Capitalism Cannot Function Without an Endless Supply of New Suckers
Have you ever wondered if capitalism could become a victim of its own “success” in ways other those put forth by Marx over a century ago. While it is certainly possible that the effects of declining profits and progressive impoverishment of the majority will derail capitalism in a world where there is not much left to plunder or conquer in an economically viable manner, there is an alternative (and possibly synergistic) pathway for things to fall apart.
The reason you have probably never heard of this ‘other’ pathway is because the conditions that made its existence possible are relatively new. Even today- most economic thought, literature and analysis is the product of people mired in the mindset of previous eras. It also helps that doing so keeps the rich patrons of these sophists (economists and intellectuals) happy and thereby ensures a steady stream of table scraps.
So how did I stumble across this pathway? Well.. it comes down to an extension of one of my observations about human beings. We are often told by “intellectuals” that human beings do things because they are naturally competitive. But how many people would jump through all the hoops and cripple themselves in ways that are considered “normal” in developed societies if they were really doing it for themselves?
What kind of moron would slave away for a house in the suburbs where he would be subject to the simultaneous tyranny of his aging hateful wife and municipal zoning guidelines? What kind of idiot slaves away to live his life surrounded by superficial and scheming people at work (colleagues) and home (neighbors)? What idiot would slave away in occupations that involved high stress or high levels of insecurity? What moron would enter vocations with decade long education and internship requirements but not much in terms of job security?
It is clear that the mindset, worldview and behaviors of the average blue- or white-collar person in all developed countries are blatantly irrational. So why do they persist, or more accurately- why was that behavior so prevalent in the past?
In one of my previous posts, I had put forth the idea that civilization as we know it is a ponzi scheme. I chose that particular term since it best describes the overall structure, mode of functioning and life-cycle of civilization. But it also describes how they grow and become bigger. Civilizations, like ponzi schemes, require a continuous influx of new naive members to scam, exploit, enslave and sacrifice. But why? Well for one you have to pay off the higher ranking (but non-apex) members in the scheme. But there is another reason especially relevant to the fate of capitalism in developed countries with low rates of fertility.
A significant minority of people who cannot move up the pyramid will eventually understand the true nature of the system, even if that realization occurs at a subconscious level.
Civilization always results in a significant minority of its members becoming cynical, disloyal and self-serving once they wise up. There is therefore a constant and unrelenting need for more naive suckers to replace and possibly help eliminate those who have wised up. Finding such new suckers was very easy in the pre-contraception era when the average women has more than two kids who lived to adulthood. But barely or below replacement fertility makes that much harder and hence we had immigration for decades. But today even countries like Mexico and India, not to mention China, have fertility rates that are close to or below replacement.
But what does any of this have to do with an alternate pathway for the demise of capitalism?
The answer to that question lies in the high level of similarity between civilization and capitalism in one area – producing cynical burnouts with nothing left to lose. However capitalist societies are also far more efficient at producing such individuals as they burn the inter-personal goodwill and institutional loyalty of their lower ranking members at far higher rates and levels than their pre-capitalist counterparts. Furthermore, the continuous and ultimately counterproductive competitions that characterize such societies are unsustainable in the absence of high level of growth and some wealth redistribution. The high ambient instability of careers in such societies, even those which involve a lot of personal investment and sacrifice, do not make things any better.
Many societies with these features attempt to stabilize themselves through social welfare programs and regulations to improve career/lifestyle stability. While such measures can be partially effective in the short to medium term, they fail in the long-term for reasons linked to human greed and short-sightedness. Moreover they do not produce fewer cynical burnouts- only slightly less bitter ones. There is a reason why even countries as ordered, stable and affluent as Switzerland, Germany and Japan are not full of highly motivated and enthusiastic people.
Now some of you will say.. but what about the USA? isn’t it an exception to the pattern of capitalistic societies having a significant number of burnt out and cynical people? and isn’t the per woman fertility slightly above replacement or something like that? Well.. let us go through each point.
Firstly the USA is not an exception to the pattern of capitalistic societies having a significant number of burnt out and cynical people. It was just a late comer to that club for reasons I shall explain in a moment. As I have previously said, ponzi schemes can grow and appear stable as long as they can afford to pay off the higher ranking (but non-apex) members in the scheme. So things looked great as long as those born between 1930 and 1945 were getting excellent jobs and enjoying the fruits of rapid and fairly egalitarian post-WW2 expansion. They started dimming a bit when those born between 1945 to 1961 started their working lives but things still looked good and the overall system had enough inertia to keep the real party going into the 1990s. The fall of the USSR, opening of low wage countries like China and India, low interest rates on credit and the housing bubble helped the USA stretch it into the mid-2000s.
But the real cracks were visible as early as the mid-1980s. It was the beginning of an era where wages of average people stopped keeping pace with productivity or inflation. It was also the beginning of a breakdown in the implicit social contract that had existed in the USA since 1933. Lifetime job and stable careers slowly became a thing of the past, as did the formal and informal social welfare system. While this trend initially affected only the blue-collar workers, by the early-1990s even white-collar workers started feeling its effects. While the tech boom in the later half of 1990s and housing bubble in the first half of the 2000s masked the decline somewhat, it was obvious to many that something fundamental about the system had changed.
But which age group is most observant about such subtle but fundamental shifts? Is it the people who grew up before the 1980s and 1990s or those who were born and grew up in those decades? My point is that the mindset, worldview and behavior of those in their 20s and 30s today is a far better indicator of where things will go. So what do we see in that group?
Do we see tons of optimism in that age group? How many of them believe in a stable livelihood or the possibility of lifelong relationships? How many of them have kids, let alone one or two kids? How many will eventually have more than two kids? How many of them trust institutions? How many of them believe in a bright future filled with endless opportunities for growth? How many of them are crushed under student debt and working part-time jobs that don’t require degrees? How many want to move to faraway cities? and if not, why not? and most importantly- are things getting better or worse?
My point is that people in that age group have, throughout the developed world, become cynical burnouts. Even more importantly- the system has far less leverage over them than their parents generation.
Now there are many minor yet highly publicized reasons for this lack of leverage, from the growth of the internet, game consoles and smartphones etc. But the two major reasons are seldom mentioned so let me do that for you. First.. you cannot threaten what does not obviously exist (their children) or things whose existence is a matter of blind faith (secure livelihoods, meaningful relationships). The threat of sudden job loss, intermittent poverty and a generally uncaring and cruel society cannot extract enthusiastic compliance from somebody who sees that as inevitable even if they play by the rules. You cannot threaten a long-term homeless guy with lifelong poverty, especially if he knows that his compliance does not guarantee you will honor your end of the deal.
Secondly- social pressures don’t mean a lot in societies where almost every relationship is superficial, adversarial or mercenary in nature. This is especially so in an era where less fucked-up alternatives are readily available. People are no longer restricted to interacting with those in their immediate physical vicinity and now often prefer those who are not. Who wants to hang around people they don’t trust, despise or don’t care about.
But what this have to with capitalism, especially its american incarnation? Let me put it this way.. capitalism requires the majority to work hard and sacrifice for the enrichment of a small minority. However getting the majority to keep on playing this rigged game requires a decent chance of mediocre rewards (real or imagined), skin in the game (future of their children, family, friends) and social reinforcement. Without them- even the best lies, propaganda and marketing become useless rather quickly.
In the past capitalism could get around such problems by tapping into the then almost limitless supply of naive young suckers and desperate wannabe-american immigrants. However we no longer have a surplus of naive suckers or desperate immigrants who want to be american- and that is not going to change anytime in the near future.
What do you think? Comments?