I do not doubt that capitalism is effective at increasing productivity. So let us imagine the ultimate outcome of capitalism - infinite or near infinite labor productivity. If you need help imagining that, watch an episode of Star Trek: The Next Generation. In this imaginary universe, so-called replicators can make any physical object that is desired almost instantly. Only a few goods cannot be 'replicated.' Energy is extremely cheap and abundant. Any entertainment experience desired can be obtained at a holodeck. Artificial intelligence and replicators can accomplish most tasks people are paid to do today, and life-like intelligent androids are a reality.
Now, let's imagine that humans achieve Star Trek level technology while still in a capitalist economy. Suppose that 25% of the society are owners of replicators to some degree - large owners can produce large things like star ships, while smaller owners can produce consumer goods for sale or personal use. 50% of the population has marketable skills, to varying degrees, and can use these skills to provide services in exchange for wages with which to purchase the produce of the replicators. Another 25% of the population both lacks ownership of any replicators and possesses no marketable skills (nothing that a computer or replicator can't do better and cheaper).
Given this scenario, how will the bottom 25% feed themselves? The answer can only be "accept charity from the other two classes." How will the middle 50% feed themselves? The answer can only be "accepting employment, mainly from the ownership class."
Recipients of charity are not free people - they must find a benefactor, subjugate themselves to them, and if they cannot find a benefactor they may starve. They must make themselves humble and attractive to benefactors. Recipients of wages have some degree of freedom only. To the extent that their skills are in demand, they have power negotiate the conditions of employment and to choose among masters/employers. Still, they must make themselves humble and attractive to employers, or else be thrown into the class of people dependent on charity.
Capitalism has no cure for poverty or political subjugation. Capitalism may make an economy even infinitely productive without eliminating the insecurity and subjugation caused by being reliant on others for charity, or reliant on the profitability of ones skills in an abstract and changing market. In other words, capitalism, by itself, actually creates artificial scarcity, in the sense that the goods needed by the non-ownership class are not actually scarce, in that they can be summoned at a word with no effort, but are only artificially scarce due to the concentration of the ownership of their production. Capitalism, on its own, has no way of reconciling effective demand with real human needs without sacrificing human freedom and making one individual the dependent or slave of another.
It doesn't have to be this way, or course. A publicly owned replicator bank would provide necessities of life to anyone who wanted them, for free, and so eliminate the requirement that anyone defer to anyone else under coercion of real material needs. Contracts in such a system would be truly voluntary, because they would in no instance be undertaken to avoid harm, but only to enhance happiness. Careers would truly be freely chosen, because the option of not having a career would also be a possibility.
Of course, this is relevant because there is not a hard line between a primitive economy and a Star Trek economy. Rather, we are somewhere in between and moving steadily (and rapidly) towards the Star Trek economy. The danger is that social ills will persist (or are persisting) longer than is absolutely required by the level of economic development attained.
This is not to say that elements of capitalism - (markets, private ownership etc.) would or necessarily should disappear in an ideal economy - but it is to point out that capitalism by itself cannot resolve many problems and evils without being complemented with non-capitalistic additions.
Ultimately, it is a question of who is in charge; is the purpose of humans to serve markets, or is the purpose of markets to serve (all) humans? If the answer is that the purpose of economic systems is to serve all of humanity, then capitalism has a strong claim to legitimacy on the basis of its efficiency and productivity but it does not have a totalitarian claim to be the only legitimate system which should be implemented everywhere and totally.
ravochol: @ Smiling Dave - I picked the 25% "no marketable skills" figure because, like I said, in this imaginary world there is (cheap) technology that can do most things people do now - for example artificial intelligence and androids. A person would not only have to do things better and cheaper than other people to be employable, but also better than technology. You won't hire a person to mop the floors if robomop 3000 does it faster and cheaper. Maybe there will be job openings for artists or designers or psychologists or spiritual gurus, but will everyone be good at such work? The answer I've seen to that argument is that people have been worrying about that for over a hundred years. Every new invention that eliminates whole sectors of labor [like the automobile did to the horse and buggy business, and electricity to the whaling business, etc etc] led people to fear there would be vast unemployment. But it never happens. New needs are always coming up. Has anyone imagined, for example, in 1975 that there would be a huge worldwide demand for cellphones and ipods and laptops? So indeed these 25% would be employed doing what androids do, but something else. Like the examples I gave. And who knows what other things would be invented and needed in such a world? Now if those replicators make every possible thing in the Universe cheap, well that's good isn't it? A few hours of babysitting a week, or some other minor work that an android lacks the human touch to do, and we could live in comfort, all 25% of us. Would full employment even be desireable? Desirable for who? If those 25% aren't getting free gifts, voluntarily given from a generous person, then yes, they would want to work and make money. Maybe you mean "Is it desirable for the economy as a whole?" The answer is, "Of course. The more working hands, the more production, the more wants are satisfied." Why would consumption have to be strongly linked to production if human labor is only weakly linked to production? I'm not sure what this means. If you mean "Why should a person have to work for a living if things are so cheaply made?" I think the answer is because he wants to eat. And if he doesn't find someone willing to feed him for free, he will have to give the owner of the food something in return. Of course he won't have to work long hours, because things are so cheap. If sodapop production is 100% automated, with no human labor input whatsoever, why should the amount of sodapop a person can consume be linked to how much they contribute to the economy? It's not a q of how much he can contribute to the economy, but what can he give the owner of the soda pop that will convince said owner to part with the pop. Now you might be questioning what right the owner has to his property. But that is an ethical question, not an economic one. I am sure many are stronger than me in ethics, and maybe a new thread would be a good idea, not to confuse the two topics. As capitalism develops, isn't production less and less strongly linked to human labor? Moreover, isn't that the whole goal and idea of investing in capital goods? The whole idea of capitalism even? Sounds right. But just because things become very cheap, that doesn't mean the owner of them should give them away for free if he doesn't wish to.
@ Smiling Dave - I picked the 25% "no marketable skills" figure because, like I said, in this imaginary world there is (cheap) technology that can do most things people do now - for example artificial intelligence and androids. A person would not only have to do things better and cheaper than other people to be employable, but also better than technology.
You won't hire a person to mop the floors if robomop 3000 does it faster and cheaper. Maybe there will be job openings for artists or designers or psychologists or spiritual gurus, but will everyone be good at such work?
The answer I've seen to that argument is that people have been worrying about that for over a hundred years. Every new invention that eliminates whole sectors of labor [like the automobile did to the horse and buggy business, and electricity to the whaling business, etc etc] led people to fear there would be vast unemployment. But it never happens. New needs are always coming up. Has anyone imagined, for example, in 1975 that there would be a huge worldwide demand for cellphones and ipods and laptops?
So indeed these 25% would be employed doing what androids do, but something else. Like the examples I gave. And who knows what other things would be invented and needed in such a world?
Now if those replicators make every possible thing in the Universe cheap, well that's good isn't it? A few hours of babysitting a week, or some other minor work that an android lacks the human touch to do, and we could live in comfort, all 25% of us.
Would full employment even be desireable?
Desirable for who? If those 25% aren't getting free gifts, voluntarily given from a generous person, then yes, they would want to work and make money. Maybe you mean "Is it desirable for the economy as a whole?" The answer is, "Of course. The more working hands, the more production, the more wants are satisfied."
Why would consumption have to be strongly linked to production if human labor is only weakly linked to production?
I'm not sure what this means. If you mean "Why should a person have to work for a living if things are so cheaply made?" I think the answer is because he wants to eat. And if he doesn't find someone willing to feed him for free, he will have to give the owner of the food something in return. Of course he won't have to work long hours, because things are so cheap.
If sodapop production is 100% automated, with no human labor input whatsoever, why should the amount of sodapop a person can consume be linked to how much they contribute to the economy?
It's not a q of how much he can contribute to the economy, but what can he give the owner of the soda pop that will convince said owner to part with the pop. Now you might be questioning what right the owner has to his property. But that is an ethical question, not an economic one. I am sure many are stronger than me in ethics, and maybe a new thread would be a good idea, not to confuse the two topics.
As capitalism develops, isn't production less and less strongly linked to human labor? Moreover, isn't that the whole goal and idea of investing in capital goods? The whole idea of capitalism even?
Sounds right. But just because things become very cheap, that doesn't mean the owner of them should give them away for free if he doesn't wish to.
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