AI in the financial system could spell ‘the end of democracy’: Harari to BIS

Yuval Noah Harari says AI should stand for Alien Intelligence, that banks & govts should create more money to build trust & that Bitcoin is bad because it’s built on distrust

Historian and author Yuval Noah Harari says that AI is like an Alien Intelligence that could lead to a political and social crisis and spell the end of democracy.

Speaking at the last session of the Bank for International Settlements (BIS) Innovation Summit on Tuesday, Harari explained how AI could wreak havoc on society through the financial system in a bleak future where nobody would be able to understand it or hold it accountable.

His solutions included creating good institutions to regulate and supervise AI and allowing banks and governments to “create as much money as they like” in a future dominated by “electronic money” that shouldn’t be Bitcoin, because in his words, Bitcoin is “a money built on distrust” of governments and banks.

“What happens if […] nobody […] understands finance anymore because AI has made it too complicated? This could lead to a political and social crisis of the kind we have never encountered before. It could lead to power shifting from humans to algorithms to alien forms of intelligence”

Yuval Noah Harari, BIS Innovation Summit, May 2024

“People need to understand finance,” Harari told the BIS crowd.

“At the present moment I think that maybe one percent of the population really understands how the financial system works.

“What happens if this number goes down to zero? No human being, no president, no prime minister, nobody at the central bank understands finance anymore because AI has made it too complicated.”

“This could lead to a political and social crisis of the kind we have never encountered before. It could lead to power shifting from humans to algorithms to alien forms of intelligence,” he added.

For Harari, money equals trust, and he is no fan of Bitcoin because it was created out of the people’s distrust in governments and banks.

“When I look at Bitcoin as a historian, I don’t like it because this is a money built on distrust“

Yuval Noah Harari, BIS Innovation Summit, May 2024

“When I look at Bitcoin as a historian, I don’t like it because this is a money built on distrust,” said Harari.

“The central idea of Bitcoin is basically electronic gold — that we don’t trust the banks, the governments, so we don’t want to give them the ability to create as much money as they like, so we create this Bitcoin. It’s a currency of distrust.

“I do think the future belongs to electronic money, but what we’ve seen over the last centuries is that it’s actually a good idea to give banks and governments the ability to create more and more money in order to build more trust within society.”

With the premise that “the product of the financial system is trust,” Harari said that AI in the financial system could ultimately lead to the end of democracy because if nobody understands it, where is the accountability?

If no human were to be held accountable for the economy — including politicians — what would that mean for democratic societies?

“If we reach a point that we can no longer understand it, then at least in democratic societies this is really the end of democracy”

Yuval Noah Harari, BIS Innovation Summit, May 2024

“If we reach a point that we can no longer understand it, then at least in democratic societies this is really the end of democracy,” said Harari.

“If a democratic public can no longer understand and hold someone accountable for financial decisions — this is a very large part of what politics is about — it’s about finance; it’s about the economy.”

Artificial intelligence is proving to be a creative force in the arts and sciences, with the ability to compose music, movies, and literature in ways that seem alien to us.

Eventually, it will be able to create new financial devices that are so out of this world, and at such speed, scale, and complexity, that nobody may know what’s really going on.

Because of this, Harari told the BIS crowd that AI is actually an alien intelligence, to which the audience erupted in laughter.

“It’s better to think about AI as standing for Alien Intelligence”

Yuval Noah Harari, BIS Innovation Summit, May 2024

“The initials ‘AI,’ people think it stands for ‘artificial intelligence,’ but there is nothing artificial about the new forms of AI — they are developing on their own,” said Harari.

“It’s better to think about AI as standing for Alien Intelligence because it really thinks and creates in an alien way from us.

“This is even true of finance […] I think we’ll see AI creativity also in this field coming up with new types of financial devices that no human being would ever imagine creating,” he added.

Harari’s solution to the problem of AI running wild in the financial system is to look to “good human institutions” to make sure we are using technology wisely.

“We need to build good institutions. This is the only thing that can really protect us from the most dangerous potential of AI”

Yuval Noah Harari, BIS Innovation Summit, May 2024

“The solution that we again and again see in history is institutions,” said Harari.

“This is the best thing that humans have managed to come up with, and we need to build good institutions.

“This is the only thing that can really protect us from the most dangerous potential of AI and also other technologies,” he added.

Harari gives talks at institutions all over the world, including events such as the World Economic Forum (WEF) Annual Meetings, the United Nations AI for Good Summit, the New York Times Climate Hub, the New Yorker Festival, and at several academic institutions including Harvard, Stanford, and King’s College Cambridge.

At the 2018 WEF Annual Meeting, he declared, “organisms are algorithms,” and at the 2020 meeting, he quipped, “We are no longer mysterious souls; we are now hackable animals.”

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Image Source: BIS Innovation Summit on YouTube