And at the very end, it will reduce to capital only, with no need for labor at all. Most people will be unemployed, and whatever capital they've amassed is unlikely to be enough to sustain themselves and their families for the long term. They (you) will end up as little more as impotent ants to AI-fueled Elon Musks, neglected until the infestation needs to be cleared to make way for some project.
I don't think it's that unrealistic. The trick will be, not going too fast, managing a few separate transitions, and making sure capital maintains control of the institutions with the monopoly on the use of force. The masses don't tend to act to project their interests until it's too late.
The masses are already showing signs of restlessness, and the only real problem right now is wealth inequality. Actual unemployment rates remain low. Forward in time a little, let's say 20% unemployment due to AI. The only way anybody is going to maintain their monopoly on use of force is if they hire every one of those 20% to be police. Right now the ratio of police to citizens is really low, and the ratio of weapons to civilians really high. I don't think the masses will wait all that long.
> The masses are already showing signs of restlessness
IMHO, "restlessness" doesn't mean anything. It would be expected in a AI-driven usurpation of labor. People have already been restless for decades due to de-industrialization, and that mainly got us Trump and an opioids, but the factories are still gone.
The key to fucking over the masses is making sure the "restlessness" doesn't get too strong, and doesn't have a clear (and correct!) villain identified, and maintaining a sense of inevitability.
> I don't think the masses will wait all that long.
IMHO, they probably will. Any individual or small group who takes action will be pilloried as wackos and thrown in jail. A larger movement will be (rightly) characterized as an insurrection and dealt with harshly.
People are complacent, and often don't realize they're really losing something until it's already slipped from their fingers.
I also think the Western world lacks the ideological tools to stop technologies like this. They'd basically have to start looking at technology like Amish do: rejecting technology that would undermine their social structure, rather than expecting the social structure to adapt to the technology.
We may not be that far away from when energy-intensive, latency-insensitive computing tasks are best located in space, to take advantage of cheap continuous solar power. The power capabilities of the next gen Starlink satellites are impressively cheap.
It does make sense, but you're not thinking about it clearly because you're too tied up in existing social structures. The end state "AI-fueled Elon Musks" (note that's a type, not a particular man) don't need common-man customers or their money, because they don't need to pay labor to operate their capital. They can directly operate their capital themselves, so they'll just do whatever the heck they want and nearly everyone who's now an employee becomes an ant.
At that point the main economy would mainly consist of billionaire ego projects and some trade between large corporations to support them. Common people would scrape by on billionaire largess and by squatting on resources not currently needed by billionaire ego projects and using it for small-scale subsistence production.