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Will the Coming Combination of AI and Oligarchies Produce a New Feudalism?

Updated: Jan 18

In this article, we examine how the aggregation of Artificial Intelligence (AI) and Domain Specific Knowledge (DSK) is coalescing with the concentration of wealth.

Oligarchy is a form of power structure in which power rests with a small number of people. These people may be distinguished by membership in nobility, a wealth class, a family, an education level, a corporation, a religious affiliation, a political group, or the military. Such oligarchic states are often controlled by families who typically pass their influence from one generation to the next, but inheritance is not a necessary condition for the application of this term.

The top 10% of American households, as defined by total wealth, now own 84% of all stocks in 2016, according to a recent paper by NYU economist Edward N. Wolff.

Fewer people own and control fewer companies:

As we said in a previous article, “DSK at the expert level concentrates in the hands of fewer people and companies as it becomes more complex.” (ignorance is accelerating). In the book by Jagdish Sheth and Rajendra Sisodia (The Rule of Three: Surviving and Thriving in Competitive Markets 2002), the authors state that in a mature market, there will normally be three major competitors along with several minor competitors and these minor competitors will only succeed if they are able to operate in a niche market. Interestingly, they go on to say, “Ultimately, the Rule of Three is about the search for the highest level of operating efficiency in a competitive market. Industries with four or more major players, as well as those with two or fewer, tend to be less efficient than those with three major players.”

In looking at the ‘ownership’ (who will actually ‘own’ AI is another discussion) and development of AI, who are likely to be the three major companies (and their limited group of shareholders), and what will the niche players be focused on? It seems only logical that the companies that can generate the most operating income will prevail.

It is hard to imagine a scenario in which AI will not optimize operating efficiencies and follow the rule of three (and for now let’s ignore the possibility of a rule of one). That will mean the concentration of wealth, knowledge, and control of socio-economic activities on a global scale will be in the hands of very few people (by definition an Oligarchic structure). In at least one scenario a new version of feudalism for the 21st century will likely evolve at an unheralded pace beyond our capacity to imagine.

In earlier Insights, we touched on the growing gap being created by AI and the acceleration of ignorance for those without access to information. We said, “If half of human ‘work’ is being done by AI and if that AI is owned and controlled by less than 1% of the companies/people on the planet then the speed at which the 99% falls behind accelerates permanently beyond reach.” (ignorance is accelerating)

As a precursor just look at what is already happening as systems are developed to construct and manage ever larger portions of a complex set of specific activities. For example, the level of complexity inherent in the process of delivering a patient-centric portal. This healthcare-specific domain has layers of complexity that are well beyond one individual’s complete grasp. However, with entry-level AI, this type of activity is easily managed and controlled, linked with other institutions, practices, and databases.

Ownership of the flows of data and the subsequent formation of unique information by a few major companies creates tremendous value. And it is just one example of why the top ten players, who make up the early leaders in AI, are buying up Domain Specific Knowledge platforms and early-stage AI companies.

What the data tells us is we are entrusting more of our future to fewer hands that are able to fund and control AI, while using technologies we are understanding less. (black box AI)

Feng Xiang, a professor of law at Tsinghua University is one of China’s most prominent legal scholars. He stated “the most momentous challenge facing socio-economic systems today is the arrival of artificial intelligence. If AI remains under the control of market forces, it will inexorably result in a super-rich oligopoly of data billionaires” (…next come the trillionaires?)

He looks to the one-party system in China where the state is being advertised as the ultimate oligarchic answer to eliminate market-derived self-serving oligarchs. “Going forward, China’s socialist market economy, which aims to harness the fruits of production for the whole population and not just a sliver of elites operating in their own self-centered interests, can lead the way toward this new stage of human development.” He ups the optimism even further stating, “If properly regulated in this way, we should celebrate, not fear, the advent of AI. If (emphasis ours) it is brought under social control, it will finally free workers from peddling their time and sweat only to enrich those at the top.” (end of capitalism WorldPost)

Similar to historical precedents prevalent throughout human civilization, wealth and knowledge are once again becoming ever more concentrated among a relative few. Only this time it is at an exponential rate of concentration that may generate a social construct that is potentially only responsive to a very few oligarchs, whether market-driven or state-run – who ultimately may, or may not, have control of the decisions made by AI.

More importantly, history suggests the probability that an artificial superior intelligence will make mistakes beyond the control of its owners. As a result of the complex inter-connected decisions made for them by AI, it is highly unlikely that the new AI oligarchs will be able to anticipate the ramifications and resulting unintended consequences on our economies and civilization.

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