Friday, July 25, 2008

Social Capitalism

Our world's aging economic system is literally creaking at the hinges, and the signs are all around us. Global greed and ignorance, ably abetted by the disregard for regulation, has ignited a crisis of epic proportions. Visionary author and futurologist, Jeremy Rifkin, examines the labour issues in his excellent book, 'The End Of Work':

In 1995, 800 million people were unemployed or underemployed worldwide. Currently, more than a billion people fall in one of these two categories. The great issue at hand is how to redefine the role of the human being in a world where less human labour will be required in the commercial arena. We have yet to create a new social vision, and a new social contract, powerful enough to match the potential of the new technologies being introduced into our lives. The extent to which we are able to do so, will largely determine whether we experience a new renaissance or a period of great social upheaval in the coming years. The twenty-first century will increasingly be characterized by a transition from mass to elite employment as more and more agricultural, manufacturing and service work is performed by intelligent technology. Based on current and projected trends, in the year 2050, less than five percent of the human population on earth, working with and alongside intelligent technology, will be required to produce all the goods and basic services needed by the human race.

Peter Drucker says quite bluntly that the disappearance of labor as a key factor of production is going to emerge as the critical unfinished business of capitalist society. It's not as if this is a revelation. For years futurists such as Alvin Toffler and John Naisbitt have lectured the rest of us, that, the end of the industrial age also means the end of mass production and mass labor. What they never mention is what 'the masses' should do after they become redundant. Up to now, productivity gains have been used primarily to enhance corporate profits, to the exclusive benefit of stockholders, top corporate managers and the emerging elite of high-tech knowledge workers. If that trend continues, the widening gap between the haves and the have-nots is likely to lead to social unrest, with more crime and violence.

Yet, its conventional wisdom that the new labor-saving technologies of the Information Age should be used to free us for greater leisure, not less pay and growing underemployment. Of course, employers argue that shortening the work week and sharing the productivity gains with workers will be too costly and will threaten their ability to compete both domestically and abroad. That need not be so, however, competitiveness currently equates to productivity, and that usually triggers the natural impulse for lay offs. As more and more workers are placed in temporary, part-time and contingent employment and experience a decline in wages, purchasing power diminishes. Even those workers with permanent jobs find their wages and benefits falling. The quickened pace of corporate re-engineering, technological displacement and declining income can then be seen in stagnant inventories and sluggish growth, which in turn set off a new spiral of re-engineering, technology displacement and wage cuts, further fueling the downward drift in consumption.

Today, millions of workers are leased out to employers by temporary and professional employment organizations, the so-called 'just in time' work force. Others who once enjoyed full time jobs with benefits are now working under short-term contracts or as consultants and freelancers. Thus, the second Achilles heel for employers in the emerging Information Age, and one rarely talked about, is the effect on capital accumulation when vast numbers of employees are reduced to contingent or temporary work and part-time assignments, or let go altogether, so that employers can avoid paying out benefits, especially pension-fund benefits. As it turns out pension funds have served as a forced savings pool that has financed capital investments for more than 40 years. If companies continue to marginalize their work forces and let large numbers of employees go, the capitalist system will slowly collapse on itself as it is drained of the pension funds necessary for new capital investments.

With the market economy less able to provide permanent jobs and with the government retreating from its traditional role of employer of last resort, the civil sector may be the best hope for absorbing displaced workers. The opportunity now exists to create millions of new jobs in the civil society. But freeing up the labor and talent of men and women no longer needed in the market and government sectors, for the creation of social capital in neighborhoods and communities, will cost money. The logical source for this money is the new Information Age economy; we should tax a percentage of the wealth generated by the new high-tech marketplace and redirect it into the creation of jobs in the nonprofit sector and the rebuilding of the social commons. This new agenda represents a powerful countervailing force to the new global marketplace