We have forgotten the true virtues of money. We usually view it from a purely utilitarian point of view - as a means of facilitating exchange and preserving value over time. Compared to barter, coins and paper money are much more convenient. However, money is not just some kind of tool. As Fyodor Dostoyevsky once remarked, "money is the freedom to mint." It helps us exist as autonomous individuals in a decentralized economy.
However, the situation will become completely different if one day we start living in a world controlled by artificial intelligence (AI), which has complete information and unlimited data processing power. In such conditions, money would probably lose its role.
To understand how money makes us free, consider any chain of transactions. When we have money, we get control. We decide for ourselves whether to save money or spend it on something we want. Only money gives us such an opportunity. Moreover, money is universal. It allows you to buy anything, anytime, from anyone - and the seller can be anywhere. This specific freedom does not come from wealth, but from choice.
Such a choice cannot be taken as a given, because payment instruments can always be subject to paternalistic interventions. During the 19th century, some companies paid employees in surrogate money, which was accepted only in stores owned by these companies. Today, technology makes it possible to issue "programmable money" for special purposes, with restrictions on the way of use and even the period of circulation. Such digital tokens can be used to combat "unfair" consumption (for example, of alcohol or tobacco products) by welfare recipients.
We need money because we live in a market economy, not a programmed world. Having money protects us from uncertainty (in economic jargon this is called "choice value"). During crises, the demand for money increases sharply because people need to prepare for all unforeseen circumstances.
And now fast forward to the future where machines organize, make decisions and manage all economic activities. They transact with each other, credit and debit their accounts and automatically guarantee the discipline and execution of contracts. No downtime, no defaults. Will we still need money?
Such a world is already somewhat looming. Ten years ago, Google's chief economist Hal Varian observed that in our digitized economy, "the computer is at the center of every transaction." Many of our daily activities are automated, algorithmic trading dominates many securities markets, and payments are increasingly programmed in advance.
If cryptocurrency proponents' visions of a future world become reality, then "smart contracts" will govern financial intermediation in a universe of decentralized finance. It is even proposed to replace central banks with complex, advanced algorithms that will be in charge of monetary policy.
For now, though, we only use machines. People continue to make decisions as free agents, expressing and acting on their preferences. Central banks do not follow the rules blindly. They make decisions taking into account difficult trade-offs, especially in times of crisis or when there is a negative supply-side shock in the market.
In fact, in an automated economy under human control - money is needed more than ever. However, he has to adapt to the fact that digitalization has dramatically reduced distances and time. Money must also go digital, in the form of tokens in our mobile phones - e-cash that can be instantly transferred around the world without having to go through a complex network of accounts and partners.
However, with artificial intelligence we are entering a new world. In some scenarios, AI will not only process information and execute commands, but also make decisions and even set goals. She would then be an "agent" acting on the basis of preferences that do not necessarily correspond to human preferences.
With such capabilities, AI could take over the distribution of resources and income. It would evaluate millions of possible economic balances and identify the one it considers preferable. This variation of "technosocialism" is very far from the model of a decentralized, free society. It would be a high-tech version of old-fashioned communist central planning.
In discussions about the future of artificial intelligence, the "singularity" is often mentioned, that is, the moment when AI will have the ability to improve and develop on its own, quickly surpassing humans in all intellectual indicators. In this scenario, people would lose control over their own destiny.
Will this ever happen? Disagreement is huge among AI experts, but money might be the ideal indicator. The best sign that artificial intelligence has truly taken over will be if money begins to lose its important role in economic life.
A world without money is technically possible. Another question is whether it would be worth living in such a world.
The author is an associate professor of economics at Sciences Po
Copyright: Project Syndicate, 2024. (translation: NR)
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