Agent Smith addresses this in the first film. "Did you know that the first Matrix was designed to be a perfect human world, where none suffered, where everyone

Agent Smith addresses this in the first film. "Did you know that the first Matrix was designed to be a perfect human world, where none suffered, where everyone would be happy? It was a disaster. No one would accept the program, entire crops were lost. Some believed we lacked the programming language to describe your perfect world, but I believe that, as a species, human beings define their reality through misery and suffering."