AI in a post-capitalistic world

Having just finished Paul Mason's incredible PostCapitalism: A Guide to Our Future, I found it sparking in my mind many interesting ideas and thoughts on how artificial intelligence can fit into an economy increasingly dependent on the abundance of information. I must mention that I am not at all an economist, so apologies in advance if I confuse any aspects of the theory. Although Mason doesn't explicitly mention artificial intelligence, many of his ideas on info-tech are directly applicable and highly relevant, so I will first attempt to explain them.

Paul Mason envisions the postcapitalistic economy as a distributed network, without any central planner, but operating primarily on the free access and dissemination of information. The lifeblood of such a setup would be instantaneous, real-time information feedback, supported by a non-centralized technological network. His argument is that, as we shift increasingly toward an information-based economy, we move away from scarcity, because information is infinitely replicable. Something that is infinitely replicable has a zero marginal cost (meaning that after the first one is made, it costs pretty much nothing to make another). This makes it really difficult to determine its cost.

In a free-market economy, prices are determined based on the scarcity of the item. For example, because there are only so many TVs available at any given time, if more people want a TV, the price will increase until supply meets demand. Supply can't increase immediately because there is a production cost for each additional TV. But with info-tech, this doesn’t apply. Netflix lets you share your account with multiple devices and family members without requiring you to pay more, because their additional cost per use (marginal cost) is practically nothing. The information itself, once created, can be freely copied as many times as needed to meet demand. Netflix is essentially charging for the fixed cost of creating the information aggregation technology (plus of course other things like advertisement, content creation, engineers, distribution, etc). Countless other examples exist of people/entities not even charging the fixed cost (i.e. Wikipedia, GitHub, open source) for access to information.

So how do you price something like this? Paul Mason makes a good point that at present, the market doesn’t know how to price “information”. Hence the crazy valuations of startups that aim to aggregate and deliver services based on it. The most we can do is compare with prices of services without info-tech. For example, if I book a hotel room, it will cost me X dollars, but if I can find someone willing to let me stay in their home while they’re gone for Y dollars, then the value of the service that allows me to find that someone should be close to X - Y. But what about the price of having songs recommended to me on Pandora or Spotify? I would not have paid to listen to these songs otherwise, as I didn’t even know they existed. But surely this service is worth something to me. What about something I don’t even have to explicitly pay for, such as Twitter or Reddit? What is the value to me of having in my hands a snapshot of current trends and articles, tailored to my specific interests?

With capitalism's inability to appropriately price information-based goods, along with the ease of copying information, Mason argues that the cost of labor will be driven to zero, thereby producing enormous profit for corporations. This is feasible until almost all the labor has been squeezed out of the system, at which point profit flatlines and prices are driven toward zero because nobody can afford the products anymore. (This is my very layperson understanding of labor theory.) Therefore, in a post-scarcity world, capitalism cannot exist.

I found this a fascinating idea, but I have a major issue with this contention. Information cannot reduce the cost of resources to zero. In fact, nothing can. We still need to make physical products such as housing, food, clothing, etc. Info-tech can perhaps make resource consumption much more efficient, such as encouraging telecommuting or reducing overproduction, but it can never drive the cost to zero, in the absence of infinite resources.

However, his point is well-taken, because the second thought I had was that the replacement of labor is primarily going to be by artificial intelligence. Mason doesn't really mention AI in his book, instead simply referring to "automation," but he seems to assume that once a process automated, it essentially becomes capital. It cannot ever inject more value into the system. But AI appears to be making remarkable strides, and is predicted by many to cause massive unemployment in the near future (especially for routine work, see below, and in the automotive sector). As artificial intelligence replaces labor, most people will be driven out of the market.

This will be a problem (to say the least), because postcapitalism assumes that we as individuals can retain control of social and other information. But most companies are extremely protective of their information (as they are essentially smart information aggregators). You can use Uber to get a ride, but you cannot have access to their database. (It is this information imbalance that gets converted to profit.) So with corporations owning both the aggregated information as well as the algorithms to process that information, the replacement of human labor could lead to an economic disaster. Perhaps, in the face of such widespread unemployment, social pressures will be so large that governments will be forced to institute a basic universal income. This is vigorously advocated by Mason as being one of the central requisites of a postcapitalism economy, but it seems like there will need to be incredible social upheaval before this will be considered.

Another interesting idea that the book brings up is that, in an information-abundant, technologically connected society, profit derives primarily from creating something. In this world, anything that can be planned can be automated. Therefore, the only jobs left will be those that are inherently innovative, creative, and unplanned. But we are already starting to see AI that can create art, generate Shakespeare, and even dream. True, there is still a long way to go before we recognize such output as truly innovative or useful to daily life, but we are only beginning to explore the full potential of deep learning and other relatively new AI methods. Will it just be a matter of time before humans are competing with machines to innovate and create? And if/when that day comes, will it be ethical for anyone or anything to "own" these creative artificial intelligences?

Overall, I found PostCapitalism to be a great read. Highly recommended for anyone looking to get a better sense of how our economy is being transformed. Mason doesn't go into detail about how exactly we are supposed to make the transition to postcapitalism, but he makes a great case that certainly something interesting is on the horizon.