Capitalism Is Dead
This is different from the previous times it was declared dead.
This time, capitalism is really dead.
AI is killing what remains of it by allowing the companies to lay off white collar professionals — the last economically viable class remaining in the economy.
The working class had already gone long before. The robotics revolution in the 70s and the 80s, following the electronics revolution in the same period, killed it at the end of the 70s.
Even the biggest factories went from needing thousands of workers to needing only 100–200 workers tops.
At that time, the US and the West temporarily saved capitalism by printing inflation-free money and giving it as free cash to investors to have them pump it into the economy through high-tech, finance, and real estate sectors.
There was the reserve currency monopoly of the dollar. The US could just print dollars nonstop without inflation. Free money.
It gave the money to the investor class at near-zero interest rates. Investors hired educated white collar professionals to run their startups… And these white collar professionals then pumped the economy by spending money.
But now the dollar’s reserve currency monopoly is gone. No more inflation-free dollars.
On top of that, AI is making the white-collar professional class redundant. In the already cash-strapped economy, companies are laying off people even harder.
Double whammy.
The free cash that floated the economy is gone. The white collar classes who were injecting that cash into the economy are also gone. The working class was already dead.
Now, nobody has the money to buy the products and services to keep the economy going.
Capitalism is eating itself from the inside, but…
There Is No Saving It This Time
No, it’s not like how cotton mills made people unemployed in the 1600s and 1700s, but newly-created factories of the Industrial Revolution came to the rescue by employing them
Cotton mills permanently cut down the workforce needed, and the excess workforce was exported to the colonies. They were not employed in their home countries.
And those new factories of the 1800s-1900s themselves were only possible because the West exploited the rest of the world (free cash) and gave some crumbs to the unemployed masses, who fought dearly to get even those crumbs.
No, it’s not like how the tech, finance, and real estate sectors saved capitalism after the robotics revolution of the 1970s cut down the workforce needed in the factories
Those factory jobs are also gone.
The number of people who were able to transition into tech, finance, and real estate sector jobs was just a fraction of the workforce cut from the factories.
The rest of the economy floated on the back of the service sector, which was fueled largely by the highly paid white collar workers and what little the working class was able to spend.
No, it’s not like the 2008 crisis either
In 2008, capitalism was saved with another cash injection in the same way. Sunken banks were bailed out. The US kept pumping dollars into the tech, finance, and real estate sectors. The white collar class was still there. After the money started flowing in after the initial shock, they kept spending and floating the economy. One last shot.
But now the free cash is gone. And the white collar class, the last remaining illusion of capitalism working, is also gone. There isn’t anybody to pay even for those gig jobs anymore.
No, there won’t come to be entirely new economic sectors enabled by AI that can employ all the unemployed masses
Each new technological revolution optimized different aspects of human society and made it possible to run them with much less effort.
Especially the fundamental necessities. Food. Energy. Medicine. Goods. Construction. Information.
Yes, technological development in these fields created new jobs to manage those new technologies. But the number of jobs it created was always far fewer than the jobs made redundant. The purpose of the technology was to optimize things, after all.
And when it created entirely new fields that created new job posts, those new fields were increasingly more removed from the basic, common necessities and circumstances of humans. New, ultra-specialized sectors that employ a much smaller number of professionals served other specialized sectors that employed a similarly small number of professionals and so on.
Entirely new fields that provided mass jobs in new goods and services that everyone needs did not come into being. Neither came to be entirely new human needs that could create such mass jobs.
There aren’t people who work as ‘cyber-bionics integrators’ in each neighborhood, to provide ‘cyber-bionics’ services. There isn’t anyone who is the ‘electromagnetic indoor farm caterer’ of your neighborhood. There isn’t anyone who is working as the ‘wind-tunnel shaft cleaner’ of the nonexistent arcology in your neighborhood. Even if that arcology existed in your neighborhood, an automated robot would be cleaning its ‘wind-tunnel shaft’ instead of a human anyway.
Even in the most celebrated miracle of technological development, the Internet, it’s the same. The biggest and largest-scale economic activities on the Internet are still shopping and information/news/entertainment consumption after decades.
People search for things to buy or content to consume. Tech companies either sell them goods or show them ads to sell goods. Or maybe sell them content/information. Just like how it was in the real world before the Internet.
Even the AI did not create an entirely new economic activity — the majority of people are still using it as a ‘better search engine’ for shopping or information consumption or outright entertainment, and they don’t intend to pay for it.
So much so that it is pushing the AI companies to provide other things that people would pay for, like sexuality:
OpenAI is about to provide erotica in ChatGPT, but only to age-verified users. You can be sure that verification will involve some kind of payment, like the former Twitter, current X’s verification requires payment. So OpenAI will basically sell chat porn. Even that wouldn’t be new, since the sex business has existed as long as humanity has, so what OpenAI will do is nothing new. Just another old economic activity in a form that is much more optimized and provides many fewer jobs as a result. It will likely cause many layoffs among those who work in the sex chat industry as operators — just like any other facet of human life that was optimized by technology.
As a result, there is no saving capitalism this time. No ‘automatic’ solutions created by the ‘magic’ of the free market, which actually never created any solution to this ever before. No usable financial trick or even an actual scam to pump the economy with cash to float it again. Starting a war and running on a military economy won’t save it either — today’s warfare is done with exceedingly specialized equipment produced and run by an exceedingly small number of professionals — the same thing with any other field.
So, It’s Dead For Good This Time
And it doesn’t even care that it’s dead.
It’s busy eating itself from the inside out as predicted at the end of the 19th century.
Companies are laying off everyone to shore up profits and stock prices. But they are also jacking up prices in an economy where people don’t have money to pay for even necessities, therefore further strangling their profits.
The solution that the capitalist elite found for this is suggesting that people work ‘even harder’ to be able to afford to live, leaving aside actually being able to buy goods. Some establishment mouthpieces are even advocating to people to stop eating breakfast altogether.
Various governments are cutting down on spending that goes to actual people who would spend that money in the economy and instead giving tax breaks to corporations and the ultra-rich, who will just hoard it — which further cripples economic activity.
The ultra-rich are buying the entire media out and pushing for censorship laws to control the narrative, as if the reality that people live in can be painted out of their eyes through lies.
They talk like they will gear for a war economy, but they don’t seem to have even the slightest intention to spend money to actually wage that war.
An immense amount of goods and services are being produced by highly optimized, automated sectors, but there isn’t anyone to buy them. Nor is there any economic dynamic to put money in the hands of people so they can buy anything.
So capitalism is eating itself from the inside out in plain sight.
It will run until the last dollar is spent, the last product is sold, and the last factory goes bankrupt — even if it means outlasting society to only collapse on itself.
An utter, total collapse that it doesn’t even seem to mind.
…
Next, I will write about the way out. Subscribe/follow to read it when it’s posted.
