Automation and AI: A Crisis of capitalism

Work is all we know, and nothing else. Work is all we do. The absence of work for human beings will be catastrophic (at first) as we have structured our lives around work, in all known human history.

Robotics, Automation, and Artificial Intelligence will move the human race beyond human labor. The transition to the post-scarcity world will not be smooth because human society has to be re-arranged.

The post-scarcity world is one that is so technologically advanced that humans don’t have to exert painful labor anymore. Goods and services that humans need will be produced in abundance by robots and automation. Solutions to solve various scarcity problems will be uncovered. For example, the energy problem will have been resolved by generating endless amounts of energy from solar and wind and storing that energy. Drinking water will be resolved by profitable desalination and having converters that turn air into water at scale, et cetera.

These things are already in motion. The future looks bright. So what’s the problem? The problem is that our systems are labor-based. Our economic system is based on distributing value based on labor exerted. If humans aren’t working (providing labor) how do you distribute value to them? The Universal Basic Income (UBI) solution is a quick way to “paper-over” the problem. Throwing money at the problem.

The UBI solution gives something to survive on to those billions who would have lost out (displaced by machines). It is actually a very practical solution. However, it leads the world to a socialist state. Billions of people getting free money.

UBI as a solution to the Market failure

UBI can be seen as a solution to address market failure. Market failure is a situation whereby the capitalist system cannot effectively and efficiently provide a specific good or service in the economy, which then warrants governmental intervention.

Fierce proponents of capitalism have always pointed out these exceptions, terming them acceptable market failure, and public goods, among a whole list of endearing terms. These failures are not really seen as failures of capitalism. They are seen as little wayward cogs that need to be fixed. UBI can be seen in the same light at first. It is a solution to a simple market failure.

However, as technology marches on relentlessly at a fast pace, the scale of market failures that need intervention will expose the set of problems posed by capitalism to be bigger than simple market failures. When billions will only rely on UBI as a means of survival, the economic system will essentially be shifting towards socialism. For example, if 70% of the people are unemployed and rely on UBI living stipends, the economy is socialist, and the problem solved by UBI is not just a market failure, it is a failure of capitalism. It is the crisis of capitalism.

Widespread Market Failure = Crisis of Capitalism

Fierce proponents of capitalism would still want to defend it as the exceptional system that can only bring progress to the human condition and view the capitalistic problems as necessary side-effects. That needs to be critiqued.

If market failure is widespread, it cannot be viewed as a simple side-effect of progress. What progress? Whose progress? The progress excludes billions of people and only serves a few people. Space tourism for the 1% and “just-making-ends-meet” for the 99%. This will obviously be pushed against and the result will be a move towards socialism and eventually a move from socialism to full-blown communism.

Capitalism as a system will run into its own limits where the pendulum has to swing back towards the once-rejected communism. So it turns out Marx was right after all. Capitalism is fast running to its own limits. Excessive levels of inequality, pollution, global supply problems, inflation, trade wars, rising nationalism, and immigration battles are all side-effects of a capitalistic system that has been driven by globalization and financialization.

Although capitalism is still very good at producing many goods and services for the world such as electrical products, golf clubs, and camping equipment, it is increasingly failing in efficiently providing some very key goods and services via the free market.

Three examples of key areas where capitalism is failing and social programs (aka socialism defined in endearingly capitalistic terms) have had to be introduced are as follows:

  1. Social Housing — it is not a secret that the capitalistic system is failing to produce decent, sufficient housing for millions of people across the world’s cities. House prices have climbed higher, exponentially, elbowing out millions and millennials are bitter about it. Rentals in cities are gobbling 40% of income earned. This is not a smaller nyana-nyana type of a side effect. This is a crisis of capitalism brewing. As increasingly more families rely on social housing, the social housing program will transform into mass public housing (i.e. a predominantly socialist state)
  2. Healthcare- it is an open secret that the capitalistic system is increasingly failing at providing reasonably priced healthcare to millions of people across the world. Socialist programs such as National Health Insurance (NHI) in the UK and Obamacare in the US have had to step in to provide decent healthcare. The NHI in the UK has done very well. Critics of socialism will pay a blind eye to the fact this is a well-run socialist program. They only point to the failed socialist programs in Cuba, China or the Soviet Union. Healthcare costs have gone parabolic. Big Pharma, monopolies, and oligopolies in healthcare bear evidence of a failed capitalistic system. The average person in the world cannot afford to be sick. Even dying is expensive too. This is a crisis of failed capitalism.
  3. Education — they say this is the key, but it is not free in many countries. The cost of getting educated is not a small fee. It is exclusionarily high and elitist. The few scholarships thrown around to the poor cannot fix this market failure. The student loan crisis in the US bears witness to this. Some countries have addressed this market failure with a heavy socialist program of free education for all, and some have gone for only free basic education. Zambia in Africa has gone for free primary education. Germany and some Nordic countries have gone for free education for all up to the highest level of education. These programs in the Nordic countries have been successful in addressing market failure and creating an educated society. Students in South Africa are calling for free education. Freebies. This is a socialist call. It is a call to Socialism. Fierce proponents of capitalism add their voices to this call for free education touting it as an investment in human resources bla bla bla without acknowledging it for what it is, a loud call for Socialism.

Failing at the Core

The above three areas are key. It doesn't matter if the capitalistic economy can provide cheap television sets if it fails to provide affordable housing, healthcare, and education. It's failing where it matters the most, and succeeding where it doesn't matter that much for now (e.g. space tourism). At the epicenter of this failure is the failure to distribute resources efficiently.

The capitalistic system is failing at its core. The efficient distribution of resources by the invisible hand is touted as the standout feature of capitalism. It turns out the Invisible Hand simply implements what he who has money wants, and it turns out only a few have billions whilst the rest have nothing, so “The Hand” simply does what the mega-rich want.

This has led us to distributive inefficiency. The trickle-down effect (where spending by the millionaires trickles down to the poor as income) is broken. It’s not working as it used to due to automation and technological advancements that ensure the system does not need as much human labor as it used to. Inequality levels have risen beyond the levels that prevailed during feudalism.

The “failure at the core” is still in the infancy stages. What is failing is not only selected areas. It is capitalism itself.

The Move towards Socialism

In Marxist theory, Socialism is a transitional social state between the overthrow of capitalism and the realization of communism. The trend towards socialism is undeniably underway.

Various forces and movements are shaping society towards socialistic themes, inadvertently and unknowingly. These could eventually converge into a real socialistic order for the world.

  1. Sharing Economy — sharing is communist, full-stop. It is a communal concept. Individualism and greed are capitalistic concepts. Any definition you can think of for the sharing economy is as communist as it can ever get. The sharing economy addresses the wastefulness and overproduction inherent in the capitalistic system.
  2. Minimalism — this is an anti-capitalistic trend. It actively seeks to counter the consumeristic hubris that exists at the epicenter of the modern capitalistic system. Minimalism is not exactly socialist or communist but it is precisely a push-back on capitalism. Minimalism is attacking capitalism on the groin. It's a fight against the immense waste that is driven by advertising. It debunks “growth” as we know it in a capitalistic way to nothing other than waste.
  3. Environmentalism — this trend is not decidedly socialist but it is evidently social in its approach. Capitalism doesn't care about externalities or things that cannot be tagged with a price. Capital only seeks to maximize shareholder returns, it doesn't really care if that destroys the earth in the process. Environmentalists dwell and built on the strength of communities to bring capital to account and hold it responsible for the environment. Right-wing fellas view carbon credits as a socialist agenda. They are right. Carbon credits are socialist and there is actually nothing wrong with socialism, contrary to what we have been taught in schools.
  4. Big Everything (Big Tech, Big Pharma, Big Banks) — these big capitalistic institutions are making a killing. They make profits from operating at scale across the world. The big fish has swallowed the small fish (i.e. small businesses). What the “Big Everything” subtly tells us is that certain things can be administered at scale, centrally. The big boys running entire industries are not much different from a ministry under a communist arrangement. The comparisons appear dubious now because the “big everything” players are selling goods and services to paying customers. What happens when billions of humans are unemployed and cannot afford to pay a market price?

The Move Towards Communism

The Socialist state might eventually be forced to actually own the means of production.

There can be a move to nationalize these big players, essentially transforming them firstly into giant State-Owned Enterprises and subsequently into government departments.

A good example is that of transportation which will firstly move from a purely capitalistic individual ownership of cars to a sharing economy type of arrangement with these Ubers and Didi’s, to a point where people don’t own cars but rather demand mobility as a service. The service provided by e-haling firms can subsequently be replaced by a service provided by car manufacturers such as Tesla, owning and operating a mobility-as-a-service company.

Millions that want this service but are not able to pay for it might get riding tokens from the government as part of UBI. In the end, the people and government might decide to simply own the Big Mobility-as-Service company (the winner-take-all) instead of giving profit to privates. Thus the winner-take-all dynamics responsible for creating the “Big Everything” are inadvertently shaping things towards a centralized economy where eventually the Board of Directors of a Big Something company gets replaced by a Planning Bureau under a Government Ministry.

The move towards communism will either be forced by citizens or the government. Citizens might directly pressure the government to own the means of production (the robots, the technology stacks, the land, and other resource banks). Governments might fail to generate enough revenue from robot taxes and corporate taxes to feed and upkeep the unemployed billions, hence they might think of owning the means of production and planning things centrally, including centrally funding and directing the R&D that spurs development.

The move from capitalism to socialism to communism will be largely driven by large-scale and widespread failures of capitalism rather than a conscious class struggle. Capitalism will overthrow itself as a system.

The Demonization of Socialism and Communism

We have been programmed by years of liberal thinking to demonize socialism and communism. The glaring failures of past communist projects bear witness to how stupid communism is.

However, what we fail to notice is that certain systems can fail in certain era’s and that does not mean they have failed absolutely. Socialism and communism were very bad ideas before technological advancement. In labor-based economic systems, capitalism made more sense. Now, as we move towards a post-labor and post-scarcity world, capitalism fails and communism makes sense. The problem with the word communism is that it invokes thoughts of a government that is autocratic. It's a trap of thinking in mutually-exclusive terms.

We tend to think that democracy can only be paired with capitalism and that democracy can never be yoked together with communism. It is possible to have a democratic society whereby the means of production are centrally owned by the government.

All Religious Utopias are Communist

There are way too many religious people in the world. There are way too many religions. And almost all religions point to one thing, exaltation of the spiritual above the physical and the existence of a socialist-communist state as the ideal livity.

Which economic system exists in heaven? Most of the ideas around heaven do not mention the economic system explicitly but they nonetheless portray a communal type of living that is as communist as it can ever get.

In Christianity, heaven is painted as a post-scarcity and post-labor place. There is no need for hard labor. Abundance is the order of the day. Heaven, though it is a communal place, is sufficiently democratic for all who are or will be in it. Thus, it is the perfect pairing of democracy as a political system and post-scarcity communism as an economic system.

If we, the people here on earth, are advancing with technology to usher in a post-scarcity world, then that post-scarcity world might as well be both democratic and communal. In short, we can create our own heaven on earth. In order to do so, labor-based capitalism has to pave the way for post-scarcity communism.

Food for thought!





Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss

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Ryan Gosha

Ryan Gosha

Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss

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