“There is a reason why it is called Capitalism, as Capital is what fuels it.” Jacksonian Libertarian
Up until recently the US economy was at full employment, with unemployment in the 4% range. What changed? What changed was that Government Monopolies all over the world starting with the US Government began sucking the fuel tank dry with massive ($1+ Trillion per year) deficit spending. The Government competition for Capital has crowded the job creating consumer and business borrowing out of the market, killing the jobs creating the goods and services that borrowing would have required. You can’t take over 5% of GDP out of the available capital every year and expect the economy to grow; the Japanese have been doing it for over 20 years and look where it has gotten them. The Leftists would have us believe that when consumer and business borrowing declines the Government needs to step in to make up the difference, but this is totally bogus as the Capital markets are just like every other market and obey the Law of Supply and Demand. Does the Government need to step in and buy eggs in the egg market when there aren’t enough buyers, or does the price fall until the Supply and Demand balance is restored?
What would interest rates be right now if the Capital Markets had the $5+ Trillion the Government has drained from the fuel tank to lend to consumers and businesses? 1%? How would this have affected home prices and the American family nest egg they represent? How many new jobs would have been created by new business start ups that are generally capitalized by home equity loans, and what would the unemployment rate be?
As always, interesting and perceptive.
You have said before that the blue model is in a war against arithmetic, and we all know which side will come out on top in that one. As in most wars, what will come next will be dictated, in large measure, by the victor, in this case arithmetic. The future of abundance that you foresee requires, first and foremost, economic growth, which in turn requires ever-increasing gains in productivity. As a practical matter, productivity will increase in direct proportion to an increase in capital investment in the work force and the tools they use — i.e., very robotics and other infrastructure improvements you mention. There is no magic bullet that might provide another path.
So, a victory by the forces of arithmetic leads inevitably to the conclusion that governmental policies going forward must promote increased capital investments. It’s not hard to devise such policies; it can be hard to get the electorate to choose leaders willing to do so. But, in the end, arithmetic will prevail even there.
Blue isn’t doomed; just limited.
You can’t promise everything to everyone without going bankrupt; you can’t take away the spur of need without destroying motivation. Capitalism works; Communism doesn’t. Eurosocialism sets the balance point far too close to Communism to work; the American Welfare State is closer to the sweet spot, but still too far Left.
Eventually, we will run out of “poorer” countries to export jobs to. The tide will rise and lift all boats, though for those who have ridden at the crest for decades, there will be a decline except for the hardest working.
But where, you ask, can we expend all tht work?
Look up, everyone, if the glittering city lights haven’t polluted your skies and deprived you of man’s ancient inheritance free to all — look up at the starry night.
There is a frontier that can absorb all your excess energies, and in return provide you with nothing less than more worlds to have and shape into new homes for humanity.
If we can go to the Moon, why can’t we solve all our problems on Earth? NASA’s dirty little secret is that it’s far easier, and far cheaper, to open up the high frontier than it is to spend our way into a Blue paradise. The stimulus package, at $900 billion, was as much money as NASA has spent in its entire Moon-shooting, Mars-exploring, Great Observatory building existence.
And even today, we spend over $100 on entitlements for every dollar we spend on our frontier.
No wonder we’re looking around and not seeing our future. Our government is run by people whose ambitions are so stunted they’re satisfied with trying to change a single world (and failing.)
Creation is large enough a stage for all human endeavor, even with all our machines to help us. Earth, however, is a mere cradle — and a cage, if we allow it.
Look up, look beyond. We’re crying for a larger scope for our endeavors. It’s there for the taking — we must take it, or shrivel and die.
Ultimate failure was baked into the blue model from the beginning because “capitalism” is not a philosophy — it is the natural result of LIBERTY.
As capitalist success was increasingly press-ganged into the service of the blue model the unfortunate side effect was increasingly over-bearing government… which eventually chokes off the very liberty permitting it to exist in the first place.
There exists a deep (and arguably fractal) tension between security and liberty. As more individuals lean towards more security they perforce drive political and social institutions in the same direction.
The blue bacterial colony, in growing, consumes its own food supply (liberty) and soon begins to poison itself with metabolic toxins.
The left advocates continually for “artistic freedom.” Would they were equally dedicated to “economic freedom,” for that would permit several nascent technological breakthroughs (eg biotech of all sorts) to burgeon and flourish, thus generating the sorts of new wealth that will enable us all to care for the truly deserving less-fortunate amongst us.
“there is no such thing as a comfortable retirement from the stresses and storms of history and of change…It is all beginning to look very 1890s again…Post industrial society is coming to the whole world…This isn’t just about us…The fight for the reforms and changes in the United States that can facilitate and speed up the birth of a prosperous post-industrial society here is deeply connected to the fight for a peaceful and prosperous world in the 21st century.”
WRM, your essay and its historical comparisons bring to mind how the “cash market” (capitalism) transformed the feudal manorial system (the manorial economy of feudalism was undermined by what was originally a cloud no larger than a man’s hand: the cash market – point being cash market brought into being a new social type); your essay theme argues for a new type (yet undefined, undetermined, etc.) given the altering of economic/social arrangements via technological change – recognizing that technology and science undergirds displacement.
WRM, you’re asking on one level that Americans be mindful of the future (perhaps generations ahead) yet we are so present oriented; but, you are correct the future is up for grabs and we must work through long-term social, political, and global trends (we may just have to make it up – with insight – as we go forward).
@ Jacksonian Libertarian
The Japanese are in their current predicament due to a national asset price bubble that burst and caused a financial crisis. Sound similar? Their secondary problem is a contracting labor force/market. Anyway, RHD has the right idea productivity gains are what really matter, therefore government’s role should be to create an environment that induces investment in both people and machines. I suggest taking a look at some of the work by Clyde Prestowitz a former counselor to the Secretary of Commerce.
Free markets can provide the environment for unimaginable advancements in productivity and the resulting raising of living standards. If more people in the US could grasp the relative abundance we enjoy at all levels of the socioeconomic scale, then the power of free markets would be self evident, but our leaders and media tend to focus relentlessly on the perceived social inequities.
Unleash the power of the free market and watch the blue model be transformed into a society that offers vast opportunities for individuals to exercise more control over their livelihood and enjoy the fundamental liberty envisioned by our country’s founders.
What’s this business about not capitalizing “the West?” It is a civilization you know.
“The mechanisms of the market would create the equality, dignity and affluence that communism promised but failed to deliver”
The eight hour day and forty hour week, or the end of child labor for that matter, were not the result of the mechanism of the market place unless you mean the political market place. In fact the Supreme Court ruled wage-and-hour laws unconstitutional at first. I’m sure you know that but a lot of your readers might not.
“During the Cold War, we said there were two kinds of countries: developed countries like the western industrial democracies and Japan, and developing countries.”
Actually the phrase back then was underdeveloped countries.
“There is no such thing as a developed country. No country on earth has reached a stable end state; there is no such thing as a comfortable retirement from the stresses and storms of history and of change. France, America, Germany, Japan: we thought we had found a permanent solution to all economic and social questions.”
So Mead writes off the possibility of a stable civilization? Or is this just a platitudinous truism?
“China will not be able to build a western style welfare state as its GDP grows. The South African labor unions won’t be able to turn the country into Detroit at its peak, with lifetime employment at high wages for a unionized work force.”
Can’t we make a few distinctions here? What are the essential components of a western style welfare state? Is Mead saying social security and universal healthcare will have to go? The eight hour day? Unemployment insurance and workmen’s comp? High wages?
I don’t think these things should be confused with the idea of life-time employment (at the same employer, doing the same job) which almost certainly is a thing of the past (if it ever was outside Japan).
Wage levels in particular are a function of labor productivity (higher now than ever) plus public policy (the length of the working day above all). The fact that immigration and our China trade are undermining our market wage is a purely political phenomenon, a consequence of legislation passed in 1965 and 1993 under false pretenses by irresponsible elites.
“automation will reduce the number of workers worldwide required to produce a given level of output ”
Correction. Automation never reduces the number of workers required. It reduces the number of man hours required. The number of workers equals the number of man hours divided by the number of hours in the working week. Of course slave owners would disagree.
“The blue clingers can’t see it, but we have laid the foundation for the greatest burst of affluence that the world has ever known.”
Yeah, but for what percent of the population? WRM refuses to see the political dimensions of this problem. Inequality (not to be confused with means-tested entitlement programs, wasteful government bureaucracies, union work rules, and a lot of other criticizable stuff) is not solely an economic but also a political problem.
Nobody believes in competition in open markets more than I do. But I also understand the limitation of such. Exhibit number one being the necessity of wage subsidies and progressive taxation in developed countries if we want to maximize welfare in developing countries through trade and capital mobility. It’s called the principle of competition in Ricardian trade theory or Pareto efficiency in welfare eonomics.
Excuse me, I meant to write the principle of compensation in Ricardian trade theory — which only becomes of over-riding significance when a country’s comparative advantage lies in its relative abundance of one of the three factors of production (land, labor, capital). I’m putting it crudely but that is the essence of Hecksher-Ohlin trade theory.
Mead is Panglossian — that’s the word for it!
“It is all beginning to look very 1890s again: Economic inequality, class struggle, collapse of once stable institutions and employment patterns, financial market instability and recurring currency crises.”
“America’s job is to show the world how to shoot fish in a barrel:”
We’ll let you take that move back.
“The fight for the reforms and changes in the United States that can facilitate and speed up the birth of a prosperous post-industrial society here is deeply connected to the fight for a peaceful and prosperous world in the 21st century”
Now we’re talking.
“And it is raving lunacy to expect that there is some master plan that can reveal the shape of the new society and show us how to achieve it.”
Meet my lunacy: http://facingzionwards.blogspot.com/
“We have to show people how, now that so many of the old jobs are becoming unnecessary, there are new ways for people to make a good living providing goods and services that, under the old system, were either available only to a wealthy few or not available at all.”
While this is perceptive, it misses the main point: What will the post-Blue model look like when “provi(sion) of goods and services” can no long provide a good living for the majority, since the problem in developed countries is plenty and its distribution (while maintaining incentive for the working few) rather than equalization of need?
Kurt Vonnegut foresaw this problem in his visionary first novel “Player Piano”(1952). He had no solution and in the 60 years since then no good alternate model has emerged.
Mead is correct that we can’t see (or even imagine) the future until it emerges – but – I do wish he’d offer us some of his ideas for post-Blue life in the West!
The most obvious failure in Communism is not even its offense against liberty; the most consistent cause of failure in public / private balance is in governments making promises that are simply too generous to be kept.
This is why the USSR’s economy failed; they couldn’t keep the promise of keeping up with the West. This is why South American socialist experiments fail; they couldn’t keep up their welfare payments. This is why the US and EU are so deep in debt; their Welfare States are too blue.
And tellingly, this is why China (after flirting with failure in their “iron rice bowl” giveaway promises) is NOT failing– they are trying very, very hard not to make promises they can’t keep. How Blue is China? How many Chinese are without health insurance? Expenditure does not exceed income– happiness, as Dickens would say.
We can keep the Welfare State. We just need to cut it down to size. We must cut back the unrealistic promises we have made. We must live within our means. We must give up hunting that unicorn of unicorns, the belief that government can solve every human problem and make good every human misfortune.
Then, our economy can heal, then roar ahead again. Until then, we are trapped in the burning building of our own disastrous finances, just waiting for it all to collapse.
I think most of the Developing Nations with market economies are aiming for the same thing that politicians in the Developed World would like to have: higher wages, lower unemployment, and stable politics.
In that sense, they’re the lucky ones. We’re seeing a global re-orientation of the labor market away from a series of national wage equilibria, to a global equilibrium on wages. For Developing Nations, that’s a good thing, since for most of them the wages in a global wage equilibrium are going to be higher than what their national wages were beforehand.
The Developed Nations aren’t so lucky. If it weren’t for minimum wage laws, we’d see a shift towards an income distribution that matches that of the world – i.e., lower wages for almost everybody in a Developed Nation. Instead, we get larger unemployment.
There’s a biological principle that says that ‘every successful organism attracts parasites’.
There would be little wrong with the ‘blue model’, and it could even remain solvent, if it were practiced it as it used to be. Too many people though have figured out how to get past its sappy gatekeepers. The blue model is being overwhelmed by its hangers-on. Compare the number of dependents on the state in China versus the US to see what the problem is, and the source of the contempt many of them feel for Western ways.
This isn’t exactly a new problem. Didn’t one of the founders observe that the republic would be in trouble if the voters ever figured out that they could vote themselves the income and property of others?
WRM, is it the creative destruction of the world of big blue or the creative destruction of capitalism (impersonal process of economic development under modern capitalism) instigating social and economic crises? The great stabilization you referred to may have masked capitalism’s endemic destruction by using new means to harness old ends – the dragon has not been slain; and you infer that now in the 21st century, America has to recast once again with the capitalist dynamic. Can diverse America truly meet the challenge and show not the world but its citizens how to shoot fish in a barrel (“how to harness the power of technology and how to fine productive uses for all the human labor being released from drudgery and routine…”)?
WRM, you advise Americans to embrace the possibilities of the future. I concur with modification: the next step lies with the Millennials – they certainly have the longer time horizon as well as inclination for inventive challenge and can best illustrate benefits from a successful transformation to the outside world.
There are many paths the developments WRM discusses can take. One thing that concerns me is the potential renewed rise of Marxist thinking. I think a case could be made that “Communism” was never really tried. Marxist-Leninism, Stalinism, Maoism, Castoism, the Khmer Rouge; these were not what Marx predicted. None of these regimes we think commonly of as “Communist” were the result of the mechanistic laws of history as Marx described them.
Rather, they were “accelerated” by revolutionary vanguards who just then happened to be authoritarian in order to impose what was supposed to happen inexorably and without necessarily the application of force, or at least force of the kind those murderous regimes utilized.
Communism was only supposed to happen once capitalism made labor superfluous and bounty abound. Under present trends, we are closer to that vision than when Lenin led the Bolsheviks.
I am not saying it is inevitable for Communism to make a renewed appearance on the historical stage, but it cannot be discounted.
In essence, “Communism” as properly understood is an experiment that actually has yet to be run and could only be run as we get nearer to the plenty we are now becoming fully capable of achieving.
Of course, Communism seems to forget human nature and human acquisitiveness. So it is possible that capitalism will be a perpetual whirlwind of Schumpeterian “Creative Destruction” so there will be no period where people will stop to partake of the fruits of their machines labor, because new machines will need to be built for new products. As Kissinger says, “History knows no plateaus” and Communism would, in theory, be a plateau.
I just wonder if there is more of an ideological battle to emerge than we think, which could lay question once more to Fukuyama’s “End of History” as that which was consigned to the “Ash Heap of History” recycles itself a bit in a new age.
It’s interesting to see how many commenters define problems and solutions in terms of “jobs” and “wages”. But we didn’t always have such concepts and maybe the future won’t have them either.
In this un-necessarily long article you have managed to discuss everything around the central problem, without managing to actually discuss THE main problem in human civilization in our current age.
And that is under modern capitalism, that at our present level of consumption and given our present economic means of the distribution of employment and distribution of the goods and services of economic production, millions of people are entirely surplus.
They are not needed for production, and without having a role in production, or employment, they do not have the ability to consume at a tolerable standard of living level and they cannot contribute to consumption demand.
Prior to globalization these people were mostly in the undeveloped nations, today with global production and distribution, they are present in all nations, including as a permanent percentage of the populations of post modern, post industrial nations.
Welfare and subsistence incomes while still provided under the capitalist system leave them with unproductive lives.
Capitalism itself will move employment to the lowest wage nations, and thus while improving production efficiency for those who have a role in production, it leaves a surplus population who can not under this model participate and will not have children who can participate not matter what their individual capacities and potential may be, since their societies will not have the means to educated them to fill a productive role.
And in the US, the Republican approach is to covertly apply “social Darwinism” in policy and eliminate as many surplus people as can be managed while maintaining the illusion of a moral society.
Globalism applied to production and distribution under capitalism is the root cause of our civilization’s failures.
“We argued that capitalism rather than socialism was the best road to the blue life.”
Maybe you argued that. But that would involve conceding that the Marxists really were on to something with their hollow mish mash about “equality, dignity, and affluence” being serious human goals, and were therefore ever something deserving of serious consideration.
Perhaps you would care to explain exactly where and when our social and governmental contract was redrawn with an express focus of achieving the ‘blue life’ as opposed to those things actually expressed in our foundational documents and covenants?
Others argued -all along- that free markets were but one aspect of the promise of liberty (along with other things like the rule of law and property rights) and that what the socialists were really about was anything other than true liberty.
Your essay is a shell game meant to mask the enormous goal post shifting of a leviathan that has grown to large to support it’s own mass. Put another way you are merely another statist working the Kubler Ross steps.
From all available evidence I have concluded that you can’t fix stupid. We have the government we deserve because of the people it serves. Our present trajectory indicates that the United States of America will fail sometime in the next decade and we will be entering uncharted waters.
The old guns vs. butter argument has never worked. In the West, we had the guns and the butter due to capitalism.
Communism sacrificed butter to make sure they matched the West in guns.
But then they lied to the West (well, to some citizens of the West) and told them they had ‘secret’ butter that was even better. And Western universities, intelligentsia and pro-welfare folks took them at their word. Capitalism could never match socialism’s ‘secret’ butter production.
“Between World War Two and the 1980s, it looked as if precipitous economic crashes and financial market crises had disappeared. ”
You never passed sixth grade math, did you?
I will spell it out:
For an investment to be worthwhile, the advertised rate of return must be higher than that of the growth rate of the economy as a whole – that is to say, of the interest rates on savings accounts. Otherwise the investor just sits on their money.
Some investments will fail. If all investments succeeded, then their rate of return would be that of the economy as a whole, and there would be no reason to leave one’s savings account.
The compounded interest on the expected payout of the investments will inevitably run away from the compounded interest at the base (savings account) rate of return. This is sixth grade exponent math.
When an investment fails, the loss must be recognized. This has a contracting effect on the economy, as it means accepting that the actual wealth available is suddenly less than expected. When many such events happen at once, there is a recession.
(This is EXACTLY what happened in 2008. And it is not over yet. Because the banks still don’t want to admit their losses and that their mortgages aren’t paying off at the rates they have on the books, and because the government is madly borrowing instead of living within its means, and because this society in general seems to think that as long as there are checks in the checkbook everybody still has money.)
Since an exponential curve with exponent X (the compounded interest rate of investments) where X is greater than Y will always grow faster than an exponential curve with exponent Y (the compounded interest rate of sitting on your money and doing nothing with it), and since when a business fails that higher exponent curve becomes an ever-increasing DEBT that must be paid off or recognized as unpayable: failed businesses can not hide losses indefinitely, bankruptcies will always happen, unexpected losses will always happen, and recessions will always happen.
Therefore, it is not possible for any sane and mathematically literate human being to actually believe the quoted sentence.
(there’s a lot more in this piece to dispute but – too much foolishness, not enough time)
You discount the effects of war. Real war. Our prosperity after WWII happened because we were the only factories in the world and people wanted stuff.
And WWII itself distracted from the massive Blue failure of FDR’s policies, which continue today to bankrupt us.
You want to get to the ‘new society’ without years of unnecessary hardship and deprivation?
You get big gov’t out of the way and that is not going to happen quickly or quietly because that means loss of power for the people that know how we should all live our lives.
Unleash hundreds of millions of individuals, local and state gov’ts on their chosen paths, exercising their inalienable rights to blaze the way for society. Social darwinism, if you will. Otherwise we all suffer the rot of the big blue model, its tyrany of small rules, and the stiffling of the ingenuity of its citizens.
An interesting essay, but I think WRM is mistaken in viewing the Blue Model as the reason the world has looked to the US. The US was the great exception, the beacon of liberty and the land of opportunity, long before the welfare state was a gleam in the eye of the nascent progressives, before even their grandparents were born.
It was American liberty, and economic opportunity, not the welfare state, that attracted immigrants and served as an ideal to the world to emulate.
Good article, but I’ve learned to turn a skeptical eye to the message of “This time it’s different–no, really.”
I read that after the Berlin wall fell, then during the internet bubble, then after it burst, then after 9/11, then after Obama was elected… you get the picture.
Nice article, professor. It seems to me the failure of the “blue clingers” as you so cleverly put it, is their decision to trust experts over the wisdom of crowds. It is best shown in the our monetary system where we exchanged the gold standard for the Phd. standard.
But the crowds always win, eventually.
They love Obama because he seems so smart and hate Palin for the opposite reason. But what “seems” is not always what is.
The hope for a new blue model lies is returning the experts to appreciating the voice from those foolish masses. Kansas isn’t as dumb as they think.
The blue model also neglects a very critical part of the equation. America and American values (puritan work ethic, do it yourself mentality, be independent) transmitted itself to the underdeveloped countries as well capitalism.
You came to America to remake yourself and become a better, richer person. No country in the world could deliver on that promise better than the USA. You could become wealthy in America if you were a pauper in your home country. The blue model removes that ethic completely and makes America just another nation in the world.
America was the last bastion of freedom for the rest of the world. Nobody ran to Cuba, North Korea, Greece, Russia, Zimbabwe or China to be free, they came to America.
This will be the hardest thing to replace. America’s place in the world will be gone. And there will be no other country to take that mantle of “bastion of freedom.”
Look at what the blue model accomplished, with no need for practical higher education for the ‘unwashed masses’ to gain lifelong comfort and security our education system devolved into a social indoctrination culture.
Now that reality has reared it’s head again and led us into a world where some advanced skill is a requirement we are floundering within an education system of trillions of dollars of FAIL.
To put it plainly, we sat on our laurels. Now we have nothing but festering laurel rash on our rears.
The physical well-being of a large part of humanity has never been better. Productivity, living standards, lifespans are improving worldwide, to levels that were undreamed of just 25 or 30 years ago. Backward looking failed social models like communism and central control have been abandoned worldwide. The Cold War is won, and democratic institutions and free market principles have no serious competitors, except in the Islamic world where theocracy and repression is still the norm.
Despite all these positive developments, and at exactly the time of the triumph of our ideals worldwide, the US has stepped backwards, with Barack Obama the prime example of the blue model bitter clingers. Mr. Obama rails against capitalism in his speeches, undermines free markets with his policies, blames the very democratic institutions and Constitution which have conferred power to him, balloons our debt and demagogues necessary changes to government programs as ‘social Darwinism.’
How can the necessary innovations in government take place if they are fought tooth and nail by the President? How can our economy adapt to world competitive levels if half the population flirts with yet another recycled failed model of a big government social welfare state?
We will certainly wander in the wilderness, with both our economy and world leadership role declining steadily as long as the regressive detour from the 21st Century continues under Mr. Obama and is not soundly rejected by the American people.
I think there are at least two things this essay gets right that most such predictive essays get wrong. One it really recognizes that we just can’t know what the future holds and that it can be far better (or worse) than anyone can predict from known knowns – as Rumsfeld famously called them. WRM gets it that both known and unknown unknowns will transform what will happen beyond all contemporary power to predict. And the second is that he takes us back just far enough beyond living memory to remind us that we have faced uncertainly time and again and had to invent the future with our bare hands and wits. Around 1900 when that worker in the poster at the top of this article was stepping boldly into the Marxist future that never happened my Great Grandfather was hustling billboard advertising in the streets of New York with a company he started with $600 of borrowed money. He went on to combine the nascent computer technology used in the 1890 census with Edison’s electric light bulb and lit up Times Square with the first electric billboards. They were so new that the best Theodore Dreiser could think of to call them in Sister Carrie was “Fire Signs.”
I am not sure that developing countries will be in trouble if the Western countries don’t solve the problems with the blue model.
After all we are seeing immigrants every day in New York who are building businesses while home grown New Yorkers who grew up in the public school system and the blue way of doing things and its expectations fall behind. It is hard to believe those same immigrants could not effect change in their own countries as competition from the West declines and the action moves elsewhere.
“125 years ago there was a lot of doubt about what industrial society would look like.”
Yes, and even 80 years ago, a lot was in flux.
I think the most valuable reading I have ever done, in terms of comprehending the role of change in social institutions and social policy and politics, is the fiction of John Updike.
Updike grasped the imaginative universe of ordinary Americans. Unlike nearly all his literary peers, he found it interesting.
When I try to imagine the future, I think of _In the Beauty of the Lilies_, an Updike novel spanning the 20th Century, and the ways people saw themselves as part of an American world. It is about all the things discussed here.
“….prepare the way for something new….” Always love to here that. Who will do the preparing? You? No. We know who you mean, though. Here’s an idea. Why don’t academicians shut up, get off the stage, and leave the gullible alone. Let the way prepare itself. Pay the cops to take care of the criminals and do it. Pay the military to take care of our enemies, and do it.. Pay the highway department to take care of the roads. Get out of education, business, insurance, health care etc etc but most of all, tell the academicians to shut up.
It’s always inspiring to read Mead’s writing, but then what? What can Weeda Peeples do to help, cause, initiate this next phase? If we get to “make it up,” where do we go to do that? I’m getting tired of arguing talking points with my liberal friends, and think tanks seem to be mostly geared toward creating better talking points. It’s like we’re two guys shoving each other in the street calling each other “punk” with some kind of horizon-darkening calamity coming up quick. I’m for stopping the nonsense and trying to find points of agreement with my blue-skinned brothers. That’s what I’d like to see you write about soon.
I guess I’m a raving lunatic because I do believe there is a simple, workable new model.
If everyone owns part of the capital, then in a fully automated economy people can live off of the return on investment. The return on investment will grow as automation reduces and eliminates labor costs, and so it will become enough to provide a very comfortable living.
Government should tax the rich NOT to provide income (consumption). It should tax the rich and put the money into investment accounts. The investment accounts will then provide income, and therefore consumers, and the future economy can blossom.
Otherwise, how can an increasingly automated system continue, when there are fewer and fewer consumers who can pay for the goods?
The fight is over whether government runs the system – which I am convinced would be very bad – or whether we continue to have autonomy for many players who figure out what to have the machines build for us, which I think is the right way to go.
A free enterprise system in which government intervenes to make sure everyone is vested, everyone owns a piece of the means of production, would work increasingly well as we move into the future.
Call me a raving lunatic. I’m used to it.
“And that is under modern capitalism, that at our present level of consumption and given our present economic means of the distribution of employment and distribution of the goods and services of economic production, millions of people are entirely surplus.”
This is the difference between the modern “liberal” and conservative in a nutshell.
The liberal sees millions of “surplus people” who can’t possibly find a productive purpose and therefore need to be “taken care” of.
The conservative believes that no human being is “surplus” and that every person has productive capacity that, if allowed to, will flourish and allow an individual to provide for themselves if not grow wealthy.
Two examples – Dave Thomas, founder of Wendy’s was a foster child who never finished high school. More recently, the founder of 1-800-junk never finished high school.
To liberals these two would be a foregone conclusion – “surplus.” But despite their obstacles, perhaps because of them! They were able to become successful businessmen, who not only amply provided for themselves, but are the means of providing thousands of jobs for others seeking to do the same.
If our children were fed with this belief – the old American standard that you can do anything you set your mind to – they would be far better served than the present indoctrination of belief that they are part of the “surplus” who is somehow a victim of Capitalism.
Love your columns. But why do you play along with the calling it the “blue model” when it is obviously the “RED” model? It was a recent manipulation of the American MSM who got us to call Republican states “Red” and Dems “blue”. Not the most important issue, granted, it’s just a shame to always play their way.
Your descriptions of present-day orders and their breakdown are more persuasive than your historical narrations. They also seem to be more useful, considering the urgency of the present crisis.
As for the future, you seem always to write of “the next step” in the singular, as if the Earth were all one place and mankind all one flock that must move in a single way. Granting that we would, of course, like to save the whole world, it seems much more likely that men will save themselves piecemeal. Recognizing this, you could help your readers by showing ways, if you know of any, in which a country, a state in a federation, or a city might save itself in the midst of the broad collapse.
great piece. your take on the great sweep of history is inspiring. the “blue” dream was real until trickle-down economics replaced it. how do we as a society, an economy, get back to enlightened self interest, and away from the GREED of corproate and capitalist selfishness that breeds the envy of the reds?
Until Mark Twain became embittered after his beloved wife died because she believed in Christian Science instead of medicine, Mr. Clemens could be counted on for an honest report of the passing scene. His “Life On The Mississippi” and “Roughing It” are American travelogues describing the attitude & ambience of what it meant to be a U.S. citizen prior to the 20th century of Marxist murder, waste, & desolation.
Here Mr. Meade says, ” …capitalism, after a very unpromising start, began to raise living standards…” but I doubt that very much. Mr. Twain’s reports of life in 19th century America describe the Liberty-driven American-style capitalism that produced a nation of joyful, hopeful citizens unlike any that had ever existed before. Was it perfect? No. But it was better than anything else and it still is. It took the likes of Woodrow Wilson and Franklin Delano Roosevelt to throw a monkey-wrench into the works. Mr. Meade calls it “blue” and I can understand the necessity of avoiding the use of the words that Western Leftists have avoided for generations. Their gross dishonesty is a big part of their undoing. But the “blue” is after all Marxist Communism and has been since Marx’s “Communist Manifesto” was published. “Blue” panders to the very worst lights in the human spirit under the guise of “mercy for the poor and the downtrodden.”
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The crisis of civilization isn’t economic, its social. The ‘Blue State’ model has weakened the family – the place where people learn the traditions and values of the past and are encouraged to live them. At the same time the traditions and virtues of our civilization have been attacked by the a radical education and culture system. People without a connection to the past aren’t really part of a civilization. The insane and false idea of human beings as radically autonomous and disconnected from each other (the default belief of the elite in our society) arises in this context.
Capitalism might have been the basis for the start of the Blue Model. It has since become Cronyism and is the reason for the accelerating decline of Team Blue.
I came here from Instapundit to post a spenglerian jeremiad. Fortunately I read the essay first.
You’re right. I was wrong.
As the poet counseled, Cleave ever to the sunnier side of doubt.
It really doesn’t matter what you call yourself, liberal or conservative.
Facts are facts, and at the present levels of production, literally tens of millions of people are entirely surplus to the economic processes of production and consumption.
And further, under capitalism which strives for profit and efficiency, there is no way to bring them into the economy without a transfer of wealth from others, or charity.
And this problem will only get worse as the advanced technology needed for production requires less human labor. And this is a constant, whether a nation is capitalist or socialist, it leads to the same end.
Yes, new technologies will be created requiring new skills and labor, but overall as production efficiency grows, less labor overall will be required.
Reading thru these comments and this article shows me how blinded people are, who are now lost in concepts of “liberal/conservative” or the Western democracies “blue model”.
The “blue model” may have been the western democracies last great hope, but it was made obsolescent by global capitalism applied to labor markets and the elimination of trade tariffs.
It is striking that not a other single participant here, including Mead has grasped the root issue.
Mead’s comments suffer from the same flaw of most pundits – he has never held a senior position in government or politics, and thus has had no experience dealing with the most fundamental challenge all leaders face, namely, how little the decisions of government can affect the historical process. Moreover, in the area of the Englightenment, which is to say the Western World plus a handful of real converts, such as Japan, it is not government that moves the needle;it is a broad class of thinkers, tinkerers, artists, doers and business people, precisely where the West’s strength remains and precisely where the rest of the world is weak. Like George Will who writes about a game he never played, Mead writes about a ruling class he has never been a part of.
@Pete Martinez: Lucky thing for us that we have you to share the inside information!
The solution to these problems are found far more in liberty than in government, for the root of much of the economic and social dysfunction lies at attempts to level incomes, or to enable on group to live at the expense of others. Indeed, this is the core architecture of socialism: that we would all be better off if we each lived at the expense of everyone else.
But a Christian or Jew should see how living at the expense of others is just a form of government-enabled coveting and theft, each a violation of one of the Ten Commandments. What if we returned to those points and started repair of society based on the principle that whatever we were going to do, we must not do it at the expense of anyone?
Because there will always be indigent and disabled people, we would have to restore the institution of charity as a personal moral obligation. But people find it easier to put their faith in a tax levied on some, but not all, on a bureaucracy to fairly administer, and on “benefits” that everyone who qualifies equally receives, even when they are more than enough, or not enough in each particular circumstance.
This is same article being written over and over in slightly different form for about a year now.
The complexity of life in the technocratic age presents challenges that are beyond the capabilities of the majority of the world’s population to adapt to or thrive in. If the ‘blue social model’ is dead as you say, we’re in big trouble. That being said, I don’t think your model entirely reflects the reality of the causes of the current difficulties around the world. Governmental corruption leading to fiscal mismanagement, unrealistic foreign policy goals and catastrophic debt are playing a larger role. As is the deliberate dismantling of perennial social norms. Unfortunately, the way things used to be was better than things are and will be for a very long time to come… when things naturally settle down and a new norm is established. You will see.
Leslie, thanks for getting it. so few do.
The only way modernity will survive is with a broad distribution of wealth either by Capital or by State. Failure to achieve this ends the game since fewer and fewer will be able to buy anything each year.
Also the very people you want in your society, the achievers and dreamers and workers and consumers have pretty much realized they can’t fix the society and can’t have what they want for their children. Thus they are having fewer children .And this is not selfishness, no one is obliged to scrimp for their family so that the rich can stay rich.
With the pill and hopefully soon RISUG the era of free babies is gone and if it wants to survive Western civilization will have to stop being too cheap to pay for kids.
Understand that sub-replacement nations will not stay modern long as the only people who reproduce in them are the very poor (mostly much less smart) and the ideological who are willing to make arrows for the quiver.
Thats not going to give you a happy future.
Well over thirty years ago I read a book written by a physicist about what the world of 2081 might look like—its title was “2081.” It was very compelling read. One of its key predictions was that relatively few people would still be doing manual labor and most factory labor would be automated or performed by robots. Another was that everyone would be guaranteed a base salary by the government–it would not be enough to make people rich but it would allow them to live quite decently. There were still moneyed people of course. But for people not born into wealth they could supplement their base salary to whatever extent their ambition and talent allowed them. It was a very utopian vision, but also quite plausible. Recalling this book years later, and not all that long ago, it seemed just as plausible that politicians willing to pay almost anything to stay in power might also find a way to ruin this future.
The survival of Western Civilization depends it’s realization that most things in life work perfectly well without the sanction or heavy handed regulation of government. The blue social model is built on the opposite assumption. We all know where that is taking us.
Best comment: Mark J.
Human capital may be the way to trace the development of a new and better social model. Human capital was once defined as the ability to produce food and shelter. Later it appeared to be closely linked to manufacturing, e.g., Das Kapital. In our present era it is more closely linked to the provision of services in the U.S.. We may be seeing human capital break free into a special class of services that emphasize innovation, e.g., Microsoft, Apple, and Facebook. This notion seems to be deeply disturbing to many people who only see value in tangle things and utility services. If, however, food, shelter, manufactured goods, and basic services and utilities can be provided at a reasonably low price by automation with a low labor input, human capital has the greatest enduring value. Since only humans can have human capital, this means that every human is valuable. The next big question is “what is the best way to develop this somewhat nebulous human capital.”
Embrace the possibilities of the future? Spoken like a true academic. You want to get somewhere with the future? Start making money with it.
BTW I have been making money on the future ever since I got my hands on an Altair in 1975.
Probably because you have it wrong.
Unfortunately, we’ve had such periods of plenty before, with sudden rise in an amount of available human resources. They’ve always ended in a war, and this one will, too.
I’m not sure that the Blue Model produced anything useful or that it was the goal of those in developing countries. I think the argument can be made that Professor Mead may be confusing the characteristics of the parasites as being the cause of the growth of the host economy.
I’d also like to point out that there is no particular reason why the USA has to be the country that develops a model for the future. It may well be. Not because it has to, but simply because the economic and political forces that will likely provide the impetus for such a model are presently strongest in the US. The Blue model is essentially the exploitation of the the common customer/taxpayer by special interests. The demonstrations which started the Tea Party movement began as a revolt against those special interests (Big Govt, Big Business, Big Labor, Big Media, Wall Street,Academia, et al).
One question for prof. Mead — why wouldn’t Hong Kong (before the turnover to communist China) be a good model for developing nations in the future?
You’re making the Physiocrats’ mistake; you believe that the economy must be based on “necessities”.
One of my grandfathers worked on a farm when he was young, and became a successful pulmonologist in adulthood. He’s the only member of my family, the vast majority of whom are gainfully employed in highly technical professions, who could be considered to work producing “necessities of life”.
The rest of us — from the radio engineer to the astronomer to the music teachers to the software engineering manager — do whatever comes up to pay the bills. And many of these jobs pay the bills very well.
How in the world are so many of us poor surplus slobs employed?
We have a free market that harnesses and facilitates the creativity of every single member of society. That’s how.
The Chinese government can’t imagine what the future will hold. Tom Friedman can’t imagine what the future will hold. Mead can’t imagine what the future will hold. (Arthur C. Clarke got a shocking amount right, but even he missed most of it.) You can’t imagine what the future will hold.
You know what? You don’t have to.
When we have a free market, where regulations against new business are light, where centralized decision makers have very little veto power over new ideas, that means everyone with any gumption and imagination can create whatever portion of our new future that their talents best suit them to create.
There are hundreds of people — thousands — hundreds of thousands of people working today to take care of employing those “surplus” people. Only in a world limited by YOUR finite intellectual capacity (any one individual’s, or small group of individuals’ finite capacity, really) is a world where those “surplus” people can’t be put to work improving the lives of those around them, by doing work that those others are willing to pay them for.
Let me see if I have this straight… our governing class, of which WRM is criticized for not being a part, is not actually the group that “moves the needle”. However that group includes “thinkers”, a group to which WRM certainly belongs.
Is he then worthy of criticism, or not? Is he then a mover of the needle, or not? You don’t make your case very well, if at all.
Sigh. Some of you still don’t see it. Much of what is going to happen over the next 20 years will be scant of capital investment. Whole companies are being created right now out of IT ether that involve little in what is traditional capital. Fact in the old blue model much of that would be considered G&A expense. I don’t need servers, routers, and all the entrapement of a big firm. I can expense it out to Amazon Web Services, and see if the idea will pan out.
Fact is the fastest growing concepts, rapid 3d prototyping, is requiring little in capital. Five years ago this was a $50k investment. Now? You can do it for a $1k if you are handy with a soldering iron. And there will be a whole subindustry that will require even less capital — designers who will produce the Gcode for all those 3D objects people will want to print.
Technology is driving down the cost of manafacture. The idea is the thing, the object merely the vehicle for profit.
What is this nostalgia for the (imagined) past success of the blue model? This is quite simple: The blue model is to civilization as leaches are to a mammal. It is a parasite that sucks blood from the host. In the early 20th century few leaches covered the body. FDR added enough to begin to do serious harm. LBJ compounded it and the number of leaches sucking blood has grown and grown. The host doesn’t even have enough blood of it’s own but must resort of a 1 trillion $ annual transfusion to feed the scourge. The volume of blood sucking is destroying the host so now it’s time, we are informed, to move on to something besides applying leaches even though it was a good thing when the leaches were few and didn’t take so much blood they actually endangered the life of the host. But these things have a way of getting out of control. Dr. Frankenstein couldn’t control his monster either. So what is the future? The parasites will kill the host and then move to another or die if there is none to latch onto. It is their nature and they have none other. Optimists, however, hope for a scenario in which the parasites see the folly of their ways and embrace a sustainable level of blood sucking rather than the death gorge they currently practice. Somehow that supposedly wouldn’t be the blue model anymore. It is also too much to hope for.
Forgive me if the point has been already made in the many enlightening comments re: this thought-provoking article. Truth to tell, I cannot read them all.
Said point is this: the Western Blue Model is foundering because of an income inequality traceable less to the relative talents of members than the the outsized influence of a hereditary economic aristocracy. Yay entrepreneurs; boo the trust fund elite.
Am I wrong that two-thirds of the wealth of the upper 1% comes from inherited wealth? How are the recipients of such largesse distinguishable from the parasitic aristocrats of old? Certainly some improve upon the economic efficiencies wrought by their kleptocratic and/or entreprenurial progenitors. But history seems to suggest that by the 3rd or 4th generation we are dealing with coupon clippers at best.
The key Marxian concept was to give workers (now read: all of us, middle class pretensions aside) ownership of the means of production. Perhaps that should now read ownership of strategic equity and creditor positions.
If so, two challenges of the Post-Blue order are to provide avenues to social preeminence divorced from mere capital ownership, and to give workers displaced by automation and global competition not merely a sense of worth apart from employment status, but adequate income to believe said sense is not an illusion.
How do we deal with that other constraint: “The limit to growth”? Do we have to go the SciFi-way into the wild blue yonder, or is it “for-every-generation-to-solve-it’s-own-problems day”, while this generation consumes it all?ATTB