The crux of your question is this: Is capitalism doomed to failure as it won’t be able to find cheap labor anymore. That’s a little bit of a contradiction right there. If everyone is a capitalist labor costs will rise, which will cause capitalism to fail and everyone will be poor.
Anyway, the assertion is wrong. Capitalism doesn’t depend on cheap labor. If you look at the US, what % of good do we buy from abroad? 10%? and what would happen if we had to make shirts, shoes, etc. here and pay $10 an hour instead of $30 a week or whatever it is. Well prices would go up, and it’s possible that some of the wealthy would be slightly less wealthy. Since the amount of goods isn’t that large to begin with it’s not like it would impoverish people.
As costs rose, furthermore, machines and other devices would become more economically viable. It’s kind of like saying America depends on cheap labor for the farm…so what will happen when factories in cities offer farmhands more money? Well, prices will soar and capitalism will be doomed. We’ll starve. Except that this happened in the US and people are richer than ever. Technology and capital on the farm enabled the agricultural sector to accomplish more with much less labor. Something like 50% of people worked on farms in 1900 vs. 2% now. So more is done with less and everyone is richer overall.
Capitalism just means “trade and freedom” basically. It’s not doomed to fail any more than freedom is.
Capitalism will eventually “fail” if technology makes production so efficient that any goods can be produced anywhere at trivial cost. Some kind of combination of widespread fusion power and nanotech might do, the latter being the driving premise of the Neal Stephenson novel The Diamond Age.
Even in the novel, though, capitalism remained in full force in the entertainment industry.
I didn’t say it depends on anything. And nowhere am I advocating anything close to any socialistic reform. It’s been tried and did indeed fail. There comes a point when the profits are too low - that’s when companies bankrupt. An ever increasing inlation with higher prices and higher wages is not very good either.
No it isn’t. The collapse will occur after everyone is middle class, when it gets increasingly harder to be able to produce goods and services at a cost where the middle class can afford it and still make a profit.
Yes, they functioned, but certainly not with the standard of living we have now. What things are you going to give up when we revert to 50’s level economy?
I did say that one factor in creating wealth is to have cheap labor as a source. I never denied that there are other factors. But what I’m wondering is that when a sufficiently large portion of the global population becomes middle class, companies will either have to cut profit or raise prices. But the richest people in the world didn’t get that way by selling Ferraris, they got there through Wal-Mart, IKEA, TetraPak, Microsoft, i.e. rather cheap or inexpensive stuff. I can see a possible future with an inflation spiral, where rising wages and prices chase each other to the point where one can’t keep up.
Statistics is slippery, but this is what the CIA WOrld Factbook says:
Capitalism has several tendencies which will ultimately doom it to be replaced by a more efficient system:
it is tremendously wasteful of human capital. Economic correction, aka recessions, stifle innovation and growth. Intelligent, capable people with well-developed skills can be tossed on the junk heap because of blips in the system. Frex, all the advanced U.S. programmers who’ve been rendered unemployable in their fields by outsourcing to India. It’s a stupid waste to have a 140 I.Q. college grad doing the “Will you have fries with that?” routine or equivalent, but there’s plenty of anecdotal evidence that that has happened.
Sooner or later, some country or society will figure out a dodge that will prevent this waste, and they’re gonna eat EVERYBODY’S lunch.
It has no built-in method for controlling the tendency of the wealthy in society to use their power and influence to grab everything. In poorer countries, this results in kleptocracies, and in nasty little provisos like the Saudi Ariabian princes’ “taking” custom. Hell, even in the U.S. the elite owns most of the wealth, and the gap between the wealthy and the middle class is doing nothing but widen.
Sooner or later some country will come up with a way of keeping the wealth more evenly distributed, something more along the lines of a Paretti curve. That country will eat everyone’s lunch because its system will function much more efficiently without the elite siphoning off all the wealth.
Look for severe short term dislocations in the world economy as soon as cheap robotic hands with effective computer controllers linked to cameras come online. Then we won’t need people to make things at all. The elite’s natural tendency in the Third World will be to let the poor starve. Million, perhaps billions, will starve, as they will have little or nothing to offer employers and they no longer have subsistence farming skills, or farms to practice them on. In industrialized democracies, huge numbers of people will be forced onto the dole. The problem will be, this will knock the bottom out of the demand for all those goods and services that robotic hands will be able to produce for free, or something very close to it.
Well, let me give you an example; today, in the United States, there is an unfilled demand for approximately 250,000 truck drivers. No, that’s not a typo; the trucking industry is short by almost a quarter of a million truck drivers, despite the fact that many of those positions pay quite well. Trucks are sitting unused because they can’t find warm bodies to put in the cabs.
The United States no longer needs chimney sweeps, candlemakers, or any number of professions. What will happen is that people will move into other roles. Face it; there’s ALWAYS something that needs doing. We’re desperately short of truck drivers, so eventually more people will drive trucks.
The unspoken assumption here is that people are some sort of liability and that the economy exists to support them with jobs. In fact, people represent the single biggest economic asset we possess; the secret, and problem, in managing an economy is to move them from role to role as efficiently as possible (the problem with truck drivers is that it’s neither quick nor cheap to train someone to drive a big truck.)
This means that the relative VALUE of certain jobs will change. We pay have to pay people more to pick up garbage or clean streets or drive trucks or do any number of things. Or perhaps there will be a big demand for engineers with skills in pollution cheanup. I think there will be more demand for health care professionals. Or a thousand other things. The aggregate demand for goods and services is NOT going to go down, and if Dell can automate the building of computers, that will make them so cheap that people will be able to buy other stuff, raising demand in those sectors. Furthermore, or more computers are being sold because they can be built by machines and sold for $99, you’ll need to sell more software, won’t you? More computers means more games, more applications, more joysticks and control pads, more service contracts…
I simply don’t buy the notion that this is a pyramid scheme. If it comes to pass that labour costs go up, then labour costs will go up; we’ll simply value labour more. Oil costs going up didn’t kill capitalism; the economy will adjust. Like a lot of SDMB threads on the subject the discussion seems to have taken the narrow view of looking at everything through the eyes of the computer industry, which is a TINY part of the economy. If you can’t wrap your head around the idea that some programmers might have to do something outside programming I can see why it would be hard to imagine how things will work out in the long run.
This I agree with to some extent. Capitalism is all about the allocation of scare resources. When a resource isn’t scarce there is no need to allocate it, people can just take what they want and no one cares. So, we typically haven’t needed to put a price on air, or sunshine. Plenty of places give away water for free, you can just walk up to a tap and drink all you want.
So with advanced automated manufacturing people could just order whatever goods they like and there is no point in charging them for it except maybe a small fee for raw materials.
But I think we’d still have capitalism, since even in a world with Star Trek style replicators in every home you’d still have scarce goods. You could have replicated truffles and foie gras for dinner every night, but what if you wanted REAL wild truffles? What if you wanted handmade art? What if you wanted services, like a haircut or massage from a human being? Maybe manufacturing clothes would be trivial, but what about designing the clothes? What if you wanted legal advice? And the entertainment industry will still be around, even when people can download any book, movie, song, or TV show on demand.
Such a society might be unrecognizable to us, just like our economy would be unrecognizable to someone from 1900. What do you do when you automate farming, and all the farmers are put out of work? What do you do when you automate manufacturing and all the industrial workers are put out of work? But now we recognize what a huge waste it was trapping people on a farm or an assembly line.
I think that’s what it comes down to, the idea that people are a liability, and the purpose of an economic system is to provide them with things to do or they’ll starve. But the real purpose of an economic system is to provide for people, not to consume people. And it makes no sense to postulate that everyone will lose their job because they are middle class and aren’t cheap labor any more. But of course, labor prices will reach an equilibrium before that happens…people don’t price themselves out of work, they work for as much as they can get even while employers try to pay as little as they can, just like manufacturers try to charge as much as they can while consumers try to buy things as inexpensively as possible, it’s just in the case of employment the consumers are the employers and the producers are the employees.
The wealth of a society is increasingly measured in terms of how well adapted it is to create new goods and services that everyone will want and need: things like cell phones, computers, TV sets, radios, automobiles, glasses, Viagra and other wonder drugs. the key to being able to do that is to have highly trained, highly intelligent, skilled people hooked up in a situation where it’s very much to their personal advantage to come up with these new things.
Taking intelligent, highly trained computer programmers and moving them into the cabs of trucks is definitely a move in the WRONG direction. This will ulitimately make us all poorer, not richer.
But WHY is it wrong for people with un-needed and useless skills to take jobs that are needed and useful? Yes, I understand it can be devastating when skills that took a lot of time and effort to acquire become obsolete. Think of all the people who used to take care of horses, and their jobs are replaced by automobile mechanics.
The thing is, the computer industry is still in its infancy. Let’s take my job for instance. One of the things I do is set up servers. And one thing I’ve had to do is install security patches on machines, sometimes dozens of patches on dozens of machines, and each one takes a minute or two of manual work…open the patch, click “install”, click “accept”, click “finished”, click “no, I don’t want to reboot”. (We have to have a particular configuration for our environment, so we can’t just use windows update or other solutions). Add it all up and it can be days of work to do. And someone in our department finally got around to automating this job, so you click a button and all this work is done. Now, I suppose I should be devastated…after all, I’m being put out of work! I used to be doing “skilled” computer work, now I have to fetch coffee or some such. Except that kind of crap work was stupid, tedious, boring, mind-numbing, hateful work to do. And I don’t have to fetch coffee or drive a truck instead, because there are plenty of other things to do around here. But even if I was just fetching coffee and scrubbing the toilets at work, it would STILL be a much more efficient use of my time than what I used to be doing! After all, what I used to do is now getting done automatically, AND the toilets are clean. Win-win.
So highly trained and intelligent computer workers can’t get jobs in the computer industry any more. But that doesn’t mean they are thrown on the scrap heap like an old Pentium I. It just means the jobs they used to do don’t need doing any more. Even if they now are working as migrant farm workers it is progress, because their old tasks are being done automatically AND we get tasty cheap lettuce. But of course, they don’t need to become migrant farm workers. After all, there are plenty of other knowledge jobs out there. Go to law school. Become a doctor. Become an artist. Become a teacher. Do something worthwhile. Working in the technology field I see so much worthless pointless work being done by really intelligent people. If that work didn’t need to be done any more, those intelligent people could be doing something that really used their talents effectively.
Its the old ‘buggy whip’ thing. Suddenly people don’t NEED buggy whips anymore, but damn, what do you do with all those folks that made them before?? Well, the smart ones move on to other things…or retire if they can. If you try and do what Evil Captor is suggesting, then you regulate things so that those Buggy Whip people retain their jobs…in spite of the fact that you no longer need buggy whips. I suppose you also have to force people to BUY buggy whips to justify the continuation of making them. Or, to get to the specific, you have to force people to buy software at a higher price in order to keep US programmers employed…for the good of the people of course.
BTW, do you actually have any EVIDENCE that the computer/IT/Programming industry is THAT hard hit, Evil? Because I work in that industry and my own anecdotal evidence seems to indicate that its the MINORITY of people who are in such straights. In the last month I’ve averaged 2-3 calls/emails a week asking if I’m interested in coming in for an interview. Now, its nothing like it was in the 90’s where I’d get 2-3 such offers a day…but not exactly the great depression either. Nearly all MY friends (and my IT/Programmer ‘network’ is quite extensive) are working…in fact, the only one I can think of who isn’t is taking a few years off after cashing in some stock options he had from CISCO. See, I can throw out anecdotes too…but they really bring nothing to the discussion. I mean, I have no idea how Nixion could have gotten elected…none of MY friends voted for him…
I seriously doubt anyone is going to suddenly figure out a better way and ‘eat everyone lunch’. If there WAS a better way, it would have been found, and there isn’t even a hint at a better way on the horizon. Lots of systems have been experimented with…this is the best so far. The system you are hinting at sounds curiously like some variation of Marxist/Leninism or some other economic planning…which have pretty universally been disasters, no matter who has implemented it. Even in Europe they use a capitalist system, though heavily regulated. If it quacks like a duck though, its still a duck, and regulation (or lack thereof) does not make it something else…its all on a sliding scale.
The artist exploits either his own labor or that of flunkies (I’m thinking Michaelangelo’s larger works or older-style animation artists) to transform the raw materials of his medium into something someone else will part with cash money to obtain access to.
Was this supposed to be some sort of counter-example?
I wasn’t arguing that moving computer jockeys into truck driving was wrong in any moral sense. I was saying it’s bad for the U.S. as an economic competitor.
As a general rule, the more people you have doing research and innovation, the better the chances are that your society is going to be the one that comes up with the Next Big Thing in international trade and commerce. If we dumb down our jobs and our people, we lose ground competitively with other societies. That’s why it’s “wrong.” We want to be upgrading our people, not downgrading them. We should be looking for new tech fields to put these sharp minds in, not new truck cabs to put their butts in.
See previous post. I am not proposing regulations, though that might be the answer, or part of the answer. I just know dumping our sharp programming minds in truck cabs and fast food joints is stupid. Maybe you think it’s smart. I’d love to hear your defense, if you do.
There’s all sorts of stuff of this nature out there on the Web. Thanks for the anecdotes.
So because something has not happened, it cannot happen. That’s a semi-compelling argument, at best.
Actually, I’m thinking just an upgrade to capitalism, where human capital is valued properly instead of treated like garbage, as in the present system.
Can you expand on this? Specifically,[ul][li]Any evidence that human capitial is currently valued poorly.Any alternatives that values human capital better.[/ul]I’m genuinely interested.[/li]
Because from my point of view, the free market seems to do pretty well at distributing resources fairly and efficiently. Any problems I can see any the present system seem to be due to a lack of (or poor management of) a free market. Problems that could be rectified by allowing a truely free flow of labour, resources and information.
Yes it was, and your counter example fails to address it. Firstly, Michaelangelo is hardly representative of “all artists” or even “most artists”-- think about modern scultors, painters, and novelists. Secondly, the “flunkies” were artists in training, who learn valuable lessons as his apprentices. One might as way say that we exploit children by sending them to school.
Your premise, that capitalism doesn’t create any new wealth, has been shown to be false by several posters to this thread. It’s not a pyramid scheme (which truly does not create wealth). And since your premise is false, your conclusion should no necessarily be taken as true. If you want to to build you conclusion on the basis of another premise, then let’s talk about it.
scotandrsn: I guess I confused you with the OP in that last post, but you did say you agreed with the OP, so I think it still stands that you have accepted the premise in that OP.
I agree that capitalism usually leads to progress and addresses many problems. But not always. The fact that capitalism works 90% of the time doesn’t mean we should use it for 100% of the problems. We should use if for the 90% of the problems it answers best and have other answers available for the other 10%.
I dinna think that word means what you think it means. I see no strawman there. If you force companies to retain programmer who’s jobs can be done cheaper by outsourcing to other countries then the price of software will rise…oh, and most likely the companies will go out of business because OTHER companies in other countries won’t be so stupid, will cut their margins and drive them out of business. Perhaps you could explain to me where the straw is?
Perhaps you should just READ it…weeping is optional.
1 in 10 does not a majority make. And while I’m unsure of which ‘firm’ they are talking about (all firms in general? A specific firm?) ‘only’ 40% of that 1 in 10 being retained and re-deployed seems like a fairly significant number. What, you figure that because they are computer programmers they have some kind of divine right to a job?? Programming has become something that is more cost effective to outsource…so people who’s jobs get outsourced need to find alternative work. Or, conversely, they could do what they are proposing in New Jersey:
What do you suppose will happen to the companies that are forced to use higher priced domestic labor for things that could be done more cost effectively by outsourcing, in light of the fact that other companies who DON’T have government contracts (or are in other countries) won’t have this restriction put on them? Do you suppose they will remain competetive? Will you buy their software for $10 a copy more to keep those hard working (and over paid) American software or help desk opperators at work? Do you suppose everyone else will also? And what do you suppose is going to happen to all the REST of the workers in said company when they start losing market share to companies not under such restrictions? I suppose companies will have 2 choices…to either give up their government contracts and outsource (btw, that means the local Americans who are doing said contracts probably lose their jobs), or keep the government contracts and disband the business units that can no longer compete using local labor…i.e. get rid of ALL the American workers in such BU’s. Good plan. This a ‘strawman’ too Evil?
Or, conversely, because you wish it would or hope it does, its something to debate about? This isn’t even semi-compelling as far as an argument goes.
Well, there is the European version of Capitalism which might be closer to your ideal. There are all kinds of variants on the theme, with no two exactly alike. But they are all still Capitalism. If it looks like a duck and quacks like a duck, its probably a duck. So, I agree…there might and probably will be many varients on the Capitalist theme, and some might be better than others…and some worse. But I don’t see the entire system being thrown out, and that was the point of this thread, no?
Exploits his own labor? :dubious: Exactly which definition of “exploit” are you using here?
You are all over the map on this one.
The mistake you are making is thinking that labor has to be cheap. Suppose I have I am a knife manufacturer and I pay someone minimum wage to buff & polish the knives. Suppose minimum wage goes up. I am now faced with a higher labor cost. Previously (and ideally) I would pay my polisher her marginal product: I pay her minimum wage and the marginal value she produces is equal to minimum wage.
Now that minimum wage has gone up, what do I do? I have to increase her marginal product. How can this be done? Since the production function is most likely decreasing on the margin, I can cut back her hours; I can buy more capital so that she can get more polishing done on the margin; I can send her to a polishing seminar to improve her technique; or I can do something I can’t think of right now. I could conceviably go out of business, sell my assets, and put them in the stock market; however, the fact that I may have to eat the cost of physical or human investment, it does not necessarily follow that I am less profitable because of it. I may have to suck up a one time write-off, but I can remain just as profitable as a going concern if my polisher’s productivity rises to match her cost.
(I think the anti-minimum wage arguments rest on the implicit assumption that unskilled labor cannot be made more productive. But McDonald’s, let’s say, still has a gigantic operation that needs to run and it may be better to invest in greater productivity than just increasing it by canning a few people.)
Jobs are going where they are going to get the best bang for the buck. But that doesn’t mean that you are looking at a pyramid scheme. It seems reasonable to conclude that businesses find it easier to employ Indians at a lower wage than it is to undertake the sort of investment needed to make Americans cost effective.
I don’t see much reason to posit a general limit to productivity. If there is and we hit it, the resulting slowing of economic growth and well-being won’t be a product of capitalism—it is a limit that any system of economic organization would hit sooner or later, if they get there at all.
Suppose we get to the situation you offer. “Where will we put them?” is an unnecessary restriction on the possible responses; one that blinds us to other possibilities. Suppose the call center is computer help. The firm could invest in faster hook-ups and software that allows better remote analysis of the problem, the firm could spend more time training the call-center staff, the firm could write better trouble-shooting algorithms for customers to follow before calling up. Suppose a firm writes an automated diagnostic and repair tool that can take the simplest problems coming into the call center. Then each operator can spend more time per call. Her productivity goes up in the sense that she can send simple problems to the automated solver and handle the trickier ones herself—so she solves more problems per hour. No pyramid scheme. Just being creative.
Why is it wrong? Why is a computer programmer more valuable than a truck driver? None of the products you name could be sold to you without trucks; essentially 100% of those products are delivered in trucks. The trucking industry is absolutely critical in allowing those products to be delivered and sold to the end customer in a timely fashion, and the lack of drivers is driving up the cost of transport.
And to be quite frank, if we have excess supply of programmers but excess demand for truck drivers, we WOULD be better off if unemployed programmers became truck drivers. How is unemployment more beneficial to society than driving a truck? You may look down your nose at truck drivers, but you can make $75,000 and up as a long haul truck driver, it serves a valuable economic role, and from what I’ve seen they could use some smarter guys in the cabs of trucks, since the paperwork and automation of the job is getting pretty complex. I don’t see that computer programmers are particularly valuable super-geniuses who would be wasted in other roles. If there’s an employement problem in that sector then it would be economically beneficial for them to leave it entirely and find work elsewhere. Furthermore, it’s a job that cannot be outsourced overseas.
Of course, what I’m seeing is that immigrants are getting into the cabs of trucks because people who wanted other professions - like, say, programmers - feel it’s beneath them. Well, the beauty of the capitalist system is that the enterprising immigrants who chose to work in that profession are starting to get their share of all the plum driving jobs, hauling in $75,000 and up, and then they’ll get to buy nice houses and vacations to the Caribbean and enjoy the fruits of their labour, while those who don’t want to lower themselves will still be out of work. Filling the market demand will be rewarded. That’s what a free market does.
And if they don’t wanna drive trucks, there’s other needs. My read of the industry is that we really need more database administrators. There also seems to be a real shortage of machinists, skilled tradesmen (especially in die casting, it seems) production managers, and people with statistical process control expertise. There also seems, from what I have heard, to be a neverending, insatiable demand for accountants and internal auditors. Those sectors really need more people. In a capitalist, free market system, there will always be something else that needs doing.
