The Marginal Utility of a Prompt
We are currently in a 'Prompt Engineering' gold rush. Everyone is trying to find the magic sequence of words to make an LLM spit out the perfect essay, the perfect code, or the perfect image. But as an observer of economic cycles, I can’t help but notice a familiar pattern. We are overvaluing the input and ignoring the marginal utility of the output . The Collapse of Content Value In Austrian Economics, Carl Menger taught us that the value of a 'higher-order good' (like a prompt) is derived from the value of the "lower-order good" it produces (the content). Right now, the cost of generating a paragraph of text is trending toward zero. When the supply of 'good enough' content becomes infinite, its marginal utility collapses. If everyone can generate a 1,000-word strategy memo in three seconds, the value of that memo isn't the 1,000 words—it’s effectively zero. The Shift from 'Chat' to 'Agency' I believe we are hitting the ceiling of...