 When it comes to the topic of artificial intelligence, we tend to worry that it will create a less libertarian and perhaps even dystopian future for us. But not so, says our guest this weekend, Hunter Hastings, who presented a great paper last week at our Austrian Economics Research Conference entitled Individualism in the Age of the Smart Machine. Hunter makes the case that technology in the form of a cognitive assistant may actually make us far more free and more entrepreneurial in the future. So if you're interested in AI, stay tuned for a great presentation by Hunter Hastings. Human action is about to change significantly. As a result of the accessibility to knowledge, it's going to come as a result of so-called artificial intelligence. So artificial intelligence, AI for short, is software that can retrieve and store vast amounts of data and knowledge. It can sort through it in response to a query. It can learn. It can exhibit some forms of machine intelligence, like understanding, reasoning, decision-making, prediction and insight. One area for the application of AI is the cognitive assistant. I'm going to be using that term a lot. Think of it as an assistant, an AI-based assistant to augment human performance. And in the future, all of us can expect to have many cognitive assistants helping us, maybe like Roboadvisors for investing. So in the context of Austrian economics, I want to make a proposition. And the proposition is that this development has potential to support the rise of individualism and as a corollary, the decline of collectivism and dependency. Much may we hope that's true. Here's the core of the argument. So the starting point is individualism. It's always been a core tenet of Austrian economics. In negation of individualism, the dominant trend in the 20th century and to date has been collectivism, the desire to overwhelm the human action of the individual with group and class and especially state intervention and regulation. Now technological innovation can exert influence in favor of individualism or collectivism. So in that sense, we can use the term, maybe it's value neutral in that concept. And that statement is true for artificial intelligence as well. It can be applied for freedom or it can be applied for repression. The cognitive assistance specifically has very strong potential to be a tool for individualism and the freeing of markets. And to illustrate that, I'm going to present a case for a cognitive assistance for entrepreneurs and entrepreneurialism and suggest that it's capable of reigniting the entrepreneurial energy that's currently repressed by regulation and intervention. So let's just talk about individualism for a second. Fritz Maklop on the occasion of von Mises, the anniversary of, 100th anniversary I guess you should say of von Mises' death, was asked to give a list of original contributions of Austrianism to economics and he has eight items on his list. The first three, methodological individualism, methodological subjectivism, and the role of taste and preferences in economic choice and decision making, they're all firmly rooted in individualism. Individualism you could say is fundamental to praxeology and to catalectics. Economic actors are individuals. Each individual acts to improve their circumstances which he or she deems unsatisfactory and replace them with circumstances that they prefer. Groups don't act. And the last one, at the bottom of the list, political individualism is kind of a corollary of economics. Political freedom requires individual freedom. So we wouldn't dispute, I don't think, the grounding in Austrian economics of individualism. Today however, collectivism dominates. We don't need to spend a lot of time on this either. There's the ever-increasing amount of government spending and its associated rules and regulations devoted to suppressing freely made individual choices and replacing them with choices made by the state. Austrian economics has been superseded as a foundation for policymaking by collectivist economics, meaningless aggregates defined as variables in a model and a crude causality assumed that facilitates them and the mathematical manipulation of the aggregates on a timeline and that's the new basis for policymaking. Subsidory policies such as those aimed at redistribution of income and wealth are thoroughly collectivist. The one group that one group deserves to have transferred to it, the fruits of another group's economic labor. And in the political field, individual freedom is overturned by the preference for newly conceived and created so-called group rights. This is bad for individuals. The predominance of collectivism has undermined capitalism in the sense that individuals through the division of labor and the voluntary and market exchange have been able to raise their standard of living over time, dear to McCloskey's favorite number is 3,000 percent in 200 years, but it's no longer working. The field of entrepreneurialism, which is driven by the energy of individuals making bets on the future and trying to serve their fellow man better, is constrained and declining. So this top chart is a list of or a chart of new firm deaths and new firm births and it's in a death cross now where the number of exits is exceeding the number of births. So we have a declining entrepreneurialism in that sense, and the bottom chart is a trend of the job reallocation rate, the input of new jobs versus the decline in jobs that they're replacing. So we've got a secular and worsening decline of the job reallocation rate. Labor's declining, workforce participation rates by individuals is going down, and collectivist laws develop more and more incentives not to work. So the marginal choice between work and welfare is more and more lopsided in favor of welfare. So Austrianism believes in marginalism, and that's one of the contributions of an insight that if you make work marginally less valuable, you're going to get less of it. Consumer sovereignty is also subject to erosion. It's not really an individualist concept. One consumer's preference can't change what the producer produces, but collectivists are accumulatively individual tastes and preferences do. And consumer sovereignty in the collectivist purview is replaced by rules and regulations determining what can be offered and what we can buy. So we can't buy low-priced cars without airbags, although there's an interesting article in Lou Rockwell.com this morning that says buy a motorcycle as close enough and it has less safety aspects. We can't buy drugs that the FDA doesn't think are worthy. So from both economic and political freedom, freedom for individuals is repressed and the consequences are that we have worse prospects for economic growth and quality of life. So let me get to the technology issue. As I said, it can work both ways. So just to illustrate, one of the things that I can do very, very well is process visual data. One aspect of that, just as an example on the left, you can take traffic cam data and one company has taken all the traffic cam data in the Bay Area in San Francisco and developed an algorithm that says if there's an earthquake, here's how we can evacuate people quicker and most efficiently. Thousands of lives potentially could be saved. On the other hand, that same technology can coercibly monitor you as you go through the airport and put you on some wanted list that the state is pursuing. Another aspect is so-called sentiment analysis. So from all the blog posts that you make, all the comments you put on LouRockwell.com or Mises.org and so on, the artificial intelligence can derive what they call sentiment, what are your motivations. And from that can derive responses that might be a good market offering. On the other hand, the same technology can spy on your email and run the same process and decide whether you should be on that wanted list. So we freely admit it can work either way. So artificial intelligence has the potential for good. That's the proposition. So we got linked software services that include cognitive computing, big data analytics, natural language processing. You can speak to the cognitive assistant that can speak back to you. Community management, peer-to-peer verification. So the trustworthiness aspect that we talked about earlier. Matching algorithms, putting the right people together to make a trade. It includes the capability of ingesting and processing vast amounts of data. So our access to knowledge is going to be much greater. That could be books, it could be research papers, it could be videos, it could be Jeff Dice Mises weekend presentations, it could be podcasts, it could be information in any form. It can understand and learn about that information. It can dispense it to anybody who wants to ask. And it can share experience through a community in a very productive way. It can give you exactly the right answer for exactly your circumstances from exactly the right expert for exactly what you're trying to do. And it can be all organized in a smart system that can learn and improve over time. So think of a cognitive assistant as an always available, always accurate, always hardworking, always super intelligent, right hand person that's willing to do all the work you ask it to do whenever you ask it. And not only that, the cognitive assistant will be able to reason at the human level, learn, talk to us in meaningful dialogue, create new understanding and insight from data analysis and patent recognition and so on. And in the future, we'll interact not just with one cognitive assistant, but a series of cognitive systems that are linked together in meaningful knowledge sharing ways. And technologists can weave the cognitive agents together in a way that they can collaborate effectively with one another, not just with the humans. So when humans are involved, how do these agents interact with humans effectively? How do we interact with them effectively? It's a social issue. It's an economic question. It's a philosophical frontier. And we've got to figure out how to interact with systems that have increasing degrees of cognitive capability and figure out the best way to work with them. What role should we play? What role should they play? That's why I said that human interaction is, or human action is going to change. So here's an example. It's still obviously conceptual, but that should say a cognitive assistant for entrepreneurs. And you don't know how to read all this chart, but I'll try and explain it to you. If we define the elements of entrepreneurship as knowledge, judgment, and action, and I took that from a Peter Klein paper, so I'm claiming that that's Austrian, we can imagine how a cognitive assistant can help with all three. So essentially, the entrepreneur can go to the cognitive assistant and ask it a question. You can type it in, you can talk it in, you can do it in various ways. Knowledge questions might include, how do I get financing for my business? How do I generate sales leads and new revenues? How do I buy the right goods and services at the right price? How do I get customized health insurance? How do I apply business processes and controls in the best possible way? So the machine can provide a lot of knowledge to the entrepreneur. The judgment questions might include choosing between alternatives. How do I make that judgment? How do I identify best practices and use them? How do I apply diagnostics and evaluations to make my business as effective as possible? How do I create the right model design for thinking about the future? And then action questions can be actually doing things, buying things primarily, but having the machine do things. So it could secure specialist services for various inputs. I need a lawyer, I need a patent lawyer, which is the best patent lawyer, have them do the patent law work. Eventually we expect cognitive assistance to be able to make those decisions on behalf of the entrepreneur. So if you put in the right parameters into the machine and give it permission, it can make that decision. It can hire the service provider directly. So that would be an example of the machine acting. So in a sense, this solves the entrepreneurial problem or at least makes a massive change in entrepreneurship. We identified eight areas where entrepreneurs say they have questions that they don't have answers to. So think of an entrepreneur, there's a term I don't know if you've seen it called the T shape for entrepreneurial people. And the vertical in the T is my expertise. Maybe I'm a programmer. And so I know all about programming. I'm really deep in that discipline. But if I'm going to be an entrepreneur, I've got to have a lot of horizontal what they call boundary crossing capabilities. I need to know how to finance my business, how to get the right lawyer, how to do advertising, how to do marketing and so on like that. So these were the eight areas where they have the most pressing questions. Financing and ensuring the business, running a marketing campaign, buying goods and services, internal processes like HR, external threats such as taxation and regulation. What's the best technology to use? And if you're successful, what should I do with my earnings and profits? How do I manage that? So access to this highly dispersed set of knowledge is going to come via the cognitive assistance. In fact, it can come from two directions. One is the corpus of data that the software can ingest, classify, verify, validate and redistribute. So cognitive computing assets can now scan all kinds of data, whether it's visual, whether it's a PDF, whether it's a telephone call, whatever it might be, it can ingest all of that data. Massive quantities, doesn't care what form it's in, can analyze it and classify it and it can give specific answers to specific questions. So machine learning can make the accuracy and customization of that information greater, sharper and sharper over time. So if we think of it as Hayekian information, it's now less dispersed or at least more accessible and so the entrepreneur should be able to do a better job. The second source of expertise is shared knowledge with other entrepreneurs. So the cognitive assistant can create a community. Let's say we have a profile of all individuals and all businesses that we want to access and then it can augment those profiles with new information as it searches and it finds new data. It can scan all Facebook and LinkedIn kinds of profiles that that kind of source and then a matching algorithm can ensure that we put an entrepreneur who's got a question with exactly the right peer entrepreneur who's got an answer, who may want to share that knowledge, he may also want to sell them goods and services. Once those entrepreneurs are linked, they can exchange services as well as knowledge and experience and the cognitive assistant might even support a blockchain secure exchange mechanism and a cryptocurrency. So we can all, we can go all the way to the kind of Rothbardian system that Professor Swick was talking about. And then just to relate this to Austrian economics, the P-declined paper I mentioned said that the entrepreneur not only has to be an entrepreneur, but he's got to manage a lot of heterogeneous capital, physical capital, financial capital, knowledge capital, human capital, relationship capital, process capital, all kinds and quantities. So in effect, the cognitive assistant is helping the entrepreneur to perform that function. So that's why we say that the artificial intelligence has the opportunity to raise the level of individual entrepreneurialism in the system, letting the entrepreneur who's a deep disciplined expert in one field also have the horizontal boundary crossing knowledge that he needs. So that's the proposition that with artificial intelligence, whatever all the bad things we've been hearing about it and how the robots are gonna take over, the individual will have new opportunities. So the smart machines might bring about a resurgence of individualism and self-reliance. Individuals augmented by this software that's easily and broadly accessible will be able to succeed on their own initiative because they've got this new access to knowledge. They'll have greater access to that Hayekian knowledge. They can share that knowledge with other individuals in a collaborative fashion. They'll have access to powerful resources, extremely cheap cloud computing services, powerful analytical tools, trustworthy credentialing tools, we talked about that earlier, predictive models about the uncertain future. They don't take uncertainty away, but we might have better models. And the productivity and wealth generating processes of the division of labor and voluntary free market exchanges will be amplified and augmented by artificial intelligence. These future systems will be networks of networks so that any individual, any node and any network can connect to any other individual anywhere on that system. So economy of scale, which is actually an enemy of individualism and a foundation of a lot of crony capitalism and corporatism will be an increasingly less powerful barrier to individual success. Every individual be able to download massive scale from the internet and apply it through the massive power of cognitive computing. So the future's always uncertain, but it's possible that the technology of the cognitive assistant will usher in an era in which the trend to collectivism reverses and the trend to individualism becomes resurgent. Thank you.