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.