The Guardian’s view on the AI ​​bubble: Capitalism has not yet evolved to protect itself | Editorial

TA message from him worldwide Regulators this week were blunt: The AI ​​boom is pushing stocks to the heights of the dot-com bubble — and the world is finally listening. With so much money dependent on so few companies, any loss of confidence could send stocks tumbling and drag the broader economy down. Proposed export controls in China Rare earths Add a new threat: not just to sentiment, but to advanced chip supply chains themselves. It’s a long way to come down from these dizzying heights if gravity reasserts itself.

Warnings of the past abound in Charles Kindleberger’s history of financial crises, Mania, panic and crash,” which began with the tulip mania in 1636. He wrote that what usually happens is “that some event alters the economic outlook.” New opportunities for profits are seized, and exaggerated.” Once the error is realized, there is a panic exit as the price of “whatever was the object of the obsession” collapses. This pattern repeats itself repeatedly until it appears that investors never learn and central bankers learn too late.

But why? Look at the economist hyman minsky, From which Kindleberger borrowed a lot. Minsky addressed the deeper dilemma that is being avoided today: How can financial innovations be stabilized before they destabilize the system? He believed that the longer the markets remained calm, the greater the risk. The genius of capitalism – and its danger – is that it cannot stop chasing another victory. Minsky believes that preventing this requires not moral restraint, but institutional redesign.

Minsky vision In capitalism it was that it worked on faith. Companies invest today because they expect others to invest tomorrow, while lenders need high asset prices – and move to support them. This ring of trust keeps economic activity going until uncertainties creep in, valuations fall, and an inevitable and sudden market collapse looms. To avoid this radical change is required. for him He plans He called for the creation of “big government” not to support stock prices, but to support society when stock prices fall. This was supported by a “big bank”, a monetary authority that would make it difficult to purchase risky assets on credit. Minsky believed that cash should be directed toward productive uses, not asset inflation. He did not want to stifle innovation but rather make it safe for democracy.

It’s a warning worth hearing today. This summer, OpenAI’s Sam Altman described some of the technology reviews as “crazyAmazon’s Jeff Bezos says we’re in bubble. The AI ​​boom looks disturbingly like Minsky’s ultimate Ponzi game – with prices fully supported by expectations of higher valuations and easier refinancing. Startups with no product raise billions; Index funds became dominated by oversized stocks; Capital chases fads rather than profits. The ratio of the total market capitalization of all US stocks to US GDP is at register High. SkepticsHowever, we point out that in the year before the dot-com crash the NASDAQ rose 86%, While it only rose 24% In the past 12 months.

Artificial intelligence may change the world. But perhaps not, if the markets are unable to handle the speculative wave he unleashed. Minsky’s approach would link borrowing limits with fiscal and industrial policies that direct money toward socially beneficial technology. Mr. Altman to caution AI startups with “three people and an idea” raise huge amounts of money, he said, adding: “This is not rational behavior. Someone is going to get burned.” He’s right. The goal here is not to rebuke risk-takers, but to build a capitalism capable of dealing with their excesses – and surviving.

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