Technology and The End Of Capitalism

The recent financial crisis brought back memories of ‘Black Monday’, October 19th, 1987, the day of the greatest financial crisis of the late 20th century and the day the concept and practice of automated trading entered the consciousness of millions of people around the world.

“Imaginary Wealth”. In Search of An Ethical Justification

The ethical value of the capitalist system, of the form in existence in most countries today, is inherently dubious; Some of the typical accusations is that it’s biased towards profit while ignoring arguably much more important aspects of life and society, the human civilisation, personal and social liberty and the environment. That it is unjust and anti-competitive and exploits the weak while protecting the strong and rich — see how debt, prosperity and personal freedom have shifted all over the world, but specifically in the third world in the last forty years. That it is deeply inefficient and promotes corrupt practices. That it presents the illusion of freedom when in reality it is as restrictive as most of the totalitarian systems in the history of mankind, only softer and less aggressive. I’m sure that many will agree with the above criticism while many others won’t. It doesn’t matter.

For a high technology society coupled with a flawed monetary system, such as that in existence today, renders capitalism largely irrelevant. In such as society, where most tasks are performed by machines and human labour becomes useless (and so do the leverages of the form of strikes, syndicates, unions etc.), capitalism is stripped of its last ethical standpoint: that of an ‘objective’, largely self-regulating and self-sufficient, ‘quasi-meritocratic’ wealth distribution mechanism; even if someone doubts Marx’s ideology and specifically his treatment of employers and opinion of labour, they would most certainly be unable to counter the point that in a society where human labour is obsolete, both Marx’s arguments and those against them hold little water. Given such a society, and given where we’re today, I would foresee two possible outcomes: first, a form of slavery, as realised by an oligarchy of technology-owning (viz. wealth-owning) proprietors and a majority of means-lacking ‘slaves’ (be it through debt — as in financial slavery, or worse), or a wholly new system that replaces profit as a goal with different challenges and metrics for motivation and success. Hopefully a system that restores personal liberty, social equality, respect for the environment, integrity and merit as primary social values by which wealth is accounted for and renders ‘profit’, poverty and greed to be historic mistakes, perhaps treated by our successors as examples of a primitive civilisation.

The introduction of ‘self-generating and multiplying wealth’ — through money-generating devices that are totally devoid of any tangible value (viz. derivatives, by and large staples of the existing global banking system) have long been criticised as dangerous for the global economy. Yet as long as people keep making money, few question their value. It is such mechanisms and the penetration of technology in banking, but also the services and industrial economy that are bound to change the way we treat money, profit and wealth.

Factoring In Technology

The introduction of technology as a profit-making device be it as a price-adjustment factor for the cost of human labour — or, crucially, in the trade of intangible, non-existent wealth tokens, arguably puts the last nail in the coffin of any ethical justification for the current economic system.

Twenty one years ago, following the 1987 stock market crash, the SEC examined the conditions that allowed the crash to take place. Computer trading software was blamed for the flooding of ‘sell’ orders that caused the Dow Jones to drop 22% in one day. Such inherent ‘problems’ in the system were quickly rectified, of course, via ‘circuit breakers’ and renewed ‘margin requirements’ as well as upgraded (more sophisticated) software that could deal with higher volumes.

Nevertheless, technology and algorithmic trading has also been blamed, in part, for the current crisis. The criticism reflects the fundamental flaw of capitalism in the context of modern society: an unjust system that affords some the capability to profit from nothing (viz. derivatives, legal and social benefit to existing wealth-owners, governments, large corporations), the unequal availability of technology as a wealth-generating resource and the tragic myth of the ‘free market’ whereby the belief that market self-regulation actually works and furthermore achieves the optimal result for society. Ironically, in this case, technology was — likely — the reason a lot of “imaginary” wealth was lost in these past few weeks, unfortunately taking down with it some very “real” wealth for millions of people.

Yet, the criticism towards capitalism as a system can only intensify as technology supplants more and more of human labour as a wealth-generating mechanism. As the wealth gap between rich and poor widens, as wealth is increasingly generated ‘automatically’ by machines, without requiring any distribution of the wealth it can only achieve a complete reversal of the equality social effect of the postwar years from 1950 to 1990, the institution of a less materialist society and the improvement of the quality of life. In the decades ahead, with increasing manufacturing, design, engineering, research and trading technology in the hands of the few massive corporations in Europe, the United States of America, Japan and China, those possessing wealth-generating means (technology, resources or capital) will be able to multiply their wealth disproportionally to the value of the services and goods they offer, whereas those lacking such means will suffer. The erosion of social values (personal liberty, justice, respect for the environment and personal integrity) in conjunction with the frivolousness and irrelevance of the monetary system and accompanying economic model will eventually strip capitalism of the last shred of legitimacy.

Manifestations of this transition are already evident. Technology is bound to bring about the End of Capitalism, or at least any reasonable justification for it in the way it exists today. Yet technology is not to blame — at the end it represent cultural and perhaps fundamental progress. There is a clear need for reform of the way people spend their lives and to date I have not seen many serious proposals that take into account modern criteria, challenges and priorities. The fact that Capitalism, as a notion, is failing is evident — not just by the recent crisis, or the continued widespread poverty, environmental destruction and erosion of the social fabric globally. What will follow is what matters — and what concerns me in this post. To this end, technology is just a catalyst that may bring about the changes required to address those challenges, or — alternatively — destroy more of the social and cultural foundations than ever before.

Creative Commons License

One Response to “Technology and The End Of Capitalism”


Have your say.

Write in the language of the post. Comments are meant to encourage on-topic discussion. For general comments, observations, complaints (e.g. about the site), you can use the form found in the Contact page. Make sure you've read the Terms of Use before commenting.

Comments Feed for this post Comments Feed for this entry.

DigitalOcean. Affordable, Fast, SSD VPS