Not what he said. He said only two internal states. This not the same thing at all. One can have a computer with only 4 symbols and 5 internal states (published in 2001 by Watanabe Shigeru; beating Minsky's 4 state 7 symbol machine in product mimimization.)
Of course, the ultimate in computer reductionism is the single instruction machine. Based on a RAM model, the instruction is: subtract memory location being pointed-at from the accumulator; if the accumulator is negative, skip the next location, else execute the next location. This mimics the working of both the IBM 650 and the Bendix G15. Such a single-instruction computer can simulate a universal Turing machine.
My universal Touring machines used to be Corvettes, but as I got older, I switched to Tahoes.
I can't even see this as a single instruction in interpretive language code.
Not what he said. He said only two internal states. This not the same thing at all.
I agreed with him that you could have just two instructions processing the data such as yes/no. However, his post was in response to mine regarding Wolfram's claim that you could perhaps model life with a few lines of code or rules which made his answer IMHO a bit non-responsive. My point in the response is that you need an instruction set in order to have a computer do things - you need a program and that takes much more than simple yes/no. In the turing machine classical examples the instructions are the 'tape' and this is the meat of what you would need to have in order to construct any sort of a model.
Let me just point out that while one can perhaps construct a useful program with just two instructions, this would essentially require the person writing the program to write an interpreter which is a fairly big program in itself . We are now used to having a single line of code do quite a bit because under it there are an interpreter that turn binary into machine code and the language in which we write into machine code. These are very large programs in themselves which are being used to interpret the instructions with which we program nowadays. What this means for example is that Wolfram's 5-6 rules would need numerous rules under it for them to be implemented in a computer program.
As to your example of a one instruction machine, it seems to me that you have two. You have an if/then in your example -if negative skip, else execute which makes for two instructions subtract and skip.