Life After Capital
Robert Skidelsky, the British biographer of Keynes, put up a post yesterday wondering about life after capitalism. His concern is that capitalism, having done the job of bringing wealth to large numbers of people in the developed countries, was running out of productive goals:
This is not to denigrate capitalism. It was, and is, a superb system for overcoming scarcity. By organising production efficiently, and directing it to the pursuit of welfare rather than power, it has lifted a large part of the world out of poverty.
Yet what happens to such a system when scarcity has been turned to plenty? Does it just go on producing more of the same, stimulating jaded appetites with new gadgets, thrills, and excitements? How much longer can this continue? Do we spend the next century wallowing in triviality?
Skidelsky quickly transitions into a moral argument about the uses of wealth. But there’s another, perhaps more important question to explore here. What if capital itself is running out of places to generate returns.
After all, we’re told that one of the prime causes of the worldwide housing bubble was an excess of capital sloshing around the world. In the US, the financialization of the economy is direct product of over-capitalization.
Finally, the latest driver of the economy, the technology business is rapidly de-materializing uses for capital. Facebook, Apple, Google even Goldman Sachs don’t have their capital invested in things. The money that makes up their capital is mostly invested in human beings.
We don’t know where Facebook plans to spend the billions it is raising. There’s talk of moving to a new corporate campus, of keeping talented engineers on staff and surely they need some server space. Groupon doesn’t seem to need the money they’re raising so much as they’re raising money because this is their time.
Maybe these are just anomalies around specific businesses. But it is troubling that these are the success stories of our time and it’s hard to see where the capital is beyond digits on a screen.
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January 21st, 2011 at 1:20 pm
True. Capitalism has been great for the growth phase of humanity, its teen years. Now we are, by some measures, mature. We need to look to another new system. technology is advancing at an exponential pace. It used to be capitalism advanced tech, now tech sort of has its own inertia. We do not need to throw gasoline on the tech fire. Product cycles are so fast its difficult to have lifespans of many products, and that will increasingly be a problem. How many PhDs are on earth now? 100s of millions?
This is why looking at history has its limitations. Capitalism HAS been pretty good. But the *big picture* is changing. As people get richer they get obese, with weight and many other aspects. What do we need more for? The price is increasingly paid by the environment as well, so we have more money, but if the forests and corals are dead, what will we do with it? Buy gold plated toilets?
As a technologist, I think this is why many of us got into tech. We watched Star trek and saw the replicators that made food etc. There was no money in Star Trek. Just adventure. The future was post capitalism. We are not far away from nanotech, where we can technologically manufacture gold and diamonds from other elements for example – 20 years? Automation threatens to increase unemployment while simultaneously reducing the need to work! These and many other transformative technologies will invert Capitalism. By the way, capitalism itself is hastening the coming of the techs that will undermine it!
While I think Socialism is the heir as the writer says, it may be a new form. When I tell most people socialism is the heir they get emotionally invested and see red. Perhaps a new word could meke it more palatable. Technologism? Stabalism? Social Technologism? SoTek?
January 21st, 2011 at 2:13 pm
Brainstorming medium and long term investments:
Life extension technologies
Synthetic organs
Enhancement drugs (neuroenhancers, nutrition pills, etc.)
Legal, side-effect free recreational drugs
Full immersion virtual reality gaming (games that feel real – Matrix style)
Robotics (for everything – mining, energy materials gathering, recon, warfare, lots more here)
Virtual classrooms/remote learning/direct brain learning
Basic science research (all areas, including computer science – algorithms)
When we finally really start getting people into space:
Energy efficient spacecraft
Off-world/asteroid mining
Terraforming industries
All this stuff is becoming less science fiction and more a part of real economies every day.
January 21st, 2011 at 3:11 pm
They will use excess captial build liquidity cisterns.
January 21st, 2011 at 3:38 pm
I always like to look at cell phone/smart phone/Ipad commercials, and think how useful what the coolest thing that the latest gadget can do. Like being able to shake your smart phone and have the phone turn into a slot machine to pick where you are going to eat that day. That is really cool, but not all together that useful. Or being able to watch a soap opera while climbing Mount McKinley I think I remember from Yesteryear.
Then I see somebody, like the gas station attendant (here in Oregon, we have attendants pump your gas for you), playing on his smart phone in between fill-ups, knowing that his cell and data coverages are probably around $100 per month. What is that guy checking out? His stock quotes? Or more likely what latest celebrity video just came out. It seems that the tech sector is taking this guy’s $100 per month away from other sectors that used to receive it . . . which is good for the tech sector, but is there any net gain over the economy?
It seems that not all development is created equally. There is the development for the sake of development, there is the development that tries to compete directly with other sectors (as in the example above), and then there is the development that really benefits society as a whole. For instance, the personal computer, or aviation, or internal combustion engine.
January 21st, 2011 at 5:14 pm
i suspect we’re only limited by our imagination as to the limits of capital investment. staying in the current; we have yet to cure the common cold, cancer(s), HIV, etc., let alone simplifying energy production and use, among thousands of other possibilities.
i saw where carlos slim declined to ‘give away’ his billions. good for him. make us earn it. there’s still plenty of us that want what he has, because the old mantra of ‘you appreciate it more if you earn something rather than have it given to you’ still very much applies.
January 21st, 2011 at 9:11 pm
…”His concern is that capitalism, having done the job of bringing wealth to large numbers of people in the developed countries, was running out of productive goals”…
Other than a profit motive I don’t think Capitalism has “productive goals”. By-products perhaps, but goals? I don’t think it as such. Using the stock market as a pulse proxy, capitalism tends to rise in secular trends followed by non profit plateaus. Non profit in the sense that capital consolidates itself waiting for the next “big” idea” which then triggers capital formation and later great excess/bubbles before again plateauing. And so it goes until this process is regulated out of existence and replaced by some variant of central planning in a futile attempt to avoid booms and busts. Then the discussion morphs into the rise and fall of empires.
Currently we have been plateauing since the tech bubble burst in 2000. Perhaps another 4-6 years combined with debt liquidations and we will be prepared for the next leg up where the tech breakthroughs of the last 30 years really blossom in ways we can’t even imagine. Just as no one knew where electricity, planes, phones and autos would take us 100 years ago. But we were going.
The next big, big thing will probably be a new energy source currently being discovered by a kid in a garage somewhere. Just as oil replaced coal, whatever is coming will do the same for productivity and new savings further advancing the second and third world as it leaps forward which it has currently done with the cell phone as an example. I’d be really amazed if this new energy has anything to do with wind, solar etc.
Humanity remains in a bull market despite the naysayers. If you think its bad now read history. The future has never been brighter even with today’s grim financial picture. With any luck the 21st century will finally be about Africa.
January 22nd, 2011 at 12:36 am
Stop paying for your neighbors’ mortgage or Wall Street bonuses by signing this petition. Unitedinprosperity.org was created to petition the government to STOP their current policy of socializing the losses at the taxpayers’ expense that allow the profits to remain Wall Streets’. Which is absurd when ninety eight percent of American citizens have been financially hurt by the housing and foreclosure crisis, signing this petition allows your voice to be heard:
*If you have negative equity regardless of being current or delinquent (negative equity is when you owe more than your house is worth losing your ability to build your own “equity” fund as you pay down your mortgage balance monthly, basically there is no financial benefit to remain a negative equity homeowner except your mortgage payments are paying Wall Street their profits.)
*If you lost some of your equity “fund” (wealth) that you were planning for your retirement or will become one of the 48% of homeowners affected by negative equity as housing values decrease another 10-15% in 2011 per leading industry researchers
*If you had your income reduced
*If you lost your job
*If you are worried about losing your job including those jobs that will be lost because of the” budget cuts”
*If you don’t agree with the government that a negative equity homeowner is entitled to a lower rate or principal reduction because they bought a house they couldn’t afford or no longer can afford that you as the taxpayer should have to pay for
*If you believe you are entitled to a similar financial advantage because you have negative equity (you are)
*If you don’t believe that Wall Street has the right to choose who or how much negative equity homeowners should “benefit” based on what the homeowner will accept or can pay, making you as the taxpayer responsible for their losses, they don’t
*If you lost money in the stock market or your pension was or is still invested in the mortgage and/or bond market
*If you are worried that your grandchildren will have to pay for our unregulated capitalistic mistakes that have raised our national debt to a staggering level and the list goes on. The 98% of us affected have the legal right to sign the petition demanding that capitalism and existing laws are enforced protecting Main Street from Wall Streets actions and abuses.
The one capitalist rule that all homeowners had understood and agreed to is, if you didn’t pay your mortgage for any reason, you were foreclosed on. When negative equity occurred no homeowner was entitled to a lower interest rate or a principal reduction UNTIL the financial industry changed the rule by modifying over 3.5 MILLION negative equity homeowners setting the precedent THEN ALL negative equity homeowners(similarly situated parties) BECAME legally entitled to a similar financial incentive (benefit) of a negative equity modification if the law was followed.
Increased banks profits will not help Main Streets recovery. But bringing back the principle that “no one is above the law” will. It will allow ImNotLeaving Streamlined Uniform Modification System to return the mortgage (negative equity) losses to their rightful parties creates a taxpayer free cash stimulus of over six billion dollars each and every month for Main Streets economy without costing the taxpayer one cent and is a “shovel ready project” representing hundreds of thousands of jobs created within weeks, not months or years boosting Main Streets economic recovery now.
While capitalism, the law and the precedent set allows for every negative equity homeowner to be entitled to a similar financial incentive to remain a negative equity homeowner WE, the undersigned taxpayers are respectfully requesting that all taxpayer paid support of Wall Street made thru back door deals, subsidies and / or guarantees are immediately STOPPED with our endorsement of this petition. Easily accomplished by a vote or even note from our congressional leaders to our taxpayer owned, Goverment Sponsored Enterprises that THEY must follow the law (as the industry leader of over 50% of all outstanding mortgages) before Wall Street will follow. Without a leader to follow there is no change.
January 22nd, 2011 at 3:56 am
I think the orientation of the crowd (i.e. people in general) is far too sanguine toward human predominance and exceptionality. The slowing of capitalism is a narcissistic orientation, at best, when placed in the context of 7+billion homo sapiens, dwindling supplies of clean water, peak oil, climate change, and near-total collapse of bee colonies – to name but a few. Business-as-usual is akin to an ostrich sticking its head in the sand while a tsunami approaches. As an economic and survival measure, we humans had best commence in using our ingenuity to balance our desires for toys and comfort with the long-term stasis of the biological food chain. There’s enormous potential for scientific and biological advancement that could pay fantastic socio-economic dividends, but if we dither until too many links in the chain are broken, we’ll be at the mercy of our own hubris. Unless we can wrest the ill-gotten capital from banksters and re-allocate it to more fruitful endeavors such as basic research, distributed energy production and efficiencies, we all but assure Nature coming to the plate with a tie game, bases loaded, no outs and a 3-0 count.
January 23rd, 2011 at 10:25 pm
Thinking about life after Capitalism is a big, Duh.
After all, that was the fundamental premise of Karl Marx. He observed, after Adam Smith and David Ricardo, that this Capitalism thing was a new phenomenon, and using Hegel’s dialectic tried to deduce what might succeed it.
Thinking about a post capitalist economy should be an ongoing intellectual discourse. Perhaps if intellectuals were able to distance themselves from this system they might envision a more rational transition to the next phase of human economic progress.
January 24th, 2011 at 2:59 pm
With all due respect to Mr Skidelsky, his postulation requires no other response than the correct one.
History has shown his sentiment to be woefully incorrect.
Think of it as the Economic Version of the Heisenberg Uncertainty Principle. You may call it by different names and refine it within your mind , cutting away all the excess fat from the facts you wish.
Capitalism will survive and it will go in directions that are strictly counter intuitive.
January 24th, 2011 at 7:01 pm
“The correct one”?
Sounds very Leninist to me.
Capitalism will survive the way Communism has survived in China, in name only.