Neoliberalism is, according to Perry Anderson, “the most successful ideology in world history”. After all, what could be more important that the true exercise of liberty and freedom. But, is it really the case? Rupert Murdoch once rightly opined in New York Post that “crony capitalism is not capitalism. It’s cronyism.” However, the same line of argument could be extended to what happened in the Soviet Union. In other words, if crony capitalism is not capitalism, what was done in the name of communism in the USSR was not communism.

How far does that take us? Seemingly, nowhere. Both the ideologies seem to have failed humans. Then, what could be done? The answer might lie in what Michio Kaku, Professor of theoretical physics in the City College of New York and CUNY Graduate Center, on 11 February 2018, said, at World Government Summit in Dubai, regarding the role of digitisation in making capitalism perfect. Or, maybe not! Or, perhaps, not in the way he thinks it might.

Let us see how, if at all, it could happen. If one tries to construe the assertions of Prof. Michio Kaku, one might not hesitate before concluding that it is the lack of information, in terms of its accessibility in almost every regard, that allows human beings to fall prey to crony capitalism. People, as the imperfect capitalism plays out in the real world, lie.

He stresses that it is the misinformation that crony capitalists use to misappropriate wealth created in our society. For instance, if everyone could know the correct and comprehensive information about products and services that are up for being subjected to transactions in society, the decision making would be much more informed and thus, improve.

Do people thrive under circumstances that allow them to take the liberty to not only know but, essentially, understand the information that they are exposed to? Probably not; otherwise, people would often read all the detailed information that they see on any consumer product or, even better, understand the implications of any user consent template they are prompted to respond to in digital environment. Furthermore, providing information! Is it the solution to what the famous Nobel Laureate, Daniel Kahneman, calls ‘noise’ in human decision making?

Though Prof. Michio is right in painting ‘somewhat’ transient picture of capitalism when equipped with digitisation, what he fails to take into account is the fact that we have long moved from value creating economy to value extraction economy and it is the rent seeking behaviour of the contemporary economy that keeps it moving ahead with intermittent depressions and recessions. The current economy thrives not on manufacturing but on speculations in financialised world. Without going into the merits of the type of economy we have today, it becomes important to analyse key factors thereto in order to assess the relevance of what Prof. Michio talks about.

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One of the various factors as ‘correct’ information that people are likely to have access to once the world gets digitised is prices of various products and services. Prices are a very subjective phenomenon. They are determined by benchmarks or parameters that are creation of whatever way the current economic system works. If there can be no objective way to determine what is result of the purely subjective domain of how crony-capitalism works, having information about various other objective aspects of the thing under transaction will be a futile exercise.

Taking the example of what Prof. Michio talked about, if one wears chip in contact lenses and upon looking at a product, information related to various aspects of the product is displayed before one. What use will it be of? Not much. Why? The prices of a product in the market is determined by various considerations most of which are inconsistent in several regards. Also, the reasoning afforded to arriving at a price of a particular thing is extremely contextual in the aforementioned sense.

If something is determined by how the systemic attributes play out, what substantial impact will digitisation  have on it unless the system itself is overhauled as a result of digitisation. Can digitisation alone lead to overhauling of the economic system? Again, the answer is ‘no!’ because as long as the rules to determine the final stage of something will remain the same, a positive change in computed data and computational speed will not yield the desired result.

On the other hand, it is very plausible that only digitisation will help the crony capitalists become more efficient because they will be able to apply the existing systemic rule more optimally and efficiently to the detriment of real capitalism. Therefore, in order for the digitisation to have an impact on the scenario explained by Prof. Michio, digitisation should be augmented by artificial general intelligence (AGI). If there exists AGI or superintelligence, then the current rigged or inefficient economic system could be scrutinized in more effective way, for it will be out of human control. AI system ought to go beyond and destroy the system itself that is skewed to serve crony capitalism. Now, the question that arises is this: will capitalism survive if the crony capitalism is destroyed by AI? I will write another post about it.

Author Paramjeet Singh Berwal

Paramjeet holds an LL.M. from MIPLC, a union of Max Planck Institute of Innovation and Competition (Germany) and the George Washington University (USA). He is often invited as AI policy making expert. In addition to being a qualified lawyer with an extensive experience, he is an invited lecturer at several universities.

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