Technological and economic change are outstripping the ability of our political institutions to manage them.
The recent Italian elections closely reflected the current situation in Europe and much of the Western world: total confusion. The left will dominate the lower house and the right will dominate the upper house. The discredited former prime minister and noted satyr, Silvio Berlusconi, made a substantial comeback and will have a great deal of influence on the choice of the new prime minister; that is, if anyone can actually form a government. If not, new elections will be called and cannot be expected to result in anything very different from the current situation. Equally significantly, the outgoing prime minister, Mario Monti, a technician who managed Italian decline fairly well during his tenure of office, did extremely poorly, while a former professional comedian, Beppe Grillo, symbolically did very well. All of this bodes ill for the future of the European Union and the euro.
While Europe, the United States and much of the rest of the world wallow in stagnation, recession and a staggering debt load, technology forges ahead, providing the opportunity for the development of a more prosperous and just world. 3-D manufacturing, advanced robotization and new oil and gas extraction techniques (especially "fracking") are making extremely rapid progress, and are transforming the technological/economic landscape, if that future is not entirely ruined by inept and/or corrupt political and social "leadership".
The factors of production: land, labor, capital and management, have been undergoing for some time a reconfiguration that can only be described as a new economic "revolution", with very favorable economic implications and extremely dangerous political and social results. Land is becoming less significant, as much of what takes place economically takes place in cyber-space and can be centered anywhere or nowhere, as exemplified by the hi-tech leadership of tiny Israel. Labor as an element in production is increasingly minor, as people are replaced by robots and the new equipment of 3-D manufacturing. Management is increasingly important, but also increasingly dependent on technical knowledge, not on the traditional kinds of management "skills". But the most important change is the ever-increasing role of capital, in the form of what one might refer to as "frozen knowledge", that is, computerization, digitalization, robotization and the new manufacturing and energy extraction techniques.
Thus income and wealth become ever-more concentrated in the hands of the owners of capital and those who have the requisite technical skills. The great majority in most countries, as a result, have become primarily owners of debt, precisely because they are not owners of capital. As such, they are ever-more dependent on the state for transfer payments - that is, income taken from the owners of capital and distributed by the state to everyone else (and to itself and its servants). This is the new serfdom, except that instead of people being serfs on large landed estates and dependent on landowners, they are serfs in their own countries and dependent on the state.
Almost one-half of the population of the United States at present is receiving transfer payments from the government. So they vote for those politicians who promise to maintain and increase those payments.
Income disparities increase, class animosity increases and dependency increases. All the while the possibility of enormous growth in social wealth also increases. There are only two alternatives: either capital is ever-more taxed to provide for those whose labor is no longer needed; or the ownership of capital is spread much more equitably, through such programs as employee stock ownership plans and community investment trusts.
"Own or be Owned" is the motto of one organization in the US dedicated to the spread of capital ownership (The Center for Economic and Social Justice), which also echoes the words of the prophet: "Justice, justice thou shalt pursue".
The alternative is continued and increasing injustice, class hatred, ludditism, political populism of both right and left, and social chaos. Review the history of the 1920s and 30s, starting with Italy.
Norman A. Bailey, Ph.D., is Adjunct Professor of Economic Statecraft at The Institute of World Politics, Washington, DC, and a researcher at the Center for National Security Studies, University of Haifa.
Published by Globes [online], Israel business news - www.globes-online.com - on February 28, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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