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misaligned.marketsWhat do AI alignment fears reveal about market capitalism?Capitalism's misincentives won't create Skynet but resemble optimization problems AI programmers face.

(2/8) Where I diverge from market fundamentalists, like Hayek, is that solving for “distribution” is incidental to market capitalism. Profit, not allocation, is the goal. Knowledge is useful insofar as it serves that end. Many profitable opportunities deliberately result in suboptimal distribution.

misaligned.marketsThe tension at the heart of market capitalismCapitalism promises competition, but its biggest winners avoid it. Separating markets from capitalism explains this paradox.

(3/8) Naive market fundamentalists miss something critical. Distributed knowledge isn't just about information in markets, but the rules of the game. The rules that create property rights interfere with "free" markets. Capitalism is a political governance structure imposing values onto markets.

21/5/26, 6:37 pm1 repost5 likes

misaligned.marketsCapitalism runs like a computer (and it's being hacked)Like computer networks, market capitalism rewards actors that exploit gaps created by system and user behavior.

(4/8) Computers actually are a good analogy for market capitalism. Not because markets “compute” how to allocate resources but because they are a distributed system (like a computer network) whose implicit and explicit rules affect throughput and user experience.

misaligned.marketsModern conflicts over property rights and commodificationIssues like right to repair and privacy are extensions of age-old battles over property rights, which are inherent to capitalism.

(5/8) Digital assets are non-rivalrous; one person's use doesn't deplete another's, and the marginal cost of production is near zero. Yet, the tech industry has produced the most profitable companies in history. Why? They've found ways to capture value that have nothing to do with distribution.

misaligned.marketsReflecting on one year of Misaligned Markets!Misaligned Markets turns one year old. I reflect on the year and what comes next.

(6/8) Markets don't naively optimize for distribution or efficiency! They can't because they encode property rights and other legal entitlements in a way that benefits incumbents asymmetrically. Employees as contractors, CDOs built on AAA tranches from subprime mortgages.