Throughout the first chapter of the book we have discussed how markets arrive to different outcomes. These markets, however abstract, are composed by agents, each one of them seeking to maximize his utility. And, as the introduction to the chapter states, ‘The world populated by self-interested individuals has a remarkable amount of order that no individual in particular is responsible for’. But what if in the not so distant future this order in the markets could be attributed to a single agent, a central planner.
Economists study the conditions under which a certain equilibrium can take place in the market. The desirable characteristics of this equilibrium often include that it clears the market, that each agent maximizes his utility (Walrasian equilibrium), Pareto Efficiency, etc. However, such an equilibria requires many assumptions to be fulfilled, these assumptions rarely hold in the real world. This leads us to reaffirm something that Keynes realized long ago, markets fail.
But what if there existed a centralized decision maker that processed all the information we generate (digital information) to determine the optimal economic activity in order to reach equilibrium (market clearance, utility maximization, etc.)?
I know it sounds like an episode of Black Mirror, but the idea is really interesting. This article discusses the implications of this possibility: https://www.ft.com/content/6250e4ec-8e68-11e7-9084-d0c17942ba93
I look forward to reading your opinions on the matter.