Every year, in a small ceremonial ritual that feels almost absurdly out of place in the modern world, the City of London pays a medieval “quit rent” to the British Crown.

The payment is not made in pounds sterling.

Instead, it is paid with horseshoes and nails.

The tradition dates back centuries, tied to parcels of land once granted by the Crown. The annual rent for one property is six horseshoes and sixty-one nails. Another requires an axe and a billhook. The ceremony survives because English institutions have an almost supernatural commitment to continuity. A contract signed in a feudal economy still gets honored in a financial capital filled with algorithmic trading firms and skyscrapers.

Today, the ritual feels quaint because the objects themselves feel trivial.

A handful of nails costs almost nothing.

You can walk into a hardware store and buy more nails than a medieval blacksmith could produce in days for the price of a sandwich. But that reaction only makes sense because we are standing at the end of several hundred years of technological compression.

To a medieval society, forged iron goods were not trivial objects. They represented concentrated labor, fuel, metallurgy, logistics, and specialized skill. Iron had to be mined from the earth. Charcoal had to be produced. Furnaces had to be built and maintained. Smiths had to apprentice for years. Every nail was individually shaped by hand.

A nail was not merely a product.

It was stored human effort.

And that is one of the clearest patterns in economic history:

Technology relentlessly compresses scarce human labor into abundant commodities.

The things societies once organize themselves around protecting eventually become so cheap we stop noticing them at all.

The nail is not special. It is the rule.

The Long Arc of Deflation

People often associate inflation and deflation purely with money. But the deeper force underneath technological civilization is labor deflation.

Technology reduces the amount of human effort required to produce useful outcomes.

Sometimes gradually. Sometimes violently.

Textiles

Textiles were once among the most labor-intensive goods in human existence. Before industrialization, producing cloth required spinning thread by hand and weaving fabric manually. Clothing represented enormous amounts of embedded labor. In many societies, garments were valuable inheritances.

Then came mechanized spinning and power looms.

The cost of producing textiles collapsed.

To a hand weaver, industrial textile mills looked catastrophic. And in many ways they were. Entire professions disappeared or were hollowed out. The famous Luddites were not irrational primitives afraid of machines. They were skilled workers watching scarcity evaporate underneath them.

But the larger outcome was not the end of clothing.

It was abundance.

The average modern person owns more fabric than medieval nobility.

Printing

The same pattern repeated with books.

For centuries, copying text required monks or scribes reproducing manuscripts by hand. Books were luxury artifacts chained to library walls because they were too valuable to steal.

Then the printing press arrived.

Suddenly the marginal cost of reproducing knowledge collapsed. Literacy exploded. Scientific progress accelerated. Entire religious and political systems destabilized because information scarcity broke.

The old gatekeepers saw disorder.

The builders saw mass education.

Lighting

Lighting followed the same trajectory.

For most of human history, generating light required burning expensive fuel sources: candles made from tallow or beeswax, whale oil, kerosene. Artificial light was scarce enough that historians sometimes measure economic progress by the number of hours of labor required to produce a given amount of illumination.

Electricity turned light from a precious resource into an ambient assumption.

We no longer think about illumination because technology made it psychologically invisible through abundance.

Computation

Computation may be the clearest modern example.

A smartphone now carries more computational power than entire governments possessed a few decades ago. Operations that once required rooms full of equipment, specialized operators, and institutional budgets now happen instantly inside cheap consumer hardware.

Photography

Photography followed a similar path.

There was a time when creating images required trained painters or expensive photographic equipment and chemical processing. Today billions of photographs are generated daily at effectively zero marginal cost.

Manufacturing

Manufacturing itself is a story of compounded automation.

Assembly lines, interchangeable parts, industrial robotics, container shipping, and global logistics transformed production from artisanal scarcity into industrial abundance.

Software

Software was already deflationary long before AI arrived.

One engineer writes a piece of code once, and it can be replicated infinitely at near-zero marginal cost.

A spreadsheet replaces rooms full of accountants performing manual calculations.

Search engines compress the labor of librarians.

GPS compresses the labor of navigation.

Cloud infrastructure compresses the labor of operating physical servers.

Every major software platform is, in some sense, a machine for eliminating repetitive human coordination costs.

This is why software companies scale differently from traditional industrial firms. The economics are asymmetric. Once the system exists, distribution becomes almost free.

The most successful software companies are often not selling software itself.

They are selling the removal of friction.

Technology Does Not Eliminate Value

This is where many discussions about automation become confused.

People often assume that when technology makes something cheaper, it destroys value.

Usually the opposite happens.

Technology destroys scarcity faster than it destroys demand.

Cheap steel did not eliminate construction. It enabled skyscrapers.

Cheap computation did not eliminate analysis. It enabled software industries, digital media, cloud infrastructure, and modern finance.

Cheap bandwidth did not destroy communication. It created entirely new categories of business and culture.

Abundance changes the layer where value accumulates.

When a capability becomes cheap, the strategic focus shifts upward.

• Once computation became abundant, the scarce resource became attention.
• Once publishing became abundant, the scarce resource became trust and distribution.
• Once information became abundant, the scarce resource became judgment.

This is one of the most important economic transitions to understand because people consistently mistake the collapse of one layer’s scarcity for the collapse of opportunity itself.

But civilizations compound by building atop newly abundant primitives.

AI Is Compressing Software Labor

Much of the current discourse around AI swings between two extremes.

One side insists AI changes nothing.

The other insists AI destroys everything.

History suggests a more nuanced answer.

AI appears to be doing to portions of software development what industrialization did to forged nails.

It compresses labor.

Code generation that once required hours increasingly requires minutes. Boilerplate disappears. Translation between frameworks becomes easier. Documentation lookup collapses into conversational interaction. Entire categories of repetitive engineering work become partially automated.

That does not mean software disappears.

It likely means software expands.

When the cost of producing something falls dramatically, humanity usually consumes more of it, not less.

Cheap computing created vastly more computation.

Cheap photography created vastly more images.

Cheap publishing created vastly more writing.

Cheap software creation may create vastly more software.

There are millions of businesses, workflows, local governments, schools, and organizations that still operate with terrible or nonexistent software because custom development remains too expensive relative to the value generated.

When creation costs collapse, previously uneconomical problems become solvable.

This is historically normal.

The Industrial Revolution did not eliminate demand for manufactured goods. It unleashed it.

AI may do something similar for digital systems.

The important distinction is that value shifts upward.

If generating raw code becomes cheaper, then architecture, product judgment, distribution, workflow integration, domain expertise, trust, and taste become more important.

The scarce layer moves.

The Mistake of Defending Scarcity

Every technological transition creates a temptation to defend the old scarcity model.

This is understandable.

If your expertise was built inside a world where production was expensive, abundance can feel existential.

And sometimes the disruption is genuinely painful. Entire professions can shrink. Skills can lose market value faster than institutions can adapt.

But history repeatedly shows that the largest opportunities emerge from embracing the new abundance rather than resisting it.

When electricity became cheap, the winning companies were not candle defenders.

When computation became cheap, the winners were not typewriter manufacturers.

When internet distribution became free, the winners were not businesses organized around physical scarcity.

The builders who win technological transitions are usually the ones who ask:

“What becomes possible now that this thing is cheap?”

That question matters far more than preserving the old economics.

The Builder’s Perspective

The medieval blacksmith may have looked at cheap industrial nails and seen catastrophe.

And from his perspective, he was not entirely wrong.

His specialized scarcity was collapsing.

But the builder saw something else entirely.

Cheap nails meant cheaper houses.

Cheaper houses meant larger cities.

Larger cities meant new industries, new markets, new professions, and entirely new forms of civilization.

The abundance of one layer became the foundation for growth in another.

AI may follow the same pattern.

Some people will experience it primarily as erosion of old scarcity.

Others will use it as leverage to build systems, products, services, and institutions that were previously impossible or uneconomical.

History suggests the second group usually shapes the future.

Because technological revolutions are rarely about preserving the value of the old tool.

They are about discovering what humanity can build once the tool becomes abundant.