Much of what we learn in economics is wrong not because it isn’t theoretically correct but because the world does not work the way economics predicts. We don’t have true markets other than financial ones. Consumer markets are plagued with search costs, psychological heuristics, biases, and other tricks companies exploit to gain pricing power.

Companies try to isolate themselves — Gucci isn’t in the handbag market which is a commodity — Gucci is in the Gucci handbag market, where they set their prices. A market of one, and for one product. People (smart people) seem to accept that argument and buy their stuff. Companies try to differentiate themselves with extra features and more to give themselves pricing power, and it makes it impossible to form real markets like we do when we sell a standard share in a company or buy one. Gucci signals something not because it fundamentally does — but because the world collectively believes that it does — and the creation of that knowledge residing in all our heads was intentional by Gucci.

We have mascots, and colors that attract the eyes, and shelf placement, influencers, and page-placement, and a million other tricks people use to make sure we buy from them without thinking too hard about other things or pay attention to the market.

We are convinced by landing pages to buy things, convinced by advertisements to look cool, act certain ways, and otherwise tricked by psychology and signals.

Products that say “buy me because I’m better for these objective reasons” are rare… we buy for a million reasons and frankly people are too lazy to read rather than look at pictures and the problems with how we make purchasing decisions only start there.

But AI does not care about most of this.

Welcome to the end of the age of psychology corrupting markets — the end of laziness, of trickery, of search costs and of being convinced by advertising or of clicking on things because they’re easy. The end of impulse purchases and of the rest of this buffoonery.

The value of psychology when AI is at its most powerful will fall dramatically compared to where it is now for commercial purposes. No more tracking user keystrokes to determine the speed of typing to determine psychological states that then dictate ads and search results. No more of any of this idyll-façade, actual-hellscape.

AI will help usher in the age of raw economics where markets can function properly without human deficiencies dictating outcomes… this is, in its most advanced form, the end of advertising, which is responsible for the market caps of most the Big Tech companies and has powered the internet — which causes news sites to make the news sensational and deficient to get clicks that then turn into ad views on their pages that then turn into dollars, and is responsible for people not understanding all their options (Amazon and Google and other trusted companies have most of their SERPs dominated by ads).

To fulfill this, the world needs real, centralized markets where price discovery can happen easily. They will come about inevitably — either via local construction when an AI goes out and researches for someone (like someone who wants a stock calling around to people that have them), or in a centralized way (like someone who wants a stock just looking at the stock amrekt).

Either way, markets will become more tangible.

People will fight this vigorously because it will kill profits for many industries, but they will not be able to stand in the way of progress: when an AI agent can do exactly what a human can and use the same mediums, you simply cannot stop what’s to come — ToS violations and bot-bans and nothing else will stop people doing what they really want to do. Drugs are illegal and people take them, and people want to save money and have easier lives and if they have the tools to do that then nobody telling them they can’t use it will stop them.

Most of what we buy should not have the prices we pay. What will happen to GDP when prices we pay are set by real markets? It’ll shift — the real valuable work isn’t in buying water bottles that are produced elsewhere far cheaper than here — it’s in the things we can do, and do do, that nobody else can.

We’re cutting fat one way or another, and are going to make money doing more unique things, instead.