The fiduciary wedge, and whether frontier labs push the other way

Uh, I don't think there is a limit. If you take the Argentinian model, you could have agents running the firm. Now, the concern — you still need an entity. Okay? So Ted Shelton and I wrote this paper on what does the organization look like if you take the coordination and so — and we coined a term called a fiduciary wedge. The reason you still need an entity is for liability, for fiduciary, for proprietary data ownership, for learning loops inside that entity, for brand, as a purpose container, as an MTP container, etc.

But the primary reason for a firm has been coordination and execution, and that kind of disappears. So you still have entities in the same way like in investing you have SPVs, and you can have multiple people be part of an SPV that then invests in something. Essentially you still need the legal container, but the primary reason, which Coase identified and all organizational thinking does come from that — that there's no reason why a company or firm or legal entity can't be owned by other agents, which will eventually happen in Argentina and other places, uh, and then have a completely virtual organization operating in its own domain for the purpose that it was set up for.

I want to push on that though, because there's a countervailing force that one might perceive, which is — we talked earlier in this episode — which is frontier capabilities potentially getting walled off from the rest of the economy. If OpenAI, for example, hypothetically, is using internal unreleased models to solve grand challenges in math and the rest of the economy doesn't yet have access to them, as a friend of mine at OpenAI and others have pointed out, wouldn't that agitate in favor of the exact opposite Coasean economics, of firms growing larger and larger so everyone has access to those internal capabilities within the frontier labs?

You could, but I think that's an edge case. Uh, for the most part, as open models allow people to have general intelligence and agents across the board — and so you could already have a frontier lab running its own hedge fund strategy, and I'm sure they're doing that now, that outperforms the market and just running that model. But it's a very niche thing applying for a certain temporal period of time.

Uh, over time, I think the big question in my head right now is, if we are achieving RSI, what the hell does that mean? I think when we get to that point, the concept of an economy starts to erode and dissolve itself. So you have to think about it in a totally different model.

Not — not as obvious. I mean, this seems to me a lot — what's the aphorism, like, what happens when an irresistible force meets an immovable object, or something like — what happens when a Coasean large frontier lab with superhuman superintelligent capabilities meets an agentic economy that wants to distribute transaction costs out to the edge, and combined with Argentina wants to create non-human corporations? Not obvious where that ends.

Alex, you remember when Sam Altman said, yes, in the future I think an AI should be running OpenAI?

I remember that. And Sam, just in the past 24 hours, also on social media expressed surprise — shocked, shocked — that OpenAI was able to solve uh Navier-Stokes. So maybe an AI would have predicted this.