Coding the economy to cut the high price of low cost

Photo by Ray Hennessey on Unsplash

The allocation of resources - and the cost of optimising that allocation - has always been humanity's most profound challenge. Artificial Intelligence may offer our best solution - but only if we are prepared to think globally.

Capital and the market model it sustains has been held up as our best bet for resource allocation for centutres. Yet capitalism and its governance are not necessary states by any means. They are emergent properties of the complex adaptive system we describe as the economy.

One transaction allocating value does not capitalism make. Multiple ones at scale can. Just as a molecule of water is not a wave, let alone a tidal force. These are emergent properties of complex adaptive systems.

The interactions within the system are what creates those emerging properties. Change those interactions and the properties change.

The best modifier we have had to date has been Government intervention - taxes, laws, welfare etc. But complex aqdaptive systems are notoriously difficult to tinker with. Think of the butterfly effect as applied to weather (another complex adaptive system).

So a Trump here or a Brexit there is going to have some impacts, but predicting exactly who, where and what feels the chill wind is a somewhat more exacting science than knowing that change will come.

As our economy has become more connected (and decentralised) it is becoming more anti-fragile. Make no mistake the economy will keep on functioning no matter what governments do. The question is can it be controlled somehow to ensure the emergent properties are desirable for humanity?

As we head towards quantum computing and ever more intelligent automation the point looms at which decisions to allocate resource will patently be better handled by machines.

Our machines will be better able to calculate the global economic costs of each transaction. They will factor for the environment as much as for human need. If we code that in.

But this is going to be a greater race for power than military applications of AI. Those who choose not to take part will be at significant compertitive disadvantage to rivals.

So the pressures to allocate to meet immediate human gratification will be huge. Only through global agreement on total costs will we give our children a chance.

Wealth blocks the market from meeting need

Via  www.freedomfounders.com/

The moment that demand became conflated with ability to pay, Capitalism had lost its way.
Capital and free markets were meant to be the single most effective way of distributing resources. And they still could be. But we need to reset those markets.
For all the removal of trade and regulatory barriers we have seen, none has had the effect of distributing resources to those who need them, instead we have seen a continued decline of the market's to ability to meet need - and an increase in the reality of demand being conflated with the ability to pay. That means wealth.
Wealth - the storage of the ability to pay - has become the blocker to the market's ability to meet need.
If a resource is scare and you have a store of wealth vs someone who has a deep need, the market gives you the resource. That resource now costs more than it did, taking it further out of reach of the person with deep(ening) need while the wealthy stock pile, only to sell on to the needy at even greater disparity from the market norm in the near future. Your store of wealth - your blocker to the market's ability to flow resources to those of greatest need - becomes greater as a result.
The bigger the great stores of wealth, the greater their ability to add to themselves by repeated distortions of the market away from need and towards ability to pay.
Remember - wealth is not what the market is for. The market cares only that resources are best allocated. (equating to the fairest distribution of wealth to all).
This may be one of the drivers behind alarming statistics such as those from the Joseph Rowntree foundation - that while the UK economy grew 10% between 2008 and 2014, average wages fell by 6 per cent.
A market already distorted by centres of wealth will always continue the flow of riches to those with the greatest wealth - spiralling upwards their ability to pay = more distortion of resource away from need.
To bring the market back into balance requires a shift back towards need. The best instrument we have currently is taxation. Super Taxes on the Super Wealthy could be a start.
But the power of some of the centres of wealth are now beyond the control of Governments. Tax avoidance is a new art form delighted in by a globalised elite.
But perhaps even they are not beyond the democratising power of technology.
We need a change in market conditions - in the way that the complex adaptive system of the market's wind blows,. Perhaps of the kind Elon Musk is venturing on to redistribute some of the wealth held by the world's top 0.1%.
What we need is an instrument which allows the market to supply against need at least as well as it meets demand. Musk's Fintech and the drive towards Universal Basic Income show we have hope of a reset.
While few expect that reset to mean everyone gets an equal share, its essential that steps are taken to support the market in meeting its brief. Without it the spiral to Capital's singularity would seem inevitable.