Letter: Hayek’s warn­ings about free mar­kets apply to AI

The FT Big Read on arti­fi­cial intel­li­gence reg­u­la­tion (Septem­ber 14) com­pares the vari­ous approaches being taken around the world. None of them, however, seem to address the threat that AI poses to mar­kets them­selves.

Main­tain­ing the integ­rity of mar­kets is fre­quently a mat­ter of reg­u­lat­ory con­cern; but the new thing about AI is that it might des­troy mar­kets alto­gether, or at least under­mine the rationale for rely­ing on them as a way of organ­ising human affairs.

If com­pet­i­tion within mar­kets is to drive innov­a­tion and real­ise other aspects of mater­ial prosper­ity, it must be sup­plied with freely-made choices by mar­ket par­ti­cipants. However, these choices will quickly be put in the hands of AI, as rational buy­ers, in all sorts of mar­kets, real­ise that AI can do a bet­ter job of choos­ing than they can.

Mar­kets will then cease to rely on the free choices of human beings in order to activ­ate Adam Smith’s “hid­den hand”. This will sever the rela­tion­ship between mar­kets and human free­dom, which so pre­oc­cu­pied Friedrich Hayek (he mem­or­ably argued that repla­cing free mar­kets with plan­ning was “the road to serf­dom”). If AI dimin­ishes, or even extin­guishes, the role of mar­kets as theatres for the exer­cise of human autonomy, it might call into ques­tion the capa­city of free-mar­ket cap­it­al­ism itself to provide a plat­form for good and ful­filled human lives.

Owen Kelly
Dir­ector of Engage­ment and Inter­na­tion­al­isa­tion, Uni­versity of Edin­burgh Busi­ness School Edin­burgh, UK