Aug 26, 2026 • 1 min read
The Cost of Intelligence Is Falling
For centuries intelligence was expensive because intelligence meant people. AI turns portions of it into compute — which makes it behave less like labour and more like infrastructure.
Part 6 of 7 — AI, Software Factories, and the Future of Work
The Cost of Intelligence Is Falling
For centuries, intelligence was expensive because intelligence meant people.
If you wanted another 10,000 hours of engineering capacity, you had to hire engineers.
Recruit them.
Train them.
Manage them.
Provide offices, benefits, equipment, and career paths.
And importantly, wait.
AI turns portions of intelligence into compute.
That means its economics start looking less like labor and more like infrastructure.
The cost falls.
Capacity becomes available on demand.
You can run it overnight.
You can duplicate it.
You can allocate a very powerful model to an important problem and a cheap model to something simple.
We're still early, so AI feels expensive today.
But the long-term direction seems obvious:
The marginal cost of many forms of cognitive work is collapsing.
Once that happens, businesses designed around selling human hours will have to rethink what exactly they're selling.
Which is why I think AI's impact on the software services industry could be particularly profound.