Will automation spell doom for capitalism?

Capitalism is doomed and, you’ll be pleased to hear, will go the way of the dinosaurs sooner than you think. That’s the conclusion of one of the essays in the book, Does Capitalism Have a Future? The author, Randall Collins, predicts the demise of capitalism in the next 30 to 50 years. So if you’re 20 now, by the time you hit late middle age you may well be living through a tumultuous, revolutionary period or possibly inhabiting a post-capitalist economic system.

The culprit is not one of the usual suspects – not financialisation leading to deeper and more frequent economic crises or a declining rate of profit – but something simpler and even more inexorable. The force in question is automation and Collins says it will seriously eat into ‘communicative labour’ in the near future – his essay is called, ‘The End of Middle Class Work: No More Escapes’.

Mechanisation – labour-saving innovations that enable businesses to produce more at lower cost and thus reduce the need to employ people – has decimated skilled working class jobs over the past forty years, says Collins. Manufacturing employment in advanced capitalist countries has declined from an average of 40% of the workforce, to just 15%.

The Robots are coming

But mechanisation has now been joined by robotization and computerization, which have the potential to automate away not just repetitive, manual tasks, but cognitive work as well. Thus managerial and professional jobs, the provinces of people who have largely benefitted from the changes of the last 40 years, will start to crumble.

Computerization is still in its youth, says Collins, but as it develops the process of technological displacement of jobs will ‘become more extreme with each passing decade’. In time we will see the arrival of ‘humanoid robots that would take over upper working class and middle class skilled work, and then displace managers and expert professionals as well.”

Such developments will cause structural unemployment of 50% or more. In these circumstances governments will undergo a fiscal crisis (a vanishing number of people will be paying income tax of any significance) and there will be mounting pressure for a ‘revolutionary overturn of the property system.’ A tiny elite of robot owners will receive all the profits ‘leaving the great bulk of the population to scrap among themselves for jobs servicing the elite and their machines.’  This won’t be, in John Major’s immortal phrase, a ‘society at ease with itself’.

Will Basic Income come to the rescue?

The lion’s share of Collins’ essay is concerned with rebutting various escape routes from technological displacement that have worked in the past but aren’t going to in the future. These include the replacement of the lost jobs with new ones in different sectors, globalisation or the endless expansion of education. Interestingly, one escape route that Collins doesn’t consider is Basic Income. But Basic Income is precisely the solution that will be tried in the face of technological onslaught. Indeed, it is being advocated now, and not just by itinerant thinkers but by Silicon Valley overlords.

However, there is one conspicuous obstacle that will dog Basic Income if the robot scenario sketched by Collins comes to pass. To actually ensure that this hi-tech future doesn’t turn into a dystopian nightmare, the basic income would have to get at a far higher level than many currently think feasible.  As Collins says, if middle class jobs going to be lost, then so is the income that goes with them. This implies, if it is going to substitute for the vanished spending power, a basic income ‘max’ set at £25/£30k a year or maybe even more.

But that will mean an increased financial burden on the government at a time when its revenue from income tax is being severely curtailed because all the middle class jobs are disappearing. To make that burden bearable, and to avoid the governmental fiscal crisis that Collins says historically has always presaged revolution, the robot-owning corporations would have to be willing to be subjected to extremely high tax rates. This is still the case even if the governments of the mid-21^st century develop the spines so obviously lacking now and close down the zero per cent tax havens that currently harbour $32 trillion.

This is possible; enlightened self-interest may hold sway. But it’s also conceivable that the small number of corporations that lay down the law in this future society (and given the capitalist tendency to monopoly, we can safely assume it will be a few behemoths) may decide that it’s in their financial interest to simply repress, through massive police forces and surveillance, the vast majority of people. 

They will be left, as Collins imagines, to ‘scrap among themselves’ for jobs servicing the elite. And kept in line, should they think of rebelling, by state and private security forces controlled by massive resource-rich corporations. There is no guarantee this option won’t be chosen. You don’t have to look into history for long to find examples of slave states that lasted thousands of years.

But the mere fact that the elite running this future society will have this kind of choice before them indicates, to me, a flaw in basic income scenarios. Basic income is usually conceived as a kind of painless balm that is applied to society in order to stop the disastrous scenarios – of mass destitution caused by the disappearance of well-paid work – that would come to pass if things were left develop freely. That is, basic income, of itself, does nothing about vast inequality of wealth and ownership that exist now and will, if trends continue, become ever more extreme. It merely, hopefully, nullifies their effects.

The mirage of capitalist competition

Collins regards the transition to a non-market based, centrally-planned economy in the mid-21^st century as almost dictated by circumstances. Reality will ultimately come to govern whatever wayward desires people have. “All the ethnic, religious, lifestyle and other conflicts will only be so much noise, stringing along the crisis until finally an alignment of mobilized political forces comes about that solves the crisis by post-capitalist transition,” he says.

Short of jettisoning capitalism, this looming confrontation cannot be averted. “There is no intrinsic end to this process of replacing humans with computers and other machines,” Collins writes. “The displacement of human work will go on not just for the next twenty years but the next hundred, even the next thousand years – unless something extrinsic happens to change the underlying mechanism driving technological displacement of work: capitalist competition.”

However, there is one problem with this scenario. Far from steaming ahead, as it theoretically should be, technological advancement is crawling along. Productivity measures output per worker and were automation to be busily rewiring the entire economy, productivity would be shooting ahead – machines (if they are ready to be utilised in the economy) being far more efficient than the average human. In fact the opposite is the case. Productivity growth in advanced economies is currently a risible 0.3% a year, compared to 1% before the 2008 crisis, which in turn pales next to the 5% attained in the 1960s and ‘70s. In the UK, productivity fell by 0.5% in the first three months of 2017. Capital investment, often the precursor to productivity growth, is likewise feeble. It collapsed after 2008 and has been falling steadily for the past three decades in any case.

Which leads to a subversive question – if technological advancement, the hallmark of capitalist competition, isn’t happening, are we actually living in a capitalist economy?

Part two to follow

What would a Labour government mean?

There have now been two UK General Election opinion polls which place the Labour party at 40%, with the Conservatives just ahead. Admittedly these are by polling companies which weight more favourably to Labour than others do. It’s quite conceivable that when the election actually occurs in two days’ time, the Conservatives will emerge with a healthy majority. But it’s also possible that by some strange alchemy what was unthinkable a month ago actually comes to pass and the greatest upset in British political history happens.

So it’s worth examining what would be good about an unashamedly social democratic Labour government, where it would likely fail and why, when all is said and done, the mere whiff of a Corbyn-led Labour government is a once in a generation (or maybe once in a lifetime) opportunity that is worth straining every tendon in your body to realise.

What a Labour government would achieve

For more than forty years a seemingly unimpeachable neoliberal dogma has held sway in most corners of the world. That dogma holds that cutting tax rates for corporations and the wealthy will spur investment and economic growth. I call it a dogma for good reason, in that it’s utterly impervious to evidence. Economic growth and rates of investment were far higher the benighted social democratic decades of the 1960s and ‘70s. But the incessant march to cut corporate tax rates has blindly continued. According to the US-based Tax Foundation the worldwide average corporate tax rate declined from 30% in 2003 to 22.5% last year.

There is a flip side to this dogma. Because cutting high end tax rates strangles government revenue and balloons public debt (in the 1980s in America the arch conservative Ronald Reagan doubled public debt), it is usually accompanied by its unloved sibling – austerity. Austerity began in the 1990s under Bill Clinton in the US and was aggressively promoted by international organisations like the OECD and IMF. It was temporarily suspended during the financialised boom years of the early 2000s but returned with avengeance when that all turned to dust after 2008. Austerity was supposed to be a short, sharp shock in Britain but has now become ensconced as a permanent feature of the political landscape.

A Labour government would, for the first time in decades in the West, diverge from this political straitjacket. It would raise corporate tax rates to 26% and hike capital gains tax. It would increase public investment, fund the NHS properly and ditch austerity.

A Corbyn-led Labour government would also abandon the austerity playbook of disciplining those at the bottom of the pile – in the hope that such imposed realism trickles up through the rest of society. A Labour government is committed to ending the work capability assessment and the confetti spraying of benefit sanctions. With one in three workers in Britain suffering precarious employment conditions, it’s possible that a different attitude would take hold – one that doesn’t see workers as mere labour costs, to be treated and disposed of as quarterly profit forecasts dictate.

Where a Labour government might fail

There is however a Keynesian backdrop to Labour’s plans which, in truth, rings hollow. The rise in public investment, funnelled through a National Investment Bank, would substitute for moribund private investment which is at a 50 year low. This kind of public investment would create profit opportunities and lead to increased economic growth, so the thinking goes. Hence tax increases on the wealthy are not simply about fairness and redistribution but would have beneficial and lasting effects on the whole of society.  This is the entrepreneurial state in full bloom.

But if the lure of profit is what drives private investment can the state act as a surrogate when profit-making opportunities are not immediately apparent? Corporate investment is a much larger part of the economy than public investment, and if corporate investment refuses to budge, the state cannot take its place unless the government is willing to countenance a much larger role in the economy. And I don’t see that on Corbyn’s horizon. Hence the question of why private investment is so low needs to be asked.

And timing is crucial. It is nine years since the last recession and many economists warn that another is imminent. According to one non-mainstream economist, Steve Keen, ‘a capitalist economy can no better avoid another financial crisis than a dog can avoid picking up fleas’. If another crash hits, the centrepiece of Labour’s plans – the National Investment Bank – may become swiftly redundant as money is diverted into unemployment benefits and other ‘automatic stabilisers’. Though I would much rather that Corbyn be at the helm in the event of a downturn than the usual suspects. It’s possible, then, that emergency action may be aimed at helping ordinary people, not just banks and major shareholders.

However, despite these caveats, I still think that …

A Labour government now could be a major historical turning point

It’s now close to a decade since the financial crisis – the biggest economic downturn since the Great Depression of the ‘30s – hit. There have been two kinds of elitist political reactions since. One has been to oversee massive intervention in the economy in order to bail out those responsible and protect their financial assets through 12 trillion dollars’ worth of money creation. A race to the bottom has ensued to make sure the ‘wealth creators’ don’t feel scorned. For the vast majority, by contrast, this political dispensation has ordained the pain of austerity and laissez-faire capitalism. The other reaction has been to recognise the huge undercurrent of discontent but displace the wrath onto immigrants, other countries and ‘scroungers’.

Should Corbyn deny the Conservatives a majority on June the 8^th, it will be evidence that a palpably different path to those currently on offer has a reservoir of support. The mere fact that 35 or 40% of the public will have knowingly decided they want something different to the prescriptions decreed as inevitable by the mainstream media and governments across the world is something that cannot be erased. 

Corbyn may fail miserably. Or his government may turn out to be a crushing disappointment. Greece happened after all. Few left-wing governments have been successes. But now, of all times, we need to see for ourselves. And once something as disruptive as a Corbyn surge happens to a schlerotic political system such as this one, no matter what transpires subsequently, things never return entirely to the status quo. What happens on Thursday will have ramifications far beyond these shores.

Vote Labour.

Failing better

In 2013, David Graeber tried to analyse the attitudes of global elites towards the social movements bubbling up beneath them. The first principle was: “under no conditions can alternatives, or anyone proposing alternatives, be seen to experience success,”

It might seem strange to imagine that the social democratic policies of Jeremy Corbyn provoke such fear and loathing, or even that they constitute an ‘alternative’, but I think they do inspire a form of dread.  We all know about his terrible approval ratings but level of vituperation directed at Corbyn from journalists and centrist politicians betrays something else. Such people find his policies – reversing swingeing tax cuts for corporations and the top 5% (partial recompense for the financial asset boosting free lunch known as Quantitative Easing), re-nationalising the railways and not selling arms to repressive regimes  – deeply threatening.

In their eyes, not only must Corbyn not ‘experience success’, he must be seen to fail catastrophically. He – and everything he has come to represent – must crash and burn, so British politics can return to the comfort zone of one centrist neoliberal arguing with a more right-wing neoliberal about how they manage economic decline.

So we must see that he doesn’t.

This is not about Labour winning the General Election. They are almost certain to lose. Opinion polls can be wrong but not that wrong. The one thing that has palpably changed from two years ago is that UKIP voters have migrated to the Tories. Prising that coalition apart in this election, in which Brexit is the dominant issue, is a herculean task.

However, how Labour loses is of vital importance. The party must be able to demonstrate that it is tapping into the enormous discontent and exasperation about the way this country is set up and the direction it is headed. As many have noticed, in polls, Labour is ahead, substantially ahead in fact, of the Tories among the under 40s. These non-middle aged people are feeling the brunt of what is happening in British society – wages falling by over 10% in a decade, unaffordable house prices and the travails of private renting, and a benefits system that represents a punishment, not a welfare, state. Older people, by contrast, are by and large insulated. They often own property and live on generous private pensions which have vanished for people coming after them, and don’t have to work for a living. However, they are much more likely to vote, and the propensity to vote is behind the Conservatives’ huge opinion poll leads.

This would seem to be an intractable problem for the Labour party in the absence of a fresh financial crisis that fundamentally changes the rule of the game. As things stand, all it can do it try to eat in to Tories’ older coalition and launch the mother of all campaigns to get (relatively) younger people to register to vote and actually do so.

Beyond that it can lay claim to the support of the legions of self-employed people and small businesses as opposed to big business. Loyalty to corporations above all else, which miraculously survived the financial crash, was one of the grievous faults of the last Labour government. Policies such as binding arbitration for late payments and the right for workers to buy firms that are sold or floated on the stock exchange need to be brought centre stage. For a party formed as movement of private sector workers, it is utterly inept for Labour to either conflate the interests of owners with employees or retreat into its public sector comfort zone.

If Labour loses the election but does so with an increased share of the vote compared to 2015, there is hope. If it secures the active backing of the pre-middle aged portion of the population, it can plausibly claim to represent the future. But if it crashes catastrophically, the New Labour old guard will ride, however unfairly, on a wave of vindication and Yvette ‘work capability assessment’ Cooper or someone like her will become leader. The robotization of British politics will then be complete. “Ever tried. Ever failed. No matter,” said the playwright Samuel Beckett. “Fail again. Fail better.”

Another Country

A review of ‘Cash not Care: the planned demolition of the UK welfare state’, by Mo Stewart

‘I want my country back!’ wailed Brexiters across the land during last year’s Referendum. But reading this book you realise that ‘your country’ – England, Britain and all parts thereof – was lost years ago and the capital of Belgium had nothing to do with the theft. Stewart painstakingly shows how hundreds of thousands of sick and disabled people have been prodded like cattle through a system deliberately designed to override the opinions of doctors and medical diagnosis, and leave them destitute. Currently, more than 2/3^rds of people who appeal to a tribunal against a decision of this system to rule them ‘fit for work’ are successful. The Work Capability Assessment, to give its proper name, betrays (in the words of one commentator) “a failure of compassion, unacknowledged incompetence and injustice on a massive scale”. And yet, far from acknowledging this tragedy the government wants to intensify it. No wonder one of the chapters of Stewart’s book is entitled, The Shame of Britain.

However, it is not this knowledge that imparts the strong sensation you are living in a foreign country. That unnerving sense creeps up on you through the realisation that the Work Capability Assessment is a replica of the non-medical assessment model of an American insurance corporation branded an ‘outlaw company’ for the way it has systematically denied ‘meritorious’ pay outs to sick and disabled claimants.  It was to Unum, labelled the second worst insurance company in America, and accused of running ‘disability denial factories’, that successive British governments turned in their desire to ‘reform’ the welfare state. You can read the whole shameful saga here.

But rather than summarise the story, I want to reflect on four things it says about the parlous state of this country in 2017:

1 We have a media problem

Stewart’s book is peppered with mounting anger that the story she is telling is unknown to the vast majority of the British people. “The entire national press, collectively,” she writes, “refused to expose to the British people the confirmed involvement of Unum (Provident) Insurance with the UK welfare reforms claims management since 1994.” There were isolated exceptions – Private Eye ­– for example. But almost exclusively it was left to minority publications, such as the Disability News Service, to tell the story. But, with the best will in the world, they have a limited market so “the vast majority of the abled bodied British people …. remained in total ignorance.” Academic research which lifted the lid of what was happening was only read by other academics or activists.

In short the steady undermining of Britain’s welfare state has been able to go on unimpeded because the media failed in its basic duty to inform the public of what was happening. It has been found that, among the public, estimates of incidence of benefit fraud range from 10 to 70% when, in reality, fraud stands at 0.3%. (I know that what the public means by fraud probably involves not really being ill as opposed to official definitions of fraud which involve outright deception but the gap is still enormous). On this and on other issues, media-formed perceptions are wildly inaccurate.

“We lack knowledge of the world beyond our direct experience … vast swathes of state-corporate activity are unreported,” Dan Hind wrote in The Return of the Public. The alternative media, though it has undoubtedly grown in recent years, cannot reach enough people to burst the bubble of the perceptions set by the mass media. The problem is exacerbated by the fact that public service media, such as the BBC, increasingly echo government priorities and see their role as reporting what ‘mainstream’ political currents, all claiming to represent the centre ground, agree to disagree about. The problem is the ‘centre-ground’ is a home for extremist political thinking and all three main political parties in this country have been utterly complicit in what has gone on. The perfect cover.

There is a justified air of fatalism about Stewart’s book – stemming from an awareness that, despite the moral imperative of its writing, it will likely not break through media fantasies. The same is true of any number of other urgent, seemingly hopeless situations – the nature of the environmental crisis, the likelihood of renewed financial breakdown – for example. Given the character of our media set-up, things will almost certainly get worse.

Improvement, by contrast, depends on changing the way reality ‘out there’, reality beyond day to day experience, is described. The existing media, not just tabloid newspapers, but also the BBC and liberal broadsheets, have a structural problem, and aren’t just guilty of moral failings. Dan Hind’s idea is for the public to decide, through a fund diverted from the BBC licence fee, what issues they want to see investigated. Thousands of journalists would be employed on researching subjects which the media would have a duty to report. The truth of what has happened to the British social security system could be one of those subjects. This may sound weak in the face of the problem but we have to accept – as Stewart’s research demonstrates – that the problem exists and that preaching ever more loudly to the converted is not going to dent it.

2 Our political parties have been thoroughly corporatized

“Sadly, these are policies that tarnish all three major political parties,” says academic Peter Beresford in the introduction to Stewart’s book. You couldn’t get the proverbial Rizla paper between New Labour and the Tories on welfare ‘reform’.   Way back in 1994 Unum were first appointed official government advisers by Conservative social security minister, Peter Lilley. When New Labour was elected, the desire for ‘active welfare’ intensified. Unum and Atos were both included in technical working groups that ironed out the details of the non-medical assessments that would determine who was eligible for disability benefits. “Approved doctors were trained in Unum’s approach to claims management”. A stringent ‘all work test’ was introduced, followed by Personal Capacity Assessment, described by the OECD as “one of the toughest in the world” – but evidently not tough enough. The 2008 Work Capability Assessment, defiantly focused on what ill people can do (such as raising their hands above their head in a tell-tale sign of work readiness), despite what ill-informed doctors might protest, was the culmination of this process.

When the Coalition entered government two years later, it made the WCA tougher still and carried through on applying it to existing Incapacity Benefit claimants – with the unwavering support of Labour, now in opposition.  The Conservatives now back “making workers pay into flexible savings accounts to fund their own sick pay” and enlarging the number of workers covered by employer ‘Group Income Protection’.

By coincidence, Unum has for years attempted to hawk both its individual and employer insurance products on the grounds that state benefits are becoming harder and harder to get.

But clearly welfare and disability is not the only area where corporations exert a decisive impact on UK government policies.  As the 2009 Alternative Report on UK Banking Reform noted, the City of London ‘has co-opted the leadership of both main political parties’. Not only did this monopolisation of views determine the climate of deregulation before the financial crisis, it also ensured that post-crisis nothing would be done to inhibit the ‘competitiveness’ of the UK as a financial centre.

Government policy has become thoroughly corporatized across the board. Corporate taxation heads inexorably downwards, subsidies go up and it is deemed as simply natural that public services are privatised or contracted out. Challengers to this state of affairs are branded left-wing populists but, in reality, they present isolated cases of politicians who haven’t been recuperated by this system and espouse policies that would have been considered quite tame and mainstream a few decades ago. They are not examples of dogmatic socialism against capitalist wisdom but pluralism in the face of a narrow corporate logic.

3 Chronically ill people are treated in a way that would shock us if it were meted out to the acutely ill

Britain can still muster outrage over the mistreatment of acutely ill people – those left on trolleys in hospital corridors or suffering prolonged abuse of care. But when it comes to mistreatment of the chronically ill – those affected by strokes, cancer, heart disease or ME for example – such empathy miraculously vanishes. At the root of the conscious cruelty inflicted by the WCA lies a stubborn conviction that these people aren’t really ill. According to the biopsychosocial model, the claims management ‘philosophy’ beloved of Unum and the Department for Work and Pensions, illness is a belief. With the right attitude (and convenient withdrawal of financial support) the temporarily ill can overcome their impairments. Just as, under neoliberalism, the unemployed, are responsible for their unemployment, so the sick are now responsible for their sickness. But this, frankly, is unscientific baloney – illness is real, whether acute or chronic.

And the idea that the UK is suffering from some kind of epidemic of psychosomatic illness just won’t wash. The amount spent by the UK on disability benefits is half what it was at its peak in the mid-90s and the benefits population is ‘static if not falling’.

In truth, what lies behind the mammoth injustice of the WCA is a refusal to accept the consequences of class. People in poorer areas die sooner and spend more of their lives contending with a disability than those in wealthier areas. In fact, the gap in disability-free life expectancy between low and high income groups is 13 years. The book, The Spirit Level, reports a study of civil servants which found that low job status was related to ‘some cancers, chronic lung disease, gastrointestinal disease, depression, suicide, sickness absence from work, back pain and self-reported health’. The authors conclude that ‘there is a sickness gradient in health running right across society … those above us have better health, those below us have worse health,  from the very bottom to the very top.’ If you want to change those outcomes, you have to change society, not tell those at the bottom, living with very real illnesses, to get their act together.

4 You might think the Work Capability Assessment is monstrously unjust but those behind it fervently believe they are fighting for social justice

I think we have to accept that, though the WCA is based on disbelieving people with actual diagnosed illnesses, Iain Duncan Smith’s tears are real. He genuinely believes he has helped the ‘disadvantaged’ by declaring the ill ‘fit for work’ and removing all financial support from the unemployed for a maximum of three years. This, as fellow partner in crime Chris Grayling once put it, is ‘tough love’. And insufferable moral worthiness is not limited to the Conservatives. Labour’s Yvette Cooper, who as DWP minister in the last Labour administration actually introduced the WCA, chided the incoming Coalition in June 2010 not to abolish the medical assessments in their zeal to cut spending across the board. To do so would be ‘deeply unfair’, she said. Yes, really.

This impenetrable sense of do-goodery stems, in my opinion, from a conviction that work is fantastically good for you. Getting more and more people into work, despite the fact that they might be seriously ill, thus becomes a matter of social justice. But when Iain Duncan Smith, or Yvette Cooper think of work, they always imagine the self-actualising, well paid kind – the kind, in fact, that they do.  But low-paid, temporary, exploitative work – the kind that people who go through the WCA are forced into – is not always good for you. In fact it can be very bad for you, as the fact that in our work-saturated society the most common reason to apply for Employment and Support Allowance is having a mental health problem, attests.

Work is not good for your health, illness is real. Apart these minor tweaks government policy towards the sick and disabled in this country makes perfect sense.

If you want to understand how politics in this country works for minorities who are never going to constitute an electorally important group, read this book. You’ll never be quite the same again.