I had an interesting conversation with AI yesterday. I have been reading a book Thinking in Systems and it had a chapter on the stock market and talked about it as systems within systems and that it is the perfect example of where conventional thinking fails. People see the flow of stock prices and then attempt to create a narrative. They look around and see rising interest rates, a Democrat victory, tariffs, a War in Iran and construct a story about businesses, and it is wrong.
It is wrong because it is a mechanical story based on the idea that all the businesses that make up the market are like cogs in a machine. They turn and another turns and there are bigger cogs controlling all of it, but that isn’t how it works. In the real world systems are more biological than they are mechanical. They are interconnected but not every events impacts every business the same.
The darkness impacts a tiger different from a panther. The rain impacts a parrot different from a slug. Not every large event is a negative for every business and the businesses themselves are systems and don’t have to exist in stasis. Take the idea that a Democrat victory means more restrictions on data centers. A business can innovate and change the way data centers are constructed.
The part that was interesting in the conversation with AI is it is trained on rational actor theory and the prevailing thinking. When pushed into the idea of behavioral sciences and systems thinking it knows the material but it discounts it. It keeps retreating to Chicago. It wants it to be rational actor theory and a mechanical world view.
We are on the verge of something different. Right now AI doesn’t think. It is a bit like a parrot in a cage. It can pull up and summarize more information in seconds than I can read in a week, but it can’t reason them or analyze them or understand them. It cannot prove itself wrong and discover a new idea.
One point that keeps being made about new forms of thinking is that people retreat to safety. Conventional wisdom is safe. Look at baseball and how all these years after the book Moneyball was written and made into a movie people are still arguing about batting average or for investing how many years it has been since the study that funds that sold their losers and put more money into their winners did better than the conventional method of selling winners and putting money into losers. In both cases the conventional thinking is still the more common one.
What happens when the AI can think and it tells people that everything they do is wrong?
