Digital Technology & The Crisis of Capitalism
Prior to capitalism, there was feudalism in Europe. It largely collapsed in the 14th century. Not overnight, but through a protracted period of time. There were a number of contributing factors that lead to the peasant revolts in England, the maritime Flanders and the Jacques in France. Today, we may well be facing a similar state of affairs with capitalism. And technology played a role back then as it is today. What does this look like and what might it mean?
“History doesn’t repeat, but it often rhymes” — Mark Twain
Two key technologies that contributed to the feudal crisis were transportation and navigation, as in better boats for shipping. Agricultural technologies were in use, but they were very basic and hadn’t been improved upon in centuries. Peasants, serfs, didn’t have much motivation to innovate. The nobility of course, controlled the land and took their significant cut from whatever the peasants produced. So peasants didn’t really desire a big surplus because they’d lose it to the nobility.
As wool production began to pay better, many landlords shifted their fields from agriculture to sheep raising, reducing the available farming land of the peasants. So the peasants left the fields, many moved into the growing cities. The peasants didn’t find life there much better. Income inequality grew. Agricultural production fell and it was also a period of very cool weather. More calories were needed, but production had fallen significantly. Revolts happened.
Eventually, as merchants took over nobility and trade between European nations grew, capitalism came into being. I’m summing up very broadly here. Merchants were motivated to innovate and new technologies emerged, such as the knitting machine invented by Englishman William Lee in the late 16th century.
So what does that have to do with today and a crisis of capitalism? We have far more technologies today and specifically, digital technologies and we have growing inequality around the world. We also have more division of labour, but that hasn’t equated to enough of an improvement for many in terms of real income. Add to the mix inflation, a high cost of energy, climate change and growing bureaucracy. And capitalism gone awry.
The early and better form of capitalism saw the ever increasing focus on new and better products. As choice grew, so did consumer spending and economic power. Companies made goods for customers. That is good capitalism. Now, companies don’t make things for consumers. The customer today is the shareholder, the product is dividends.
One of the first signs of people realizing capitalism had gone wrong and leveraging digital technologies to express their discontent was the Occupy Movement that started in 2011. Although it didn’t bring about the desired societal change, it was a globally organised effort, afforded by digital technology; social media. Income inequality has continued.
Digital technologies are both critical to the survival of humanity, but they also have a downside. All technologies do. Humans often know what the downsides might be, but carry on regardless. Sometimes we can’t know the unintended consequences.
Digital technologies, from the internet to smartphones, drones, satellites, genetic engineering, nanotechnology and so on, have both created a greater division of labour and fostered an elite class of what we might call Techno Merchants. As in Jeff Bezos, Bill Gates, Elon Musk, Mark Benioff and Larry Ellison among others. They’ve also lead to more bureaucracy and an increase in technocratic thinking, which means more rationalization.
Hence where we are today. It is in part, why conservatism is supported by Techno Merchants and explains in part, why nationalism and populism are growing. They foster a system that supports rationalisation and the current form of capitalism. Among other factors. It is an interesting irony that while conservatives rail about big government, typically, under conservative governments, bureaucracy increases rather than shrinks. As research has show, over-rationalization leads to irrational outcomes.
So what are the implications of digital technologies in this type of scenario? There are more than one can cover in a blog post. But genetic engineering is one example.Right now, it is very expensive to have gene therapy. The cost will come down, but it is already impacting those who can’t afford it. This begs the issue of human rights and the right to et life-saving treatments. Another is internet access. Norway has made it a basic human right. Then there’s privacy and behavioural manipulation by tech companies like Meta (with Facebook), TikTok and others .
Are we in a crisis of capitalism? The anecdotal evidence would suggest we’re likely in the opening phase. Just as the feudalism crisis took many decades to unfold, so it would be with a crisis of capitalism, but because of communication technologies and of course, faster, better transportation, it is likely to unfold faster, but could still take a couple of decades to be realized.
Will we solve it? Yes. While neither capitalism nor democracy are perfect, they’re our best options. What lies ahead however, is a period of turmoil. We are already in that. Human society has always progressed in favour of better societal outcomes. We’re far better off, economically and health wise than serfs were in the feudal times. It is unlikely that the Ayn Rand version of deep conservatism however, will survive. Humanity is exploring right now, how it sees the future and digital technologies are playing a vital role. We are entering the Cognitive Age, where we change our internal environment, our ideas of governance, political and economic systems. It’s why we have the idea and arguments of cryptocurrencies, DAOs, social media and so on. These aren’t just digital technologies, they are discussions about the future of humanity. They can hurt us, but ultimately, they can also save us. Not through a technotopia or utopia, those are impractical concepts.
