Capitalism, democracy and Milei in the 21st century

Yesterday, Javier Milei somehow expressed some of this through an article in the London newspaper Financial Times. He chose to write there just as the world is experiencing an extraordinary increase in investments in artificial intelligence, unleashing a race of global proportions between companies and political leaders to see who can attract the most the new capital of the 21st century.

The President maintains in his note, almost with an argument more of a lawyer than an economist, that the way to ensure that Argentina attracts these investments is what the Netherlands did four hundred years ago: provide a legal incentive umbrella. Milei proposes to frame companies managed by AI in the figure known as limited liability company and not of collective partnership.

They all seem like lawyer questions and terminologies, but the difference is that with the first figure, the owners would not be personally responsible for the company’s debts or lawsuits, profits usually avoid paying taxes, skipping double taxation, and less administrative procedures and annual meetings are required than a traditional corporation. Milei says it in the FT: the industrial revolution was not born as a result of engineering but of Amsterdam corporate law.

The President’s article is revealing because it also confirms that in his vision Democracy must adapt to technological changes, something that Elon Musk and Peter Thiel also think.. For a leader like Milei, democracy must adapt to providing more immediate responses and since the challenges that come are different from those of the 20th century, the academic perspective must be readjusted. Giuliano da Empoli describes this entire ecosystem as ‘technopolitics’.

Capitalism is allergic to uncertainty, said Schumpeter. The point is How to prevent him from sneezing and triggering a crisis.

One option is that, under democracy, predictability and the rules of the game are provided by agreements that exceed the time horizons of the rulers’ mandates. It happens in Uruguay and Chile.

Milei does not believe in that path. But at the same time he knows that he must clear up doubts with the country risk still below 500 points. People aware of Open AI’s announcement last year of a data center for AI in Argentina (US$25 billion investment) admit that it is long overdue. There are local and global issues: at a global level they are beginning to see doubts about the completion of many of these announcements, he said The Wall Street Journal this week. And Milei seeks to compensate for all this in some way, diluting business risk. There many see tension with democracy as it was known in the 20th century.