Capitalism, Technology & China
One of the most pressing issues of today is the shift that technology, specifically the Internet, has brought us. Through the new interconnectedness of the world, a new magnitude of concentration of power has been enabled. In the past decades, a handful of technology companies have grown larger and more influential than any organisation ever before. What’s so dangerous about this is that these companies are employing a platform strategy that makes them stronger as they grow bigger, effectively creating unbreakable monopolies for themselves.
In the past century, capitalism has emerged as the dominant economic model and has been working just fine for a while. Its great power was the ability to regulate itself. However, the developments described above are showing that the Internet has broken capitalism’s ability to self-clean. In the age of information and artificial intelligence, capitalism will only lead to continued rise of inequality. What people gain from efficiencies as consumers, they lose as workers. With more automation in physical labor, and with information as companies’ most valuable asset, the importance of human work will continue to decline.
The demographic group that is hit first are the less educated. Manual jobs, e.g. in factories, are being replaced by robots. Those who do keep their jobs are often employed as contractors with few chances to improve their situation. The result is the rising populism seen in the last few years. Brexit and the election of Donald Trump are only the tips of the iceberg. Even Germany, my home country, which should know the ugly face of populism best, has seen a nationalistic party become the third biggest in the recent election. This is the voice of actually ‘forgotten’ citizens who are losing to technological progress and using the only means they have, their vote, to change their situation.
While most Western powers are experiencing this phenomenon, China is seeing a new wave of surprisingly liberal and progressive politics, e.g. by turning away from North Korea and fighting climate change. What we are seeing is that, while the West is destroying itself, both politically and economically, China is preparing to be the new central power of the future.
In order to keep the region’s relevance, leaders in the West need to focus on two things: Firstly, find a way to decrease inequality. In a few decades, there will likely no longer be any manual labor jobs and I am suggesting a universal basic income to ensure a safety net for all citizens. Secondly, figure out a way to decentralize power to spark continued competition and innovation. Blockchain technology can help here. It resembles, in many ways, the good sides of capitalism: Both systems are self- regulating and reward productivity.
Although I am not sure the West will make those necessary changes, I can see China taking them on and leading us into a new age of Eastern societal preeminence.