Algorithms, Bytes, and Chips: The Emerging Political Economy of Foundation Models

Abstract

Recent interest in generative artificial intelligence (AI) is changing the political economic environment in which this technology is produced. Understanding this emerging landscape is essential to grasp the economic and societal effects of AI. Using the AI triad model of algorithms, bytes, and chips, this article argues that a confluence of factors is likely increasing the costs of developing foundational AI models, and thus generative AI products. Speculations about how the AI industry may adapt to this changing political economy, and the potential role of the state, are offered.

Keywords: artificial intelligence, economic strategy, political economy, supply chains