What does Artificial Intelligence mean to economists? Well, let’s look at the term for a moment shall we? I can think of one famous economic definition: Value. When you talk about financial markets, whether it is stocks, real estate, or anything else, what are the values of all the different assets you hold?
How much does it cost to take one of these assets and sell it for a higher value? What will happen if you change that asset from being valued at a certain price to be valued at a higher price? It sounds a little ridiculous, doesn’t it?
But these things have happened in the last couple of decades, and yes, now we are really getting into the details of how economic forces can actually change the assets and make them more valuable? For example, let’s say we have a rise in oil prices, and the value of oil goes up, or maybe there is some other form of energy that becomes more valuable than it did before. What then happens to your value?
Yes, this is an example of a new concept, and it could be argued that perhaps our economies could really change if we do something like this. But then again, what happens when oil prices go down, or how about the same thing with gold?
The question is, what exactly is Artificial Intelligence? The term itself is a bit nebulous, but the broader idea is that a computer program is able to learn what it takes to buy a stock, when to buy, and when to sell, so that it can make money based on market fundamentals.
So how can this benefit any business? Well, one aspect of this is that it will help future proof a business against disruptions, so that it can keep making money even if there is a change in the weather, or something else happens to the energy source of the company.
What will this do for a small business owner, though? Well, a very small business owner has to carefully plan his investments in a way that takes into account the likely change in the economy and makes his investment decisions accordingly. That’s not something a computer program can do, though it can take in all the information about the market and then make a decision on its own.
So will Artificial Intelligence really change economists? Well, there is no denying that it could potentially, especially if the market makers who make billions off the information to go out of business and the vast majority of money comes in from smart algorithms taking it all in.
Perhaps the best way to see the future of Artificial Intelligence is by considering the future of human manipulation of the market. This is the greatest fear of many economists because they believe this technology could lead to a socialist society where everybody has to work for the government and that would lead to a future without free markets. Of course, this has already happened in some countries, and it probably won’t take place, but nevertheless, it is one of the concerns of economists.
So is Artificial Intelligence a threat to human manipulation of the markets? There is no question about that, in fact it would take a significant blow to humans in some countries to make it impossible. However, it would mean some serious manipulation from the side of the computers to get us all hooked into some sort of mandatory labor plan, and I don’t think we would be happy about that.
So in the end, Artificial Intelligence could change economics, or it could be something positive in a way. It will probably be something of both, as it goes in a direction where humans will be less important, or are far less important.