Once upon a time, a man his partner and children, (and their dogs, too) looked out from the mouth of their cave home, and saw a world to live in.
There were seasonal pulses of scarcity and abundance, sure, but with enterprise and effort, there would be game animals to hunt, and roots and fruits to gather. And then there was the competition from the other human species – but that was not to last.
Our man and his family, and their descendants, made steady progress. They got better at doing what they had to do, over time. It was only when they mostly became tied down by a reliance on crops, that, for a long while their lives became tougher. But the fittest survived, made more people, kept on striving, and here we are.
Now upon this time, I look out at the world from the comfort of my COVID-19 cave, and what do I see? I see a near world on the quiet; a community cautiously venturing out as if there’s some great fear at large. Which of course there is.
Looking – or rather listening – wider, I learn of established systems of administration, government and business taking a gut punch, confused and struggling. And of their instinctive, cornered reactions. I hear on the news that Air New Zealand, that recently great and profitable business, despite a massive cash grant from the government, will be laying-off 3,500 staff. What, I wonder will they do when they need these people again? When business returns to normal? Or if there will ever be a normal again.
I see a nation all hushed and insecure as if some inexplicable force of fate has demanded that we slow down our hectic pace, and sent a virus by way of practise. Naturally, this has led me to take another look at what, just till recently, were our fundamental, imperative systems. How we chased material advancement, and ever-increasing comfort and convenience. How we shopped, endlessly and as if there would be no limit to it all. How we mostly drifted away from religions. How we counted our success in things and money. And how we had – and now have even more so – become reliant on a webworld seen through the window of the laptop screen.
The result, like one of those Magritte paintings of a window and a constructed view through it, is an outlook that says simply, Things are not what they seem. And like the repercussions of the surrealists’ worldview, our view may be forever altered. In this lull, there’s time to consider what has built our society, our current culture and our economy. And how these foundations may not be as secure as they seemed.
Which leads to the thoughts: What is it we have built as our meta-system? What can governments do in the face of an unseen invasion? And how does that affect our markets, our economy, our lives? What happens to income? To money, and the ability to make it? What is the essence of capitalism? How come it is so easy to arrest? And, has it had its day? Its pure dictionary definition is “an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.” In practise this has come to be accepted, sort of, that as part of the capitalist system as we know it, is the ability to make money from money (considered a sin in the Muslim world), and the resultant fact that the rich get richer while the rest just hang on.
Scarcity is a central driver in the operating of markets in the capitalist system, for it determines prices. Of course, scarcity can be manipulated for profit advantage. One example of this is De Beers Corporation’s monopolising and selective marketing of the world’s supply of jewellery diamonds, to maintain their high value.
Hart Buck, a statistician at the Toronto Dominion Bank says “The basic idea of capitalism is that if we are left free to choose what we want most, we’ll get the most of what we want.” But right now, we mostly have vastly reduced freedom of choice. And as we have seen, even in normal times, that choice is not always unfettered.
Capitalism has evolved to depend on constant growth in the economy. The proponents and beneficiaries of the system are adamant that we need growth to survive. One of the biggest fears of capitalist economies is recession, defined as ‘negative growth.’ But endless growth is a futile dream. The choice thing may be fine, but there is the irrefutable observation that pure capitalism can and does lead to a continuum of exploitation, depletion and eventual extinction of resources. And taken in a wider view, this can trigger starvation, pollution or environmental collapse – which hardly gives people choice then, does it?
The earth, our planet, large as it seems, is a finite system. This may seem like a statement of the obvious. But it seems to have eluded the designers and proponents of capitalism. Earth only has so much in the way of resources. It has only two inputs: solar energy, and that of the gravitational force of the moon that power the tides in the oceans. The deposits of coal, or other fossil fuels, for example can, quite simply run out if exploited endlessly. Then what?
The defenders of capitalism will respond that human ingenuity, which has always been rewarded in this system, will be inspired/motivated/incentivised to invent other methods of energy transfer. And you could say this is happening right now, with the advancements in photovoltaic energy systems harnessing solar power, and the rapid improvement in storage mechanism through improved battery technologies and design.
To look at our supporting ecosystems as essentially and ultimately finite, then it follows that eternal growth is self-destructive. An analogy would be the unstoppable proliferation of cells in a body that is the driving force of cancer. And we know the disease does not have good outcomes. Paul Mason, a writer for The Guardian newspaper, and author of the book Postcapitalism writes: “As with the end of feudalism 500 years ago, capitalism’s replacement by postcapitalism will be accelerated by external shocks and shaped by the emergence of a new kind of human being. And it has started.”
He cites three factors in the development of information technology in the last generation that are pivotal to this change. “First, it has reduced the need for work, blurred the edges between work and free time and loosened the relationship between work and wages.
“Second, information is corroding the market’s ability to form prices correctly. That is because markets are based on scarcity while information is abundant.” The giant tech companies that have developed, he says, cannot last: “By building business models and share valuations based on the capture and privatisation of all socially produced information, such firms are constructing a fragile corporate edifice at odds with the most basic need of humanity, which is to use ideas freely.”
In a way, it’s a case of capitalism destroying itself. The e-business model, built on the premise of holding, monopolising and controlling data – and charging for it – simply cannot last.
And third, “we’re seeing the spontaneous rise of collaborative production: goods, services and organisations are appearing that no longer respond to the dictates of the market and the managerial hierarchy.”
Take a look at Wikipedia, he suggests. It’s the largest information product in the world, yet it has no private profit motive or outcome, being the product of an army of volunteers. It has already destroyed the encyclopaedia industry, and deprives the advertising industry of billions of dollars.
To look at it from another perspective: while capitalism relies on the exploitation and manipulation of scarcity (often by remote elites), and rewarded unequally by hard money, the currency of postcapitalism is centred on free time, networked activity and free stuff. The real problem to the old ‘industrial capitalist’ system, is that this new wave of information cannot be adequately assessed under capitalism’s playbook.
The value of intellectual property for instance, is always just a guess. And the knowledge content of products – smartphones, for example – is way more than their intrinsic physical worth. This new wave of ‘cognitive capitalism’ is predicated on dynamics that are essentially un-capitalistic.
The proliferation of information in our online, connected, digital age, is close to zero. Information is incapable of being controlled, owned, exploited, and priced. So where is the ‘profit’ in that? Profits is suddenly sounding like an antiquated and useless concept.
The irony is that the sharing of information was – is – seen as a social good. That’s why the internet was gifted to the world by the US military, for free. The power of knowledge now lies with all of us.
Karl Marx envisaged this exact scenario in a piece written in 1858, The Fragment of Machines, which was published only in the 1950s. (As an aside, given what we know that the application of Marxism was to become – a theory of exploitation based on the theft of labour time – this is revolutionary for an entirely different reason.) In Fragment, Marx wrote that the information economy would “blow capitalism sky-high.”
Besides these epic challenges to capitalism, there are other parallel crisis points in play right now. The effort to slow-down or minimise climate change by ‘de-carbonising’ our production and transport, indeed our very living systems; and dealing with demographic timebombs, like over-population, forced mass-migration, and the international conflict between haves and have-nots (who have populations dominated by the elderly and youth, respectively). We have to deal with these simultaneously with our rewriting of our established economic tenets.
A previous example of essential change that we can look to for guidance is that when feudalism was changed into capitalism. Feudalism was system based on obligation. Capitalism was based on scarcity, and the free market’s manipulation of this. Post capitalism (we don’t yet have an independent term for our new age) is predicated on abundance, and free and universal access to information. Feudalism, and its agricultural economy foundered on environmental limits and the great demographic shock of the Black Death. Suddenly there were too few workers.
The subsequent rise of merchant capitalism was built on the backs of the slave trade, improved shipping, and newly-discovered resources to be exploited in the New World. But that model seems to have run its course.
Now the internet is everything: it is the ships, the ocean, the gold – everything in one accessible place. What’s the new system to be called? Mason suggests ‘Project Zero’, based as our new socio-political-economic system will be, on “a zero-carbon-energy system; the production of machines, products and services with zero marginal costs; and the reduction of necessary work time as close as possible to zero.”
A core challenge in the world facing us will be to decide, and to act, on what’s important and what’s urgent. Sometimes an issue is both (like climate change), but often the two are separate.
Urgent issues (like food security in a crisis like COVID-19) must be addressed simultaneously with important stuff (like restructuring work to remote, and modular units). There’s a contradiction in place now between scarcity (possibly of food, but certainly in the capitalist way of keeping products and services commercial), and great and freely accessible abundance (information on the web). Mason sums up the task of integrating the two: “We need more than just a bunch of utopian dreams and small-scale horizontal projects. We need a project based on reason, evidence and testable designs, that cuts with the grain of history and is sustainable by the planet. And we need to get on with it.”
The current COVID-19 international crisis will have a hand in hastening capitalism’s demise. Already, some ideas that are anathema to classic capitalist thinking – like a universal basic income (UBI) – are being considered and implemented. Under duress, yes, but UBI is now a realistic option, and being widely considered, even if only as a temporary measure at this stage.
One thing is certain: the lockdown of societies around the world has halted capitalism frenetic growth pattern. In this hiatus and its aftermath, I reckon it’s time to look carefully at our other options.