Let’s design the future of capitalism

As regular readers will know I’m optimistic about the future. I think there’s a strong chance that advances in technology will bring us cheap and abundant energy, machines that can do most of our work for us and medicine that delivers longer, happier and healthier lives. But, as I’ve also written before, the path between here and there will most likely be very rocky. Automation will replace jobs at an increasing pace over the next decade or two and without radical change wealth inequality will skyrocket to dangerous levels and existing welfare structures will collapse.

My kids will enter the workforce in 10-15 years and I’m worried by what they will find.

There’s a counter argument to this, most vocally espoused by Marc Andreessen, which says that every time technology replaces jobs the capitalist system finds new work for people to do. We’ve seen that movie play out multiple times over the 200 years since capitalism rose to prominence in the UK’s industrial revolution and we should expect to see it again.

The only thing I know for sure is that there are no certainties, and Andreessen might be right, but I think it’s more likely that this time it will be different. If I’m right it will either be because the destruction of jobs will happen much faster this time and the job creation won’t come close to keeping pace, or because automation will take the new jobs too and there will be a permanently lower requirement for human labour going forward.

In both these ‘it’s different’ scenarios we will need more income redistribution to fund bigger and better safety nets and radically better retraining and back-to-work programmes. Otherwise we will end up with a large permanently unemployed underclass and riots on the streets. A universal basic income is one solution that’s being increasingly widely touted.

Right now it’s still hard for most people to believe that we are headed to a post-scarcity world and think it’s a waste of time thinking seriously about how we navigate from here to there. The common reaction to pending automation is to fear job losses and robot overlords, think briefly about restricting technology development, decide that’s futile and then put off change for a few years because the problems aren’t imminent and the solutions are hard. The point they’re missing is that most of the pertinent technologies are developing on exponential curves – change will come slowly and then it will come FAST.

Capitalism is a system designed to optimise the distribution of scarce resources. That’s what money does. If we are entering a post-scarcity world then almost by definition we will need a new system. If we are entering a period of difficult adjustment then keeping equality of wealth and opportunity within reasonable bounds will be a difficult global challenge. Either way, we should take the opportunity to design our future system rather than simply let it happen to us.

Designing our future system requires thinking through where we collectively stand on acceptable levels of wealth inequality and how much we support the right to work. That’s worth doing even if I’m wrong and Andreessen turns out to be right.

For further reading see Vivek Wadhwa’s recent post on Venturebeat.

  • A universal basic income is a fascinating idea. Nic, do you think might move us towards more of a communist state? I think though that in the future it’s possible that we will have a one world currency. Hopefully the advent of the rise of androids will redirect our focus towards a liberal arts education as skilled labourers and engineers are replaced by AI.

  • Harry Holmwood

    Thank you for writing this. Couldn’t agree more. I’m also enthusiastic about and terrified of what tech is going to do for/to society in the coming decades. It’s not good enough to say ‘the markets will optimise it’ – we’re already in a world of plenty, but most people don’t have enough, and I don’t see signs of that changing just because we can generate electricity more cheaply, unless there’s a wholesale reinvention of society. I worry that the smartest and most powerful people in tech subscribe a little too much to the Ayn Rand school of thought and it’s good to see someone thinking a little more deeply than that.

    Personally I think we need to consider a post-scarcity world where, almost by definition, there isn’t anything ‘productive’ (in the strictly economic sense of the word) for a lot of people to do, for a lot of the time. Factories are empty, and offices are already full of people pretending to work, making products and services we don’t really need… and we’re only at the start. We adhere to a 5-day, 40-hour, commuting work week as the norm when it doesn’t need to be, and can’t be in the future. Our economies are built to rely on endless growth (consumption) which can’t carry on forever. If we can adjust to this new world without subjecting ourselves to grinding poverty or boredom, technology can indeed usher in a wonderful new world. If we don’t, it’s bleak indeed.

  • Harry Holmwood

    Of course, with nothing else to do, everyone will be playing more video games, so that’s a plus 🙂

  • A lovely article about it all is here. You might not like it. I hope you will.

  • Thanks Harry. I’m not sure we’re yet in a position where we could sustain a reduced working week though. It seems that we don’t have enough money and taxes to go round already and removing productive capacity and income from the system would worsen the problem.

  • Thanks for the link. One of the reasons I like blogging is because people point me to articles I’ve missed. I think Paul Mason goes too far though. I share some of his views, but others appear to be emotional rather than rational in nature, perhaps rooted in a visceral dislike of capitalism.