Posts Tagged ‘political economy’

After Capitalism

Tuesday, November 18th, 2008

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