Artificial Intelligence, NFT, and Other New Technologies: The Breakdown That Shows How Technology Markets Have Lost Their Rationality

Does the downturn in the markets contrast with the technological euphoria that has been expressed in recent years in the media in particular?

Does the downturn in the markets contrast with the technological euphoria that has been expressed in recent years in the media in particular?

©Justin Thales/AFP

Blinded by the noise

Does the slump in the markets contrast with the technological euphoria that has been expressed in the media in recent years, particularly on AI, cryptocurrency or NFT?

Atlantico: Whether in AI, cryptography, NFT and other new technologies, does the downturn in the markets contradict the technological euphoria that has been expressed in recent years in the media in particular?

Remy Bourget: It’s hard to see in the markets the strength to assess the intrinsic value of technologies, both ups and downs. We’ve just come out of a period of incredible valuation for tech companies. The Nasdaq increased tenfold between 2009 and the end of 2021, but has fallen by more than a quarter in the past six months. This drop comes after an extraordinary movement financed by mountains of liquidity in central banks, from crisis management to crisis management. The nearly uninterrupted policy of monetary stimulus in the developed world since the 2008 financial crisis has ended up in high inflation, against the backdrop of global logistical chaos at the end of the pandemic. Inflation sounds the death knell for these monetary policies while the huge bubbles we’ve seen in recent years, from financial markets to real estate, don’t seem to worry much.

Beyond the liquidity bubble, it is difficult to compare the revolution represented by AI — although the question of its direction clearly emerges — with phenomena like NFTs, which are instead the icing on the crypto bubble cake. Moreover, regardless of what one thinks about cryptocurrencies and the unbridled speculation that drove them, the notion of monetary decentralization has also responded to intuition about the monetary impasse that emerged as early as 2008, backed by arm’s length. The banking system (the central engine of monetary creation) by central banks, under the guise of permanent recovery of the real economy. Ironically, this intriguing crypto invention found itself driven into frenzy by an onslaught of liquidity from the same central banks that its founders wanted to challenge and compete with.

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The political and media environment is very favorable for startups, especially in the high-tech sectors, but are there really profits and success? What could explain that tech companies are not as profitable as they seem?

In recent years, 80% of start-ups that have opened their capital in the United States have been unprofitable, compared to about 20% forty years ago. Financial perceptions have changed drastically due to the influx of liquidity. Investors’ view of the long-term has increasingly focused, throwing away the good old financial facts and valuation methods. It is natural and legitimate for investors in this type of company, from a technological standpoint, to look to the future. But the compass turned wild with the various phases of quantitative easing, and it ended up in a violent collapse at the end of the extraordinary pandemic-stimulated support operations, as central banks were neutralized by the spike in inflation. There is also the question of the economic, and particularly industrial, role of start-ups. Their perception was conditioned in part by financial turmoil. The contribution of startups to their integration into a larger innovation system, including large corporations, universities, public bodies … Despite the ongoing industrial revolution, the unlimited multiplication of overvalued startups, must be understood, following in some cases what is stated: From It is clear that the complex variant of the Ponzi scheme does not guarantee the movement of objective innovation alone.

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Why let ourselves be convinced of the “hype”? How do we return to a more rational and equitable approach to technologies?

We are truly living in the age of an industrial revolution, centered around a new phase of automation, with artificial intelligence. Its scope, along with the (very) long history of mechanization, is actually revolutionary in nature. All major innovations take years, in fact decades, to really integrate into the economy and in particular through the organization of labour. We see it with the Internet, which would have required a global catastrophe like the pandemic and its political management to work remotely, more than a quarter of a century after the mass use of the Internet began. Bureaucracies have the genius of containing technological innovations, preventing them from turning into a leap in productivity and improved lifestyles. However, this does not exclude the ongoing technological breakthroughs and their scope. Of course, financial bulge has shaped technology investment decisions over the past decade, but an innovation like AI has to be put into a much longer story, which logically fits in with the dynamics of developing electronics and computing power. The study of science fiction in the postwar period tells us more about this dialectic than most economic studies.

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