Employment and Productivity: A Modern Paradox?

This is not meant to be a scientific article, although I am confident the key points can be substantiated with evidence. Feel free to let me know if you find otherwise.

We live in an overwhelmingly capitalist world, where how much we are allowed to consume depends on how much money we earn, and how much we earn depends on the value of what we produce.

Of course, there are many distortions in to what this “value” really means. Ultimately it comes down to bargaining power, and bargaining power depends on all sorts of things: education, position in and dynamics of society, the law and its stakeholders, politics, and much more. For example government subsidies into gasoline could generate more profits for gas station owners, without a change in their activity. Being a white male in North America yields a significant wage advantage over an individual with identical abilities caught in a conflict zone.

The most important point to note, in my opinion, is the increasing disconnect between production and renumeration, in a system (capitalism) that ties the two together. More and more, massive productivity, however this value is determined, is concentrated in a small capital base: very efficient machines, or software programs. People are still needed to guide the direction of such companies, and indeed are the essence of these companies, but massive return on time and investment is achieved at a scale never seen before in human society. Take the giant software companies as an example.

In the meantime, labor intensive jobs are at a loss. Think about the enormous automation occurring in publishing, manufacturing, online commerce… Humans just can’t compete with machines and computers for the most part in the modern economy. Human super-organisms such as companies indeed still have a role, but the number of people employed relative to the economic output generated is falling.

It is absolute folly to pursue growth in an advanced capitalist society, while hoping to maintain meaningful employment levels. The result, which we are already seeing, is massive inequality. Do not misunderstand me, capitalist incentives are good — they work a lot better than Communism. That said, we need to take modern realities into consideration and allow these incentives while recognising their limitations. Working harder and smarter should lead to benefits, but more and more the human species operates as a global super-organism. We all benefit from gargantuan positive externalities in scientific discoveries, for example. In such a system we are going for home runs that benefit everyone by very large amounts, and that requires a lot of tolerance for failure.

I strongly believe a modern version of capitalism requires an assured, minimal standard of living including healthcare, education, housing, and food. Just not enough to be extremely comfortable (to maintain incentives to work). This needs to be paid for by progressive taxes on productive bases, since looking forward our global economy will be more and more concentrated in these productive powerhouses. It is perhaps fine to be 100, or arguably a 1000 times richer than the average. But when 1,000 individuals possess roughly the wealth of the remaining, there is a welfare issue by most people’s standards. Of course, this is very subjective. But there’s probably a utilitarian balance (a probabilistic dense zone) based on people’s opinions.

The value of a human is no longer in his or her physical might, or ability to perform “soft” tasks that can be automated. It is in the shared experience of being human, our interactions with each other, what we gain from working and not what we produce from it, and how we express our creativity and intellect, however humble.

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