Intermission

Meanwhile, in Chile

The great misconception about the Chilean experiment is that it was an attempt to apply computer technology to the task of organizing a command economy. This is a handy myth for those who want to use it as an example for whatever argument they’re trying to make. Neoliberals and apologists for Pinochet and Friedman can pretend that it was a quixotic project with no more hope of working than the Soviet system; socialists and other apologists can pretend that it nearly worked. Neither is the case, and by now it ought to be obvious why — management cybernetics demonstrates quite clearly why a centrally planned economy doesn’t respect the law of requisite variety and can’t get the information it needs to function.

These two features of technology revolutions—their promise to deliver progress and their tendency instead to reverse it for people out of power, especially the most vulnerable—are perhaps truer than ever for the moment we now find ourselves in with artificial intelligence. Since its conception, the development and use of AI has been propelled by tantalizing dreams of modernity and shaped by a narrow elite with the money and influence to bring forth their conception of the technology. That conception is what has led to the exploding social, labor, and environmental costs that are playing out around the world today, particularly, as we’ll see, in many Global South countries, for which the consequences of their dispossession by historical empires still linger in delayed economic development and weaker political institutions. And yet, just like the South Carolina congressman, Silicon Valley has painted the experiences of those being exploited and harmed by the technology as happier because of it.

Where MTurk’s workforce primarily came from the US and India, Scale went hunting first in Kenya and the Philippines, English-speaking former colonies with a long history of servicing American companies through call centers and digital work. The startup’s worker-scouting teams searched for the areas in each country that struck the very same balance of factors that would converge in Venezuela: a high density of people with good education and good internet yet who were poor and thus willing to work hard for very little money. The thesis was guided not only by the company’s cutthroat business practices but also a compelling story they told themselves: that these were the people who could benefit most from the economic opportunity and be happier because of it.

Under Pinochet’s rule, Chile privatized nearly everything—education, health care, the pension system, even water. The strategy produced economic growth; it also fueled stunning inequality. Chile is among the most unequal countries in the world today, with nearly a quarter of the country’s income concentrated among a few powerful families in the 1 percent. Having never meaningfully industrialized, it also remains tethered to the extraction economy that makes it relevant to higher geopolitical powers.

And so, as the AI boom arrived, Chile would become ground zero for a new scale of extractivism, as the supplier of the industry’s insatiable appetite for raw resources, not just its copper and lithium in the north but also its land, water, and energy resources for a growing crop of data centers in the Santiago metropolitan region. In May 2024, the government proudly announced that the country would welcome twenty-eight new data centers, on top of its existing twenty-two, over the coming years, bringing in $2.6 billion of foreign investment.

In Uruguay, Daniel Pena draws the same conclusions. The AI industry’s supply chain is convoluted and expansive. “They take energy from here, the data goes there, they extract minerals from somewhere, they bring workers from somewhere else,” he says. Against these sprawling impacts and the massive, powerful companies behind them, each community fighting their local struggle can feel isolated and disempowered, especially when hamstrung by their own governments that “need the companies to maintain an appearance of a stable economy.”