Is an Artificial Intelligence Bubble About to Burst?

Hype about artificial intelligence has been cyclical in the past. The pattern typically saw some cause for expectations that the big moment everyone has been waiting for--the arrival of Artificial General Intelligence of genuinely human-caliber, and all it betokens--is really, finally, at hand make excitement about the technology surge, and then when this proved not to be the case the excitement collapse, "AI spring" followed by "AI winter," though usually not for very long because, the grip of artificial intelligence on the imaginations of so many being what it is, some new development soon enough prompts a resurgence of excitement and the return of spring. Thus the ebullience of the "tech"-obsessed '90s and the forecasts of Ray Kurzweil, Hans Moravec and company produced a great wave of such excitement, which, as the predictions failed to come to pass in the '00s, waned. However, progress in neural network design, and promises about the uses to which it might be put, like the production of self-driving cars, prompted a new surge of interest in the mid-'10s. Of course, those expectations were disappointed in their turn, leading to declining interest by decade's end, but then the pandemic's disruptions reminded the cloistered idiots of the board rooms far removed from where the economic rubber meets the road just how much the structures of everyday life rely on lots and lots of boring, tiring, physical labor that hasn't been automated, while they were excited again by the chatbots that, at least one set of scientists said may have been the real thing, artificial general intelligence--in a crude and incomplete form, but nevertheless, the moment in its way having already arrived . . . as the idiots of the media seized on every cliché they could to fan the hype.

The result has been an historic investment in artificial intelligence evident in ways from the level of individual firms and even individual fortunes (Tesla's being valued more than all the really major automakers combined, the chip maker NVIDIA becoming the world's first $4 trillion company, Larry Ellison's buyout of OpenAI making the valuation of his fortune leap a hundred billion dollars in one day), but also at the level of the stock market as a whole, as shown by the "Buffet Indicator" (the ratio of the market capitalization of all the publicly traded companies in the U.S. to the Gross Domestic Product of the country). Simply for comparison purposes, at the height of the dot-com boom of the '90s, when the capitalization of the U.S. stock market had been growing on average 20 percent a year for five years it stood at about 150 percent. Today the Buffet Indicator stands at 220 percent.

Of course, the Indicator's standing much above 100 percent usually means an overheated market full of overvalued firms. So did it prove to be the case when the dot-com boom was revealed as a dot-com bubble that burst just after the turn of the century, all as, if one assumes the principle holds good, barring the Technological Singularity being very, very near (read: a lot nearer than even the stubbornly never-admitting-he's-wrong Kurzweil said it was at last check) an even more painful correction is coming. In either case the consequences are incalculable. Should it be the case that in this era in which we have so often seen smoke without fire (for all the self-important talk about INNOVATION! today's neoliberal economy is far better at generating hype than progress) the Electronic Herd prove to have made their very large bet correctly (for once!) then we may be looking at the unleashing of enormous technological potentials. I say potentials because one cannot be sure of precisely what they will actually be, or what one should never overlook, what people will actually do with them--a matter which is most certainly political, however much a great many persons would like to ignore the fact. (Indeed, we get so much Frankenstein complex crapola in our science fiction because it is far, far safer to point to the danger of an imaginary machine developing a mind and will of its own than the actual danger posed by the minds and wills of the very real people who control the machines in the world in which we happen to live.) Moreover, it has to be admitted that recent experience does not instill in any intelligent person great confidence in the practicalities of how our political-economic model presently works realizing those potentials for the benefit of all, with the Internet a case in point. The oligarchs of Silicon Valley who falsely take credit for having invented all of the technology in their garages but actually deserve credit mainly for having taken what had already been invented and thoroughly enshittifying it seem almost certain to be the owners and controllers of the hardware and software of any imminent artificial intelligence revolution, while these have already expressed some very dark--frankly, dystopian--intentions regarding it indeed.

However, should this prove to be another case of the same old neoliberal crap writ even larger than before (not least with regard to ultra-loose monetary policy fueling speculative madness as the engine of the economy in their gotta-keep-the-roulette-wheels-spinning way until it can't anymore and the bubble bursts) and the investors (just as they did every previous time) prove to have bet incorrectly then it is hard to imagine our not looking at a massive destruction of values--perhaps on an epoch-making scale. Indeed, according to a recent study by the British-based research firm MacroStrategy Partnership, that 220 percent of U.S. GDP represented by the Buffet Indicator bespeaks a bubble seventeen times as big as that New Economy bubble of the '90s, and four times as big as the real estate bubble that burst in '07. One can thus very easily imagine there being close at hand something much, much worse than what the world faced in '07--which, contrary to the stupid mainstream media narrative about the matter that made it seem like a speedbump we all got over together (yay!) really was an epoch-making event, dealing the world economy a blow from which it never recovered as the euphemistically called "Great Recession" went on and on (it was not just Japan but the world that saw a lost decade turn into a lost generation, with outside China per capita Gross World Product today pretty much where it was in the 1970s), with the consequences of the catastrophe--and one should not forget, the manner in which what pass for world "leaders" addressed that catastrophe they did so much to make happen--including the stalling out and fraying of the once-seemingly "like the rising of the sun" progress of globalization, the ascent of the far right all over the world, and the resurgence of great power warfare that already has Europe "not at peace" with Russia as the bloodbath in Ukraine nears the end of its fourth year, and once again under German leadership Europe rearms for a contest with the colossus to its east. A far vaster crash hitting a U.S. economy looking much more vulnerable than it was in 2007 (from the Federal debt load to the Federal Reserve's asset portfolio to the standing of the U.S. dollar to the ability of America's working people to stand a shock things are in just about every way different from what they were two decades ago, just about all of them for the worse), at the center of a world economic and political order that likewise look even more decrepit than they did two decades ago, one would not be wrong to shudder at the thought. They would also not be wrong to retch in advance at the way that the professional economists will demonstrate their worthlessness by dutifully sniveling that no one could have seen it coming, and the financial community wheel out its favorite spokesperson to tell us "It was all black swans, see?" as middlebrows beguiled by the imagery in which he wraps up his banalities of cheap epistemological nihilism nod their empty heads--never mind the reality that a great number of people saw it coming and said so but were ignored completely by those who held all the power and disclaimed all the responsibility, supported by their lickspittles in the Mainstream Media's platforming only the "right" views as they snarl at anyone who points out such inconvenient truths as a Know-Nothing piece of scum fighting the "war on experts" with "fake news." However, rather than wallowing in doomism (and contempt for those responsible for it) one would do better to think very, very hard about how the world might do better this time because of the sheer direness of the consequences if it doesn't.