After Capitalism
I know that some may argue that the US has not REALLY been a capitalist society since Roosevelt, but we have been. I have long maintained that the American economy has always redefined economic modeling, and that economic theory describes our economy in an historical fashion, rather than being able to state with any kind of clarity where we are at or what we are doing. In that context, it is clear that we have been a capitalist society – albeit with some socialist elements – for a very long time.
Today, however, we find ourselves on the doorstep of something very new. For the last several decades we have seen the US economy become more integrated into the world economy with the result being that manufacturing has been pushed to areas where it is more cost effective. This has left the population of the Unites States more and more dependent on retail and service jobs as a main source of income.
Without continued integration of a world society (and government) this has meant that the US has become almost totally reliant on consumer spending to keep our economy growing and producing the increased jobs necessary to keep people working as population expands. We have, thanks to “easy credit” become a nation with a negative savings rate as we borrow money to consume to keep the economy afloat.
The housing crisis is as much fueled by the fact that homeowners borrowed A LOT against the paper valuation of their homes as it is by the creative ways that bankers packaged and repackaged mortgages in ways to make even more money off of loans that became more and more specious as time went on. Homeowners would simply have lamented that their homes were worth less on paper and moved along with their lives if they hadn’t refinanced to take that around the world cruise or to buy that Hummer. Now they can’t afford the balloon payment due after the five years they thought they would never reach and they can’t refi again because the value of the house didn’t go up 20% like they expected.
This last quarter will see retail purchasing decrease dramatically, and many retail companies will be in danger of going out of business given the close margins they operate on in order to overpay their executives. I can’t imagine what the first quarter of next year will look like.
But that really isn’t the point of this discussion. This is but a prelude to what’s coming. This crisis will cause us to increase unemployment benefits, perhaps even making them permanent, and tying them to retraining or government job functions. We have to do this, because unemployed people don’t consume, they don’t pay their mortgage, they don’t buy new cars – all of which is vital to make sure that no one else loses their jobs.
But this presages what will happen in the next few decades as we move into a post capitalism society.
Productivity and technological advances will soon bring us to a point where we need less labor then we do consumers.
Read that again so you understand me clearly: “Bring us to a point where we need less labor than we do consumers.”
As technology makes it easier and cheaper to produce the electronic gadgets that define our lifestyles, as efficient energy production makes homes less reliant on oil and other products and more reliant on home hydrogen cells or home solar cells, our economy will need less and less of a workforce, even as we need to find other ways to move money around.
There will be two answers at that point. We either “pay” people more for doing virtually nothing and allow them to happily consume, or we move towards removing the “capital” from our society altogether.
Over the next few days and weeks I will be discussing this and other topics in what I would consider “political philosophy.” A bit different than what we have seen here so far, but something that I feel should bring out discussion in a very positive way. Please comment or come to the forum and elucidate.
— writeside
Tags: political economy
Very interesting read, Writeside. Some thoughts….
In the 1950’s, many economists believed that the advent of new technologies would lead to the 20 hour work week and a new generation raised on excess leisure time. Those economists, obviously, were wrong. Very wrong. The great strides in productivity didn’t lead to less work, they led to more production.
A more productive economy (which is, by definition, a more technologically advanced one) leads to less expensive production of goods. This leads to increased demand for goods, and therefore people working more. While it’s not a perfect summation, The supply of goods in the market really does create demand for those goods (on an aggregate scale). The increased incomes that come from increased productivity (technology) increases demand. As a bad analogy, a more productive method of making hot dogs doesn’t make hot dog manufacturers work less, it makes bun manufacturers work more.
The real question, in my humble opinion, isn’t the lesiure/work tradeoff that never seems to materialize. The real question is for how long we can sustain exponential growth with the resources provided to us – and what the signal will be when we’ve removed ecosystem services beyond their ability to regenerate. The past couple hundred years have demonstrated that our demand for goods is insatiable, while the past 100 years has proven that the environment’s ability to maintain and sustain the inputs is very finite.
At any rate, you raise some very interesting points. I look forward to reading more.
Seven.