Adam Smith created the concept of the “invisible hand” intending it to refer to the market forces at work which determine resource allocation in an economy but now, there is a very real possibility that technology could create a new, much different invisible hand.
While communism is in the news less frequently now than it was in the recent past, there are still nations committed to living out Marx’s thought experiment. For the sake of simplicity, I am going to ignore the social aspects of communism in favor of the much more exciting economic factors relating to a centrally planned market.
One of the main reasons communist countries struggled so much is because they were unable to perfectly allocate resources. In a centrally planned economy, either a single person or a group of people must decide the exact quantities of goods which are to be produced. This is an impossible task because of the sheer scope of information required to make such decisions in a reasonable manor. To top this off, the central planners of the communist countries of the 1900s were responsible for understanding this data and making decisions largely without technology at their disposal.
While European communist countries failed en mass, the invisible hand of capitalism allowed buyers and sellers to determine pricing and from there, allocate resources. Now, in the age of Big Data and advanced processing, the role of a central planner would be so drastically changed that it may even be possible. As more and more aspects of our lives become increasingly integrated with technology, incredible amounts of data are being recorded. This is resulting in an increased measurability of the world around us.
As more of the world becomes digitized there is a massive increase in data recorded. Utilizing this data, an advanced enough computer program could conceivably play the role of a central planner. If the Computer had access to enough data, it could potentially make informed decisions related to price and resource allocation. This program could operate efficiently enough to enable a communist country to succeed economically and actually live out Marx’s dreams of equality. Utilizing a computer program to serve as the central planner would in theory result in an optimal allocation of resources providing the staples of a happy life to the citizens of the country. At the current moment, the only factors keeping this possibility from fruition are our lack of technological advancement. This sheer scope of the data required to make decisions of this magnitude would be incredible. Until there is even more equipment accessible to monitor and analyze nearly every aspect of production within a country, accompanied by a powerful enough program ready to analyze the data and synthesize production decisions, this is still a far-off future. That being said, with such a focus on AI software and increased technology dedicated to measuring nearly every aspect of our lives, the world is definitely heading in a direction where this could be a distinct possibility.
As artificial intelligence software becomes more advanced this could be a potential application. Central planners failed because they were not omnipotent enough to control so many interconnected aspects of an economy but where they failed, a computer has the potential to succeed. Running the economy of an entire country is no small feat but computers are the perfect candidates.