After Technology Destroys Capitalism

by Jon Evans

In honor of May Day, let’s think big for a moment. No, no, no. Bigger than that.

Consider all the furious attention paid to economic inequality of late, courtesy of Thomas Piketty and Capital in the 21st Century. He argues that increasing inequality is an inevitable outcome of laissez-faire capitalism, and proposes we fix this with a global wealth tax.

I humbly suggest that he’s thinking much too small, and that the 21st century will be far too transformative to be contained within the worn and shabby walls of capitalism.

…Given that intro and title, I should quickly disclaim: I am, in fact, a big fan of capitalism. I don’t think it’s possible for anyone to have traveled across as much of the developing world as I have without being convinced of the enormous benefits (on the whole) of technology-powered capitalism and/or capitalism-powered technology, which have made billions of lives around the globe immensely better over just the last few decades.

But:

What if today’s technology is beginning to finally make better alternatives possible…but just as clean tech is being thwarted by the trillions of dollars previously sunk into fossil-fuel infrastructure, our collective investment in capitalism itself is forestalling superior post-capitalist alternatives?

If that sounds completely crazy, consider this:

Replace “ownership” with “capitalism” up above — and I would argue the line is fine — and I submit you wind up with an awfully similar conclusion.

Similarly: “We are beginning to witness a paradox at the heart of capitalism … enables an emerging collaborative commons to flourish alongside the capitalist market,” argues Jeremy Rifkin in the New York Times. And: “What should happen if and when the continuous production of surpluses stops being desirable or even necessary? The point, if you will, when capital becomes excessive to humanity’s needs?” asks, of all publications, the Financial Times.

I think it’s worth at least considering the possibility that we are, very slowly, inching towards a post-capitalist society.

But if and when we get there … capitalism will be replaced with what, exactly? A centralized command economy? God, no. Everyone singing “Kumbaya” in perfect seven-billion-part harmony? Seems highly unlikely. Even in a good-case low-scarcity future, there will still be hierarchies, highly unequal distribution of resources, etc; it’s just that the rules of distribution will be different, and hopefully better.

I strongly suspect that any post-capitalist society will be built around a technologically sophisticated reputation economy, very very loosely a la Cory Doctorow’s Down and Out in the Magic Kingdom.

Obviously we already live in a world full of subtle reputation economies — you see one in action any time a celebrity gets special treatment. Nowadays, though, technology could enable something much more codified and quantitative. (Crude hacks like Klout may at least light the way, for all their flaws.)

But any working reputation economy can’t be subject to centralized control. That would offer too much opportunity for corruption and abuse. Instead, it would probably need some kind of distributed algorithm which could reliably orchestrate and verify transactions without any central authority. If only such a system had arisen of late…

Oh. Right. Huh. Enter the blockchain.

How would a blockchain-based post-capitalism reputation economy work? I don’t pretend to know exactly, this is obviously highly speculative and hand-wavey, but: suppose that every month everyone got 100 Repcoins1 to allocate, along with some incentive to dole them out to people they don’t personally know … but Repcoins, like nuclear isotopes, dissipate over time, with a half-life of a few months. Voila: the artists, activists, and companies which many people think are awesome would collect, and spend, meaningful — albeit temporary — reputational wealth.

I’m just spitballing here, to illustrate that we can and should think way outside of the box; currency with a half-life might not be the right idea. Regardless of the implementation details, though, all utopias (and this isn’t really a utopia, more like a next-itertopia at best) share the same key problem; how do you get there from here? If there’s no answer, this is nothing but meaningless speculation.

But this time I think I actually see a way.

Let’s back up for a second. I’ve been arguing for some time now that the combination of new technology and old capitalism will soon drastically worsen inequality. It seems to me that technology will soon destroy jobs faster than it creates them, if it hasn’t started to already. Which is a good thing! Most of the jobs it destroys are bad, and most of the ones it creates are good. Net human happiness should be vastly increased, not decreased, by this process — but, unfortunately, capitalism doesn’t work that way.

Even titans of capitalism and tech leaders increasingly agree. The Wall Street Journal says: “Technology and globalization are transforming jobs faster than many workers can adapt.” The Financial Times concurs: “combined with other new technologies, robots might make the distribution of income far more unequal than it is already.” Sam Altman: “Technology makes wealth inequality worse.” Eric Schmidt: “Inequality will become the No. 1 issue for democracies.”

And now, thanks in large part to Piketty, capitalism itself has become suspect, too. “Capitalism simply isn’t working…the gap between rich and poor threatens to destroy us,” laments The Guardian, which also notes that the last five years in the UK have been “the longest period of falling real incomes in two generations.”

There are alternative views, of course. Bruce Schneier’s interesting take on inequality as a security issue. A bizarre Economist piece which blames inequality on feminism. But it’s fair to say that both technology and capitalism — which, remember, between them brought us much if not most of whatever progress we’ve made as a species over the last two centuries — are now being blamed in tandem for economic stagnation, inequality, and unfairness across the developing world.

Suppose for a moment that this is true, that we have indeed now reached some kind of critical inflection point. (We can’t know this for sure, no matter how hard we look at the data; the nature of inflection points is that there’s no compelling evidence for them until well after they occur.) What’s to be done?

Well, better education won’t hurt, but as the New York Times puts it, “most new jobs are likely to be lower-wage jobs.” We already see highly educated graduates competing for unpaid internships, while millions of long-term unemployed have been living on “a mishmash of personal savings, odd jobs, credit card debt and loans from friends and family.”

And so a lot of people have been banging the drum for a basic income. The idea has become sufficiently mainstream that The Economist‘s review of Piketty actually takes him to task for this: “”Why not propose a universal basic income: an inheritance, effectively, for everyone?” But as the Boston Globe puts it:

In the United States, the idea of handing out unconditional government allowances is seen, understandably, as a nonstarter … it just sounds too much like a socialist fantasy … the idea is widely seen as too radical a departure from the status quo. Working out the mechanics would be a nightmare … people who get free government money tend to work less and get divorced more … by guaranteeing people money without requiring them to do anything in exchange, we decouple their value in society from their ability to do a job

That whole “people should work or starve” attitude seems evil and perverse to me — as Politico points out, “The idea that “full time” work is something foreordained and the bedrock of morality is new, mostly a product of the last century” — but it’s a moot point, because if I’m right, even those angry reactionaries who fulminate about parasites will eventually be forced to accept that there simply aren’t enough jobs which need to be done by people. Consider the fate of America’s millions of truck/taxi/Uber drivers when, as the Financial Times suggests,

the entire concept of a car as an appliance is replaced by cars as the physical backbone of a transportation network or cloud … . The real action is commercial, where — freed from the cost of the driver — the fleet of delivery vehicles can easily expand

…All of which is a recapitulation of what I’ve been writing about for years. Now let’s take it a little further.

What happens in a world, or at least a nation, where most of the population lives semi-comfortably (by historical standards) off a basic income, supplemented by occasional temporary gigs, thanks to the economic output of tomorrow’s technology; a small middle class works at the diminishing number of jobs which can’t be handled by technology; and a smaller-yet minority of the ultra-rich actually design the tech, and/or live off their inheritances a la Piketty? Call it a “low-scarcity” future, as opposed to the full-on Singularitarian “post-scarcity” future.

It seems to me that such a world would be extremely fertile ground for the rise of — you guessed it — a reputation economy. The key is that it wouldn’t outright replace a traditional monetary economy, at least not for some quite considerable time; rather, it would begin to thrive parallel to, and independent of, its capitalistic counterpart. Eventually, though, as I’ve argued before, since we are fundamentally social creatures, in the long run, “at some point it will be better to be awesome than to be rich.”

If this is so, then Paul Graham’s tweet up above is true but doesn’t go far enough; capitalism itself will be viewed as a crude but useful hack — albeit one with a whole lot of nasty side effects — which ultimately paved the way to a more enlightened system.

I eagerly admit this is all very far indeed from guaranteed; even if I’m halfway right, then I suspect this will all take a handful of decades yet. But who knows, maybe I’m wrong, maybe this will all happen much faster, on a near-Singularitarian timescale. Maybe if your ultimate goal is to be rich, you’re already barking up fundamentally the wrong tree. Because … will any reputation economy reward the lords of capitalism? Somehow, today, with the occasional rare exception, that seems unlikely.

Don’t be too alarmed. This is just a May Day thought experiment. But I’m increasingly convinced that, if nothing else, it’s one at least worth contemplating.

1 Repcoin: a bad name, but still better than “Whuffie.”