We are three near-future technologies away from universal price collapse.
Nesting doll of prices
The price of everything you can buy can be thought of as the sum of the price of all its inputs plus some margin for the seller of the combined good or service. Every input's price can be thought of the same way, all the way down to energy and raw materials.
A metaphor I find useful for thinking about this is those Russian nesting dolls (Matryoshka dolls). As you shrink the price of a doll on the inside, every doll containing it will shrink as well.
An oversimplified example is a pencil: inside a pencil is the wood, graphite, rubber, that little metal band, and the yellow paint. Inside of each of these inputs is more source inputs. At each stage there's also the application of energy (human labor, electrical, fossil fuels, etc) and transportation to get all the inputs together.
Layers upon layers upon layers. But if you drill all the way down there are a few general components that everything is made of.
- Raw materials (metals, minerals, natural chemicals, wood, etc)
- Energy (electrical, fossil fuels, metabolic, etc)
You can think that the prices of each of these things will amplify changes in price of complex goods (housing, cars, food, clothes, etc).
The consistent progress of technology has radically reduced the price of these base inputs and has lifted most of humanity out of poverty. The amount of human labor dedicated to producing food has dropped from greater than 90% to less than 10%. (source)
We currently have line of sight to several radical technological advances that could result in universal price collapse.
The cost of operating renewables energy generation is near-zero (because they don't require fuel) and the price of manufacturing is dropping rapidly. (source) They're already cost-competitive with the cheapest fossil fuel based systems and more than half of new electricity generation installations are renewables. (source)
Battery technology has also advanced tremendously. Grid-scale battery installations can be made with readily available minerals (no need for Cobalt, etc), that take 10% of the energy that batteries used to require, and are readily recyclable. (tesla megapack)
These battery installations are needed to transition the grid to 100% renewables, but they also level out the cost of electricity, reducing the overall cost of electricity. (source)
If trends continue the price of electricity will reduce by an order of magnitude and the amount of energy that we will have access to will double or triple. (source)
Energy is an input to every good and service, so a world with energy abundance makes human necessities (food, water, clothing, shelter) far cheaper.
As humanity has spread, we have drained much of our sources of fresh water (aquifers, rivers, lakes, etc). If nothing changes, we will run out. And water usage reduction will not be enough (when the rivers run dry).
Desalination technology has improved tremendously. To the point where places like Israel and Dubai get most of their fresh water from desalination (source, source). The most costly part of desalination is the electricity input needed (source).
In a world that has intermittent renewables, we will need to have places to utilize this excess energy when we're generating more than needed by consistent consumers. We already have days where there is negative cost electricity, as in utility companies will PAY YOU to use electricity (source). This will continue as we scale renewables.
Desalination plants are a great energy sink in such times because we can fill reservoirs while we have energy excess and turn them off when electricity is expensive.
In a world of energy abundance we could provide all the water humans consume just from desalination. We already have vast systems of pipes and pumps for fossil fuels that will be unnecessary with a renewable grid. Maybe we can repurpose them to get water from coasts to the reservoirs of land locked places!
We could have a future where the rivers and lakes go back to their natural levels because we don't need to pull from them unless there's an emergency.
The other near-future technology is autonomous driving. Whether we are months or a decade away from truly driverless cars and trucks, it is going to happen in our lifetimes.
71% percent of all goods were shipped by truck in the US (source). 40% of the cost of truck transport is the driver, and ~10% is the cost of fuel (source). If both costs trend to zero (autonomous driving, and cheap electricity for electric trucks), our supply chains become incredibly inexpensive to operate. That's not even including the cost of maintenance and insurance which greatly reduce with safe autonomous driving and electric vehicles.
Autonomous driving is estimated to reduce the amount of household budget Americans spend on transport by $5600 per year (source).
Autonomous driving will drastically impact the cost of goods, as well as increase the disposable income of each household.
Whether it's smelting steel, manufacturing concrete, or fertilizaer production much of the cost of production is in raw materials, transportation, energy, and human labor.
Electrification of industrial processes can improve their energy usage by up to 80% (source). Electrified machines require less maintenance than their fossil fuel counterparts as well, reducing costs further (source). As we electrify more of these industrial processes the cost of energy, as an input, will trend toward zero.
We also have line-of-sight to humanoid robots and machine vision systems that can automate a lot of the labor-intensive (Amazon's warehouse bot, Tesla general humanoid robot) and intelligent jobs (GPT fixing bugs in code) that are part of manufacturing. As we introduce these systems, the labor costs in manufacturing will trend to zero as well.
The cost of mining for metal ores and minerals is mostly machinery, fuel, and labor. (source) Each of which will get cheaper with electrification, energy abundance, and humanoid robotic labor.
More complex products
Cars, food, housing, etc are all made up of inputs that are going to have their prices slashed.
Food = land + water + fertilizer + machinery + labor (all but the first will get less expensive)
Housing = land + building materials + labor
These innovations have positive feedback loops
As each base input gets cheaper, complex goods will get cheaper as well. As complex goods get cheaper (like manufacturing systems / robots, autonomous trucks, etc) they'll start to feed back into the system and reduce the cost of everything else. Creating a positive feedback loop reducing costs.
Given enough time, there may be universal price collapse.
A few radical technologies away
We already have the technology for energy abundance, it's a matter of bootstrapping production of current technology to replace existing energy systems.
We are probably 2-10 years away from truly driverless transportation.
We are on the order of a decade away from humanoid robots and machine vision that can do most simple labor.
We already have machine vision systems that are better at certain jobs than humans (some radiology, facial recognition, etc). More are coming online all the time.
Whether these items are years or decades away, they aren't a hundred years away. We may soon live in a world that is post-scarcity, or one of universal unemployment and poverty. We should prepare our imaginations so we can push toward the most positive outcome.