In the previous column titled “Economics in the Age of AI: A thought experiment on a “fully automated society”,” the author considered a fully automated society, in which AI and robots can produce almost all the goods and services necessary for society, as a thought experiment. The author discussed the ideal income distribution system that would guarantee a minimum standard of living without having to work. This time, I would like to explore a related question in greater depth: once issues of production and distribution are resolved, how should humans choose to live?
The FIFA World Cup has captivated people around the world. Countless people around the world have spent time and money following the tournament, cheering for their favorite teams and sharing in the highs and lows of victory and defeat. The World Cup has become a vast global festival. Music festivals and concerts, films and theatrical performances, traditional Bon Odori dances and fireworks displays may likewise be understood as forms of collective celebration. At first glance, such events may seem unproductive. Yet human societies around the world have continued to hold festivals since ancient times.
The development of modern economics centered primarily on production, consumption, and investment. The economics of innovation has also developed under the major theme of how to create better goods and services. However, in a fully automated society, the issue regarding production loses importance, and the primary question becomes how people choose to use the free time that automation has provided for them.
Gary S. Becker, a Nobel laureate in economics, who applied economic analysis to a broad range of human behaviors, argued that people allocate not only income but also time (Becker, 1965). Traditional economics viewed individuals as facing tradeoffs between work (time spent earning income) and leisure (time outside of work). However, in a fully automated society, where work is no longer necessary for survival, this tradeoff changes fundamentally. What remains is the pure issue of time allocation, i.e., how to allocate the limited resource of 24 hours every day.
On the other hand, would people be satisfied with a life in which they do nothing but consume goods and services? A life enriched by AI-generated movies and music, comfortable housing and food would be pleasant, but can this explain why the World Cup and Olympic Games attract so many people? In reality, despite the fact that human shogi (Japanese chess) players have been defeated by Shogi AI, people continue watching matches between human players.
Consider dining. The act of sharing a meal with someone or seeing someone enjoying a dish that you cooked is of value in and of itself. In education and childrearing, those who teach also learn and grow through the experience. In the tourism and hospitality industries, interactions with guides and innkeepers and sharing memories with the people who serve you or travel with you create value. In these cases, value is created through mutual interactions between producers and consumers.
This perspective reminds us of Adam Smith, the 18th century thinker, who is commonly known as the "father of economics." He is famous for The Wealth of Nations, which emphasized market efficiency. However, in his earlier work, The Theory of Moral Sentiments, he examined people’s capacity for empathy toward others (Smith, 1759). Market transactions involve imagining what others want and what we can provide to them. In that sense, the original market economy envisaged by Smith may have been based on a face-to-face ichiba (marketplace) where participants could both observe and interact with each other in close proximity.
However, as such marketplaces expanded and developed into enormous, anonymous market systems, human empathy gradually receded into the background. Rather than benefiting the person in front of you, attention shifted toward prioritizing market assessments, such as prices, sales, profits, and rankings. Markets became not only mechanisms of empathy mediation, but also mechanisms that make empathy unnecessary.
If markets reduce the need for empathy, AI may represent the greatest amplifier of that mechanism as it might manage people's desires and resource allocation more effectively than market mechanisms can. In that case, would human beings become merely consumers of goods and services optimized by AI?
That will not necessarily happen. Even if the role of the large, anonymous market is replaced by AI, the face-to-face marketplace may remain. There, people would share time, space, and emotions instead of merely exchanging goods and services. One way to interpret the value co-creation theory of Prahalad and Ramaswamy (2004) is a modern management-based redefinition of these human connections. They argued that value is not created unilaterally by companies but is co-created in interactions between companies and customers. In a fully automated society, this co-creation logic may extend beyond business and permeate society as a whole. Education, childrearing, dining, tourism, sports, community activities―in these activities, people are not mere consumers but participants.
If so, a fully automated society is not the ultimate realization of a society centered on production and consumption. Rather, it may be a society centered on participation and co-creation, transcending production and consumption. Economics has until now treated all time outside working hours as “leisure,” used for consumption and rest, without sufficiently examining its internal complexity. Perhaps the true challenge for economics in a fully automated society is to understand how people choose to use the time that automation has freed up for them, how they will participate and co-create value with others, generating the interest, excitement and meaningfulness of human life.
In this column, as a starting point, the author presents the possibility of a shift from production and consumption to participation and co-creation. The essence of participation and co-creation may lie in people interacting, engaging in dialogue and jointly creating value.
Let’s make an uninteresting world interesting.
This famous death poem attributed to Shinsaku Takasugi, a leading figure of Japan's late Edo Restoration movement of the late Edo period, poses a new question to economics in the AI era. Even if AI takes charge of production and people no longer need to work for survival, people are unlikely to be satisfied only through consumption of goods and services. Through participation with others, co-creation, and becoming immersed in collective excitement, they will surely create their own sense of meaning and enjoyment.
Even in a fully automated society, festivals will surely go on.
The show must go on.
July 9, 2026
>> Original text in Japanese
