Towards Benevolent Capitalism
Capitalism has been the most successful economic system in the history of humanity. It has pushed private companies to innovate and create new products and services that, in turn, has helped billions of people to see huge improvements to their quality of life worldwide.
After the world wars, the growth of businesses in capitalist societies needed human labor to grow, creating a sizable and healthy middle class in the process. Hundreds of millions of people moved from living in tiny shacks and apartments to living in their own houses and driving their own cars to work.
The work itself, thanks to the progress of technology, was becoming gradually cleaner, more interesting and more dependent on using one’s brain instead of hands. We saw a rise of large, educated white-collar workforce with lots of opportunities and dreams to chase ahead of them.
The downsides of capitalism
But as a system, capitalism is not flawless. People are naturally greedy and selfish. Business owners would rather see their businesses becoming monopolies than being at the mercy of free market competition. Peter Thiel, a well known venture capitalist in Silicon Valley, published a popular book named Zero to One that explains why it is important to build a monopoly, and guidelines how to build it.
The progress of technology has given rise to a new generation of businesses that don’t need a lot of human labor, and claim monopolistic control of complete global marketplaces simply by applying algorithms in large scale.
As an example, the rise of Amazon has already decimated the retail business in the US. The media is calling the current situation The Great Retail Apocalypse, while Jeff Bezos has became the richest human alive. Many previously well known retail chains like Toys’R’US, Gymboree, Payless and RadioShack have filed for bankruptcy during 2017.
Artificial intelligence and big data will eventually obliterate the need for human labor, making it impossible to fund a modern society by taxing labor. The use of algorithms makes it possible to aggregate all value from a business to the shareholders instead of sharing it via salaries with employees.
This will aggregate capital at an unprecedented pace to a tiny elite that can use the power to create an AI- and data-driven “winner takes it all” monopoly for every market. Now Google dominates search, Facebook dominates social networking, and Amazon dominates e-commerce. Smaller entities will have no chance of competing with them.
The capital gains from technology businesses has grown rapidly, but the middle class incomes have stagnated. These corporations hire only top 1% talent for intellectually demanding jobs, and automate the rest. When we combine this stagnation of the middle class incomes with the skyrocketing costs of profit-driven healthcare and education, the equation is looking increasingly grim for the majority of Americans.
Let’s look at the cost of education at private universities in the United States. The cost has almost quadrupled in 40 years after adjusting for inflation, putting a lot of students under massive debt at graduation. The total amount of outstanding student loans is around $1 trillion today.
In my native Finland, where the university education is provided by the government, the yearly cost of the Master’s degree in Engineering was 7200 euros in 2002, and 8000 euros in 2015. When the profit motive is removed, the cost of education increases only at the rate of general inflation.
The capitalistic model for healthcare has produced similar results. The US healthcare spending as percentage of GDP has grown from 5% in 1960s to 18% today, and forecasted to grow to 20% by 2025.
In countries with a smaller degree of privatization the costs have increased at a much lower rate. This discrepancy can only be explained with excessive profits and greed of various parties in the healthcare industry.
The capitalistic model hasn’t ruined only healthcare and education. Do you know what happened in the US after the privatization of prison system started in the early 1980s? Have a look at the chart below.
Did this happen due to 1) a huge growth of crime that started right after the establishment of private prison industry? Or rather, because 2) private, profit-driven prisons have an economic incentive to keep inmates longer to maximize their profits? I believe it was the latter.
I can’t even begin to describe the amount of unnecessary human misery caused by these dirty, profit-seeking sharks and their cronies in the police forces and judicial system that value their personal gains much more than human life.
A lot of the businesses around the world depend on fossil fuels for transportation and manufacturing of goods. The massive growth in the consumption of fossil fuels has not come without consequences.
We are now witnessing a rapid climate change with catastrophic consequences to many highly populated geographies around the world that can lead to mass migrations at an unprecendented scale.
Capitalism in its current form is unsustainable. Socialism, on the other hand, was a failed experiment that does not deserve a second chance. You can’t build a sustainable system that does not incentivize innovation and progress.
Not only is today’s capitalism unsustainable, but so are the nation states.
Nation states are becoming a burden
With the rapid progress of globalization, and the rise of powerful global corporations, nation states are struggling to find realistic models to tax economic activity to fund their already too large organizations. Global corporations are difficult to tax, and even United States is struggling to tax their most successful global giants.
As the global elite has moved their wealth out of the reach of nation states, their focus has moved on taxing the middle class, increasing the cost of labor to private corporations in the process. High taxes on human labor has accelerated the incentives for tech companies to automate the jobs. The more taxes the governments impose on human labor, the faster technology will develop to take care of the work. The future of labor tax based government funding looks bleak.
Furthermore, nation states are increasingly becoming an obstacle to the progress of humanity. The interests of the ruling elites in many large countries have diverged from the interest of their own constituents, resulting in big brother style monitoring, restrictions on free speech, censorship, blocking of access to online services and many other restrictions to our individual freedoms.
The business elite and the leaders of global corporations do not wave the flag of any nation, but rather spend time in multiple metropolitan cities across the planet. It is in their interest to have a borderless world, where capital and goods flow freely and all markets are open for opportunity.
To provide universal services and opportunity to the citizens of planet earth as a whole, we need a new approach. We need a solution that does not require taxation and goes across the borders of nation states.
Cryptocurrencies offer us a path to benevolent capitalism
While the global corporations have become the kind of monopolies that are not anymore in the interests of the general public, and the nation states have become an obstacle to progress, a new paradigm has arisen, where global communities now exchange value using cryptocurrencies that run on decentralized blockchains.
Today’s cryptocurrencies are still in their infancy, and a lot of the early growth in cryptocurrency markets have been driven by greed and speculation.
But they also offer an opportunity for benevolent entrepreneurs to create new economic models, where the value created in communities is shared with the whole community, not extracted to a tiny elite of corporate shareholders.
The promise of benevolent capitalism
If artificial intelligence was used in a benevolent way, it could serve us all with everything we need. It could provide us food, shelter, transportation, education and healthcare. If nobody tried to extract an unfair economic rent from others using their monopoly powers, we could reach a state of collective abundance.
Can the whole humanity collectively rise to a new standard of living and level of existence with the help of AI? Yes it can, but it takes benevolent capitalism.
We need to start by removing the greediness of the crony capitalism, and share the value and opportunity in a more equitable way with the whole community that participates in the value creation. We should leverage the phenomenal rise of cryptocurrencies and decentralized economies to create new models of collective ownership.
We should focus on benevolent uses of artificial intelligence and to run them on blockchains to provide everyone the basic services that the nation states will be unable to offer us in the near future.
We need to build AIs that remove poverty and disease. We need to build AIs that provide basic income, free universal healthcare and free universal education to everyone. When human labor and greed is removed from the equation, almost anything is possible.
If our basic needs were universally served by AIs via decentralized communities, we could live together in a peaceful world, where nobody had to be poor or desperate, and where no taxes were needed to support our needs. It would lift the whole humanity to a higher level of existence.
I know it sounds like an utopian dream. But it is a much better scenario to fight for than letting the current capitalism enable a handful of elite global corporations to use AIs to addict you to time-wasting dopamine loops and manipulate you to dysfunctional behaviors to enrich their small group of shareholders even further.
I’m doing my part to realize this dream with Inbot. We help distribute value created by artificial intelligence back to people.
Berlin, 18.2.2018
Mikko Alasaarela
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If you liked this story, check out some of my previous stories:
The Church of Currency
End of 2017: We are losing control
The Rise of Emotionally Intelligent AI
The Human API
How Humans will merge with Machines
Tokens could give birth to AGI, Artificial General Intelligence
AI offers us a new path to opportunity
