Why Capitalism Keeps Falling Over

Left on its own, this computer program moved forward by just stacking itself really high and then falling over

When I was in middle school our woodshop teacher was unwittingly drafted into being our computer teacher as well. So he took us into this room with green monochrome computers to learn, among other things, touch typing. The way we learned this useful skill was a game. We played it so ‘well’ that Mr. Carter had to shut it down.

In this game you controlled a track-and-field runner, leaping over hurdles. To run faster you had to type faster, and if you typed wrong you fell. We tried and tried but we weren’t very good at touch typing, until someone figured out that actual skill didn’t matter at all.

‘E’ is by far the most common letter in the alphabet, used 11% of the time. Someone discovered that you could just hold down the ‘E’ key and run super fast. The character would stumble and fall but ultimately those ‘E’s would register and we all got high scores. Old Mr. Carter just grumbled. Woodshop was easier. The kids that tried to cut corners over a lathe just lost fingers.

Computer Programs That Fall Over

Even more than cunning middle-schoolers, computer programs are prone to taking shortcuts as well.

In a seminal work from 1994, Karl Sims evolved 3D virtual creatures that could discover walking, swimming, and jumping behaviors in simulated physical environments… However, when Sims initially attempted to evolve locomotion behaviors, things did not go smoothly
Figure 1. Exploiting potential energy to locomote. Evolution discovers that it is simpler to design tall creatures that fall strategically than it is to uncover active locomotion strategies. The left figure shows the creature at the start of a trial and the right figure shows snapshots of the figure over time falling and somersaulting to preserve forward momentum.

Sims hoped to evolve creatures that would walk, wriggle, or squirm, but the program—taking its goals quite literally—figured out that it was fastest to just get really tall and fall over.

The researcher Krcah found a similar effect when he tried to ‘evolve’ creatures that jumped. The program, taking him quite literally (as programs do), just built very tall structures that never leapt off the ground at all.

So Krcah changed the rules saying that height would be measured as how far the closest block to the ground got off the ground. But of course, as with any specific set of rules, this was quite specifically ‘hacked’. The program just evolved to get really tall and fall over again, flipping it’s lower parts in the air.

Falling over seems to be the default hack for a lot of algorithms. Including capitalism.

Figure 2. Exploiting potential energy to pole-vault. Evolution discovers that it is simpler to produce creatures that fall and invert than it is to craft a mechanism to actively jump.

Capitalism That Falls Over

Capitalism is really just a big computer program, an AI, and one of the inputs is the equivalent of dumb middle schoolers constantly trying to hack the thing. Investment bankers, stock traders, even computer programs sniffing out any loophole in the rules.

The 2008 Crash

Hence you get stuff like the 2008 housing collapse, which was quite literally building up a bunch of blocks and having them crash to the ground. Except this time those blocks were homes, and the ground they crashed into was the entire US economy.

Dan Olson of Folding Ideas goes into this deeply, but the basic structure of the US housing crisis was that banks have been told to make money. OK. So they give home loans, which makes a little money over like 30 years. These are the basic building blocks of the computer program here. They’re literally human homes.

Now you need to stop thinking like a person who even knows what homes are or what people use them for. Just think like a stupid computer program (or a bored middle-schooler), ie, think like a bank. Just focus on the goal and fuck everything else, even if it all crashes to the ground.

Line Goes Up — The Problem With NFTs

These banks figured out that they could stack these homes (mortgages) into really big towers called bonds. Like a computer program building up just to crash down, these created perverse incentives. As Olson said, “a bad mortgage is worth more as a component of a bond than a good mortgage that’s not part of a bond.

So the banks just issued more and more bad mortgages to anyone, developers kept building more and more houses that people don’t actually want and need, but which are happily bought up by speculators.

Like a computer program (or middle-schoolers) these people are just responding to the literal incentives (make money) and not any actual human needs like having a home, getting money out of a bank, or having a pension.

And so, predictably, like all the computer programs above or the running man in my middle school game, this shit went really high, really fast, and all fell down.

Except in this case it wasn’t a computer program. This was the entire US economy. They’ve been carrying it around the carcass like Weekend At Bernie’s, but shit really died in 2008.

The Capitalist Program

Capitalism left unchecked like this is just a computer program gone wrong. Without human intervention to tell it what anything means—that things like housing, health, and a livable planet matter to human beings—capitalism will just run up the score by any means.

It will build empty housing, it will monopolize vaccines, it will destroy the entire future of the Earth to just have a good quarter. Capitalism will fight losing wars just to make money from the bombs.

None of this makes sense unless you only look at the scoreboard, and then it makes perfect sense. Then you have to understand, this is all the program sees.

Because capitalism is just a distributed algorithm you only get literally what you ask for. So if you ask for more GDP, if you ask for a higher stock market, that’s all you’ll get.

Oh, you wanted a planet to live on? You wanted a home? An education for your children? For a pandemic to go away? Well, you didn’t ask for that. It’s just a demented AI genie.

That’s why Capitalism keeps falling over. It’s the same reason those computer programs fell over, and the same reason my running-man in middle school fell over.

Capitalism is a dumb set of rules, given to a bunch of cheating dumbasses, with no concept of reality. Deciding to run your whole society this way is like giving up control to a bunch of degenerate middle-schoolers on computer terminals. Bankers are even worse and do more drugs.

These people will just hammer down the ‘E’ button to make money while everyone in the actual economy is constantly falling down. They won’t care, and Capitalism can’t care. Capitalism only knows the score we tell it to keep, and the easiest way to spell ECONOMY is just holding down the letter ‘E’.