Sunday, June 16, 2013

When Capitalism comes to a Shuttering Halt

* I received this as a comment from RobertSF on my post Massive Churn in Job Market: It's not Job Skills. I felt it was worth reposting because I found it to be very insightful. Although it is very thought-provoking, I disagreed with some of the criteria of the author's premise, and left my own commentary afterwards.

When Capitalism comes to a Shuttering Halt

We need to realize first that persistently high unemployment is not just a problem in the US. It's a global problem. It's estimated there are 200 million unemployed people in the world, and it's a number that continues to grow. Why should that be if the world is not producing less over time?

Global GDP has gone from $42 trillion in 1999 to $78 trillion in 2011. Except for the 2008 downturn, GDP growth has been positive. The world produces and consumes more goods and service than ever.

When we view it that way, the conclusion is inevitable. It's not any skill gap. It's not immigration, financialization, or outsourcing. It's that we're able to produce increasingly more goods and services with fewer and fewer people. How have we been able to do that?

In a word, technology. Technology has allowed us to push productivity beyond the point of demand, to the point where we have surplus productivity. That is what unemployed people represent. They are productivity that cannot be absorbed or put to use at any price.

It's true that individual countries could lower their unemployment rates by restricting low-skill immigration or reversing their outsourcing, but that would be at the expense of other countries, and worse, it would not be a permanent fix. It would simply kick the can down the street because technology continues its inexorable advance and would eventually catch up.

The solution requires us to first acknowledge the effects of technology. We can't stop the progress of technology, nor would we want to, but we must manage its effects. Developing countries have less to worry about for now because they have the lowest labor costs, so they'll be the last to lose jobs.

Developed countries, however, will have to rethink the "work for a living" paradigm because that increasingly will become impossible. At this point, people begin to mutter nervously about "redistribution," yet without getting the fruits of their economies into the hands of their people, developed countries will find themselves without consumers, and without consumers, the capitalist machinery comes to a shuddering halt.

My Commentary in Response

While although it may true (and tragic), that unemployment is a global problem -- just as poverty, disease, famine and war -- I'm more concerned about these issues as they pertain to me, my immediate neighbors and my fellow citizens.

Our domestic global elitists (American business leaders and politicians) have taken it upon themselves to fix the world's problems without first addressing the problems we have here at home. When you say "at the expense of other countries", it reminds me of Bill Gates, Bill Clinton, and the Waltons with their global foundations --- helping the people of the world.

While although their "global initiatives" may appear to be noble causes, only the most wealthy among us can assume this type of global generosity because it doesn't directly effect their own stand-of-living -- such as outsourcing work to China and India to lift those people out of poverty, but at the expense leaving our people unemployed and living in poverty.

I don't live in a box; I'm well aware that the U.S. is part of a much larger global community, and that as the economic and military leader of the world, we have a responsibly in world affairs. But not at the expense of our own people -- just as foreign leaders have a responsibility to their own people.

At the rate of China's economic growth over the last 30 years (since manufacturing peaked in the U.S. when outsourcing escalated), China could very well surpass the United States in GDP within a few short years (China just recently surpassed Japan as #2 in GDP). Our government and business leaders have been enablers of China's expanding economy, growing their middle-call at the expense of ours.

Our government has allowed our business leaders to perpetuate the problem of unemployment and low wages here in the U.S. --- by using "guestworker" immigration, financialization and offshoring to escalate our domestic problem, without first thoughtfully considering how to use technology for the betterment of all -- without eviscerating our own labor force in the process (after all, people have to have a way to earn a living, right?)

Therein lies the problem, as with "globalization", multinational corporations and banks have no patriotic duty to any given nation, as their profits freely flow across borders where "real" people don't matter --- and who are just considered "revenue streams", rather than sovereign citizens.

When considering all these issues, while it might not be a permanent fix (kicking the can down the road), why make things worse before first considering other innovative alternatives, potential solutions and ultimate outcomes --- instead of just continuing on the present course we're on?

And with newer technology in the future (robotics, nano-technology and artificial intelligence), when productivity is off the charts and stops becoming profitable, and when people (all over the world) are left with nothing to do (and no money to spend), then what? Especially when governments and businesses are already complaining about "entitlements".

So, with an ever increasing global population, and a finite supply of natural resources (with the exception of human labor), and with technologies better capable of exploiting those limited resources, and with multinational corporate conglomerates concentrating their power to control those resources, and with all the global wealth being extracted and concentrated among the very few, does the end justify the means? Or will the means ultimately justify the end...of humanity?

There has to be a better way to "redistribute the wealth" (like hiring people and paying them a wage for labor) in a more fair and equitable way. Otherwise, what are we to do? We can't all become hunters and gatherers again, because the corporations own all the land as well.

RobertSF replies:

"Thank you for posting here the comment I left on your Daily Kos article. I agree entirely with what you say, and I certainly did't mean to imply that we should sacrifice ourselves so that the developing world can have jobs.

I wrote from a global perspective to emphasize that technological unemployment is not an exclusively American problem, and thus can't be fixed by bringing jobs back or limiting immigration or anything like that. If we went all out and applied all those fixes, I doubt we'd gain more than a couple of decades. That would be enough for us to retire -- we seem to be about the same age -- but not enough for the next generation.

China? I think their rise has peaked, even if they continue manufacturing the world's gadgetry. Technology makes their production less and less labor-intensive too, just like it does to us. And although manufacturing lifted millions of them out of poverty, they haven't reach anywhere near our level of development. And I don't think they're going to.

I'm not at all against bringing jobs back, limiting immigration, enabling protectionism, and balancing our imports and exports. We should do that, but we also need to find an alternative to the traditional paradigm that requires everyone to work for money they then use to buy the goods and services they want. We have to move forward to something that is socialism no matter what we call it, or move backward in a return to feudalism.

If you haven't read it, I recommend Martin Ford's "The Lights in the Tunnel." It's on Amazon but you can download the free PDF from the book's website. He argues that technological unemployment is upon us and calls for a Basic Guaranteed Income for everyone paid from a "wage recapture tax" imposed on corporations.

Again, thanks for giving a forum to what I wrote, and I hope to see you around the Daily Kos.


  1. Thanks for your reply. Again, I thought your response was so good that I just added it to the original article.