Mass Human Labor is No Longer Needed. Where Do We Go From Here?
OUR ECONOMIC PROBLEM
Global economies still haven’t recovered from the 2008 Great Recession. Believing the crisis stems from a shortage of capital liquidity, some governments—national and local—have incurred unprecedented levels of public debt in an effort to stimulate economic activity via government spending programs. Meanwhile, other governments—claiming mass budgetary overreach and insolvency as the underlying causes of the recession—have taken the exact opposite approach and instituted (often draconian austerity) measures in an effort to arrest hemorrhaging debt.
No matter the antithetical and increasingly extreme policies enacted, however, economic growth remains stagnant.
Our book, Wealth Beyond Nations: Economic & Moral Principles of Global Interdependence, begins by asking the fundamental question: with all the multifarious and often contradictory ‘solutions’ being thrown at the problem, have we perhaps not accurately defined the root cause of the global economic malaise?
HOW TO VIEW THE GLOBAL ECONOMY
In an admittedly non-conventional manner, we view the global economy via two interconnected lenses. The first lens is a combination of two practical foundations of economics: (a) based on observations made by economists Colin Clark and Jean Fourastié in the 1940s that technology has persistently replaced the need for human labor throughout increasingly widening sectors of the economy (see chart below). We can now observe that the services sector, now comprising over 72% of the economy has reached a tipping point where technology is increasingly replacing the need for human labor to the extent that increasingly wider sections of the population no longer seem to possess assets to contribute to the production of economic activity.
Colin Clark and Jean Fourastié
And (b) In 1979, the world’s economic systems discontinued using gold as a method of creating and valuing currency, and thus, ended the process of what is called ‘fractional reserve banking’ (where banks are able to lend more than they have on deposit). Fractional reserve banking was replaced by fiat currency, where local commercial banks create new currency when real estate loans are created.
From the convergence of these two practical foundations of economics—technology replacing mass labor and fiat currency created from real estate lending—we can now observe that the conventional metrics used by political institutions and banking systems the world over in determining the relationship between commercial real estate and residential real estate are no longer viable. Banking systems have self-evolved to move away from market lending to creating financial instruments that are traded exclusively between the banks themselves (this is referred to as the ‘shadow banking system’).
Government institutions, however, have not evolved… and thus have essentially become irrelevant in terms of managing affairs of economics.
The second lens with which Wealth Beyond Nations views the global economy is a moral and philosophical view of how and why individuals and groups interact with each other. Prior to Adam Smith’s Wealth of Nations in 1776, the benefits of economic activity were in the main enjoyed by elites (the aristocracies, monarchs, and churches, which were all prone to violent upheavals). Smith’s blueprint provided a process by which the masses could both contribute and benefit from participating in what he referred to as ‘a commercial society’, and it was this commercial society which self-maintained social order.
But in modern circumstances where economic production no longer needs the masses to contribute to production, how can the masses expect to participate in such a commercial society?
But even deeper, we observe that societies across the world are constructed upon a foundation of consuming material things that merely contribute to their sense of self-aggrandizement (and most often, not to their overall well-being). John Kenneth Galbraith’s seminal work in 1958, The Affluent Society, already observed that this foundation was simply unsustainable.
Consequently, if it is true and accurate to restate the central problem underpinning the global economies as being: contributions to economic production by the human masses is no longer the glue that holds societies together, as well as the observation that almost everyone on the planet is operating from outdated knowledge of how economic markets operate… then, and only then, can we begin to grasp the severity of the real problem. Then, and only then, can we begin to grapple with exploring real solutions to the real problem.
TOWARDS A “SOLUTION”
Based on a 10-year case study of social, political and economic consequences of ‘nation-building’ failures in Bosnia-Herzegovina, we have assembled a wide-ranging collection of practical and philosophical alternatives to consider as the world comes to terms with this admittedly provocative redefinition of the problem.
In short, a new ‘glue’ that binds individuals and groups into collaborative networks is required.
Although we cannot and will not (for moral reasons) provide specific ‘solutions’, we can state the following: (a) the challenge is not that technology is transforming how we do things, but rather, technology is forcing us to create new things to do; new individual and social objectives that require individual and social interactivity and interdependence (the Pokémon Go effect of bringing entire groups out of isolation, but with perhaps more collaborative human utility).
(b) these new objectives and collaborative activities, then, will most likely be intangible in nature—essentially creating markets based on human relationships, experience, and even questions of curiosity, rather than tangible goods… where we, ourselves, become the market… and as consequence, the objective no longer becomes one of ‘wealth redistribution’, but rather of new wealth creation by the masses.
(c) a new merging of technology and personal/group responsibility will reshape the political process itself, transferring the responsibilities of ethics away from government institutions and national/political identities, and back into the hands of individuals and collaborative groups directly.
(d) as only one practical example of the possible evolution of economic markets we illustrate: presently, what is referred to as ‘technology transfer’, is essentially limited in its control to the executives of a corporation… but if anyone and everyone within any company were to be empowered to exchange in technology and know-how transfer transactions, and using a subset of quantum mechanics called ‘knot theory’ we project that as a consequence of facilitating existing and new corporate-to-individual and individual-to-corporate relationships, roughly 50% of the human population could migrate to the exchange of intangibles throughout what we refer to as a new ‘fourth economy’ (see chart). Consequently, this could generate radical volumes of new global wealth value throughout the masses.
Michael Byrnes and Tamara van Halm
There can be no ‘leaders’ that can show us the way to this new evolution and function of interdependent economic activity. Finally, we must all take responsibility to create our own relationships and bonds that transcend national and ideological borders. We have no other choice but to evolve.