The West once again seems to be embroiled in debate about the merits of capitalism — only this one, as David Brooks contends in his most recent column, is “both bolder and more intellectually rigorous.”
But while this debate may seem a little more sophisticated and better conceived, it’s assumed the parameters of earlier ones, Brooks maintains.
The current critics of capitalism contend that we’ve got to find ways to tamp down the ill effects of markets. While they concede that some capitalists may be doing lots of good through their foundations and other nonprofit ventures, the daily practice of capitalism is causing grievous harm.
Uberization of the Workforce
And part of this harm is reflected by the Uberization of the global workforce, which is not only underemployed but also denied employment benefits and opportunities for job fulfillment and advancement that previous generations of employees generally took for granted.
Moreover, they contend, the titans of present-day capitalism are becoming increasingly more rootless — more removed than ever from their communities — and far more insulated from the destructive effects of their decision-making.
And this has sparked a conviction among many that government must step in to mitigate these effects. And these efforts no longer can be focused solely on siphoning off part of this wealth to build greater opportunities for the less advantaged — enhancing early childhood education or building better community colleges, for example. No, for capitalism to be tamped down, government must intervene to ensure that the corporate world makes better investment decisions.
It’s a hidebound argument, to say the least.
Capitalism’s greatest strengths is the fact it undergoes unremitting renewal — a process that the Austrian-American economist Joseph Schumpeter described as creative destruction. And because this renewal occurs so unpredictably and at such a rapid speeds, no amount of government planning can keep up with it, much less, render it any more efficient.
Friedrich von Hayek, the Nobel Prize-winning economist, supplied the most compelling argument against planning decades ago. The knowledge to operate an extended economy doesn’t exist in concentrated or integrated form but is distributed in bits and pieces throughout the economy, often in contradictory form.
In a very real sense, markets associated with capitalism defy human reason. And in the course of destroying and renewing itself throughout the constant interplay of markets, capitalism sets is own parameters.
As paradoxical as it seems to many people, these unrelenting cycles of destruction and creation benefit all of us. The constant destruction and renewal associated with markets assure that products grow more diverse and cheaper over time. The advances in digital technology within the last generation will only increase the speed with which this destruction and renewal occurs.
Planning is simply not a viable option within such a vibrant system.
Super Computers in Lieu of Planners
In the months following the fall of Eastern European communism, I recall some detractors of the market expressing hope that capitalism ultimately would supply its own germ of destruction via super computers. They conceived supercomputers as supplying humans with the means to second guess the creative genius of markets.
But this contingency raises its own unsettling implications. Who, for example, will control these machines and set their parameters? And do we want to tie our species’ destiny to super machines, which conceivably could acquire the capacity to supplant us?
An Intellectually Stratified Economic Order
If critics of capitalism have any case to make, it’s that the rapid uptick of creative destruction brought on by digitization is contributing to the rise of an cognitively stratified economic and social order.
In a sense, the future could boil down to the question: Creative destruction for whom?
Isn’t it conceivable that the technological strides stemming from digitalization will create levels of creative destruction so intense and complex that only the most cognitively gifted among us will be equipped to benefit from them?
And if this proves to be the case, what will the world look like? Will it bear many of the hallmarks of the feudal age, one in which global order is maintained by a small cluster of elites holed up in enclaves protected by killer drones and robots?
Again, this is only conjecture. But if I were a critic rather than a qualified defender of capitalism, the prospect of digital feudalism is what would keep me up at night.