.
This dynamic was evident after the 2008 financial crisis as well. The neoliberal playbook’s response to that collapse was bank bailouts and austerity. Banks deemed “too big to fail” were rescued – effectively shielding capital from its own risky bets – while millions of ordinary people lost homes and jobs. In the decade that followed, central banks kept interest rates near zero and pumped liquidity into markets (via QE) to stimulate recovery. Asset prices rebounded swiftly, and by the mid-2010s stock indices and real estate values were hitting new highs. Yet workers saw a slow, halting recovery in the job market and little improvement in job security or income. By 2019, unemployment was low on paper, but many jobs were gig-based, benefits-poor, or part-time. The benefits of the “longest expansion” skewed toward shareholders: the S&P 500 tripled in value during the 2010s, CEOs reaped record pay (often tied to stock performance), while the median American household barely gained ground. This was neoliberal normalcy – growth sustained by and for capital.
Then came 2020, a once-in-a-century pandemic that could have upended this paradigm. Instead, it reinforced it. In retrospect, the COVID crisis and its aftermath functioned as an accelerant for trends already underway. Consider the extraordinary monetary intervention: the U.S. Federal Reserve’s balance sheet more than doubled from $4.3 trillion in March 2020 to $8.9 trillion by May 2022 (Shrinking the Federal Reserve balance sheet) – a scale of money-printing (in effect) never seen before. Much of this flood of liquidity flowed into financial markets and housing. Indeed, U.S. house prices exploded, rising at the fastest rate on record during 2020–21. By one Federal Reserve estimate, $9 trillion in new housing wealth was created for homeowners in just the first two years of the pandemic (The Fed - House Price Growth and Inflation During COVID-19). Stocks, meanwhile, surged so high that by late 2021 the S&P 500 was up nearly 100% from its pandemic lows – even as millions remained unemployed or underemployed. The result was a staggering increase in inequality: U.S. billionaires saw their collective net worth jump by roughly 70%, over $2 trillion of gains in 2020–21 (Updates: Billionaire Wealth, U.S. Job Losses and Pandemic Profiteers). The world’s 10 richest men didn’t just hold onto their fortunes – they doubled them (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian), profiting immensely from the very stimulus meant to stabilize the real economy.
To be sure, emergency policies also kept many working-class households afloat – stimulus checks, expanded unemployment benefits, loan moratoria. These measures briefly reduced poverty in 2020. But they were temporary lifelines, and by 2022 the support largely vanished while the distortionary effects remained. Low interest rates and government spending had by then ignited the highest inflation in 40 years. Central banks swiftly pivoted to fighting inflation, primarily by raising interest rates. That, predictably, put a damper on wage growth and cooled off hiring – effectively prioritizing price stability (and by extension, the value of financial assets) over full employment. This sequence, repeated across advanced economies, highlights the deep structure of neoliberal incentives: when forced to choose, policymakers have tended to safeguard capital (asset values, investor confidence, low inflation) even at the expense of labor (jobs, wage gains). It is not framed in such bald terms, of course – the rhetoric is about preventing “overheating” or keeping markets functioning – but the outcome is the same. As The Guardian observed, even in a global crisis our “unfair economic systems manage to deliver eye-watering windfalls for the wealthiest but fail to protect the poorest” (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian).
By 2023, the stage was set for Wither Up Economics to fully reveal itself. The term refers to an intensified form of neoliberalism, one in which the triumph of capital over labor becomes painfully apparent. If classic neoliberalism claimed that empowering capital would eventually help everyone (“a rising tide lifts all boats”), Wither Up Economics accepts – perhaps even embraces – the reality that the tide is lifting only the yachts while many smaller boats run aground. It is the logical endgame of policies and trends that have long favored capital: a system that can continue to generate wealth and technological advancement, but for a shrinking share of people. Demographic shifts and new technologies didn’t cause this outright, but they turbocharged it. Let’s examine how recent events – from pandemic stimulus to tech layoffs to the AI boom – reflect capital’s structural response to a changing world, and how various systems interlock to produce a self-reinforcing cycle that could define our future economy.
Pandemic Windfalls and the Asset Cascade. In the immediate wake of the pandemic, governments faced an unprecedented economic free-fall. The solution was equally unprecedented: flood the economy with money. In the U.S., trillions of dollars were injected via direct payments to citizens, forgivable loans to businesses, and massive Fed asset purchases. Initially, this did prevent total collapse – demand rebounded quickly by late 2020. But where did all that liquidity ultimately settle? A large portion landed in capital markets and real estate. By mid-2021, U.S. house prices were up nearly 20% year-on-year, the fastest clip on record (Why house prices surged as the COVID-19 pandemic took hold - Dallasfed.org), and by 2022 home prices had soared roughly 40% above their pre-pandemic levels, marking one of the sharpest asset appreciations in history. This made homeowners (and property investors) vastly wealthier on paper, while aspiring homebuyers found themselves priced out. The surge “created $9 trillion in owner occupied housing wealth” in two years (The Fed - House Price Growth and Inflation During COVID-19), a boon for those who already owned property – disproportionately older, wealthier households – but effectively a new barrier for those who didn’t. Even renters felt the squeeze, as landlords hiked rents in hot markets, knowing that would-be buyers had no choice but to rent longer.
On top of housing gains, stock markets boomed. Companies used low-interest debt to buy back shares, further driving up valuations. Venture capital flowed freely into speculative tech ventures. By late 2021, memes abounded about the “K-shaped recovery”: the top arm of the “K” (the affluent, asset-owning class) was skyrocketing, while the bottom arm (those reliant on wages, with little or no assets) was sinking. Indeed, the incomes of 99% of humanity fell in 2020–2021 (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian), even as billionaire wealth hit new highs. This divergence wasn’t due to a coordinated plot – it was structural. When money is essentially free (0% interest) and plentiful, those with access to capital borrow and invest, driving asset prices up. Those living paycheck-to-paycheck, however, don’t get to partake in asset inflation; they may even lose their paycheck entirely in a downturn. Thus stimulus, while preventing outright destitution via relief checks, ultimately amplified the asset-wage disconnect. By early 2022, U.S. consumer price inflation hit 7-8%, eroding real wages. The average worker was suddenly paying more for food, fuel, and rent, even as their net worth (if they had no assets) stagnated. Meanwhile, the owners of stocks and homes enjoyed asset inflation plus the luxury of refinancing mortgages at rock-bottom rates, further enhancing their long-term position.
Policy choices then compounded this divide. To curb inflation, central banks raised interest rates sharply in 2022–2023 – the fastest hiking cycle in decades. Their goal: cool off demand, especially in overheated labor markets, to tame prices. In plain terms, this meant slowing wage growth and increasing unemployment somewhat, since high wages and labor scarcity were seen as fueling inflation. The U.S. Federal Reserve openly acknowledged that wage pressures needed to ease. Thus, even as workers were finally seeing slightly faster raises in 2021 (after years of stagnation), the policy response treated that as a problem to be solved. The higher rates quickly pricked speculative bubbles (crypto crashed, housing prices leveled off) and made borrowing more expensive for businesses, which in turn announced cost-cutting. By 2023, the number of announced layoffs, especially in the previously booming tech sector, was making headlines daily.
Tech Sector Layoffs and the Shareholder Salute. Nowhere was the logic of Wither Up Economics more visible than in Big Tech’s 2022–2023 correction. After a decade of heady growth and pandemic-fueled expansion, the giants of Silicon Valley faced a post-lockdown reality check. User growth slowed, online ad spending cooled, and rising interest rates dented lofty valuations. The response was swift and coordinated: mass layoffs. Companies that had hired rapidly in the boom suddenly declared they had “over-hired.” In 2022 alone, nearly 160,000 tech workers lost their jobs (How Layoffs Affect Stock Prices of Tech Companies | Money). The trend continued into 2023 with tens of thousands of additional cuts in just the first few months (How Layoffs Affect Stock Prices of Tech Companies | Money). Google’s parent Alphabet axed 12,000 workers, Microsoft let go of 10,000, Amazon over 15,000, Meta (Facebook) cut more than 10,000, and so on. These were not struggling companies on the brink of bankruptcy – they were among the most profitable enterprises on earth. Yet, citing a “worsening economic climate” and the need to maintain efficiency, tech executives swung the axe.
How did markets react to these job cuts? With euphoria. Tech stock prices jumped. One analysis by Bloomberg found that, on average, large U.S. tech firms saw their stock price rise 5.6% in the month after announcing layoffs (How Layoffs Affect Stock Prices of Tech Companies | Money). Meta’s stock soared almost 50% in the weeks after it shed workers (How Layoffs Affect Stock Prices of Tech Companies | Money). Alphabet’s share price climbed 15% in early 2023 after its layoffs (How Layoffs Affect Stock Prices of Tech Companies | Money). In the short term, Wall Street clearly viewed trimming payrolls as a boost to the bottom line. By reducing labor costs, companies signaled a renewed commitment to profit margins and “shareholder value” – the core tenet of neoliberal corporate governance. It was a stark illustration of capital triumphing over labor: human employees were cast overboard to keep the ship of valuation afloat. The individuals laid off (many of whom were highly skilled engineers, designers, support staff) suddenly found themselves in a tough job market, even as their former employers’ market caps rebounded.
This spate of layoffs also underscored something fundamental: in the modern economy, labor has become a lever to adjust earnings, rather than the engine of value creation it once was. In classical economic theory, companies hire workers to expand production and meet demand; layoffs would normally signal declining business. But in these cases, the firms were still plenty profitable – they simply sacrificed part of their workforce to appease capital markets’ desire for leaner cost structures. This is Wither Up logic distilled: if labor gets too costly or numerous, prune it, and let the gains flow up to owners. There was little pretense that cutting these jobs would enable some greater innovation or efficiency – it was primarily about protecting profits in a time of slightly slower growth. In years past, companies might have held onto workers during a short-term downturn, viewing employees as long-term assets or even as a social responsibility. That ethos, already weakened over decades of outsourcing and automation, has virtually vanished at the corporate strategy level. Instead, many firms now treat labor as a mostly variable cost: to be ramped up in good times, slashed in bad times, with the ultimate goal of doing more with fewer people.
The Great Acceleration in AI. Running parallel to these layoffs was another development that at first seemed unrelated: the sudden leap forward in artificial intelligence, and the frenzied investment in AI that followed. In late 2022, OpenAI’s ChatGPT burst onto the scene, dazzling the public with AI-generated essays and answers. Within months, “generative AI” became the tech world’s obsession. Companies large and small proclaimed AI-first strategies, venture capital funding for AI startups skyrocketed, and commentators declared a new technological revolution at hand. Crucially, the excitement around AI wasn’t just about cool new products – it was also about productivity and automation. CEOs looked at AI and saw the potential to streamline operations, perhaps even eliminate whole categories of white-collar work. One reason the tech titans could cut staff with such impunity was the belief (or hope) that advances in AI would allow them to maintain output and growth with fewer humans. Indeed, global funding for generative AI soared nearly 9-fold in 2023, reaching $22.4 billion (up from just $2.5B in 2022) (Investment in generative AI has surged recently - Our World in Data), despite an overall pullback in venture funding. In boardrooms, there was a palpable sense that AI could be the answer to shrinking workforces and rising labor costs: why hire another moderately paid analyst or copywriter if a refined GPT model can do 50% of their work at near-zero marginal cost?
Early studies gave some statistical backbone to these ambitions. Goldman Sachs economists estimated that the new wave of AI could expose 300 million full-time jobs worldwide to automation in the coming years (Generative AI could raise global GDP by 7% | Goldman Sachs). Nearly two-thirds of occupations in the U.S. and Europe could be at least partially automated by AI, they noted, with as much as a quarter to one-half of the tasks in those jobs replaceable (Generative AI could raise global GDP by 7% | Goldman Sachs). While they also noted that historically technology creates new jobs in the long run, the short-term implication was clear: a huge swath of the labor force could become redundant or need to transition to new roles. For capital owners, this is a double-edged sword – fewer workers mean less consumer demand overall, but it also means labor costs can shrink dramatically for those who successfully deploy AI. The immediate reaction in many corporations was not to lament potential job losses, but to race to implement AI and gain a competitive (cost) edge. By 2024, companies from call centers to law firms were integrating AI tools to handle routine work. Microsoft and Google embedded AI into office software to automate tasks like writing and data analysis, potentially reducing the need for as many junior employees in those tasks.
The subtext of the AI boom is that it empowers capital at the expense of labor in a very direct way: it promises that the next big productivity gains will come without the need to hire more people. Contrast this with past industrial revolutions – say the rise of factories in the 19th century – when new technologies (steam power, assembly lines) ultimately led to hiring more workers to increase production. AI suggests a scenario where you can increase production or services with algorithms and servers, not headcount. It’s telling that stock prices of companies announcing AI initiatives often jumped, much like those announcing layoffs. The market clearly bets that AI will raise profit margins, not necessarily wages. Even venture capitalists have mused openly that AI could enable a future where startups achieve billion-dollar valuations with only a handful of employees. In effect, the dream (or nightmare) is companies with vast capital and minimal labor.
None of this is to say that AI will instantly replace human workers en masse – there are technical and ethical hurdles, and many roles will be augmented rather than automated. But the important point for our theme is how the anticipation of AI is already reinforcing the wither up pattern. It strengthens capital’s hand in negotiations (“we can always automate you if you ask for too much”), dampens long-term demand for labor, and potentially allows an economy to keep growing output even if the working population declines.
We have, then, a recent history where stimulus and monetary policy enriched capital, corporate strategies (like layoffs and stock buybacks) prioritized shareholders over employees, and technological leaps promised to further reduce the reliance on human labor. These are not isolated trends; together, they form a mutually reinforcing system. To truly grasp Wither Up Economics, we should map how different subsystems – monetary, housing, educational, political – interact to create a cycle that could lead to deflation and depopulation, while entrenching the dominance of capital.
One way to think of Wither Up Economics is as a synergistic web of policies and market dynamics that all favor capital accumulation, even if unintentionally. Let’s break down a few key systems and their roles in this emerging structure:
Monetary Policy and the Financial System: Central banks, in attempting to manage economic cycles, have inadvertently become the great enablers of capital. In downturns, the response is almost always to slash rates and, in recent times, to buy assets (QE). This props up financial markets – a clear boon to those holding stocks and bonds – and aims to stimulate borrowing. But when these policies stay in place for long (as they did for much of 2009–2019), they also inflate asset bubbles and encourage corporate debt binges used for unproductive purposes (like stock buybacks). We saw how the Fed’s balance sheet explosion during COVID directly translated to soaring stocks and housing (World’s 10 richest men see their wealth double during Covid pandemic | Rich lists | The Guardian). When inflation finally forces the hand to tighten policy, the burden falls on workers through higher unemployment and slower wage growth. Over the last 15 years, the consistent pattern has been: protect capital in bad times, discipline labor in good times. The result is that wealth grows at the top (through asset appreciation) much faster than incomes grow at the bottom. Easy money also fuels speculation in technology and real estate, often leading to over-investment in automation (which reduces future labor demand) and overpricing of housing (which raises living costs for working families). In sum, monetary policy has evolved into a tool that – however well-intentioned – keeps capital safe (liquidity for markets) and often lets labor “wither” (via austere corrections and credit constraints on small borrowers).
Housing Market Dynamics: Housing is where the financial system meets everyday life. In recent decades, homes have morphed from primarily places to live into one of the main stores of wealth and investment assets. The surge in housing prices relative to wages means that home ownership increasingly divides winners and losers. Those who owned property gained equity and borrowing power; those who didn’t face higher rents and difficulty saving. When central banks pushed interest rates to historic lows, it triggered a frenzy of mortgage borrowing and speculative buying (including by private equity firms and institutional landlords) that drove prices even higher. The aftermath is a generation of young adults in many countries who either delay buying a home or never manage to. This has societal ripple effects: people postpone marriage and childbearing due to housing insecurity, and they remain more geographically constrained by rent burdens. The asset-wage disconnect is stark here – housing prices in many regions climbed 30-50% in a span of a few years (Rural Areas Saw Disproportionate Home Price Growth During the ...) (US home prices have soared 47% since 2020), while wages maybe rose 5-10%. Housing inflation essentially transfers wealth from renters (often workers) to owners (often older capital holders or investors). It also, as noted, depresses fertility: surveys and studies often find that high housing costs correlate with people choosing to have fewer children. In China, for example, the cost of urban living and housing is cited as a key factor in couples deciding against a second child (China's population drops for second year, with record low birth rate | Reuters) (China's population drops for second year, with record low birth rate | Reuters). In many Western cities, raising a child in a decent home has simply become financially daunting for the middle class. When fewer children are born (we’ll dive into demographics shortly), the future labor force shrinks – which, paradoxically, can further prop up housing prices because there are fewer new households forming, allowing owners to maintain pricing power on scarce units. Housing, then, becomes part of a vicious cycle: it enriches the present asset owners while impoverishing or discouraging the next generation, literally in terms of wealth and figuratively in terms of even existing.
Credentialism and the Knowledge Economy: Another subtle “enclosure” has occurred in education and employment. Over the past few decades, there’s been significant credential inflation – jobs that once did not require a college degree now insist on one, and positions that used to accept a bachelor’s degree now prefer a master’s, and so on. Between 2010 and 2016 in the U.S., three out of four new jobs required at least a bachelor’s degree, whereas only one out of 100 new jobs was open to someone with a high school diploma or less (Degree inflation: Why requiring college degrees for jobs that don’t need them is a mistake | Vox). This arms race for credentials forces individuals to spend more time and money on formal education to even compete for jobs. Who benefits? Often, it’s the educational-industrial complex (private colleges, student loan financiers) and employers who can be pickier at no cost to themselves. Who loses? Young people sink under student debt and delay entry into decent-paying careers. They effectively transfer a chunk of their lifetime earnings (via tuition and loan interest) to financial institutions. Moreover, requiring high credentials for most good jobs filters out those from poorer backgrounds or those who can’t afford years of unpaid internships and graduate school. This ensures a stratified labor force – a smaller elite of highly educated (often also more privileged) workers who can command good salaries, and a larger mass of under-credentialed folks who get relegated to low-paying service jobs or gig work. The credential treadmill keeps many people in precarious limbo well into their late 20s or 30s (prime childbearing years, notably). By the time they establish a stable career, they’ve often missed the window or appetite for having larger families, contributing to declining birth rates. In essence, credentialization privatizes and delays the returns to human capital development, and in doing so, it pairs with automation to reduce the bargaining power of average labor. If every barista now has a college degree, it doesn’t make the coffee taste better – it just means an oversupply of education relative to jobs, driving down the wage premium of education except for the top institutions. From capital’s perspective, this is not a bug but a feature: a surplus of educated labor means you can hire top talent relatively cheaply (unless they are in a very scarce field). It also means the workforce is disciplined by debt – many can’t risk rocking the boat or taking time off, as they owe tens of thousands in student loans.
Privatization and the Erosion of the Public Sphere: Neoliberal policy has long pushed for privatization of services traditionally provided by government – from utilities to transport to healthcare to prisons. The theory is that private companies run things more efficiently. The reality is often mixed: sometimes costs go down, but just as often, the public ends up paying more as profit margins are tacked on to essential services. Since the 1980s, numerous public assets have been sold off worldwide. For instance, in the UK, railroads, water supply, and energy were privatized; in the US, even elements of education (charter schools, student loan servicing) and infrastructure have been handed to private firms. One outcome is that citizens increasingly pay rents or fees to capital owners for basic needs – be it higher train fares under private rail companies or costly pharmaceutical bills under for-profit healthcare. This acts like a regressive tax, draining disposable income from the many to enrich shareholders of utility and service companies. Moreover, when everything is monetized, nothing is truly a “right” – you get what you can pay for. Wealthier communities get top-tier services (private schools, gated community security, concierge medicine), while poorer communities see their public options wither, without an adequate private alternative they can afford. The broader social fabric frays as common spaces and resources shrink. This is analogous to the original Enclosure Movement in 18th-century Britain: then, common grazing lands were fenced off and turned into private property, displacing peasant farmers. Today, one could argue we are seeing an enclosure of the welfare state and commons – affordable housing, public parks, libraries, universal healthcare – all are under threat of defunding or privatization. As with historical enclosure, the immediate effect is a more “efficient” use of resources (land used for higher-profit sheep farming back then, capital optimized under private management now), but the human toll is displacement and marginalization. In Britain’s case, enclosure created a mass of landless laborers who crowded into cities, fueling the Industrial Revolution’s factory workforce (a silver lining of sorts for capital). In our case, the new displacement might not have such a silver lining – it creates a population that can neither fall back on subsistence (the commons is gone) nor always find dignified work (as we’ve seen with credentialism and automation). They become what some Victorian economists called the “redundant” population – essentially surplus labor. Under Wither Up Economics, the existence of a surplus population isn’t seen as a problem to be solved by job creation or redistribution; it’s a condition to be managed, often through cheap entertainment, fragmented “gig” opportunities, or in dire cases, through incarceration (private prisons also being a booming business). It’s telling that even amid labor shortages in certain sectors in 2021, we still had a global glut of workers who couldn’t find secure jobs – a reflection of mismatched skills, yes, but also of structural exclusion.
Automation and the “Peak Human” Moment: We touched on AI as the latest wave of automation. It sits atop a broader trend of the past few decades: the replacement of human labor with machines and software in sector after sector. Manufacturing jobs were the first to go, with robots and offshoring decimating factory employment in developed countries from the 1980s onward. Then clerical work was hit by computerization. Now AI threatens roles in customer service, writing, accounting, even programming. There’s an incisive historical analogy here: the story of Peak Horse. In the early 20th century, the advent of the automobile and tractor radically reduced the need for horses. In the United States, the horse population reached its peak around 1915 and then went into steep decline (Automobiles Freed Us from the Tyranny of Horses | Mises Institute) as mechanized transport took over. Horses didn’t disappear overnight, but over a few decades, tens of millions of horses were gone from the economy, made essentially obsolete (aside from niche uses like racing or recreation). Humans, of course, are not horses – we are both producers and consumers, and we don’t expect people to be “culled” when their labor is no longer needed. But economically, there is a parallel: we may be approaching a “Peak Human Labor” point in certain industries, after which the demand for workers falls secularly. If that happens while the population is still growing, you get unemployment and social turmoil. But if it happens while population growth is also slowing or reversing, you might simply see the workforce shrink in tandem with labor demand, mitigating overt unemployment but leading to a smaller role for human work overall. Automation enables capital owners to decouple growth from employment. A factory that once needed 1,000 workers might need 100 today; an office that required a floor of clerks might now need a single server farm. For the owners of those factories and offices, this means output and profits can continue (or even rise) with far fewer salaries to pay. For society, it raises a question: what do the “excess” people do? In a trickle-down vision, those people would find new, better jobs created by the efficiency gains. In a Wither Up vision, many of those people are simply not needed – much like many horses weren’t needed after cars – and so society faces a choice: support them via redistribution (e.g., universal basic income), or effectively let them fall into poverty, or somehow reduce their numbers over time. It sounds dystopian, but hints of this reality are visible. Long-term unemployment and labor force dropout rates rose in many rich countries even before COVID. Labor force participation among prime-age men in the U.S., for instance, has been trending down for years, as manufacturing and other blue-collar jobs disappeared. Some of those men ended up on disability benefits or simply out of the count of job seekers. That is a form of hidden “wither” – people who vanish from the labor statistics because there’s no place for them in the economy’s new configuration.
The Enclosure of the Cognitive Commons: Beyond physical labor, capitalism is now vigorously enclosing what we might call the cognitive commons. This term, coined by writer Jonathan Rowe, refers to the shared realm of knowledge, culture, and attention – basically, our collective mindspace. Rowe warned of “the ultimate enclosure – the enclosure of the cognitive commons, the ambient mental atmosphere of daily life” (Awareness Bound and Unbound | HuffPost Religion). Think of how our attention is relentlessly monetized by ads, our social interactions commodified by social media, our creative outputs scooped up as “content” for platforms. Even our personal data (what we browse, where we go, who we know) has been appropriated as a valuable asset – the oil of the digital age. The rise of big data and AI takes this a step further: AI models are trained on the vast trove of text, images, and videos that we, the public, created on the internet. In a sense, the collective intellectual effort of billions (often shared freely on Wikipedia, forums, art sites, etc.) has been harvested by private companies to build proprietary AI systems. That knowledge, once part of the commons, is now enclosed behind paywalls or locked in corporate services. For example, an AI might incorporate medical advice gleaned from thousands of doctors’ writings and patient experiences online – but the AI service itself is owned by a tech firm that will sell subscriptions to hospitals. Thus the benefit of shared knowledge is privatized. This enclosure of knowledge and culture reinforces Wither Up Economics by concentrating the profits of the information age in a few entities. The “cognitive labor” of many (often done for free, like posting reviews or sharing open-source code) is captured by platforms that convert it into capital (either via ad revenue or AI capabilities). The individuals contributing get little or no reward; in some cases, they even lose their livelihoods as the AI replaces them. It’s akin to villagers collectively tending an open field, only to have a landlord fence it off and charge them to access what they once freely used. By enclosing attention and information, capital not only creates new revenue streams, it also controls the narrative and frames what is “normal.” For instance, if the idea of a declining population serving an elite becomes normalized in media (much of which is corporately owned), it may be met with eerie acceptance rather than public outrage. Enclosure of the mind can lull society into acquiescence – a crucial lubricant for a system that, if examined coldly, does not serve the majority’s long-term interests.
Each of these systems – monetary, housing, education, privatization, automation, cognitive capture – interacts with the others. They form a feedback loop that consistently tilts toward capital’s advantage. Importantly, this is structural, not conspiratorial. It arises from countless decisions by individuals, corporations, and policymakers, each acting in their own immediate interest, but collectively producing a pattern. A company automating tasks is simply seeking efficiency; a university raising tuition is trying to fund itself; a landlord increasing rent is following market rates; a central banker raising rates is fighting inflation. Yet the aggregate effect is a self-reinforcing deflationary-depopulation cycle:
High asset prices and cost of living deter family formation, contributing to lower birth rates.
Slower population growth means older societies with fewer workers and consumers, which tends to reduce demand and put downward pressure on inflation (as seen in Japan’s aging economy) (Shrinkanomics: Policy Lessons from Japan on Aging – IMF F&D).
In a low-inflation environment, central banks keep interest rates low (until recently), which again fuels asset inflation – benefiting capital holders and making costs even higher for the next generation (closing the loop back to deterring births).
Fewer young people entering the workforce can give workers short-term bargaining power (labor scarcity), but instead of yielding broadly higher wages, this often prompts more investment in automation, allowing output with even fewer workers.
Automation then creates the possibility that you don’t need as many people economically – which, combined with fewer births, means the surplus labor force is further reduced. It’s a grim synergy: fewer people are born to face a world that has fewer jobs for them anyway.
The reduction in labor’s share of output (due to both fewer workers and lower relative wages) ensures that a larger share of national income is going to profits, dividends, and asset owners. This further swells the wealth of the elite, who then invest in more capital-accumulating ventures (from real estate to tech), reinforcing their dominance.
Meanwhile, the public sector’s ability to redistribute or provide safety nets is hamstrung by political opposition (the wealthy often lobby against higher taxes and robust welfare), leading to minimal correction of these imbalances. If anything, we often see moves to privatize elements of the safety net (like replacing public pensions with private 401(k) investments), which again channels more funds to capital markets.
It becomes a tight loop: deflationary forces (aging, tech efficiency) lead to pro-capital policies (easy money, cost-cutting) which lead to greater inequality (capital accumulates), which leads to less broad-based spending and family formation, which furthers deflationary/low-demand conditions. Rinse and repeat. It’s essentially a slow bleed-out of the broad middle of society, as capital secedes into its own growth orbit.
One of the clearest markers of this emergent system is demography. Many advanced economies are now confronting population stagnation or decline. Japan is the poster child – its population peaked around 2008 and has been shrinking since, with a very high median age. Europe is similar; even dynamic economies like Germany face decline without immigration. The United States had relatively higher fertility, but it too hit a record low birth rate in 2020 (about 1.64 births per woman, far below replacement (U.S. Fertility Rate Hits Record Low - National Review)), and saw births drop to the lowest number in over 40 years (U.S. birth and fertility rates drop to another record low, CDC says). China, famously massive, has now entered absolute decline – 2022 was the first year since the Mao-era famine that China’s population dropped, and 2023 saw a further decline of 0.15% (a loss of 2.1 million people) (China's population drops for second year, with record low birth rate | Reuters). The birth rate in China fell to a record low of 6.39 per 1,000 people (China's population drops for second year, with record low birth rate | Reuters), and youth unemployment hit record highs at the same time (China's population drops for second year, with record low birth rate | Reuters). These are historic pivot points: the most populous nation on earth is now on the downslope, and many others are following.
Why are birth rates falling so sharply? There are many factors – education of women, shifting social norms, urbanization – but economic precarity is a common thread. When asked, young people often cite the high cost of housing, inadequate childcare, job insecurity, and debt as reasons for delaying or foregoing children (China's population drops for second year, with record low birth rate | Reuters). In other words, the pressures of neoliberal economies discourage reproduction. It’s expensive to raise kids when wages are stagnant and everything else – education, rent, healthcare – is costly. In some societies, there’s also a sense of pessimism about the future, which is itself a byproduct of our economic system’s failures (e.g., millennials doubting they’ll ever be better off than their parents, so how can they responsibly have kids?).
From the vantage of Wither Up Economics, demographic decline is not necessarily alarming – it can be seen as aligning with the needs of late-stage capital. If automation and productivity improvements mean fewer workers are needed, having fewer young people could help avoid massive unemployment. A shrinking labor pool can even put upward pressure on wages for a time – but as we’ve seen, the system’s response is often to tamp that down via policy or tech. Moreover, a smaller population can be sold as a positive for other reasons: less strain on the environment and climate (fewer carbon emitters), less crowding and resource competition. Some environmental thinkers do welcome the idea of “peak human” for ecological reasons. But under our current incentive structure, any environmental dividend might just translate to more comfort for the rich, rather than a healthier commons.
One can imagine elite circles acknowledging privately that a gradual population decline, especially among the poor and working class, is not the worst outcome for their interests. Publicly, they may not advocate for it (with notable exceptions – some tech billionaires do speak about population control, albeit often concerning over-population in poorer countries). But subtle policy biases reveal themselves: scant support for young families, housing policies that favor existing owners over new buyers, higher education that keeps getting pricier. These all disincentivize having children. It’s very different from the post-WWII era, for instance, when governments actively encouraged baby booms and built social housing, affordable suburbs, and robust public schools to accommodate growing families. That was a time when economies needed lots of labor and consumers. Now, with growth sputtering and aging, the urgency to renew the population is weaker.
In fact, some actions of late suggest a level of comfort with a leaner society. During the pandemic, for example, policies often prioritized reopening financial markets and businesses over protecting vulnerable lives (consider how quickly governments accepted certain mortality trade-offs to “get the economy going” again). The elderly died in large numbers in 2020-21; life expectancy in the U.S. dropped. While tragic, one cynical view from a pure capital perspective is that many of those were economically “inactive” people (retirees) whose pensions and healthcare costs were a burden on public finance – their premature passing somewhat eases fiscal pressure. It’s a callous notion, and no responsible leader would say such a thing out loud. But it hints at an unsettling possibility: if the population “withers” at the margins (the very old, the chronically ill, the marginalized poor), the system might not find that entirely undesirable in a cold cost-benefit sense. We saw something similar with opioid addiction in the U.S.; entire communities were economically sidelined and turned to substances, causing “deaths of despair.” Rather than a clarion call to reinvest in those communities, the crisis was largely allowed to burn on for years, as if those lives were collateral damage of economic transition.
The endgame of Wither Up Economics, if left unchecked, might be a world with a smaller, older population in developed countries, a modestly larger but also stabilizing population in developing ones, and an economy that has shifted to primarily serve those with purchasing power. In other words, a lean population catering to an affluent elite – essentially a global service class tending to the needs and wants of capital-owning classes, who themselves might only be a sliver of society. It’s a quasi-feudal picture: think of a future where much of GDP comes from things like bespoke healthcare, luxury travel, entertainment, gourmet food, high-end real estate, and personalized tech – all consumed by the wealthy – and provided by a workforce of fewer people (and many robots). The masses of the 20th century industrial age, who were needed to buy millions of Model T cars and Levi’s jeans, are not needed in the same way. In fact, if too many of them exist without good jobs, they pose a political risk (demanding redistributive policies or causing instability). Far easier is a gradual reduction of their ranks through low birth rates, while those who remain can be kept content enough with digital distractions, gig work, and stipends if necessary.
Let’s paint this picture more concretely. Imagine a country in 2040 that has embraced Wither Up principles de facto. Its population is 10% smaller than in 2020, and considerably older. Traditional mass manufacturing and retail are mostly automated – factories run “lights out” with robots, and AI handles logistics and warehousing. The average person doesn’t work on an assembly line or behind a store counter; those jobs are largely gone. Instead, employment has bifurcated: a segment of the population works in high-skill roles (tech, engineering, management, creative industries) and is well compensated, while another significant segment works in service roles aimed at providing experiences – think hospitality, personal care, entertainment, boutique services. Why experiences? Because an affluent class with endless access to goods (which are cheap and automated) will crave experiences – things like fine dining, live performances, adventure tourism, wellness retreats, custom art, etc. These are the kinds of products that still often require human touch and labor: a robot might cook a perfect steak, but the human story of a chef and the ambiance of a restaurant are part of the experience; AI can generate music, but a live concert by humans might carry a different appeal as a luxury event. In this future, a “lean” population means maybe only, say, 50-60% of adults are working (others live on some form of basic income, pensions, or are simply not needed). Those who do work either operate/maintain the automated systems (a relatively small group of technicians and professionals), or they serve the wealthy in these experiential industries.
Crucially, full automation isn’t the goal – not because it’s impossible, but because the elite economy prefers to have some human labor around for certain roles and to avoid the scenario of a completely idle populace. A dystopia of total automation and massive unemployment could lead to social unrest or require heavy-handed control. Instead, the society subtly optimizes for just enough people to keep things running and provide luxury services, and no more. The others gradually fade out via attrition (low births, perhaps emigration, etc.). This might sound like sci-fi, but elements of it are visible now: even with all our technology, wealthy households still employ nannies, tutors, personal trainers, chefs; high-end tourism is staffed by gracious human hosts; exclusive medical clinics boast attentive human doctors for those who can pay. The difference in the future is scale and context – these could become relatively larger sectors of the economy as manufacturing, agriculture, and mainstream services become more capital/automation intensive.
We can draw a historical parallel to the Gilded Age or the Belle Époque (late 19th century). In those times, industrialists and aristocrats led opulent lives supported by a retinue of servants, while much of the rural poor were simply out of sight or had migrated to cities. Today’s servant class could be tomorrow’s gig workers or contractors in the experience economy. The twist is they might be fewer in number proportionally, thanks to tech. And they themselves may live on the cusp – not quite sharing the elite’s lifestyle, but doing better than those entirely pushed out of the workforce.
From the perspective of the elites (corporate and political leaders), such a society has its appeals. It’s more stable environmentally (population pressure is lessened). There’s less need to compromise with labor demands if labor is both small and relatively privileged (easier to co-opt the most skilled workers with high pay, and let the rest fend for scraps). The risk of mass political movements – like the labor unions or socialist waves of the 20th century – diminishes if there simply isn’t a mass proletariat of the same kind, and if those who remain are fragmented or aging. Power can become more concentrated and inheritable, resembling an old aristocracy but cloaked in the meritocratic language of “shareholder value” and tech innovation.
Of course, this is not a rosy outcome for humanity at large. It involves essentially writing off a portion of potential humanity – those never born, those underutilized, those left out – in service of maximizing the comfort and wealth of those at the top. It’s the antithesis of inclusive prosperity. It also carries hazards: who will buy the goods and services at scale if populations fall? Perhaps the answer is that goods become so cheap to produce (due to automation and AI) that you don’t need volume buying – a smaller number of rich consumers can still keep businesses profitable, especially if intellectual property and monopoly allow high markups. (Consider how a company like Apple thrives on selling pricey devices to a global middle and upper class – they don’t need everyone to buy an iPhone, only the relatively well-off, which could be a stable number even if population shrinks.)
One could argue this future is unsustainable because eventually even the elites depend on a functioning society and new ideas that often come from the cross-pollination of a broad population. An overly pruned humanity might lose dynamism or face demographic collapse spiraling. Indeed, in some countries, leaders are awakening to the dangers of low birth rates – for example, Japan and South Korea have scrambled to incentivize births (with limited success), and even China reversed its one-child policy and is now anxiously trying to encourage families. However, these pronatalist policies clash with the entrenched economic realities we’ve described. Unless housing, labor conditions, and inequality are addressed, simply urging people to have more babies is like pushing against the tide.
In a way, Wither Up Economics might be described as capital’s Gambit to maintain growth and power in spite of – and in some ways thanks to – a declining population. It’s an inversion of the 20th-century logic where growth was tied to ever more workers and consumers. Now, capital seeks to decouple from that and thrive even as the populace plateaus or contracts. The post-2022 AI push is an explicit attempt at that decoupling: growth via productivity, not via more labor. And if productivity gains predominantly accrue to capital (through AI ownership, patents, etc.), then you don’t need widespread prosperity to have a robust stock market or GDP on paper. You could have a high per-capita GDP with a very skewed distribution and fewer people – the averages might even look impressive.
Wither Up Economics is a bleak extrapolation of current tendencies, yet it’s crucial to recognize it not as a formal policy platform, but as an emergent logic. It’s what happens when each actor in a system follows the incentive to maximize their gain in a context of demographic change and technological possibility. No shadowy cabal sat down to plan a “leaner humanity” – but many decision-makers, acting in self-interest, could collectively steer us there. Executives don’t need to harbor ill will toward workers to lay them off en masse; they just need to see short-term profit and shareholder approval. Central bankers don’t intend to enrich the wealthy exclusively; they just see no alternative to asset-heavy stimulus in crises. Politicians don’t explicitly say “let the poor die off”; they just craft budgets that repeatedly neglect affordable housing, healthcare, or child care, and the poor do, in fact, die sooner and breed less.
Understanding this systemic nature is the first step to challenging it. If we expose the internal logic – that left unchecked, capital will choose its dominance over broad well-being, even to the point of accepting a kind of societal shrinkage – then we can start to discuss countermeasures. For instance, do we accept an economy where the stock market can boom while the population literally declines and most people’s lives don’t improve? Or do we redefine success to include societal flourishing, not just aggregate wealth (much of which sits in a few hands)? The neoliberal creed has been so strong that even as evidence of its flaws mounted (inequality, climate damage, instability), many clung to it or could only imagine tweaks. But facing a potential future of “experience economy feudalism,” perhaps more people will question the fundamental direction.
Thinkers like anthropologist David Graeber critiqued the absurdities of our system – such as the prevalence of “bullshit jobs” (roles that seem to exist just to keep people busy, without real value) – pointing out that our economy is not purely rational or efficient for human needs, but often serves opaque corporate or financial interests. John Maynard Keynes, nearly a century ago, imagined that by 2000 technology would allow a 15-hour workweek and abundant leisure for all; instead, we got the technology but arranged it so a few benefit massively while others still toil or are cast aside. The internal logic of capital – to always seek more profit – unless checked by external forces (like strong labor movements, regulation, cultural norms of equity) will not voluntarily halt even if it undermines the social foundation on which it stands.
Is an alternative possible? It could be, if proactive choices are made. We could choose to redistribute the gains of automation through mechanisms like universal basic income or job guarantees in socially useful work, thus avoiding the scenario of masses rendered useless. We could invest heavily in affordable family support – housing, childcare, healthcare – to enable those who want to have children to do so, countering the demographic spiral. We could treat knowledge and data as a commons to be regulated, not a land to be enclosed, ensuring AI and tech benefits are widely shared (for example, taxing AI productivity and redistributing it, or giving people ownership rights over their data). We could revisit antitrust and corporate governance, so that companies don’t single-mindedly prioritize shareholders at the expense of employees and communities – perhaps giving workers seats on boards or ownership stakes (labor having capital, in a sense). These shifts would require a dramatic change in policy ethos – a break from neoliberal assumptions and a revival of thinking that values labor, community, and sustainability on par with capital, if not above it.
History offers reminders that today’s apparent trajectory isn’t destiny. Societies have reformed themselves in the face of imbalances before. The Progressive Era and New Deal in the United States arose after the excesses of the Gilded Age threatened social cohesion. European countries after WWII built robust welfare states to ensure broad-based recovery and avoid a return to the miseries that gave rise to fascism. Those reforms were hard-fought, often led by popular movements of the very people being squeezed. If Wither Up Economics is to be forestalled, it likely will not be the benevolence of capital that does it, but the insistence of labor and citizens – essentially saying “we refuse to wither.”
For now, however, it’s important to call the situation by its name. When we see stock prices leap on layoff news, when we see billionaire wealth chart a vertical line up during a disaster, when we notice policymakers fretting more about wage growth than the fact that people can’t afford homes – we are seeing Wither Up Economics in action. It is capital’s current answer to a world of slowing population growth and rapid technological change: double down on the neoliberal playbook, intensify the extraction of value from every system (financial, social, cognitive), and accept that many will be left behind. It’s a path that leads to a smaller society, perhaps stable for a time, but morally and humanly diminished.
The task for those who care about broad human flourishing is to change the arrangement of incentives. We must realign what is profitable with what is socially desirable – a formidable challenge, no doubt. But acknowledging the ghoulish model of Wither Up Economics is a start. It shines a light on the fact that absent intervention, capital will pursue its triumph even as labor (and the population at large) dwindles. Exposure can breed understanding, and understanding can breed accountability and action.
In closing, Wither Up Economics is a warning label for our current trajectory – a trajectory where capital’s victory comes at the cost of a vibrant, inclusive society. Whether that warning is heeded will shape the decades to come. We stand at a crossroads where technology and policy could either liberate humanity widely or enrich a few while the rest fade into a footnote. It’s our collective choice whether “capital triumphs over labor” becomes the final story, or just a dark chapter before a new balance is found. As always, the future is not written in stone; but for now, the logic of the present is clearly pointing upward – and it’s up to us to decide if we are content to let the majority wither in its shadow.
ChrisF | Starholder