An Inquiry into the Wealth of Corporate Nations

When my child tells me we live in a democracy I wince. Votes do decide elections, but votes are decided by corporate spending. In this light we live in a corpocracy where business interests, more than individuals, decide elections.

Corporations have taken over the world. Of the world’s hundred largest economies, 69 are public corporations while only 31 are nations. Perhaps this is not surprising. Your purchase of an iphone may matter more than your vote. In the end, regardless of what name we give the current political system, the pertinent question is how the growing influence of corporations impacts our daily lives.

An increasing number of apartment buildings, grocery stores, ski mountains and breweries are owned by private equity corporations. As in the game of monopoly, if they own enough of the market they can systematically increase the price. Not surprisingly, the cost of our needs and wants are skyrocketing.

When I look back 25 years to when I graduated from college, I see that some things have changed while others have not. My daughter makes roughly the same amount out of college that I did 25 years ago. The mortgage interest rate is again around 7%, but the same condo I bought in 1999 now costs eight times as much. If I were graduating from college I might ask why the outlook now is so much worse than 25 years ago. We all see the wealth gap rising, but do we understand why?

As a roboticist, I see things in terms of feedback-driven behavior. Much of human behavior is driven by a limited form of feedback called money.  If we use only this we glorify a rampant individualism that eats at the fabric of our cities and our souls. How much fabric we have left to wrap ourselves in will depend on how we understand our past and reimagine our future.

Growing up in Scotland my two heroes were Andrew Carnegie and Adam Smith. Andrew Carnegie grew up in my town of Dunfermline. Dunfermline does not have a great soccer team, but it does boast the beautiful ruins of the Abbey that hosts the bones of Robert the Bruce – a great champion of the underdog. Andrew Carnegie grew up poor, chased by the Laird’s guns in his favorite place, Pittencrieff Glen. The first thing Carnegie did upon making his fortune was buy the glen and gift it to the town as a community park. It was my favorite place too. For me, it represented the hope of prosperity, but also the obligation of the rich to build community.

Carnegie was a complex figure and by no means an ideal model. He, more than most, wrestled with whether to foster the goodness of community or to shore up his individual power, influence and wealth. To the Pittsburgh steel workers, his harsh efforts to crush the unions indicated his choice to profit at their expense, but in the end he opted for libraries, pools and schools.

Adam Smith pointed out that even if they only served their own self-interest the wealthy should recognize the importance of building community. He saw the need to complicate the economic function called capitalism with a variety of constraints to protect the weak and limit the power of the elite. If COVID teaches us anything it should be that what happens to the least of us impacts the rest of us. We are all connected. We drink the same water, breathe the same air and walk the same streets.

Why is this hard for corporate leaders to understand?

One reason we fail to see this is that we cut out most other forms of feedback. We have money and we have a thumbs up icon. The blame for how we got here matters less than reattaching the cords that link us together.

The very technology that severed those cords could be repurposed to accelerate a new future. AI is advancing in leaps and bounds. So far, it has bound us to the cloud. Repurposed for social good rather than corporate interest, AI could help shine a light on the dark underbelly of corporate finance.

The approach used by ChatGPT provides a methodology not only for natural language processing, but for other learning tasks as well. AI is good at finding patterns, tracing the cause of anomalies and tracking money through a complex system. To accomplish this we need more than automated accounting… we need a means to read an enormous corpus of financial data in the cloud to ferret out cause and effect.

Perhaps AI can help us write a better “fitness function” for how we measure human impact?

What’s a fitness function? For an AI program to learn and adapt, it must have a criteria against which to measure success and guide progress. In machine learning, this automated critic is called the fitness function – the  most important component of the intelligent system because it sets the goal and decides when and how feedback is used to guide progress.

Capitalism uses money as a means of feedback, but despite Adam Smith’s admonishments, we seem to still lack a good fitness function for dispensing it. We may need money as objective feedback, but we also need this feedback to be actionable and linked to the things we care the most about. If this sounds idealistic or even socialist, understand that performance measurement is the hallmark of healthy capitalism. We can’t improve what we can’t measure.

We don’t have healthy capitalism today. We have a system where most of the mergers and acquisitions in the tech space have been based on optimistic business models and precious little current revenue. In the self-driving world where I reside, corporations have paid out more than $70B without any profit to show for it. Startups received these billions, not based on profit, nor even revenue, but rather a marketing mosaic painted with powerpoint.

Our capitalism isn’t objective dollars and cents, but rather storytelling wielded by charismatic leaders with fake videos and optimistic projections. When the conjecture turns out to be wrong we bail out the false prophets with taxpayer dollars rather than let the invisible hand of objective capitalism do its work. The massive bailout of banks in 2008 indicates we will do anything but admit that our fitness function is wrong. The delusion that our current system is objective prevents us from even conceptualizing (much less realizing) the goal of a healthy economy.

When coaching soccer I found that most of the feedback I gave didn’t help the team of seven year old girls improve. If I watch an athlete kick the ball over the top goal post and say: “keep the ball down!” this is indeed feedback, but unfortunately it is not actionable. Every athlete that has ever kicked the ball over the goalpost knows what the goal is. They want to keep the ball down. They just don’t know how to do it. Eventually, I learned to say things such as “Lean more forward so your knee gets over the ball.” This is actionable because the athlete can transform the feedback into specific actions.

How do we provide actionable feedback to corporate leaders? Or perhaps the more pertinent question is how do we impact their bottom line?

I see four options. The first is that we hope wealthy people choose to be Andrew Carnegie in his later years. Not willing to be this optimistic, Adam Smith in “Wealth of Nations” foresaw the need for option two: government regulation as a means to limit individual power and hold corporations accountable. If you live in a corpocracy there is little hope for this option, because the government is unlikely to rigorously limit the hand that feeds it. The third option is for each of us to carefully control our spending, individual data and use of the cloud. This bears more discussion and could be optimal if we can motivate ourselves to be responsible consumers. Unfortunately, the average consumer needs help to understand how to use their data better. Many don’t even understand what the cloud is or how it impacts their lives.

The cloud is really a vague marketing term meant to include the thousands of server farms where networked computers digest your data. The cloud is, strictly speaking, server data connected to the internet. The cloud is also the reason why your email about how much you’d love to visit Maui is followed by an advertisement for Hawaiian airlines.

AI can be helpful, but perhaps the best help we can receive from AI is an objective fitness function with which to hold politicians and corporations responsible. Option four is to use AI to measure the social impact of corporate policy by tracking its use of data. After all, if your bank can use AI to measure your creditworthiness by sifting through transactions, why can’t we measure the social impact of your bank. AI can help us trace the use of our data and its value as its ventures through the cloud, into corporate servers and into their bank accounts.

Option four may seem like the stuff of science fiction, but it is not as technically daunting as it may seem. If we can believe in the potential of blockchain ledgers to trace financial provenance, we can also believe in the power of AI to trace the value of your data. I am increasingly convinced that no matter how hard option four may seem, we must seriously consider it.  If all other methods fail, we can use AI to learn a better fitness function and reclaim control of our data – the largest monetary wellspring in history.

Economically speaking, companies that have learned to monetize cloud data have outstripped all others. You own your data but they are using it through targeted, “hyper-context sensitive” advertising. This process generates billions for corporations, but what is the impact on our social fabric? Instead of getting feedback from our community we get our feedback from the cloud. This emphasis on cloud data isn’t just a business issue, but rather impacts the daily lives of billions in large and small ways. We get our feedback from the cloud and we give our feedback to the cloud. The cloud has turned most of us into robots… and not the good robots that think for themselves, but rather the kind driven by centralized, cloud-based control.

The cloud isn’t evil, but we’ve let it take too much direct control over our lives. The solution is hard, but it’s also simple. Don’t ask the cloud who to date, what books to read or where to eat. Wander. Bump into people. Ask the rental car attendant where to eat. She knows and she isn’t biased. Listen to your hairdresser as well as your psychologist.

In the Encyclopedia of Physical Science and Technology I defined intelligence to be the pairing of perception and action based on actionable feedback. If we eliminate feedback or fail to make it actionable, we no longer have an intelligent system. Robots drink in actionable feedback and we should want it too.

I know robots, but I don’t know economics, politics or people. I dont have the answer. The answer may be a whole new field of study devoted to feedback-driven economic control loops. No one has the algorithms written yet, but they are coming. I can’t say what the result will be, exactly, but I can tell you what it won’t be. It won’t be the unfettered consumption of resources because predictive algorithms will “feed forward,” recognizing sustainability and reuse as the key to long-term profitability.

Money is not actionable feedback. It is feedback, and I don’t mind receiving it, but on its own this scalar value is directionless. We need vectors that point us to each other. Money doesn’t tell us how to improve, how to adapt, how to build a better future. True value is measured by impact on humans. We are not good at measuring that impact but AI can help.

When we focus only on profit and ignore the impact on and feedback from our neighbor, we become less intelligent. Humans are suboptimal and we drink in chaos along with feedback… but this helps us adapt, grow and evolve. AI can help us modulate the chaos, sift through complexity and see the truth. To adapt, we must take the next step, embracing AI not just as corporate influence, but also individual empowerment.

This article was authored by David Bruemmer, Founder, W8less, USA