Change needed!

In the cost of manufacturing and services, automation leads to reduced use of  labor and increased use of machines. In an automated word the need for capital is huge. This increased need has led to an increased accumulation of capital, and globally to the birth of a new billionaire class. Limitless accumulation of capital is now leading worldwide to autocratic corruption aided by billionaires. Further increase in automation, aided by AI, may lead to nearly complete elimination of labor and a total collapse of society as we know it. Without change we face a world where no work is needed to provide for all, but human society is unable to function.

With the exception of some areas where systematic racial discrimination was entrenched, in 1957 life in the United States appeared to have been close to ideal. (I chose that year because that is when I arrived in the United States as a refugee from the communist Hungary.) The USA and the Soviet Union were engaged in a global competition. People in the USA were happier, better off, and worked fewer hours than those in the Soviet Union.  The communist world outside of the Soviet Union emerged after the end of World War II. All these new communist countries first followed the Soviet model. While maintaining nominal national independence, most of them were under direct Soviet rule as a result of the agreement reached between the west and the Soviet Union near the end of the war. As the communist parties took over political leadership, all of these countries came under a single party dictatorial ruler, led by a top party official who enjoyed a personality cult, an exact replica of that given to Stalin in the Soviet Union. All private property was nationalized, entrepreneurship

discouraged, and free speech prohibited. Party leaders were provided an aristocratic life. There were no real incentives for common people to try to improve their life. Stealing from the state rapidly became socially acceptable. All communist countries slid on a downhill economic slope.

In 1957 Capitalism was clearly superior to Soviet style communism.

The standard working week in the capitalistic United States was 40 hours five days. At the same time, in the Soviet dominated socialistic communist world it was 48 hours, six days per week. The USA-led western capitalist world was incomparably wealthier than were the Soviet led Warsaw Pact nations. The world was divided into two antagonistic sides; one rich and progressively getting stronger, while the other relatively poor and getting weaker, irrespective of the nuclear power that both sides processed. Clearly this situation could not continue forever.

The Soviet Union collapsed and disappeared around 1990. Around 1980 China abandoned its Soviet style socialism it had pursued during Mao’s rule which produced devastating economic results. While the one party communist state rule remained, China allowed the beginning of capitalistic private enterprise that progressively grew as China rejoined the global economy.

After these changes, first, globally, freedom, and democracy increased, some even predicted “the end of history”. (Through progression to global peace, freedom, democracy, and equality.)

But then things began to change. Why? Because of the overwhelming power of capital in modern society. More accurately; its power is post industrial society.

In the prehistoric era of humanity, when hunting and gathering dominated, only labor mattered. Even the concept of capital was unknown. 

During feudalism labor remained a dominant factor in the economy. Power was derived from natural resources, mostly land ownership, and from organizations managed with dictatorial powers (kings and emperors), frequently supported by religion.  Globally religion showed wide varieties, however locally everywhere it was monopolistic, maintained by joining in power with the ruler. Thus joint power to control the soul and body was typically achieved.

The concept of capital evolved during the industrial era. The value of natural resources, like land, became less important than capital. Once capital existed, capitalism eventually evolved. While certain forms of democracy were known in the classical period, the new era of capitalism required new and broadly applicable concepts and forms of government. Democracy in the early area was only local. Most of the world up until the 20th century was ruled by autocratic rulers who wielded absolute, or close to absolute, power.

Here a clarification is needed. What is capital?

Capital in general terms represents wealth, including a variety of assets:  land, corporate shares, cash, etc. For the purpose of these notes, I use the term capital to represent objects and assets that are easily convertible into other assets, especially into cash. For me cash means money: a legally defined object that can be exchanged for any available good, service, product, thing, and/or legal right (for example patent license) available for purchase by any interested buyer. 

The first assembly lines for mass production of affordable consumer goods were installed in the early 20th century, principally in the automobile industry. In contrast to earlier single-step production of goods by expert tradesmen,  assembly lines reduced the working steps to simple, short operations. The partially assembled product is passed down the line from workstation to workstation, from raw material to finished product at the end of the line.

As technology advanced, assembly lines became more automated. First the movement of the product along the assembly line was accomplished by  passing it manually down the line from assembly station to the next assembly station. Later on by putting it manually onto conveyor belts that carried the product from station to station. As technology advanced, transfer units started to be used for moving products between workstations and between the workstations and the conveyor systems. With further advances the workstations themselves started to be automated, robotics entered every phase of manufacturing. Early assembly lines were characterized by a long line of assembly workers. Modern factories frequently have assembly lines virtually devoid of people. Most assembly work is now fully automated.

Automation has not only changed manufacturing, but it also had a major impact on agriculture and services. Agriculture used to be all human work, aided by some working animals. Then came machines that combined plowing and planting. Later on the combine could accomplish all steps in one move down the field: harvesting, plowing, and planting. In the early phase of agricultural automation the combines were driven and directed by human drivers. Today, combines can be fully automated without a human driver, as they are directed through satellite dishes by remote control. Services are also undergoing significant automation. For example the delivery of goods in response to an online purchase request is significantly assisted by automated warehouses.

It has long been well known that the major cost component of all manufactured goods arises from quality issues. The cost of shipping a defective product from a manufacturing factory is very high; it may exceed the unit cost of manufacturing the shipped item. Thus manufacturers have long been motivated to eliminate defects and automate their production systems, because automation produces fewer defects than manual labor. (As it has been well known “to err is human”; machines do not err.)

The cost of all goods and services has three fundamental components: materials, labor, and capital. Most materials are supplied by other vendors. Following the materials supply chain leads back ultimately to: natural resources, labor, and capital. With further improvements in automation, combined with newly emerging artificial intelligence, the need for labor ultimately disappears. Therefore, ultimately most goods and services may be provided by/from natural resources and capital, without any labor.

We are not there yet but the world of no labor is rapidly approaching. Computer systems have significantly reduced the demand for secretarial services. Recent advances in AI have already impacted some online services. For example, job applications are increasingly processed by artificial intelligence systems. Also online chats, related to inquiries for details about products and services are increasingly AI

In a capitalist society the cost (and value) of everything is determined by supply and demand. This is where and how modern capitalism faces a contradiction and dilemma, and a major problem that demands some solution.

Because creating products and services requires less and less human participation, the demand for labor is progressively reduced, but availability remains unchanged. Thus the value of labor as reflected in wages is progressively becoming a smaller and smaller fraction of the total economy, as already indicated by the GDP trend.

But to maintain a healthy society and to maintain a growing GDP, the economy needs purchasers; products and services must be bought by someone.

With the continuous increase in automation the wealth of billionaires continues to increase because capital is becoming more and more important than labor.

According to Wikipedia virtually all countries in North America, South America, Eurasia and Australia have billionaires. Communist China is home to hundreds of billionaires. In Africa there are about half a dozen such countries. Worldwide there are a total of about 3,500 billionaires, whose total aggregate wealth is about $16 Trillion. Approximately 8 billion people live on earth and their total aggregate wealth in 2024 was between $450 and $500 Trillion; thus a few thousand people controlled several percent of the entire human wealth. Their share continues to increase together with their political power.

The power of money sways political power. In the past decade there has been a global increase of autocracy. Autocratic regimes are supported and given more and more power by their new class of billionaires. The autocrats became billionaires, as the billionaires got even more billions.         

A change is needed!

Most societies believe in work ethics. Irrespective of whether societies organize along communistic, socialistic, capitalistic, or some hybrid ideals; all believe that people should work. Not only believe, but also mandate it to be eligible to receive emergency support in case of need. (Unless they had the good fortune to inherit, or to accumulate sufficient wealth to provide for all their needs and desires; in that case the common norms and obligations of society do not apply.) All political, economic, and social systems are based on the notion that most people work most of their lives. In modern society some knowledge is needed to participate in work, such knowledge is obtained through education. Collectively accumulated wealth (created through taxes) is used to provide public education for most children. Social, political, and legal systems provide assistance and support for individuals to accumulate sufficient wealth during their working years to provide for their needs during retirement. 1000 years ago essentially all humans worked in agriculture. Later on, as technology evolved, manufacturing industries grew, and  most people moved to industrial work. In post-industrial societies, most people moved to service work. Now, with the birth of the AI age, service work is progressively eliminated, with no new known new option created.

To enable the much needed change, IDEAS are needed.

Capitalism, thus far the winning social and political economic system is entering a self-contradictory collapse phase. No one working means no one has money, therefore no one is shopping. No one shopping means that it makes no sense to grow or make anything, or to service anything; all investments are worth nil; the billionaires lose all their assets. In our current Capitalist World, thus, no work leads to total collapse. Nothing to grow, nothing to make, nothing to service. Everything stops, and society collapses. We humans need a fundamental new idea to organize our society in the rapidly approaching totally automated new world. Today we equate work with purchasing power. In a world with no work how will we maintain purchasing power?  We are headed to a world where no work is needed to provide for us all, but how should we organize our society in that new, abundant world?