Capitalism is Artificial Intelligence, Let me Explain

This is a difficult post of half-formed thoughts so it may meander or I may revise it as I think it out.

There has been a lot of discussion about Artificial Intelligence (henceforth, AI) on the Internets (what I call the Internets are blog sites, mailing lists, and YouTube presentations, social media is a different animal).

My position is that AI is not I, nor is it analogous to I.

I is a survival adaptation which provides living beings a measure of understanding and control over their physical environment. Just as the eye and the ear projected consciousness out beyond the physical edge of the organism. To a living being, physical environment is very important – it can be dangerous, it can contain needed things, it can be coerced to produce needed things. Non-living beings have no such interest in understanding and controlling their environment. The non-living have no needs or wants, they are beyond “this mortal coil.”

Then, while watching some PBS or local access channel on TV I saw an interview with George Guilder at a book fair.

He was promoting a book and the book had a thesis in it. Perhaps the book took 500 pages of dense text to develop and support the thesis. I had not read the book but I was drawn into the interview. It was hard to follow, but I got the gist of a really interesting and plausible idea.

I think he was saying that the market was not a mechanism for maximizing the exploitation of resources, as it is thought of in economics. The market is a thinking machine.

I understand that in some sense the price mechanism under capitalism is a conduit of information. I remember reading a comment that the communists were not able to find a replacement for price. Price tells you a lot about demand and supply – both very important if you want to supply the demand of people.

Communists tried factory quotas: produce 10,000 pounds of chandeliers per week. You cannot allow people just to wander into the chandelier factory and produce whatever they feel like. So the factory turned out two five thousand pound chandeliers per week. Few wanted such giant chandeliers.

They said, produce 750 chandeliers per week. They produced tiny, little, midget chandeliers way over quota. No one wanted them either.

You see the problem that they were trying to solve was an information problem: what to produce so that people got what they wanted. Without a price mechanism it was almost impossible to figure out what people wanted, and if you by chance did figure it out what they wanted, it could change in a minute. In fact it would because it is always in flux.

Guilder said that the market through the price mechanism processes information about costs, supply, demand, substitution, in real time from billions of data points, never missing anything, never stopping, never unaware. He said that the amount of value that the market could add is “unlimited.”

I would have to go back to watch the interview or read the book to confirm what I took away as his point, but I kind of get it. There is a huge amount of unmet needs in our world. At the same time there is a huge amount of resources that have not yet found a way to meet needs and therefore earn money (think of SPARC’s searching for some company to invest in). Perhaps it is is simply poor people have limited resources so are ignored. Still, Walmart makes a good living selling to the less than glitterati.

Sell to the Classes and dine with the masses; sell to the masses and dine with the classes.