TERMINATED: Why machines spell doom for capitalism

obama_terminLet’s face it; we’re all a little terrified of machines. Technology has pretty much defined the 21st century, amidst the incredible advances made possible by machine operated factories, the smartphone and even the humble vending machine. While we appreciate the incredible contribution machines have made to making our lives easier and more comfortable, we can’t help but be intimidated by hunks of metal and wiring that can do our jobs far faster, with surgical accuracy and incredible efficiency.

Most dismiss the claims of those worried by the increasing dependence we have on machines as simply the ravings of a vocal minority afraid of change. For the most part, the claims made by said vocal minority are fueled by irrational fears that hold little to no water. However, brilliant french economist Thomas Piketty has conclusively proven that these fears are justified, if not for the reasons one might think. But, let me explain.

In ‘Capital in the 21st century’, referred to as perhaps the most important economics book of the decade by respected Keynesian economist Paul Krugman, Piketty has comprehensively shown that when the return to capital is greater than the rate of economic growth, in the long term, wealth is concentrated in the hands of the rich. For the economically challenged, when the profits made by people that own property and machinery is more than the increase in value of the goods and services produced in the country (both per year), a large proportion of money ends up in the hands in the rich. So, the rich get richer, the poor get poorer and the culprits are machines.

But the increasing inequality of the classes is not the only concern in this dire situation. Rather, its the fact that machines are slowly doing the jobs that people used to do, only more efficiently with a smaller margin of error. And that is the troublesome nature of capitalism and perhaps the inevitable conclusion of our economic system will be an oligarchy; a society in which a few elite control all of the wealth. Capitalism has never been about job creation or caring for the people, which in some ways is its strength. If job creation was our primary concern, why use cars when we can just hire four or five poor sods to carry us from place to place. Nonsensical right? Well, corporations agree and in the ruthless pursuit of profit, as long as robots are cheaper, more efficient and better at generating profit than people, machines will continue to replace the general populace.

Now there will be some that will argue that the shift of industrial production to third world countries represented a huge structural change in western economies, resulting in more people working in the service sector. However, This time it’s different. Machines are taking jobs in the service sector, jobs like cashiers at supermarkets, ticket booths at trains stations and even cooks in certain restaurants in China and Japan. These are jobs that have historically required the ‘human touch’.

If machines have taken over production and are taking over services what will be left for the rest of us?

Well for the time being, highly specialized occupations like lawyers, doctors and Psychologists will remain in the hands of the people. However, these jobs are in the hands of the elite, the highly educated, the top of the societal food chain. Where is your average Joe going to work and more importantly, what wages will he receive?

Capitalist economic theory states that inevitably, the economy will adjust for these structural changes. But, even if it does, according to Piketty’s book, there will be little wealth to distribute in the hands of the non-societal elite.

Will machines spell the end of Capitalism? Probably not. Do we have some serious questions to answer with regards to the redistribution of wealth? Absolutely.