 This is Mises Weekends with your host Jeff Deist. Our good friend Hunter Hastings gave a really fascinating presentation last week at our Austrian Economics Research Conference in which he applied some of the concepts and principles of Austrian economics including praxeology to the world of AI or artificial intelligence. And Hunter argues that smart machines will actually be programmed to understand and adapt to human action and as a result, far from some sort of status dystopian future, AI will actually lead us to a richer, more decentralized and more spontaneously organized society down the road. So if you're interested in AI and you're interested in Austrian economics, you don't want to miss this great presentation from Hunter Hastings. My proposition is that we are entering a new age of spontaneous order and it's facilitated by an unprecedented set of newly maturing technologies and that this new order will be supportive of more individual economic freedom and less hampered markets. So to put that another way, we can say that artificial intelligence or smart machines, if you like, will master the praxeological method, will act as Byzisian rationalists and point the world in the direction of liberty. So here's the argument. Entrepreneurship is a core concept of Austrian economics. You can choose all kinds of quotes from human action to support that. I chose this one. The direction of all economic affairs is in the market society a task of the entrepreneurs. There is the control of production there at the helm, they steer the ship. So entrepreneurship is very fundamental to Misesian economics. And technology is a major part of the entrepreneurs choices, capital choices. Here she has to decide which technologies they believe are best suited to help them meet consumer needs and they must select from the multitude of technologically feasible projects those with satisfied, the most urgent, of the not yet satisfied needs of the public. So right now, today in this exact context, we're having a debate in society about the role of technology. To live in this era of smart machines or artificial intelligence and we're having difficulty predicting how it will affect our future. And it's the entrepreneur who must decide. Mises said that the entrepreneur acts as the pioneer of improvement. So there are dystopian views and utopian views of this artificial intelligent future and I'm proposing that we take the optimistic stance that the entrepreneur driven economic system will have a resurgence as a result of augmented entrepreneurial intelligence. So think of the future enterprise. We've been doing a lot of research at the Institute of Service Innovation Professionals and IEEE and we find that the organization of firms and enterprises is changing a lot. They're essentially today a cluster of projects. And those projects might have different timelines and different resources, different levels of complexity but they're all a series of projects. This is pretty consistent with the violence new theory of the firm that he's going to be talking about later. Those projects are nested in a cloud or a network of available labor of various kinds and capital of various kinds. And they're all interconnected by technology in the cloud and those projects can draw on labor and capital. They can assemble it, they can reassemble it and be very flexible and permeable as time goes on. So they're essentially just a cluster of projects. And this world of work inside the cloud computing technology and the networking technology enables innovative entrepreneurs to conduct experiments in a very free kind of fashion. They're innovating at the edge. They're trying new things. They're doing different things at different times very, very quickly. They're collaborating with customers at the edge. They're also innovating, changing their demands. And there's no central control. And the reason why there's no central control is that central controls can't process knowledge fast enough, information fast enough to stay up at the same speed that's required in this technological, organizational, disrupted world. The technologists call it innovation at the edge where the central control doesn't have the same effect. Let me give you a case study. LinkedIn has a project they call the economic graph and here's what they say about it. They talk about it manifesting every economic opportunity in the world full time and temporary. The skills required to obtain those opportunities, the profiles for every company in the world offering those opportunities, the professional profiles for every one of the roughly 3.3 billion people in the global workforce and all the way the professional knowledge of these individuals and companies onto the graph. So they all get connected. You get the right people to the right projects at the right time with the right skills. That's current today. So we use this word imagine this technological future and it's very carefully selected because we as Austrians know that you can't predict the future. But you can't imagine. But central planners think you can design it. And design is exactly the wrong word for this emerging future. Emergence is the right word. So that's a word that Hayek was very familiar with. So emergent systems are a very Austrian kind of concept and they're going to be enabled by this new technology. So what emerges is spontaneous order. And that's another term that Hayek always was very familiar with. So spontaneous order is a beneficent stable order generating the mutual, the greatest mutual good for all participants that emerges without central direction or planning. And Hayek and others talked about the results of human behavior but not of human design. So we can't design this future. It's an organizational concept that's got a long history in social systems and biological systems. So we talk about language, you talk about rainforest, we talk about crystal formation. They're all spontaneous order systems. So now we're talking about socio-technical systems. Human systems where humans are augmented by machines. And so in this new order we're going to create emergent systems without design. So what do humans do to support that emergence? And the answer is get out of the way. So this is what LinkedIn says about their economic graph. Once realized, once we've done all of those connections, we then want to get out of the way and allow all of the nodes of the network to connect seamlessly by removing as much friction as possible. It's what Austrians call unhampered and technologists call friction-free, allowing all forms of capital, working capital, intellectual capital, human capital to flow to where it can best be leveraged. In doing so, we believe we'll be able to help the global economy. So in other words, an unhampered market with emergent properties. So what replaces design? Hayek basically says two things. One is there's got to be certain starting conditions and then you establish general rules, but nothing more specific than that. So he says establish or be alert to the starting conditions from which a spontaneous order can emerge and identify some general rules that apply to all participants and all elements and don't favor one form of development over another. So in the rainforest example, you've got some starting conditions of climate and soil and temperature. There are no rainforests in the Arctic, for example, it doesn't have the starting conditions. Some standards of translating light into energy and transfer an exchange of energy between plant and animal types, and then you stand back. For the economic graph with LinkedIn, you've got starting conditions of technology and data and interconnectivity. You've got the basic idea that the participants compile their own profiles and then you stand back. So in the technologies of spontaneous order, we can identify, I think, four. One is cloud computing. Huge amounts of computing power and data management and analytics and storage and so on like that. That any individual or any small firm can purchase pretty much close to marginal cost. So we have powered everybody with tremendous amounts of cloud computing power. Then there are technologies of augmentation. Artificial intelligence can be thought of as augmented individuals. And one term that's used a lot is cognitive assistance. All have cognitive assistance where artificial intelligence is giving us greater access to knowledge and capability. And we say that that can improve our performance vertically in a profession. So every profession will have a cognitive assistance that will make you smarter within that profession. It's happening in law right now. It's happening in many professions. It also help us as humans horizontally. So we can be better at more things. We can be quicker in absorbing knowledge and become good at whatever we do. So augmentation. Then disintermediation. And the big technology here is blockchain or more precisely the distributed ledge technology. And it takes a lot of service systems that have inefficiency due to mediation, intermediaries, and it eliminates the intermediary, replaces it with peer to peer. So you get faster, better service, cheaper service, and you eliminate many intermediaries. So one of the general attributes of blockchain secure peer to peer transactions which you mentioned is trust, which is an economic benefit but is supplied by cryptography and the security of the blockchain. Then the third category is platform technology, market exchange platforms where multiple parties on multiple sides of a platform can connect with each other, can exchange and collaborate, you can assemble teams, you can disassemble teams, you can create this economic wave where everybody is collaborating. I hope that's not a bad word, but they're collaborating together for creating economic value. So you get organizational and social fluidity as a result of these technology platforms. So the result is not only the emergence of better outcomes like medicine or artificial intelligence is being applied, or entrepreneurship where these platform technologies are being applied, but also new economic and social structures and I would suggest new values. I think we're going to see new self-reliance emerge where individuals taking advantage of these technologies become less dependent, less collective and much more independent. So emergent financial systems, money is the first one to talk to, and Austrians obviously have thought about money as an emergent system for a long time. So we went from trading oxen to wheat to using commodities like gold, and then it hit an evolutionary dead end, the fiat money with a monopoly by the government. But hey, the new technologies have leapt over that dead end, and we now have the emerging spontaneous money, which is cryptocurrency or digital currencies. And businesses and projects can run on the blockchain using digital tokens, which might be different at different projects and different firms and different areas of the world and so on, and act in a very efficient fashion there with unamplified market exchange using cryptocurrency. And Hayek predicted that with his work on concurrent currencies. By going further in financial systems, we see that this emergence applies not just in money, but in financial services in general, the broader context of banking credit and loans. So fiat appeal lending is essentially the smart profile of an individual who knows the company of assistance with a smart profile, knows what we know, knows what we own, knows what our credit history is, knows what we're good at, knows what record of exchanges we've had in the past. And it talks to the smart profile of a lender who's got a certain lending profile and a desire for economic exchange. And artificial intelligence matches those two smart profiles together, the lender's profile and the borrower's profile. And so lending takes place without any need for a bank, without any need for an intermediary, just matching those two, those buyers and sellers. And financial services become software. We don't need those intermediaries, we don't need those banks, no middlemen. That could just as well be a stock exchange, where the same thing is happening, where ownership of an asset on the blockchain can be easily exchanged, easily reported and settled at a very fast speed and no need for a middleman. This is actually already helping entrepreneurs today. So Prosper is a lending platform, one of many, where loans are originated on the platform, there's no bank. Borrower is going to apply, they've put together, they've matched on the platform, and entrepreneurs can get financing much easier and at lower costs, new ideas are financed, the economy grows. Then a company like Theorem takes those loans from Prosper, applies analytics to them, identifies the ones that are least likely to default, resells those to investors who have a preference for those kinds of loans, so now individual investors can become a bank because they're essentially lending money to those entrepreneurs who borrowed from Prosper. And venture capital is another example. Our crowd is a venture capital platform where small companies, small startups can put their due diligence on the platform, and individual investors can invest relatively small amounts of money, $5,000, $10,000, that will come down over time. And so venture capital is now becoming democratized, and again, you get more entrepreneurs, more ideas, more startups, more economic exchange. So that's the summary. These cloud cognitive blockchain platforms are going to result in new economic structures, new processes, new values even, emergent systems, emergent institutions, which may include the dissolution of old institutions so we can create new ones. If we don't have banks, what do we have? We have financial services as a software. New forms of money are likely to happen, new forms of peer-to-peer exchange, new forms of contract. So one of the elements of the blockchain is the smart contract, which is law as software. The contract is just a piece of software that records the exchange of the asset between the buyer and the seller. It can automate things like investments or interest payments and so on. So we don't need lawyers anymore. New forms of asset exchange and settlement, new forms of banking, new forms of participation for individuals in the financial economy, so like venture capital for everybody. All of this with no central to control, no design, only emergence from starting conditions and general rules. So I've got three and a half minutes left. I want to suggest a project that would be good for the Mises Institute and the Austrian economics professors with the engineering department of their university and that is to program an artificial intelligence for the praxeological method. So the artificial intelligence being individual, we can use methodological individualism. It is an individual. Things from the point of view of an individual can be programmed that way. It can be purposive. It can have an end. There's an amusing piece in a book by Pedro Domingos called The Master Algorithm. He talks about this. He said you have to be very careful about what the ends are that you give to artificial intelligence. He uses the example of telling an artificial intelligence to efficiently and effectively run the paperclip factory. And the artificial intelligence papers every surface in the entire universe with paper clips. So you've got to be very careful with what goal you set the artificial intelligence, but it can be purposive. It can make choices. It understands the trade-off concept. You can give it time preference. It can understand periods of provision. You can tell it about saving. It can understand saving as a concept. You do less now so you can do more in the future. You can give it a subjective preference scale. There's tremendous progress being made now in programming artificial intelligence with emotion and understanding the idea of psychic profit from action. So it's a matter of programming. It's just like our brains are programmed that way. The artificial intelligence can be programmed that way. It can understand scarcity and have any choices in scarcity. You can give it situational awareness. You can tell it that the market is hampered now or unhampered now. And have it imagine which future is best based on its application of its own AI. It can certainly deal with future uncertainty. In fact, artificial intelligence is better than economic marshals have at this because artificial intelligence is always probabilistic. It's never deterministic. It always tells you there's a 75% of chance of X happening but a 20% chance of Y, maybe even a 5% chance of Z. It's by definition probabilistic, which is good for people to think like us. So it can certainly understand entrepreneurship, the idea of looking into the future and taking some risks in terms of making a prediction of what consumers will need in the future and how you're going to meet those. It can certainly create what Rothbard called a technological recipe. How do you get from A to B? That's what it can figure out. And it can certainly understand marginal productivity in the future might be almost completely capable. So that's an idea that I actually talked to Pair Bailand about. Could we program an artificial intelligence to think practically? So I submit that we can and I hope there's a volunteer to do something. Thank you.