Microsoft has a problem: lack of demand for its AI products

That's what's meant by efficiency, it's allocating it to the place that has the highest return on investment.

As you point out, in practice what's efficient is what can capture the highest return, not necessarily the highest return per se. If say investing in education had high returns society wide but those returns couldn't be captured, that's not an efficient use of private capital.

As somebody doesn't consider himself a capitalist, wouldn't it be fair to say it is "the most efficient" in precisely one thing: capital reproducing itself?

And if so, why is that necessarily a good thing? Why should that be our goal as society as opposed to things like minimizing child mortality, increasing literacy rates, making sure we don't have a ton of our fellow humans living on the street in misery etc etc - things that make the lives of our fellow humans better? Why is capital growth the metric we have chosen to optimize for? Surely there's better things to optimize for?

Excuse the polemic, but infinite growth with no regard for anything else is the ideology of a cancer cell - and to me that is increasingly what it feels like when we are wasting all these resources on a dying planet just to make numbers go up.

Optimizing for capital returns is a simplification of the real world, where it allows for comparing whether it makes more sense to put one's money into opportunity A or B.

There's a lot that's not captured by solely looking at dollars, like the examples that you bring up, such as quality of life, human welfare, and so on.

Ultimately that money is made by people choosing to spend their money on something, because it helps them, because they like it, because they need it for whatever reason (real or imagined). That's what grounds the financial markets: eventually someone is buying a thing because they want the thing, and all the rest of it is basically just figuring out who can make the thing, how many people want the thing and how badly, and whether the stuff used to make the thing could make a different thing that people want more. Financial markets can depart from that reality for a while, but mainly because of a collective belief in some falsehood about the above (everyone really badly wants AI, right?).

Number go up infinitely is due to inflation and that's basically just an incentive to not hoard cash indefinitely, and instead use it for something useful. But the only thing that uses up is numbers. Everything else is because people, on average, want more stuff and are willing and able to work hard to get it.

(Of course, this generally means that the markets chase the desires of those who have something valuable enough. People who don't will be marginalised by this mechanism, for sure. And of course there's lots of opportunity for people to steal or abuse powerful positions in the market to the detriment of others. Which is why a free market is not the be all and end all of organising a society, and other organisational structures exist to regulate it and to allocate resources in a less transactional manner)

But isn't that counter to the very article we're commenting on? Everyone is shoving half baked AI junk into everything because that's what makes number go up on the stock market, but I'm pretty sure that's not actually what most people would want those resources to be used for.

I'd posit that markets are completely detached from the real world and are more of a speculative/religious element than an indicator of any ground truths.

Edit: I just realized I missed a sentence of yours where you kinda spoke to this. I still believe that this is more of a rule than an exception - there is nothing inherently tying markets and reality together - they're mostly about people making bets on what the next big hype is; not on what is actually useful to anyone.

Most people or most people with money? Ultimately it's the people making investment decisions you need to convince in order to get the money from them. Then the reality check is whether you can give them that money back and more. Those investors should in theory be self-interested in making sure that this is actually useful, because if they don't they'll lose their money, but in practice they are not superhuman and prone to fads and echo-chambers (especially because it's a relatively smaller group that can move a lot of money around, and short-term investing rewards running with the crowd to some degree), but there's not a single group of people that would not fall victim to poor decisions in this regard (whether you're imagining a centrally managed economy, the electorate, or some hypothetical benevolent dictator).