Why Technology Spells The End Of Capitalism (As We Know It)
A great paradox of capitalism is emerging, and that is that its very success is leading to its own endgame. In a capitalist market, sellers seek to increase productivity to allow them to sell products cheaper than their competitors. Technological advancement allows for such efficiency gains, leading to lower marginal costs of production. What few people consider is that such marginal costs could actually fall to zero.
The consequences? Goods and services become priceless. ‘Stuff’ becomes free. In the capitalistic mechanism’s pursuit of profit, businesses irreparably undermine their own margins. And this very trend is happening under our noses.
Capitalism is killing capitalism.
Sound far-fetched? It all comes down to technology. The information economy, fields such as the music industry and newspaper industry, have experienced this marginal cost shift over the last few years. It doesn’t cost anything to share a piece of music or a newspaper article over the internet. People are constantly producing and sharing content online, and the marginal cost of doing so is zero. The assumption has always been that this zero marginal cost phenomenon would not be transferrable to actual tangible goods. In other words, it’s easy to see how to spread a piece of software for free, but how can we produce and distribute physical things for nothing?
The economist Jeremy Rifkin points to a third industrial revolution to explain this shift. We are heading towards a society based on the pillars of renewable energy, internet communication and automated transportation systems. A new Internet of Things. Compare this with the capitalist-reliant model of oil, electricity and engines and you begin to see the vast implications of the new structure. According to IBM, we’ll have 100 trillion sensors by 2030 connected to appliances, warehouses, offices, logistical systems, all sending big data across the network, dramatically increasing productivity and driving marginal costs of both production and distribution towards zero.
Artificial intelligence will soon allow for self-replicating machines. They will be powered by alternative, near-infinite energy sources such as solar. They will require next to no human input. 3D-printing will allow complex products to be produced for next to nothing (aside from raw material inputs). Added to this is the growth of the sharing economy — people are collaborating in resource allocation (AirBnB, uber pool) and therefore bypassing the capitalist network — and you begin to see why our current profit-incentive model is breaking.
The implications are huge. Technology will replace many human jobs (granted, some more will be created, but the net effect according to almost all theorists will be negative for employment). Yet population growth is rising. So we are looking at a huge pool of underutilised labour, but given efficiency gains, GDP likely on the increase. This will call for an increased role of the welfare state, and indeed, a rethink of the current work/leisure paradigm. 8 hour work days spread across 1 unit of labour could become 4 hour work days spread across 2 (assuming we’ll want to keep unemployment as low as possible). So we are looking at a situation of fewer working hours (per individual, as Sweden is already implementing) yet greater economic wealth. This will need to be redistributed, while the increase in leisure time will necessitate the introduction of a third branch to the equation. In my eyes, this will be community-based collaboration. A coming-together of people for nonfinancial societal enhancement.
Capitalism as we know it cannot continue in its current form, a demise begot not by the moral meanderings of the Left but by the inexorable push for productivity from the Right. It will still have its place, but at the fringes rather than the core of society. The overthrow of capitalism will ironically be a self-inflicted one.