Yuval Noah Harari feels AI could lead to ‘catastrophic’ financial crisis, may indirectly trigger war

The Israeli author also expressed that the primary concern about safety testing of AI models was forecasting all the potential problems it could lead to. He told the publication that with AI unlike nuclear weapons, there was not a single big dangerous scenario that was understood by all. He asserted that with AI we were dealing with a “very large number of dangerous scenarios”.

The author also said that the multilateral declaration at the global AI safety summit was a very important step forward. Earlier this month, the UK, US, EU, China, and Australia agreed that AI poses a potentially catastrophic risk to humanity. This was the first international declaration on AI. 

Sharing his views on the declaration, Harari said that the most hopeful part was that they could not only get the EU, UK, and US, but also the government of China to sign it. “I think that was a very positive sign. Without global cooperation, it will be extremely difficult, if not impossible, to rein in the most dangerous potential of AI,” the author was quoted as saying by the publication. 

AI and unpredictability

The author emphasised that AI is unique among all the new technologies developed by humans as it can make decisions, create new ideas, and learn on its own. While pointing out that the finance sector is the most suited for AI as it is data-driven, the author also said that it could be a serious source of the AI-made crisis. 

He highlighted the possibility of AI gaining control over the world’s financial systems and creating complex financial tools that humans may be incapable of understanding or regulating. Harari drew parallels between the financial crisis of 2007-07 which was an outcome of the issues created by complex debt instruments such as collateralised debt obligations (CDOs) which were poorly understood and regulated. 

The author said that AI could develop financial tools that could be far more complex than CDOs, leading to a situation that could be beyond human comprehension, thereby virtually unregulatable. He also added that an AI-created financial crisis would not destroy human civilization. He said that it could indirectly trigger certain kinds of wars or conflict. “It’s a catastrophic risk – economic, social, political – but by itself, I wouldn’t describe it as existential.” he was quoted.

Overreliance could harm

This is not the first time that AI’s potential to wreck the finance sector has come to the fore. Earlier, Gary Gensler, the chair of the US Securities and Exchange Commission said that the increasing use of AI systems and concentration of power in a few AI platforms could lead to the risk of financial crisis in the next decade. In his interview with The Financial Times, Gensler said that many financial institutions may be dependent on the same AS model and data aggregator, which could undermine financial stability. 

In his article in The Economist, Harari had called attention to the need to regulate AI adding that it was important to put a halt on irresponsible deployment of AI tools in the public domain. He had also said that the current social and political systems were incapable of dealing with the emerging challenges posed by AI. The author also highlighted the need to have an ethical framework to respond to challenges posed by AI.