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The Problem With Capitalism

Eric Nevala · 2016-11-07T21:48:05

Claim: I honestly believe that a capitalistic economic system is inevitably doomed to fail and that we're already starting to see some of the beginning stages of that inevitable failure. Somehow, we're going to eventually have to gradually move away from capitalism. My untested hypotheses / premises: 1. The world population is growing at an exponential rate. Meanwhile, the ultimate goal of capitalism is to produce goods with as little cost as possible and sell them for as much as possible. The observable trend for capitalistic systems is to use technological advancement to increase the production efficiency of production lines while reducing the costs of production as much as possible. What used to take hundreds of people to produce decades ago may now only take dozens of people today. This trend will reach an asymptote across all industries. The bottom line is that the production of goods requires far fewer people today. 2. As a result of #1, fewer people are required to produce goods. The beneficiaries of these production pipelines are the owners of these businesses. Gradually, the socio-economic classes get stratified to such a point that a handful of people possess a majority of the worlds wealth, the middle class vanishes, and the poor get poorer. Nobody is really to blame for the boon of technological advances, but the capitalistic financial model is going to rapidly become a source of suffering for the majority of people. 3. The world is becoming increasingly globalized, such that multinational corporations can have business operations in multiple countries. Manufacturing is done in parts of the world where it is most economically efficient, where labor is cheap and ecological laws are lax. Sales are conducted online and the transaction takes place in countries with the most generous tax laws. Business interests will try to preserve and push this global advantage in as many countries as possible by spreading "free" trade. Free trade ensures that the benefits of low costs of production are not lost when goods are sold in another part of the world. This forces local workers to compete on a global scale against foreign wages they can't compete against. 4. In the next 50-100 years, most human labor will eventually be replaced with robotic labor. The mass scale production of products will eventually be done by a handful of people. A million cars could be fully produced by a staff of 20 people, from mining raw materials from the ground to the car rolling off the factory floor. The actual production cost per car could be about $5. Imagine that the production of all goods is nearly costless at this point. 5. IF all goods cost nearly nothing to produce and can be sold at the same prices, the markup values will be 50,000x. As the required workforce to produce said items dwindles down to nearly nothing, the potential customer base which can afford to purchase these items at the listed prices drops as well. So, that means we'll have a huge supply in a market which can't afford the existing prices, so the prices will have to drop to meet the price average consumers can afford to pay. What if you can buy a big screen television for $1? 6. The "work" people will do in the future will skew towards work which just isn't economically feasible or possible to replace with robotics or machines. If a coke machine can dispense soda, then a machine could also dispense cheeseburgers. If McDonalds can figure out how to automate hamburger production down to a machine, they would... provided running the machine is cheaper than paying a small staff an hourly wage barely above minimum wage. 95% of what few jobs remain will become service industry jobs (retail will mostly be replaced by online shopping). The remaining jobs will be creative pursuits, such as writing books, creating video games, music, artwork, etc. that a robot can't do. Due to this lack of demand for human labor, unemployment will skyrocket to "absurd" levels (75 percent? Maybe higher?). Basically, you'll be able to login to a computer and order a big screen television to be delivered to your house for $1. ------------- Okay, so normally if we took our existing capitalistic framework / worldview and applied it to this future scenario, it would seem like a dystopia with a lot of doom and gloom. But, the philosopher in me asks, "What's the real objective of life and living? Is it to work or to spend our time with more worthwhile personal pursuits?". When the costs of production have essentially been reduced to zero, why maintain a monetary system at all? What's the point? When the costs to produce something have been reduced to nearly zero, why not just make everything free? What would a society look like where anything anyone could ever want is readily available? The notion of material possessions becomes kind of meaningless. Who cares if your neighbor has a 52 inch television, when you could order one and get it at any time you wish? The concept of measuring worth by material possessions becomes antiquated. When our daily pursuits for mere survival are replaced by pursuits of leisure, I think the natural human tendency is to become creative and to share our creative works with each other (game development being one of those creative pursuits). To take this to a scientific level for a moment, all of what I've said above is testable. We are game developers, and what is a game? Most of the time, it's a real-time simulation, and we can create a simulation of a capitalistic global society and create economic models of the past, current and future economic trends and try to predict the long term economic outcomes. Let's suppose that we can calibrate our real time simulation to accurately predict the future. To test this, we could model the world from the pre-industrial era until the year 2000 and try to predict what the world looks like in 2010 and 2015, and see if the prediction matches reality. Once the model is precisely tuned, we could start making reasonably accurate predictions of what 2050 might look like as well as 2100. Here's where things get interesting though: Since this is a grand simulation, what kinds of tweaks can we make to the simulation to change the predicted outcome? What tweaks would be the best tweaks for promoting global human well being? Would a global minimum wage change things? What about basic income? Tariffs? Or what about the abolishment of currency all together? What if 80% of people go through life having never "worked a job"? In our current worldview and value system, that's kind of hard to comprehend and respect, but that could very well become the norm in the future, and I think, a desirable norm. What if... the only work people did was work that was a passion or hobby for them? Painting... cooking... singing... "work" was just another luxury which people did at their own convenience and will, rather than a mandated repetitious daily sequence of tasks? Whatever happens, one thing is certain: Capitalism is gradually becoming a deprecated economic system because it is a self-defeating system. We're gradually approaching an economic singularity brought on by technological progress, and in the next few decades, we as a human race are going to have to address this. I hope it's in a way which promotes global well being and prosperity rather than finding ways to preserve the increasingly stratified economic system we have currently.