Every improvement in computing power and artificial intelligence raises anew the claim and, for some, the hope that now we can centrally plan the economy. I was asked at Quora whether this will ever happen.

I will begin by accepting that there is nothing inherently impossible about an AI running an economy so, for the sake of argument, let’s say it could be possible using today’s computing power to run a small economy in say 1800. Nevertheless, I assert that an AI will never be intelligent enough to perfectly organize a modern economy. Why?

The main reason is that AIs will themselves be part of the economy. Firms and individuals use AIs to make decisions. Thus, any AI has to take into account the decisions of other AIs. But no AI is going to be so far advanced beyond other AIs that this will be possible. In other words, as AIs increase in power so does the complexity of the economy.

The problem of perfectly organizing an economy does not become easier with greater computing power precisely because greater computing power also makes the economy more complex.