The Welfare State in the Digital Age
The last time humanity underwent massive change in our societies due to technology was when the Industrial Revolution revolution really began to take off in the 1830s. Those who opposed this huge shift decried the loss of jobs and the death of capitalism due to to automation. But the biggest losers weren’t humans, it was horses. From some 20 million to today with less than 2 million horses employed around the world. More jobs, in fact, were created.
Even the founding thinkers of sociology, especially Webber and Durkheim, predicted that the more technology we have in society, the greater the division of labour. More jobs, in fact, would be created. This is exactly what happened. We are again hearing the siren calls of massive job losses due to self-driving vehicles, Artificial Intelligence and robotics. Yes, some jobs will be lost. New ones however, will be created. That is capitalism at work. Free markets. Democracy.
The technologies of AI, robotics, genetic engineering, cryptocurrencies, blockchain and so on, digital technologies, will be as dramatic in changing our macro sociocultural systems as the first Industrial Revolution. The changes may well prove to be even more profound this time. This includes the welfare state and what we might call capitalism 2.0 as we evolve new economic models.
The rise of the welfare state was a direct result of industrialisation. New Zealand was the first country to implement welfare state style legislation, such as worker rights and social supports in the 1890s. Welfare state supports came about in a big way in the mid 1930’s under Roosevelt and the Social Security Act. But it may go back even further to the Roman Empire when the first emperor, Augustus brought in the Cura Annonae, known as the grain dole, ensuring citizens had access to food. Providing better healthcare and broader access to it, covering economic hardship in downturns, are benefits of the welfare state and have promoted greater human conditions.
The digital technologies of today will more than likely result in even more social policies being needed. Not just to manage job losses and retraining, but because of shifting economic models and a need to return capitalism to what it was supposed to do, which is deliver a social good. In the 1970’s, capitalism shifted away from this model to deliver value not to the consumer, but to the shareholder. Thus we’ve seen the rise in wealth inequality, the concentration of wealth to elites and the ongoing suppression of wages. Digital technologies have only exacerbated these issues and will, if unchecked, cause more such disruptions.
It is why cryptocurrency is more of an argument for wealth equality than a technology. It is a free market response to wage suppression and broken economic models. Economic anthropologist Karl Polanyi would certainly have been fascinated with these changes underway. Polanyi wrote a still relevant book, The Great Transformation, published in 1944, that posits traditional economic thinking of separating human nature from market forces is wrong and that both markets and societal needs should be considered together, what he termed as a “Market Society.”
It is not just jobs that are being redefined and that will create even more divisions of labour. Digital technologies such as genetic engineering are creating huge debates on societal morals and ethics, just as AI is right now. Then there’s the weaponisation of AI and drones, which has already happened. Russians senseless war on Ukraine is the first war being fought at a large scale with drones. Cryptocurrency is likely heading into a dark winter, but it won’t go away and it shouldn’t. Blockchain may enable societies to truly deal with corruption as well, but it is an uneasy change as it fights against systemic values that prefer a degree of murkiness.
There’s enough growing evidence to suggest that capitalism is in a crisis, even perhaps just starting. That digital technologies are becoming increasingly intertwined in our sociocultural systems in ways that are forcing a rethink on our approach to free markets, the current model of capitalism, the role of the welfare state and even, a renewal of unions to help as a sobering counter to when capitalism runs amok. The challenge, as always with democracy and capitalism, will be to ensure free markets can continue to innovate without being overly burdened with regulation.
How these changes will unfold is impossible and foolish even, to predict. We can make some educated guesses, we can also look back at older societies such as Mesopotamia and Pre-Columbian America for insights. It is not the digital technologies themselves to worry about, for technology is always neutral, but how we use them. That is decided by culture, for culture is the knowledge we use to live our daily lives and how we transmit how we want to govern ourselves and ourselves. Tools like AI, may turn out to be very helpful in navigating our increasingly complex sociocultural systems.
