The challenge for capitalism in the 21st century – employment

It has been obvious to me for some time that there is an emerging challenge for governance systems throughout the world. The main challenge is the gradual inexorable automation of industry, which continually reduces the number of humans required to create goods and services. A subsidiary contributor is the move from dirty fuel sources based on digging stuff out of the ground towards cleaner energy sources that require far fewer humans (an offshore wind farm employs far fewer people than a deep coal mine).
Capitalism as an economic model works best when countries are continually expanding their economic output. In the past, expansion of economic output would add employment, and sometimes scarcity of employees would push up wages and salaries, thus increasing prosperity. Rightly or wrongly, human expectations in the Western World have become set on the idea that people should enjoy continually increasing standards of living. Governments that fail to deliver on that fundamental expectation tend not to stay in office for very long. This is one of the main reasons why just about every Western country has massive government debt. Governments would rather kick the can down the road by borrowing than go to the electorate and say “sorry, we can’t give you X because it would require money we don’t have”. They have learned that this is not an acceptable answer, so they fudge, borrow, fudge some more and avoid the issue in order to keep voters happy.
Science fiction writers, who mostly live in the future, have been thinking and writing about this for a long time. Charlie Stross has certainly noticed it. Here is a series of tweets he just posted.

Unemployment is a key measure against which governments are measured by the electors. When I lived in the UK, there was a level of unemployment for a long time, above which the incumbent government would be negatively measured. That “magic number” was 1 million. Governments would try everything to keep the number below 1 million, lest they be shamed and embarrassed. When the underlying structural level of unemployment rose above that number due to de-industrialization in the 1980’s, the government simply changed the rules for counting people as unemployed to make the number smaller. Most Western governments have a host of exclusionary rules that they apply to unemployment measurements in order to keep the numbers down. As a result, the real level of unemployment in most Westernized democracies (including the USA) is usually higher than the quoted official numbers. This article from the UK explains some of the ways in which current official unemployment statistics can under-count the actual numbers of people who are unemployed or under-employed.
There is also a significant level of under-employment (people working, but not full-time) that unemployment statistics, almost by definition, will not count. Australia is one country that actually measures underemployment in addition to unemployment.Today it seems to be around 8.5%. This is a significant extra dimension to employment that many countries, unlike Australia, do not measure.
In a market where too many people are chasing too few jobs, conventional economics predicts that wages and salaries for employed people will fall. This appears to have happened over the past few years in Europe and the USA. People are employed, but many of them have lost wages and benefits compared to 10 years ago. There is a lot of discontent as a result, which is being exploited by demagogues and nativists, who tend to see issues like this as proof that there are too many non-natives competing with the true citizens. We can see the political results throughout Europe and in the USA today.
Libertarians have been wrestling with the issue of increasing scarcity of employment for a while, and there is a proposal which has been extensively debated for the introduction of what is known as a Universal Basic Income (UBI), an economic safety net to allow people to live without necessarily being employed in the conventional sense. Needless to say, the UBI would run headlong into entrenched ideological opposition from authoritarians who would yell “entitlements!” and other hopelessly unhelpful nonsense. To be fair, there is not even agreement among libertarians about the usefulness of a UBI. (But then, to use the old joke, if you put 10 libertarians in a room and ask them the same question, you get 13 different answers, because libertarianism, like classical marxism, has never been implemented on a grand scale).
The challenge for the world is however a serious one. How do we as a species evolve a governance model that recognizes that lifelong employment at steadily increasing wages is an outlier, not a mainstream experience? What can we do to structure societies and manage people to allow them to accept leisure time as valid and fulfilling? These types of issues are almost never discussed by politicians, since they conflict with established narratives about what people have as valid life expectations. However, if the issues are not addressed, I predict that there will be an increase in conflicts between countries over time. When resources are perceived to be scarce, people adopt a zero-sum approach, the “I Win You Lose Tough Shit” approach. So this underlying structural issue is having real tangible consequences in terms of political governance. History tells us that nativist political governance eventually leads to conflict between countries. Nativists singing from a songsheet with the hook line “I will make us great again” eventually see expansionism and conquest as the way to prove that the country is indeed Great again. That will not be good for global civilization.


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