This week was Labor Day in the U.S.
Have you ever stopped to think about how the economy is working against you? Progress is usually defined as being able to accomplish the same work with a fewer number of workers. This means that it would be considered as making progress if your job could be eliminated.
The trouble with eliminating jobs is that the economy is not "linear", it operates like a circuit. A company is linear in that it would certainly be making progress if the same task could be accomplished with fewer workers. But companies, which produce products and services, are dependent upon consumer spending. If many companies could do with fewer workers then that would mean higher unemployment and less consumer spending, which would mean less demand for the products and services being produced by those companies.
The major threat to jobs now is the emergence of AI. It can do the work of thousands of knowledge workers, such as programmers. The theory of capitalism is that workers who are displaced in such a way will find something else to do, and that workers should be continuously upgrading their skills and education, and looking for opportunities. But is it fair to workers to have change coming so fast? Not so long ago, a computer science degree was considered as the ticket to success. Now AI has put that in doubt.
Donald Trump is firing thousands of U.S. Government workers, to cut the size and cost of the government. It is also possible that AI is making their jobs unnecessary. But I see what else the reason is. Those former workers will hopefully start businesses, which will boost the economy. The hoped-for boom might become known as the "Trump Spring".
I have never thought that recessions are an entirely bad thing. Recessions eliminate jobs which don't return. But the lost jobs are jobs that are not really needed anyway. Does anyone remember when there was always someone to pump your gas and bag your groceries? It seemed like they went away during a recession and never came back.
So many lines of work have gone away during my lifetime. If you once picked up a landline phone and dialed "0", an operator would answer as "operator". Most newspaper ads were drawn in pencil and being good at drawing was a very marketable skill. Printing was done with type that had to be manually set. There were always ads for correspondence courses in electronics. Now, electronics is more important than ever but has been so miniaturized as to be disposable and repairing electronic devices is no longer a skill that is in high demand. Buildings with elevators used to have elevator operators. Suddenly they went away and people had to figure out how to press the buttons themselves.
But there is another side to it. Is it entirely fair to workers, in what is supposed to be a meritocracy, that the economy is actually trying to put them out of work and they have to be continuously worried about falling behind? What about the philosophy of the Industrial Revolution? The ideal was to let machines do the work. Of course there should be continuous innovation but shouldn't we be able to relax a little bit and "let the machines do the work" instead of worrying about AI putting us out of work?
What this means is a system of guaranteed income and benefits. Some would deride this as "Communism", but the truth is that communism is still all around us.
I have a food product over here with a label that the company is "100% employee owned", as if that is a good thing. But that is exactly what the philosophy of communism is about, the workers owning the means of production.
Government involvement in the economy is what Communism is about. Only in "pure" Communism did the government completely control the economy, with no private enterprise. Donald Trump is a Republican, which we would expect to be about as far away from Communism as we could get, but the Trump Administration holds a share in Intel, which is a private company chip maker.
Why do you suppose that Communist China has so much control over the global supply of rare earth elements? These elements that are vital for modern chips are actually not rare but are difficult to mine because they are not usually very concentrated, unlike the ores of other metals. So a company that mines and processes these elements cannot expect much of an immediate profit. This naturally deters companies and creates a possible shortage.
But a Communist government can think long-term and isn't bound by the need to soon make a profit in order to stay in business. That is why China controls the rare earth market.
What about the development of the Internet? It was a vast and expensive project, originally intended as a communications web that could survive a nuclear attack. A communication would be sliced into packets and sent to the destination. If they couldn't get through by one route, then they would take another route. The packets would be reassembled at the destination.
Private companies would never have undertaken such a vast project by themselves. Even if they did, the internet would have been handicapped by all of the companies having different standards. The reason that you are reading this on the internet is that the government, which means socialism or communism, got the project going and then later turned it over to private companies.
The same goes for the space program. Private companies would have never undertaken anything like this, especially since the economic gain was not in the program itself but in the technological spin-offs. The U.S. Government undertook the program by contracting with private companies.
Passenger aircraft are not entirely the development of free enterprise. The governments commisioned the development of military aircraft, during the Second World War, and passenger aircraft were mostly based on modifications of those after the war. The two best-known U.S. aircraft from this time are the B-17 and the B-29. Later would come the B-52. The aircraft were commisioned by the government but the "B" stands for Boeing.
The automotive movement today is toward electric cars. But progress is slow for a number of reasons. The cars are expensive, difficult to charge, and expensive to fix. Maybe it's because the governments are leaving the development up to private companies. We should remember that this is a project on the order of the internet and the space program. To really get electric cars going, it may be necessary to put the profit motive aside, and get the government involved.
I am the first to agree that private companies are usually more efficient than the government. But the government is free from the need to earn a profit in a way that private companies aren't. A vast project without the prospect of immediate profit is beyond the scope of private companies. Notice that I am certainly not advocating "pure" Communism, where the government runs everything, but the government taking on great projects that are beyond the scope of private companies, and then contracting with those companies.
Another issue is national security and sovereignty. In a purely free market system there is a risk of industries that are essential to national security, such as the production of steel and microchips, leaving the country. Shouldn't the government hold onto such essential industries, regardless of whether they are making a profit?
As an example of national sovereignty, consider state airlines. It is true that private companies have a better reputation for efficiency. But complete reliance on the free market brings the possibility that citizens of a country might become dependent on foreign carriers to fly them between their own cities. Maintaining a state airline is a guarantor of national sovereignty.
Aside from essentials like steel and microchips, another example is the auto industry. In the event of a major war, the auto manufacturing sector can readily be converted to making military vehicles and equipment, and planes. It should certainly be governed overall by the free market but it would ensure national security for the government to hold a stake in it.
I have always thought that Karl Marx, whose writings were the basis of Communism, deserves some credit. He wasn't totally right, but yet he certainly wasn't totally wrong.
THE MARX CLOUD
I have a new way of looking at the theories of Karl Marx. I conclude that the fulfillment of Marxist theory can be seen in, of all things, computer technology. Since the end of the Cold War, Marx has been viewed as one of the great losers of history. He was nowhere near completely right in his predictions, yet was on to something and cannot be ignored. When I was in London, I thought of visiting his grave in Highgate Cemetery but never got around to it.
The workers of the world did not unite and take over the means of production, as Marx had envisioned. But he was somewhat vindicated by the crash of Capitalism in 1929, as well as the somewhat lesser crashes of 1987 and 2008. He might have been pleased with the implementation of minimum wage and workplace safety laws, labor unions, unemployment benefits and social security, and especially mandatory public education. All of which, with the exception of labor unions, was virtually unheard of in the Nineteenth Century when Marx wrote his theories.
We look at the theories of Marx in socio-economic terms. But what if there was another side to the theory, that of technology, even if Marx himself did not see this? Some of the fulfillment of Marxist theory certainly was in the socio-economic sphere, as the above mentioned reforms. But the other side, the technical side and it's global social effects, had to wait for the advent of computers and the internet.
Computer and phone technology has empowered the masses like nothing else, even though it is produced by companies owned by wealthy capitalists. Wikipedia, for one, seems to be straight from the pages of Marxist theory. It is the collective encyclopedia of the masses, operated by donations and open to anyone who wishes to contribute. All free apps on the internet, open to all and not entirely driven by profit motive, although there may be advertising, also fall into this category.
The nation-state has not faded away, at least not in the way that Marx supposedly envisioned. In the more than century and a half since the days of Marx, nationalism has been stronger than ever before. My theory is that people are designed to believe in something and if they drift away from religion, substitutes like nationalism will take it's place.
But yet national borders also mean less today than ever before. Trade and travel goes around the world. It is possible to wake up in any country one morning, and go to bed in any other country that night. You can log onto a web site, or make a call, or send an email virtually anywhere on earth, with the national borders in between being absolutely meaningless.
But the latest manifestation of Marxist theory is this phenomenon of collective global internet, known as "the cloud". The basic meaning of the cloud is that the data that you store, and increasingly the applications that you use, are not stored on your phone or computer but are "out there somewhere" in the cloud. This blog is an ideal example of the cloud. It is not stored on my phone. I presume that the content of this blog is kept at Google's HQ in Mountain View, California, but could be on any server farm anywhere.
Marx sensed what would come. The Nineteenth Century in Europe was a time of revolution, and he presumed that the inevitable changes that he saw would be brought about in the same way. We could say that half of the fulfillment of his theory was by way of the social reforms listed above. But the communication technology of the time was limited to telegraphs relaying Morse Code. Marx could not possibly have imagined the computer revolution which would one day manifest the other half of this fulfillment.
He also did not see that while the technical side of his theory would be fulfilled, and it would greatly empower the masses that Marx saw as exploited and ill-treated, it would be brought about by very wealthy capitalists. The difference, with which Marx would be at least partially pleased, is these capitalists would not be from an entrenched upper class, but would be college kids who got an idea, quit school to work on it, and found themselves as the billionaires which would, ironically, bring about the remaining fulfillment of Marxist theory.
My observation is that the best economic model is not one that is right or left, but the one which best weaves right and left together. Our economy is as complex as we are and that makes it difficult for any of us to see the entire picture. It is much easier to see either the left or the right. Both are half of the big picture.
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