Why do you think capitalism will fail?

[Little Raven]

Yes, I know there's a thread with 'capitalism' and 'fail' on the front page already. But I don't want to derail a perfectly good conversation, and I'm going to take a different tack on things, so I think it's appropriate to start a new thread.

Most of us could probably imagine several ways that capitalism (as we know it in the West today, and especially as we know it in the US) could fail. Too many people competing for too few resources. Too few working people to support an aging population. Massive energy supply shock. (inflation) Massive liquidity trap. (deflation) Monopoly of services by a single supplier. There are all kinds of ways for the system to fall.

Which do you think is the most likely?

A couple of notes:

• This assumes a real-world setting for capitalism, which means it has to deal with government, (either democratic or otherwise) unhappy mobs, imperfect information, and the works. Think the US if you need a model.
• You don't have to be an anti-capitalist to play. That is to say, you don't have to believe that the option you choose is particularly likely or imminent, just that it's more likely than any other.
• Feel free to make whatever speculations about future technology you want, though be sure to explain them.

Play ball!

 

[The Last Conformist]

Civilizational collapse, caused by global war, massive climate change, asteroid impact, or whatever.

 

[betazed]

I think it will be because of an average individual (which includes the individual's government) consuming more than what the average individual (and his/her government) produces.

btw, this is a way for any system to fail. not just capitalism. That should be evident, shouldn't it?

 

[Little Raven]

Civilizational collapse, caused by global war, massive climate change, asteroid impact, or whatever.

So you see civilization collapsing as a whole happening before modern capitalism?

I admit that the two are so tied together that it can be difficult to determine where one end and the next begins, but still, you must have a lot of faith in good old Smith.

Out of curiosity, what's you bet for the most likely cause of the downfall of civilization then?

 

[Little Raven]

I think it will be because of an average individual (which includes the individual's government) consuming more than what the average individual (and his/her government) produces.

Hmm...good guess. Certainly things seem to be treading in that direction right now.

Just for clarification - your guess doesn't have to be specific to capitalism by any means. Just whatever you think is most likely to bring the party to an end.

 

[The Last Conformist]

I should perhaps say that I assume that more-or-less peacefully evolving into something unrecognizable over the generations doesn't count as "failure". If that's to happen - and I suspect it will -, future historians are no doubt going to argue about exactly when capitalism was supplanted by whatever-ism, but it would hardly constitute a failure, merely social evolution.

 

[Mark1031]

What is your definition/criteria for the fall of Capitalism? Capitalism has evolved over the years. Do we have any free unregulated market in anything? Does the failure of capitalism mean there is no trade of goods and services among individuals/groups. Even after a global collapse or in communism we would have some capitalism.

 

[Double Barrel]

I see the burden of a massive federal government on it's citizens as a chief reason why capitalism might fail. In addition, the same federal government, while never containing it's own growth, has an inherent inability to be responsible with it's budget and is never accountable for it's spending mistakes.

Reminds me of this:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's great civilizations has been two hundred years.

These nations have progressed through the following sequence:

from bondage to spiritual faith,
from spiritual faith to great courage,
from courage to liberty,
from liberty to abundance,
from abundance to selfishness,
from selfishness to complacency,
from complacency to apathy,
from apathy to dependency,
from dependency back to bondage.

I believe that we are well into the "apathy to dependency" phase, and are heading quickly to certain bondage.

 

[The Last Conformist]

So you see civilization collapsing as a whole happening before modern capitalism?

Um, no. Civilization collapsing would bring capitalism as we know it with it. Maybe the survivors - if any - would set up a Libertarian utopia, but they certainly couldn't retain our globalized capitalism of today.

I admit that the two are so tied together that it can be difficult to determine where one end and the next begins, but still, you must have a lot of faith in good old Smith.

Not particularly. I just don't think that economic systems are particularly prone to systemic collapse. See my post about evolutionary replacements.

Out of curiosity, what's you bet for the most likely cause of the downfall of civilization then?

Hard to say. Of the possible ones I mentioned, climate change is the most likely in a short-term perspective, but it is unlikely to topple civilization, I'd say. I can't meaningfully put a number to the likelihood of nuclear holocaust. The risk of a big asteroid finishing us off is pretty constant, if low.

 

[Little Raven]

My (current) bet.



Not this particular self-checkout machine, mind you, or even the concept of self-checkout machines, but rather what they represent: an ever decreasing need for unskilled labor.

Throughout history, we've always needed a lot of humans doing fairly mundane stuff to support those who were doing really cool stuff. Whether they were working the fields or manning the assembly line, we needed people doing stuff.

That equation is changing. It's been changing for a long time, of course, but we've always managed to move the mass of humanity higher up the ladder. But I think that option has about played itself out.

Automation is just getting faster and faster and easier and easier. Very soon (if we're not there already) we'll be getting to the point where the machines can change faster than the mass of humanity can be re-educated. Frankly, the only thing keeping machines from doing a whole lot of stuff is that we haven't figured out a cheap, reliable way to make a machine 'see' yet. But that's just a technical problem, and sooner or later we'll find a technical solution. Once we do, a whole lot of jobs that have remained safe from automation are going to go the way of the dodo. And it will happen fast. Much faster than people can adapt.

I'm not convinced that we will make ourselves obsolete, as some futurists have suggested. I still think we're always going to need smart people doing stuff. But I do think there will come a time when we only need a fraction of the population doing stuff. And I don't see how capitalism can survive that.

 

[Little Raven]

What is your definition/criteria for the fall of Capitalism? Capitalism has evolved over the years.

Like I said in the first post, capitalism as we would recognize it today, in the US. Obviously this a pretty fuzzy definition, but that's ok for the purposes of this discussion. If you see a gradual evolution, then pick what you foresee the single biggest shift as being and label that 'the end.'

 

[Mark1031]

Well I guess I would pick an economic collapse like the 30's then as a failure point. I could see that happening as a consequence of a collapse of the dollar and a withdrawal of $$ from the US market. A terrorist nuke in NY or DC would also do the trick.

 

[Little Raven]

Well I guess I would pick an economic collapse like the 30's then as a failure point. I could see that happening as a consequence of a collapse of the dollar and a withdrawal of $$ from the US market. A terrorist nuke in NY or DC would also do the trick.

A failure point like that would certainly qualify. So what's your guess as most likely? Terrorist attack or currency meltdown?

edit: Currency meltdown sparked by a terrorist attack?

 

[IglooDame]

Bread and Circuses, the death knell for both capitalism and democracy. People will invariably demand more and more while contributing less and less, politicians will demand it from the capitalists, who will collectively take their toys and leave home. The resulting collapse will be interesting to watch but unpleasant to experience.

 

[Mark1031]

A failure point like that would certainly qualify. So what's your guess as most likely? Terrorist attack or currency meltdown?

edit: Currency meltdown sparked by a terrorist attack?

Most likely (well maybe 10%) within next 5-10 yrs: currency meltdown. However, within 25 yrs I think nuke in NY/DC is 50:50.

 

[betazed]

My (current) bet.

Not this particular self-checkout machine, mind you, or even the concept of self-checkout machines, but rather what they represent: an ever decreasing need for unskilled labor.

Throughout history, we've always needed a lot of humans doing fairly mundane stuff to support those who were doing really cool stuff. Whether they were working the fields or manning the assembly line, we needed people doing stuff.

That equation is changing. It's been changing for a long time, of course, but we've always managed to move the mass of humanity higher up the ladder. But I think that option has about played itself out.

Automation is just getting faster and faster and easier and easier. Very soon (if we're not there already) we'll be getting to the point where the machines can change faster than the mass of humanity can be re-educated. Frankly, the only thing keeping machines from doing a whole lot of stuff is that we haven't figured out a cheap, reliable way to make a machine 'see' yet. But that's just a technical problem, and sooner or later we'll find a technical solution. Once we do, a whole lot of jobs that have remained safe from automation are going to go the way of the dodo. And it will happen fast. Much faster than people can adapt.

I'm not convinced that we will make ourselves obsolete, as some futurists have suggested. I still think we're always going to need smart people doing stuff. But I do think there will come a time when we only need a fraction of the population doing stuff. And I don't see how capitalism can survive that.

Are you sure you have thought this one thru? This is precariously close to a Luddite's argument.

I would think that automation shifts labor from one place to another place where it is more productive. If you do not end up using the labor in another place then that is an inefficiency on your labor markets part.

Also, I am not sure I believe the basic premise of your argument. that technology changes faster than we can adapt to it. Just ask yourself how many adapatation changes have you had to do because of changing technology? Personally, I have done none. But i am pretty sure technology has changed substantially in my 30 years and 3 months of my life. What technology has done is opened new oppurtunities and closed old ones. So I am doing something that I would not have been doing otherwise if technology has not changed so. But that is not adaptation. That is just oppurtunism. We should already be adapted to be oppurtunistic.

 

[betazed]

from bondage to spiritual faith,
from spiritual faith to great courage,
from courage to liberty,
from liberty to abundance,
from abundance to selfishness,
from selfishness to complacency,
from complacency to apathy,
from apathy to dependency,
from dependency back to bondage.

Hmm... That is a good one (at least it is pithy ). Surely seems to be a possible path. I wonder how many civilizational examples we can find for this.

 

[EdwardTking]

(1) Rapidly depleting oil reserves will result in:

(a) Rising prices destabilising economies
(b) Reduced supplies replacing growth with recession
(c) Wars over remaining oil resevoirs.

(2) One above will result in global collapse of financial system:

(a) Stock market crash.
(b) Banking crash.
(c) Corporates going out of business and fragmenting.

(3) Collapse of global system will result in collapse of global trade.

(a) Without finance, it becomes barter (coal for food).
(b) and without anything to barter, a region will be entirely on its own.

(4) Collapse of global trade will compounded with energy shortages
result in collapse of many nation states.

(5) Regional command economies introduced to prioritise emergency
distribution of remnant oils, food etc.


There will still be money, but it won't be very important.

Resources and non resource values such as labour and residual money
functions will be calculated in terms of energy and food equivalents instead.

It won't be a question of I own $10 M, it will be a question of my wind
turbine produces so many KW which is worth so much food, servants etc.

 

[Little Raven]

Are you sure you have thought this one thru? This is precariously close to a Luddite's argument.

Yeah, I know. I have to shower regularly.

Unlike a luddite, though, I'm not arguing that the loss of labor to automation will be bad, just inevitable and, ultimately, overwhelming to our current economic system.

I would think that automation shifts labor from one place to another place where it is more productive. If you do not end up using the labor in another place then that is an inefficiency on your labor markets part.

But that inefficiency exists. Big time. And even if there is a void where displaced workers can go, it generally takes a few years to re-educate someone completely. That's not a big deal when the landscape might shift over the course of 20 or 30 years. But in a world of high tech automation, the landscape can completely shift in 5. And it can (and will) do it over and over again. Smart people can keep up. But not everyone is that smart.

Also, I am not sure I believe the basic premise of your argument. that technology changes faster than we can adapt to it. Just ask yourself how many adapatation changes have you had to do because of changing technology? Personally, I have done none.

Do you really think you represent anything resembling the majority of the population?

I'm not saying that we'll get the point where we don't need anyone working. We'll always need the best and brightest doing what the best and brightest do. What we won't always need are millions of low level service workers. In fact we won't need low level workers at all. And that will be the problem.

We can't all be doctors and lawyers. There is a sizeable proportion of the population that just isn't suited for much beyond low-level work. But just because they can't do high-level work doesn't mean they can't vote, or don't want to eat. And even if we could all function at a high level, it take a long time to educate someone enough that they can climb the ladder. At the rate technology is changing the world, it will become increasingly difficult for those on the lower rungs to keep up.

Like I said, this doesn't have to be a bad thing. We could always abandon the conventional goal of universal employment and shoot for a work-optional society instead. But I don't think capitalism as we know it today can survive.

 

[betazed]

We can't all be doctors and lawyers. There is a sizeable proportion of the population that just isn't suited for much beyond low-level work.

You know this pov is anarchic and non-conforming, right? But I do agree with you.

But just because they can't do high-level work doesn't mean they can't vote, or don't want to eat. And even if we could all function at a high level, it take a long time to educate someone enough that they can climb the ladder. At the rate technology is changing the world, it will become increasingly difficult for those on the lower rungs to keep up.

Like I said, this doesn't have to be a bad thing. We could always abandon the conventional goal of universal employment and shoot for a work-optional society instead. But I don't think capitalism as we know it today can survive.

Ok. So let me grant you that. This will mean that there will be a sizeable population that will not be able to adapt, hence their income will be low and they will have a lot of hardship. While, another group will continually be oppurtunistic and prosper. But isn't that always happenning anway? What you are basically talking about is an income differential.

How do you go from a income differential to capitalism collapse? I can see how capitalism may need some change (like we may need to do away with universal healthcare, social security as we know it etc. etc.). But the basic tenets of capitalism and free market need not be abandoned.