Nothing wrong with capitalism, the capitalists are the problem

In March 1964, a group including Linus Pauling, Gunnar Myrdal, Tom Hayden, Ben B. Seligmanm and computer pioneer Louis Fein sent a letter to President Lyndon Johnson covering their report on “The Triple Revolution.” The letter began: “We enclose a memorandum... prepared out of a feeling of foreboding about the nation's future. The men and women whose names are signed to it think that neither Americans nor their leaders are aware of the magnitude and acceleration of the changes going on around them. These changes, economic, military, and social, comprise The Triple Revolution. We believe that these changes will compel, in the very near future and whether we like it or not, public measures that move radically beyond any steps now proposed or contemplated.” They were right about the changes but underestimated our ability to drift towards the iceberg most would not see until much later.

The three revolutions were in cybernation, weaponry and human rights. The nuclear and other new weapon systems threatened peace. The African American struggle for equal rights in the US was part of the rising demand around the globe for full human rights. But the report focused on the affects of the cybernation revolution (their term). The combination of the computer and automation was issuing in a new mode of production as different from the industrial as that was from the agricultural. It would result in “almost unlimited productive capacity which requires progressively less human labor.” Yet the current economic model awarded access to this production, to the wealth it created, unequally to those with capital and those who earned their keep through labor. The cybernation of production would mean increasingly less of good paying industrial jobs. The US was experiencing this process first but it would spread throughout the world we dominated.

The report argued that having access to the collectively produced wealth of society could not any longer be tied to labor. Maintaining and improving individual wellbeing across society – through making maximum use of the potential of automated production – would have to transition from depending on good paying jobs. Income would have to be separated from work. This would require some form of guaranteed individual income and vast investment in public goods. Left to itself, the market would not move in this direction, it would require government action.

As it turned out, capital figured out a way to exploit the new cybernetic economy by shifting production to automation (and now AI) and to areas of cheap labor. Some developing countries – like China – followed suit using their cheap labor to industrialize. This form of globalization produced cheaper goods and did lift many from poverty, worldwide. But it mostly benefited capital rather than labor.

The Western democracies did little to ensure the political sustainability of free trade globalism. This would have required providing those reduced to un- and under-employment or low-paying service sector jobs with the decent income and public goods (including improved education, free healthcare and jobs created through spending on updating infrastructure) that we could have begun 60 years ago. The Western European democracies did a bit better than the US with their social welfare programs but still found themselves in this 21st Century facing the political drift to the right fueled by those left out of the wealth creation.

In the US, we got Trump and his MAGA movement. This virulent form of the anti-globalism reaction has plunged the world into Trump’s tariff war on the very foundations of the world capitalist order.

Nothing wrong with capitalism, indeed there seems to be no good alternative to markets coordinating supply and demand. Free trade to maximize market functioning is part of this (with some measures perhaps needed to ensure fair trade). The World Trade Organization could expand its trade liberalization agenda to include mandates to improve local living standards alongside fair labor standards. Rather than make war on the system of rule-based trade that we have benefited from, the US government would encourage foreign investment in our productive sector as part of a rational approach to whatever re-industrialization makes sense. (This could include China.)

The monopoly capitalists at the top of our cybernetic economy are the problem. They need to be taxed at levels considerably greater than their workers. Their ability to wield political power through money needs to be ended. Government must be empowered to ensure that everyone benefits from market functioning even if this means a form of guaranteed minimum individual income. The Democrats need to do more than wait for Trump to fail. Railing against the billionaires must be accompanied by explaining the need for change and advocating the policies laid out in that report to Johnson.

Three Things

Thing One: As noted before, we now have front row seats to Trump’s attack on governing, the Constitution, his enemies, migrants, and the government protections built up over decades to protect us from the ravages of unrestrained capitalism, climate change, and globalized disease. The pundits have recognized that Trump’s aggressive efforts to see what he can get away with – the courts being the only potential obstacle – is an intentional effort to enlarge his power not by flaunting law and order but by bending it to his will.

The mostly unqualified sycophants with which he is seeking to stuff his cabinet will pass or not through the Senate – Hegseth squeaking by J.D. – and thus fully legally. As Jon Stewart recently noted, this is not fascism but entirely consistent with the 18th Century founding document – allowing a presidential monarchy – we seem to be stuck with. We will have to do something about that someday if we are to ever grow up. This bring me to ….

Thing Two: In the face of Trump flooding the field to keep everyone else off balance, the Democrats are either hiding, lost in a forest of self-analysis, or just plain waiting for the Trump chickens to come home to roost on all of those deluded people who voted for him. That is not much of a political party, more a herd of well-fed sheep. The Democrats need to find a way to address the issues that drove so many to place hope for a better life in Trump and the oligarch-loving Republicans amassed under the MAGA banner. This brings me to ….

Thing Three: The Democrats need, the country needs, to find a way to deal with the forces driving so many to feeling relatively deprived. All too many Americans feel that they and their children cannot reach, or maintain, the lifestyle of their own parents or grandparents. They are right to so believe.

The post-WWII economy of the Boomers peaked by the early ‘80s. Since then, inequality has been increasing while the Reagan Republicans and Clinton Democrats have favored capital over labor. Good paying union jobs gave way to low paying service sector work. Big capital fought off unions. The 21st Century has added further automation, now powered by AI, to further diminish the good paying working class jobs of the past. Health costs have risen, public schools struggle, drug use moved well beyond inner cities. Folks wonder what happened? So they look for those to blame – migrants, Jews, anyone different – and those to save them.

We need to face up to a few basics. We will never be a country full of high-paying work again. Tariffs won’t do it and build-it-here won’t do it. Most remaining (or recaptured) industry and many so called white-collar jobs will be done by machines and computers. For a while we may still need some skilled craftspeople like plumbers and electricians. But picking our crops, slaughtering our animals and rebuilding our outdated infrastructure will be done by machines and those migrants we say we don’t need. (No high paying jobs there.)

What is to be done? The Democrats will need to bite the bullet and revisit that approach long made anathema by the rich and their Republican servants: socialism. By which I mean, collecting substantial taxes from the obscenely rich and from big business, perhaps nationalizing fundamental platforms of the 21st Century economy such as Amazon and providing a guaranteed minimum income to everyone. This last would not be means tested or require looking for work and should be at least a few multiples of the basic poverty line. (Free healthcare, life-long education and varied public goods would supplement this.) We should, in other words, separate making and providing the goods we sell to ourselves and the world from the necessity to make them through human labor.

From each according to his ability, to each according to his needs.