In this interview, Professor Peter Boettke discusses the enduring challenges of socialism, particularly in light of advances in artificial intelligence (AI), and contrasts these with the dynamics of capitalism. He begins by revisiting the socialist calculation debate of the 1920s and 1930s, which centered on whether collective ownership of the means of production could rationalize production as effectively as private ownership under capitalism. Boettke explains that economists like Ludwig von Mises argued that without private property and market prices, it is impossible to make rational economic calculations about resource allocation. This absence of price signals in socialist economies leads to inefficiencies, shortages, and ultimately economic deprivation and political tyranny, as seen in historical socialist experiments.

Boettke addresses the modern argument that AI and advanced computing could solve the calculation problem by processing vast amounts of data to plan an economy efficiently. He counters this by emphasizing that the fundamental issue is not computational complexity but the nature of knowledge in a market economy. Markets operate in a “wicked learning environment” characterized by constantly changing and unpredictable parameters, innovation, and creativity, which cannot be fully captured by algorithms operating within fixed rules. He distinguishes this from “kind learning environments,” like chess, where parameters are fixed and computers excel. Thus, AI cannot replicate the dynamic, decentralized decision-making and innovation that markets foster.

The conversation also touches on the resurgence of socialist ideas, particularly among younger generations and political figures like New York’s Eric Adams and others influenced by technosocialist thought. Boettke suggests that while some contemporary socialists may not explicitly endorse technosocialism, they may rely on advisers who believe that modern technology can enable effective socialist planning. However, he warns that these ideas often underestimate the political and economic realities that have historically undermined socialist systems, including the concentration of power and the suppression of dissent, which technology alone cannot fix.

Regarding AI’s impact within capitalism, Boettke expresses cautious optimism. He acknowledges concerns about mass unemployment due to automation but argues that AI should be viewed as an augmenting tool rather than a substitute for human labor. He highlights the potential for AI to enhance productivity, especially in aging societies where innovation and labor productivity tend to decline. By augmenting human creativity and extending productive working lives, AI could contribute to economic growth and prosperity, provided it operates within a free-market framework that encourages innovation and entrepreneurship.

Finally, Boettke stresses that technology itself is neutral; its effects depend on the economic and political systems in which it is embedded. He warns against the hype surrounding AI and urges a realistic assessment of its capabilities and limitations. Drawing on historical examples and economic theory, he underscores the importance of freedom and decentralized decision-making for fostering innovation and prosperity. The interview concludes with a reminder that bad ideas, rather than technology, pose the greatest threat to economic and social well-being.