Every so often, history resolves an argument without consulting the people who were arguing. Positions that once looked irreconcilable are collapsed not by theory or politics, but by unknowable events. Artificial Intelligence appears to be doing exactly that – quietly reconciling a 19th Century socialist critique of bureaucracy with a 20th Century free-market argument for cash transfers, using a mechanism neither side anticipated.

The irony of this is not subtle.

Friedrich Engels believed bureaucracy would wither away once class antagonism dissolved.

Milton Friedman believed bureaucracy should be dismantled because it was inefficient, paternalistic, and hostile to freedom.

They disagreed on almost everything – except the middleman.

AI has arrived to remove that middleman, a dispassionate dismantling of a system corrosive of our fundamental principles, because it is simply better at the work the bureaucracy has grown to perform without ego and its siblings. The consequences are structural, not speculative, and despite pockets of resistance, Australia is well down the path.

Engels and the Purpose of Bureaucracy

Engels’ argument, particularly in The Condition of the Working Class in England, was not sentimental. It was functional. The state, he argued, was not a neutral arbiter of social life but an instrument for managing irreconcilable class interests.

As long as society was divided between:

• those who owned productive capital, and
  those who sold their labour to survive.

The state was necessary because courts enforced contracts, police suppressed unrest and administrators managed the fallout.

Bureaucracy was not incidental. It was a mediating infrastructure. It softened class conflict by translating power into procedure – regulation, compliance, inspection, and reporting. The bureaucratic class insulated capital from unscrupulous behaviours and protected labour from exploitation while presenting itself as neutral, rational and benevolent.

Engels believed that once class antagonism disappeared, this layer would lose its function. Bureaucracy would wither because there would be nothing left to mediate.

Despite being wrong about how this would happen and underestimating its ability to feed off itself, he was not wrong about what bureaucracy does, albeit now in overdrive.

Friedman and the Case for Cash

Milton Friedman reached a similar conclusion from the opposite direction about the welfare state. His support for a universal payment – via the Negative Income Tax – was not an exercise in compassion. It was a rejection of administrative hubris. Conditional welfare replaced individual judgment with bureaucratic supervision. Cash transfers, provided universally and without prejudice he thought, did not tell people how to live: and that was the point.

Friedman believed welfare systems would eventually collapse under their own complexity. When the cost of administering assistance rivalled the assistance itself, the rational response would be to bypass the machinery altogether. Think NDIS for the most recent example of this.

Where Engels imagined bureaucracy dissolving after capitalism, Friedman imagined bypassing it within capitalism.

Neither anticipated what would actually do the dissolving.

AI and the Collapse of the Mediating Class

AI does not primarily threaten labour. Nor does it meaningfully threaten capital ownership. It threatens coordination.

The first functions to be automated are procedural:

• compliance
• risk assessment
• HR
• middle management
• policy drafting
• professional services
• clerical analysis

This is the modern Australian lanyard economy.

That class was never inevitable. It expanded because regulation expanded, because complexity expanded, and because someone had to sit between capital, labour and the state to make the system appear humane. It’s now out of control and AI removes that need.

Australia’s New Class Fault Line

Australia is unusually exposed to this shift. For three decades, we absorbed labour into credentialed, regulated, administrative work – finance, compliance, education, public administration, consulting, policy, and oversight.

As that layer erodes, capital remains concentrated and operational labour – trades, logistics, care, construction – remain a vital part of the economy because it is physical and local, but the buffering class disappears.

Capital and labour become adjacent again but with a twist this time. Not serfs and peasants, just an unemployed, alienated and cranky former middle-class with nothing to do.

That is exactly the condition Engels described as requiring a coercive state.

Universal Income as the Least Bad Option

Universal Income re-enters the conversation stripped of ideology.

It is no longer about efficiency or fairness, it’s about preventing direct class antagonism in a post-bureaucratic economy.

Without it:

• consumption contracts,
• legitimacy erodes,
• social volatility rises,
• and the state’s only remaining tools are enforcement and surveillance.

Australia’s instinctive response from the Uniparty – will be, more rules, more reporting, more guardrails – it will attempt to rebuild a mediating layer that technology has already rendered obsolete. That’s a mistake we should avoid because Universal Income overcomes this issue in large part, not because it is generous, but because it is cheaper than repression, and it may just provide the micro economy with the fillip it needs to get Entrepreneurs motivated again.

Pain, Pleasure and an Older Human Problem

Schopenhauer was not inventing a new theory of human motivation so much as sharpening an old one. His claim that human life oscillates between pain and boredom sits squarely within a much longer philosophical tradition.

For Epicurus, the highest good was not excess or indulgence, but the avoidance of pain – aponia of the body and ataraxia of the mind. Pleasure, properly understood, was not stimulation but relief: the quiet satisfaction that comes when unnecessary suffering is removed.

David Hume later secularised this insight. Human reason, he argued, does not command desire; it serves it. We act not because something is rationally optimal, but because it promises pleasure or avoids pain. Moral systems that ignore this basic psychology inevitably collapse into abstraction.

Arthur Schopenhauer simply removed the remaining illusions. Once pain is alleviated, he argued, boredom rushes in. Desire does not disappear – it reconfigures itself. Humans must then create meaning, effort, and purpose or sink into listlessness.

This matters because modern economic systems have relied overwhelmingly on pain as the organising force. Hunger, precarity, debt, and fear of exclusion have disciplined behaviour more effectively than any moral argument ever could.

Universal Income interrupts that logic. It does not promise happiness. It removes pain. What follows – boredom, curiosity, creation, or decay, it is the basic human condition reasserting itself, untethered to survival.

AI, Agency and the Return of Purpose

There is a persistent assumption that if people are not compelled to work, they will drift into passivity – numbed by screens and sustained by transfers. This misunderstands both technology and human behaviour.

The tools for small-scale agency have existed for decades. Digital platforms, online marketplaces, cheap production, remote coordination and payment systems long pre-date AI. What was missing was not capability, but permission – time without panic and risk without ruin.

Universal Income changes that arithmetic.

Some people will idle. Many already do. But boredom is not stable. Remove pain, and boredom becomes intolerable because it seeks friction and meaning, not the endless distraction of the modern hamster wheels spinning the economic turbine.

In practice, this expresses itself through modest, human-scale activity: local services, cottage industries, care, repair, craft, writing, making, tinkering. These activities don’t scale well, but they matter deeply to those who undertake them.

AI is actually the freeing agent here, not by creating purpose, but by removing the administrative quagmire that made personal agency irrational in a world defined by a labyrinth of rules and regulations.

Choice, Including the Ones We Pretend Don’t Exist

When survival is decoupled from employment, people begin to make choices that do not align neatly with policy assumptions or ideological narratives.

Some parents – including mothers – may choose to spend more time raising their children.

Not because they are coerced.

Not because they lack ambition.

But because they can.

That is not regression. It is a real preference that has effectively been managed off the menu over the last 30 years.

A system that claims to value choice has to tolerate choices it does not personally admire. Universal Income does not mandate any particular life path. It simply removes the economic penalty for choosing differently.

Governments are deeply uncomfortable with this. A population that is not desperate, not credential-chasing, and not permanently engaged with administrative systems is hard to manage.

The Dark Alternative Revisited

If Universal Income is rejected, the state will continue to find ways to intrude.

Resources shift from distribution to control, administration to enforcement, welfare to surveillance.

AI will be redeployed accordingly and Australia already possesses much of the regulatory architecture required to move in this direction as we have seen recently.

A Peace Treaty with History

Engels believed bureaucracy would wither after justice.

Friedman believed cash would replace bureaucracy because of efficiency.

AI ensures bureaucracy withers before either condition is met.

Governments are left with a simple choice:

• pay people to preserve social order, or
• police them to preserve power.

Universal Income is not a moral triumph nor is it not a market victory.

It is a peace treaty with history brought about by a modern revolution.