Via capitalism, we are constantly barraged with the idea that continual growth is mandatory. Who came up with this concept? I’ll give you three guesses and your answers will probably be the same all three times and will probably be correct. Capitalists, of course.
The capitalist propaganda is that constant growth is necessary for capitalism to even survive. No, it is not. That is not even necessary for the stock market to survive.
Continuous growth is toxic. The striving for continual growth is what destabilizes markets, leading to highs and lows, including market corrections, retractions, crashes, recessions and depressions. Market stability is far more desirable and economically healthy. However, that is not desired by major investors because then the market flattens out with little movement. No huge profits for speculators who buy low and sell high on a daily basis.
The fact of the matter is, competition on the scale we see today is not healthy. There is no problem with one company being an industry leader in one geographic area and another company being a leader in another geographic area. The so-called competition we see today destroys companies and reduces choices in the consumer market. Hostile takeovers and mega-mergers serve no positive purpose for consumers or the labor market.
Productivity is another myth. Increasing productivity effectively decreases wages. If you work for a company and you produce one widget per hour for $10 an hour, the company makes a profit for what you produce. If the company introduces a new machine or process to increase your production, you may produce two widgets an hour. However, your pay remains $10 an hour. One assumes that the company is making twice the profit for your production but the truth is that they make more than double the original profit. If demand has not increased to the point that the company is now selling twice as many widgets, what happened is that one job is eliminated. This is what most commonly happens. So now the company is paying half the wage but also paying less in benefits. Less spent for vacation, sick time, insurance, liability, possibly health insurance and payroll services. Chances are good that if they reduce personnel enough, now they need fewer lower and middle management.
This is also one way that entire factories can cease to exist. If a company has two factories and double the output at one of those, they may close one factory. Like I have explained before, this has downstream effects. If a city or town has a significant part of the local economy dependent on a factory which closes, the results can be devastating. Now workers have no income, there are fewer jobs available in general, the unemployment rate increases, consumers spend less which impacts other local businesses. The other businesses may lose so much business that they are then forced to lay off workers or close their doors completely. There is less tax revenue collected which goes to fund schools, libraries, road repair and other municipal services. If it is a small town, the entire town may cease to exist.
Capitalism is a machine which never stops consuming, devouring all it encounters. Marx predicted 150 years ago that capitalism would reach the point where it would ultimately consume itself. That is the point we are at today. Increased productivity, automation, centralization and consolidation reduce the available jobs and career paths on a daily basis. Mergers and acquisitions have become larger than those of us over 50 could never have conceived 30 years ago.
Since the Industrial Revolution, as technology has advanced, we have gone through cycles of technology creating jobs, then mechanizing and automating jobs nearly as quickly. When was the last time you met a telephone operator? Print setter? Proof reader? Copy shops were once a common sight, far more rare today. 3D printing and self driving vehicles stand to eliminate millions of jobs in the next few years. I’ve pointed out many times that one self check register eliminates 4–6 jobs, with an average of 10 per large store, multiplied by tens of thousands of stores nationally. McDonald’s alone set a goal in 2016 of eliminating 55,000 jobs through order kiosks. They met that goal and are only one chain of many using them. Sit down restaurants are using touch screen ordering systems to reduce wait staff.
At each stage, productivity is increased while jobs are eliminated. The contradiction and danger is that each job eliminated reduces consumer earning and thus spending.
Consumer credit debt is at the highest level in history. Credit is easily available, though credit at affordable interest is only for the privileged. A huge percentage of those with credit debt have interest rates on that credit which is formidable and leads to consumer failure. That system is collapsing at this moment as we see repossessions and student loan defaults rising. Millions are trapped in a cycle of using one credit account to pay on other credit accounts while millions more are trapped in the payday loan cycle. This is no longer a distant early warning sign. This is a klaxon signalling impending collapse in the very near future.
The trade war with China is not a surprise. It is not a mere political stunt. It was inevitable under our current system and has been coming for many years. It is not reported as such by corporate media but the real point of the tensions with Russia, Iran and Venezuela are also trade conflicts. I do not expect it to be long before tensions increase with India, as they are a rising manufacturing and consumer powerhouse. We can also expect more tensions with Mexico as wages and employment in Mexico increase, which will result in an improving consumer market. That will cause increasing pricing on goods coming from Mexico as the domestic Mexican consumer economy competes with the export market to the US.
Yet one of the biggest problems of all is that sustained expanding growth is simply not possible. There are limits to consumer need. No matter how many crops are grown, people only eat so much. No matter how many vehicles are produced, people can only drive so many cars at once. All of this is limited by the ability of consumers to purchase goods while gainful employment (sic) continues to contract. See my last article, here.
All of this is completely aside from increasing environmental damage accelerating as climate change worsens and our deadline draws near to change course.
I’m really not sure what the rich and greedy expect to happen from here. Can it truly be nothing more than to be more comfortable than most as the world is incinerated? Even if they have bunkers to hide out in which the population cannot breach, what kind of life is that? How long do they think they will survive?
Without radical changes to the capitalist system, we are absolutely doomed to failure. Not only as a country but as a species. All for the greed of a limited percentage of the population. Unfortunately, that change will only occur if the most radical of us become far, far more radical than we are. The general population will continue believing what they are told by corporate media and corporate politicians until they have absolutely no choice. By then it will be too late.
So we have to act. Entire nations need to work together. The rich need to take what they have and decide they finally have enough. Because growth and productivity have reached their end point.