Adam Smith meets AI: Digitizing the invisible hand for a brighter future
Adam Smith’s “invisible hand” illustrated how free markets, guided by supply and demand rather than central planning, naturally allocate resources with remarkable efficiency. In his 1776 masterpiece, “The Wealth of Nations,” Smith argued that individuals pursuing their own interests unintentionally benefit society through voluntary exchanges.
Today, this timeless principle lives vividly in peer-to-peer platforms like Uber, Airbnb and inDrive, where consumers and providers determine value directly, sidestepping layers of bureaucratic friction. These innovations have normalized decentralized commerce, proving markets self-regulate when empowered.
Peer-to-peer platforms pave the way
Uber revolutionized transportation by turning private vehicles into a flexible supply network, creating over 5 million flexible jobs worldwide since 2010. Drivers often earn 20% to 50% above local minimum wages through surge pricing, which responds dynamically to real-time demand spikes in cities from New York to Nairobi.
Airbnb applied similar logic to lodging, unlocking more than $100 billion in annual economic activity by monetizing underused homes and apartments, naturally balancing prices through supply and guest preferences.
inDrive refines this model further by reintroducing genuine negotiation: riders propose fares, drivers counteroffer and mutual agreement locks the deal. Now operating in over 40 countries, including emerging markets with volatile economics, inDrive shows how direct dialogue can outperform rigid pricing in unpredictable sectors like ride-hailing.
These platforms didn’t dismantle regulations but dramatically reduced entry barriers, fostering trust in open exchanges and generating billions in untapped value. Their success has conditioned millions to embrace peer-driven markets, laying essential groundwork for even broader applications.
AI’s potential to restore wage conversation
AI holds a transformative possibility — not yet widespread reality — to digitize the invisible hand across labor markets, powering platforms where employers and workers negotiate wages dynamically using real-time data on skills scarcity, job urgency, performance history and local conditions. Rigid minimum wages, originally designed as worker protections, have increasingly silenced worker bargaining, transforming pay determination into a political tool wielded to appease voters rather than an economic signal grounded in common sense or local realities.
Consider the distortions: excessively high minimums, like those pushed in progressive states, price low-skill workers out of jobs entirely, with economic studies showing employment drops of 1% to 3% for every 10% wage hike in sectors such as hospitality, retail and seasonal services. Businesses cut hours, automate roles or close outlets, leaving the most vulnerable unemployed.
Conversely, stagnant low minimums fail to attract or retain talent in high-cost areas, trapping workers in poverty cycles without upward mobility. Both extremes harm workers and industries alike by overriding market signals — abundant labor should soften pay temporarily, while scarce expertise demands premiums — yet politics prioritizes headlines over balance.
Peer-to-peer successes foreshadow the shift. Just as Uber and inDrive disrupted fixed transport fares, AI could enable workers to counter job offers instantly on digital marketplaces. Algorithms would surface prevailing rates, flag anomalies, verify credentials and suggest total compensation packages (wages plus portable benefits).
In abundant retail labor pools during off seasons, pay might adjust downward. For scarce tech or nursing skills amid shortages, it surges upward. This restores transparency and agency, complementing — not erasing — baseline safeguards while fostering efficiency. International Monetary Fund analysis projects AI touching 40% of global jobs, but when channeled through such platforms, it promises responsiveness over displacement.
President Trump’s 2025 executive order preempting patchwork state AI regulations also clears innovation pathways amid contrasts like California’s hikes to $16.50-plus an hour, signaling federal support for market-led evolution.
Puerto Rico’s prime opportunity
Puerto Rico, bound to the federal $7.25 minimum wage despite living costs 20% to 30% above the U.S. mainland average, represents fertile ground for this vision. Tourism booms in San Juan or hurricane recovery demands could trigger AI-mediated pay surges, while off-peak lulls allow flexible adjustments, tailoring compensation to island-specific rhythms that rigid federal rules ignore.
AI marketplaces might enable portable total compensation packages (wages, health credits and training stipends), mirroring elements of Sweden’s flexicurity model, where market flexibility keeps youth unemployment below 10% despite strong protections.
Energy markets, long plagued by monopoly inefficiencies and blackouts, could pivot toward performance-based bidding, allowing consumers to select installers or microgrid providers based on uptime guarantees and responsiveness, much like choosing a ride.
Health care access, strained by provider shortages and geography, improves as patients post needs — say, a specialist consult — and licensed professionals compete on availability, outcomes and price, slashing wait times from weeks to hours. Trades like roofing or plumbing follow suit, monetizing idle skills during recovery periods.
In each case, AI introduces competitive pressure on bottlenecks without upending institutions, promising genuine prosperity through connection rather than top-down control.
A visible hand for all sectors
This logic extends seamlessly to skilled trades, construction, logistics, education and beyond. Imagine posting a roofing job with budget and deadline, receiving AI-vetted bids highlighting market norms, then locking terms with automated compliance. Goldman Sachs estimates AI could automate tasks equivalent to 300 million full-time jobs globally, but platforms channeling this into peer exchanges might unlock $1 trillion to $2 trillion in latent economic activity from underutilized human capital.
Decentralized finance (DeFi) smart contracts already optimize trades autonomously on blockchains, hinting at Smith’s self-regulating vision scaled digitally. As peer-to-peer pricing reshaped transport and lodging over the past decade, the trajectory points to full wage transformation across economies — not overnight, but incrementally, as technology matures.
The invisible hand, once metaphorical, becomes visible through AI — measured, informed and accessible to anyone with a skill or need. Society’s embrace of Uber and inDrive suggests peer-driven, data-enriched negotiation will expand, operationalizing supply and demand as everyday practice. Prosperity emerges not from rigid control but from empowered connection, brightening futures one market signal at a time.
Antonio Santos is a professional with more than 30 years of experience in the hospitality, service and tourism sectors. In 2024, he ran as a candidate for the Puerto Rico House of Representatives for District 1 in San Juan under the conservative party Proyecto Dignidad. He has expressed support for entrepreneurship and economic development policies that emphasize small government and economic independence.
