A Crisis For Capitalism: The Inevitability of Automation

A Crisis For Capitalism: The Inevitability of Automation

In the 21st century, we face a plethora of obstacles, many of which are global, that generations before us haven’t had to face.  In fact, many of the issues we face today have only been the stuff of science fiction: Artificial Intelligence, global climate catastrophe, the exploration of our solar system, etc.  However, one imminent problem that human beings are being force to confront today is that of automation.  The rapid increase in technological advancement that has defined the past 30 years, and is sure to define the rest of this century, has allowed for the development of a myriad of technologies that can do many jobs more efficiently and with far less error than humans can.  Additionally, machines do not have to be paid wages, they do not need to sleep or eat lunch; they never go on strike or get pregnant.  Technology has allowed us to obtain the means by which we can free ourselves from menial labor.  However, there is a catch; capitalism.

The purpose of this paper is to argue that technology is advancing in such a way that automation of most jobs is inevitable and furthermore, the current socio-economic structure of capitalism is intrinsically unable to accommodate those inevitable changes.  I will also argue that the welfare state is a manifestation of capitalism, and offers the only hope for saving capitalism; however, I do not think it will ultimately be able to. The arguments that follow are ones I have developed over years of having a keen interest in capitalism and technology, and they do not relate directly to any other philosopher’s work, although many thinkers have dealt with the issues that reside in this essay.

To begin, I will explicitly lay out the claims I will make in this paper in order to maximize clarity from the onset. I will argue for each of the following claims in depth throughout the paper. The claims are:
1) Technological advancement is such that automation of most jobs is inevitable.

2) The modern welfare state is a manifestation of capitalism, and acts as a necessary counter-balance to capitalism’s excesses and immoralities.

3) Capitalism is structured in such a way that the advancement of automation technology will dramatically increase wealth inequality and massively burden the welfare system that stems from it.

4) Capitalism, like all systems before it, will collapse under its own weight in the face of rapid and wide-spread social, economic and political changes that stem, in large part, from the inevitable technological advancements leading to automation.

I want to be clear that I do not intend to offer any alternative system to take the place of capitalism.  The purpose of this paper is not to prop up a different system, in part because I believe that what comes next will be outside of what most of modern political philosophy can think of.  Capitalism will succumb to forces that will act as the seeds of the next system, and those forces are, as of yet, still vague and undetermined.

The Inevitability of Automation

A provocative new study that came out in late 2013, conducted by Carl Frey and Michael Osborne at Oxford University, entitled “The Future of Employment: How Susceptible Are Jobs to Computerisation?” postulated that 47% of American jobs are “at risk” of being automated within the next 20 years.  Whether or not that turns out to be the case in the time predicted is questionable, but what is beyond questionable is the fact that these technologies have already started to spring up and replace jobs, and that this trend will continue.  Let’s take, as a random example, one technology that most of us will be familiar with: self-driving cars.  Google and other companies have already created self-driving cars, and they are predicted to be common-place within the next couple of decades.  What jobs will such a technology replace?  Well, they will replace Taxi drivers, truck drivers, and bus drivers for sure.  These technologies will be built to dramatically reduce human error and thus will be a matter of public safety that they be preferred over human drivers.  Additionally, drones will likely replace postmen and delivery drivers.  So, just by taking one example of inevitable automation, we have eradicated millions of jobs.  We can extrapolate this logic to all sorts of occupations, including most service industry jobs, retail jobs, and manufacturing jobs.  In the case of the latter example, we have already seen heavy automation, and what manufacturing jobs haven’t been automated have been shipped overseas in order to exploit cheaper pools of labor, a classic hallmark of capitalism.  But even in the case of the jobs that have been shipped overseas, as those countries develop technology, they will find ways to automate away those jobs as well, meaning no matter how you slice it, those jobs are not coming back.  Even more amazing is the fact that medical robots are starting to be developed with the aim of replacing surgeons and doctors. They will have the benefit of being able to have full access of any patients medical history.  They will also have the ability to do long, arduous operations with no need for a break.  It will allow the element of human error to be eradicated from important medical procedures.

So this expansion of automation technology will affect jobs all across the spectrum; from trash-men to neuro-surgeons, from cashiers to pharmacists, and everywhere in between.  Sure, there may be some jobs that we can think of that will be very hard to replace, at least in the near future, but those jobs will be what is left after most of the labor market has been decimated.

A software company CEO named Carl Bass once said: “The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.”  My contention is that the factories of the future won’t even need the man or the dog, because the job of security can also be done by drones, robots and advanced sensory technology.

I can continue rattling off jobs that will likely be automated to prove my point, but I believe that this claim is the easiest for most people to accept.  In any case, if one wanted to refute this claim, one would have to construct an argument that denies that these sorts of automation technologies  will be possible or will be implemented. We can surely debate the time span involved, but the current trajectory seems to indicate that all of this is inevitable, barring a global catastrophe.  If you are on board with me so far, than you more or less accepted my first claim, and we can move on to my more controversial claims concerning the structure of welfare state capitalism.

The Welfare State as a Manifestation of Capitalism

I postulated early on in this paper that I believe that the modern welfare state is a manifestation of capitalism and acts as a counter-balance to its inequities and immoralities.  Let me further explain that point.  The modern welfare state came into existence, in America, after decades of unfettered capitalism.[1]  Years of massive wealth inequality, racism, child labor, horrifying working conditions, abysmal wages and a myriad of other obvious immoralities resulted in various social movements as well as economic collapse (The Great Depression).  After the Great Depression, which was caused, at least in large part, by the excesses of unfettered capitalism, FDR’s administration put forth The New Deal.  The New Deal was, arguably, the creation of the modern welfare state in America.  It acknowledged the moral atrocities committed by unregulated capitalism, and sought to right those wrongs via the power of The State.  Over half a century later, our current socio-economic system can be described as Capitalism plus a welfare state.  The very existence of the welfare state, I claim, rose out of the rubble of the Great Depression and the associated excesses of the Capitalist system.  Not only did the welfare state blunt the edges of the capitalist system, it also allowed capitalism to continue to exist.  By sweeping up the inevitable social fallout produced by capitalism, it shored up the system and allowed it to prosper; and prosper it has.

To bring this point home, consider for a moment what capitalism in America would look like with no welfare state.  No food stamps, no section 8, no unemployment insurance, no government jobs, no environmental regulation, etc., imagine only unfettered capitalism.  Anyone with an ounce of intellectual honesty will be quick to concede to the fact that the state of affairs would be dramatically worse if we had no welfare state. This conclusion supports my claim that the welfare state rose out of capitalism and helped perpetuate its existence.

All of this is simply to state the obvious: the welfare state cleans up after capitalism and allows it to continue; it is a manifestation of capitalism and acts as its counter-balance.  If capitalism cannot employ everyone, the welfare state steps up and either hands out unemployment checks or puts into action stimulus packages to spur the increase of government jobs.  If capitalism cannot feed everyone, the welfare state steps in to hand out food-stamps to poor and struggling families.  If capitalism cannot shelter everyone, the welfare state steps in and hands out section 8 housing and welfare checks to help folks pay their bills.  If capitalism cannot regulate itself, the welfare state steps in and regulates capitalism, ensuring it doesn’t poison our rivers or mine away our mountain tops.

To be clear, I support, 100%, the existence of a welfare state in the capitalist context. I view it as a moral and practical necessity, and as the main ingredient for stabilizing a capitalist society.  I also understand that capitalism was a huge improvement on what it replaced: feudalism and monarchies.  I am not making any normative claims about the development or existence of capitalism in and of itself, nor am I denying its power to create wealth in unprecedented ways.  Those arguments are for another paper and another time.  My claim is simply that the welfare state grew out of the soil of capitalism, and serves, to this day, as its necessary counter-balance.  If you are willing to stay on board with me so far, then you accept both my first claim and my second, and we can now move on to my third claim: Capitalism is structured in such a way that the advancements of automation will dramatically increase wealth inequality and massively burden the welfare state to the point of turmoil

The Structure of Capitalism

I have spent the last 5 pages talking about capitalism, but I have yet to define it.  It is important to remember that when we define terms, we often do so in their real-world context and are therefore not fully limited by the textbook definitions.  Dictionaries have a notoriously tough time defining complex, evolving systems.  If one looks for the dictionary definition of capitalism, for example, they will find the following: an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.  However, is this all that capitalism contains? Is it simply a dichotomy between private ownership or state ownership? Does that capture everything there is to know about the capitalist system? Of course not.  However, I will be charitable and take two things from the above textbook definition to use as main aspects of my following arguments: private property and profit.

Capitalism is a system in which some human beings buy private property, and develop that private property so as to create a profit.  In that process, capitalists employ wage labor.  Wage labor is basically the renting of human beings to produce more value.  Some of that value produced goes to the worker in the form of a wage (say, for example, 10 dollars an hour), but much of the value produced by that worker goes to the capitalist in the form of profit.  Capitalists argue that this is totally legitimate because it was the capitalist who invested the initial money to get the business going, and it was the capitalists who took the initial risk.  Therefore, some of the value that the worker creates can be fairly taken by the capitalist as profits.  The spectrum of how much of that value goes to the top, and how much of it stays with the worker differs wildly among individual businesses, and certainly between countries.  Some countries, for example, have minimum wage laws to ensure that the capitalists do not get too greedy, while others do not.  Some countries tax the capitalists to prop up the welfare state, some countries do not (and thus lack a welfare state altogether).  Some countries have workplace regulations to ensure that workers are given fair hours, fair compensation, fair holidays, etc, and some countries do not. However, the basic system stays the same: capitalists at the top or the business hierarchy hire workers to produce value, and then take some of that value as profit.

It is essential to also understand the fact that capitalists must also stay competitive.  This can mean a myriad of things, but what it often means is that companies strive to cut operating costs where they can.  Often, this comes in the form of cutting labor costs.  Capitalists can cut labor costs by firing workers, slashing wages, shipping jobs overseas, or by automation, among other things.  Competition forces companies to keep prices down, and since many companies are publicly owned by investors, it also forces them to continually increase profit margins.  This is, in part, the structure of capitalism, and it is not hard to see where my earlier arguments about automation come in to play.

Capitalists are more and more looking at automation as a way to cut labor costs, increase profits, and stay competitive.  As I said earlier, machines don’t sleep, strike, or eat.  Machines don’t need wages.  Machines can work 24-7, increasing productivity dramatically while all but negating labor costs. Here lies a crux of my argument: given the inevitable increase of technologies that can replace workers, and given that capitalist firms need to stay competitive and answer to their investors in regards to profit margins, automation of more and more of the workforce is inevitable.  And therein lies the structural contradictions of capitalism and the inevitable burden on the welfare state.  It is my contention that in the process of automating the workplace, the capitalist system will demand that the welfare state take more and more unemployed, poor people into its ranks.  It is important to remember that all wealth created by the automated technologies are usurped by the capitalists.  They do not need to pay wages, and thus all the value created by machines goes directly to the capitalists, enriching the capitalists while depriving workers of employment. The wealth created by these various automation technologies will not go to the greater good, they will go into the pockets of the already wealthy.  This creates massive wealth inequality.  If more and more workers are unemployed, and the profits generated by automation go into the pockets of the capitalists (including wealthy investors), this will invariably result in a fewer number of people owning more of the economic pie.

The modern welfare state is funded via the taxation of wealthy people and corporations.  Simultaneously, wealthy people and corporations often resent being taxed so heavily.  They have strategies to avoid taxation, such as hiding their money in offshore accounts or hiring lobbyists to buy out politicians to shape economic and tax policy in their favor.  As more and more people are kicked out of the workplace and need governmental assistance, the government will be forced to increase taxes on the wealthy capitalists and their corporations.  This will lead to more strategies being employed by the wealthy to hide their money or influence the political system in their favor.  This influencing of the political system by the wealthy, a hallmark of our current system already, will result in austerity (i.e. the cutting of welfare programs for the needy in order to reduce the demand for tax revenue).

If, by some miracle, it does not result in some form of austerity and the rich do not continue to control our political system, then an inverted problem will arise: namely that taxation of private industry will have to be so high in order to fund the massively displaced work force, that it will de-incentivize private activity and create general turmoil in society.  If taxes get too high, or if the amount of people who are taxable gets too low, the welfare state, which depends on the wealth generated by capitalism, will be unable to fund its project.  Either way, the burden on the welfare state will continual to increase until it can no longer operate efficiently.  However, given the current state of our government, which can only be described as a plutocracy, it seems likely that the former case will manifest; namely that the rich will make even more concerted efforts to influence the political system via their wealth, resulting in austerity.

Austerity brings about poverty, and poverty brings about desperation and crime, and desperation and crime de-stabilize society.  When people are poor and unemployed, when the welfare state can no longer operate effectively, and when the political system is hijacked in the interest of the ultra-wealthy, chaos will ensue.  This is a fact of history.  When parents look into the eyes of their starving children, they will get angry.  And if the political system does not have the means by which to correct these problems, desperate human beings will become violent.  No matter how you slice it, the inevitability of automation will bring out the inherent deficiencies of capitalism, and a new system will have to arise.  To avoid the widespread turmoil described above, the government would have to be highly organized, uncorrupted and competent in order to gradually usher in a new system over time.  This would take unprecedented foresight on the part of the government.  While this remains a possibility, most people would not count on it.  We can already see how big governments, corrupted by big money, deal with big problems.  Take climate change as an example: the utter nonexistence of proactive, intelligent, moral solutions to this issue on the part of government is an illustration of the inability for big government to be proactive and rational.  In fact, the language of our governments has quietly switched from the language of prevention of climate change to the language of adaptation to climate change. Our political systems are simply not set up to be proactive in the way that would be necessary to usher humankind safely and smoothly into a new socio-economic paradigm.


If you agree with my first two claims, and find yourself nodding in general agreement with my claim that capitalism is structured in such a way as to make the inevitability of automation a serious problem for social stability and the continuance of the capitalist system itself, then you have already accepted my conclusion.  My conclusion is that capitalism, like all systems before it, will bring about its own inevitable downfall via its own intrinsic structural contradictions.

If you want to oppose my conclusion, you will be forced to argue along the following lines:

  • Automation is not inevitable and technological advancements won’t displace most jobs.
  • The welfare state can, in fact, provide for a society where unemployment numbers might reach 50% or higher. (The current acceptable unemployment rate for a healthy capitalist economy is around 4-5%)
  • Capitalism is not structured in the way I laid out, but is structured in a different way that will not give rise to the problems I have predicted.

At the very least, this is food for thought. In the realm of political philosophy, I do not often see papers that make contact with these very real and pressing issues.  It is my general hope that political philosophers will take up these concerns more robustly, and work through some of the various problems.  Modern political philosophy seems to be debating within the sphere of liberalism: debates concerning Nozick and Rawls abound.  If it is not debating modern liberal thought, it is rehashing the history of political philosophy, talking endlessly about Locke, Rousseau and Hobbes; about social contracts and even Marxism.  What it doesn’t seem to often do is to analyze the current system and probe for problems that are likely to arise in this century of change.  The 21st century is vastly different than the 20th century or the 19th century, and it is my assertion that we need political philosophers to turn the page, as it were, and begin to focus on political philosophy in the context of the 21st century.

Before I conclude completely, I want to point out that the argument I have laid out in this paper has the unique advantage of possessing predictive power.  Rarely in philosophy do we get to provide arguments for how things will likely go, and then check them against reality as it unfolds.  If my basic arguments in this paper are more or less correct, then in the following decades we should begin to see the problems I have postulated coming to pass.  Automation should continue to increase dramatically; unemployment should continue to rise, even in the face of robust attempts to stem the tide.  We should see, even in our personal lives, family members and friends being displaced by technology, and a growing resentment in the working and middle classes that will inevitably result in political action.  We should expect to see great minds rise to the occasion in various ways, and deal with the issues that I claim are inevitable.  Perhaps, sometime in the next century, after the dust has settled, we will even find ourselves in a post-scarcity world; where the wonders of technology are no longer utilized by the advantaged as a way to perpetuate that advantage, but shared by all people to meet the basic needs of every man, woman and child on the planet. Perhaps we will deal with climate change, revolutionize food production, and have a paradigm shift away from profit and competition and towards the idea of a global community of cooperation.  On the other hand, perhaps this is one of the last centuries that humankind will be on Earth.  Perhaps social, political, economic and environmental tragedies will pile on top one another and overwhelm us.

Nothing is certain except this: Human beings are at a crossroads, and how we decide to deal with the pressing issues of this century will dictate who we are as a species at the turn of the next century. Will we be a wiser, more moral and equitable civilization ready to begin the era of robust space travel or will we be a decimated society lying in ruins at the hands of our own collective incompetence? Only time will tell, but I believe political philosophers have an obligation to start thinking about these issues and bringing them to light.

[1] Other developed countries (in Europe, Canada, Russia, China, Australia, etc.) have similar systems, but for the sake of clarity, pragmatism and brevity I will focus on America in this section.