Our New Plutocracy
In any introduction to foresight we would be remiss if we didn’t include discussion of perhaps the greatest single negative socioeconomic development of the modern era. We are speaking now of the great growth in economic inequality and the consequent plutocracy that has emerged in modern industrial nations since the mid-20th century. Plutocracy, with its counterinnovative monopolies, corporate welfare, crony capitalism, corruption, and the erosion the social and educational contract for the middle class, including good jobs, affordable housing, education and health care, and a democracy based on evidence-based thinking, is a predictable development of the great wealth generated by technology and globalization, in successive waves since the Industrial Revolution. Wealth always accrues the fastest to the holders of capital, and never has it been built faster for corporations and the top 1% than in our modern post-1960 era of globalization.
As the futurist David Brin has said, for almost all of the last six thousand years, human culture lived under a pyramidal structure, where feudal lords denied power, property, and information to the lower rungs of the pyramid. Feudalism entrenched this inequality into the laws and norms of society. With the Enlightenment, circa 1600-1800 CE, we turned the Feudal Pyramid into the Democratic Diamond, a society with a large and healthy middle class in our most progressive states. We’ve had about 250 years of this great new form of government, social capitalist democracy. Most recently in US history, our grandparents can recall the the post-war US from the 1940s to the 1960s, when an average family enjoyed the highest wages and social benefits, and the fairest tax structure in recent memory. We’ve fallen quite far from that desirable state of affairs in the last three generations, and will have to build back up to it again in coming years.
Democracies are an incredible social advance, and we’ve had them for only a tiny fraction of our existence. They depend on an educated, productive, and well-cared for middle class, which must gain the largest share of social wealth. In diamond-shaped societies, only a small percentage of the citizens (5%?) live near the poverty line, and must be subsidized by society in order to survive. Most are in the middle class, and an educated, productive middle class keep the rich accountable to public interests.
Unfortunately, social capitalist democracy has a couple of structural problems that must be actively managed to keep it working. The first is a slow problem. Something called the law of accumulation, which we’ll discuss later, tells us that over time, profits will slowly but steadily accrue to those who already have the most wealth, a physical reality that causes all democracies to increasingly become plutocracies (governance by the rich), unless we intervene by political means. The second is a fast problem. Technological productivity (TP) is the primary creator of wealth (GDP) in the modern economy, and the faster technology improves, the faster it creates disruptive new wealth. Since the start of the Information Revolution in 1960s, technology has been creating wealth at increasingly accelerating rates. The income and assets of the richest 1% and 5% have grown so rapidly that economic, political and social power has increasingly flowed to the elites, out of all proportion to their contribution to society. In plutocracies, the elites use the state to shift the burden of paying for all the benefits of society back on the citizens, who become increasingly overtaxed, overworked, undereducated, and disempowered. In that grim climate, citizens increasingly disengage from the political system, leaving all the important social and political decisions to elites. This perfectly suits their ends, but impoverishes us all, as the average citizen can achieve only a small fraction of their real potential in such a state. Sociologist Jürgen Habermas aptly called this process the “refeudalization“ of civil society. It’s probably the best single term we could come up with for this process, as it has such a Big Picture historical perspective behind it. Take a look at what corporations paid from the 1950s to 2010, in the graphic at right, to see what the rich have been doing to our tax base in the last few generations, all while our society’s productivity has soared.
Refeudalization is a smart political strategy for the wealthy, as it keeps the average voter undereducated and in favor of deregulation to maximize job creation and innovation. Eventually, there will be so much technological abundance in our democracies that the average voter will be informed and wealthy enough to shift their priorities to include much more sustainability, interdependence, immunity, and intelligence, the other fundamental adaptive goals we discuss in this Guide, even in those cases where increased corporate regulation and taxation slows innovation. Unfortunately, until we are on the threshold of such abundance, we should expect that economic concentration and inequality growth will continue to occur.
Here’s a nice Sankey diagram of US income and expenses in 2010, and deficits or surpluses 1930-2010. Looking at the top part of this diagram, ask yourself if you think corporations pay their fair share of taxes for the benefits they get from society, including their right to exist as a legally protected entity. Consider that both individual income taxes and social security and other payroll taxes are levied on individuals, making them classically double taxed. Formally, companies pay a share of these payroll taxes, but they are levied on companies only when they hire people, as a penalty for employing them. Thus we see that they are truly taxes on employing people, and on the good work they do, rather than on corporations.
As Tim O’Reilly argues in his excellent WTF?: What’s the Future and Why It’s Up to Us (2017), both the ancient rules of accounting and our modern political economy are set up to make labor a cost to be minimized, rather than a net benefit to be optimized. Few companies use triple bottom line accounting, which we’ll discuss later, which tracks the social, environmental, and economic profit created by companies, and no country is taxing companies differentially based on the benefits they provide society in all three of these domains. Yet we could easily start down that road today, and we’d have a much fairer and more democratic society if we did. O’Reilly observes that financial speculators are among of the least productive and most disruptive actors in our modern economies. He argues convincingly that besides wholesale corporate tax and profit accounting reform, we need a financial speculation tax to start to rein in our financial plutocracy. I think we’ll eventually recognize this as voting citizens, but in in the meantime, we’ll see an increasingly refuedalized citizenry and state.
Yes, even the state has become refeudalized in our modern economy, relative to the new power of elite-owned finance, of Wall Street. Take a look at the US deficits chart at the lower right. The last time America ran continuous deficits was during WWII. Today, we are running huge deficits, and the state has accumulated some $20 Trillion in debt to finance a new war. As you may have guessed, this new war is a war on the middle class. The new game is to see how much wealth can be transferred from both state institutions and average workers into the hands of elites. In the world of finance, this game got us into the Great Financial Crisis of 2007-2008. But even though the GFC was directly attributable to the moral lapses of financial leaders, they have grown so powerful, and our politicians are now so deeply captured by the elite, that financial leaders like Goldman Sach’s Hank Paulson were the architects of the government’s response. For the last decade, our financial elites been making the state and its citizenry pay for their excesses, and they’re continually inventing new ways to impoverish both the state and its citizens.
Fortunately, people are beginning to wise up and fight back. Anyone who keeps part of their money in crowd-owned digital currencies like Bitcoin is someone who, consciously or not, is opting to actively create an alternative economic system, based on algorithms that reward average people, not elites. Many more such examples will emerge in coming years, and we’ll see several of them in this Guide.
The last major re-feudalization of American society, moving us away from mass wealth to elite wealth, happened in the 1880s to 1920’s. We call that era the Gilded Age. In that time “Robber Barons“, the captains of the second industrial revolution, grew wealthier than many of our governments, using many illegal, coercive and anticompetitive business practices. J.P. Morgan famously bailed out the US government in 1893. The term robber barons, interestingly, was also used to describe unscrupulous feudal landowners operating for at least a millennium in Europe, from 800 to 1800 CE. As the saying goes, while some things change, other things stay the same.
Fortunately, every so often our modern societies do a democratic reset, (democratic with a lower-case “d”, meaning people-empowering, not a political party) where leaders or voters act to restore the pyramid, via positive deregulation that increases entrepreneurship and competition, and by expanding free or merit-based education, resources, or services for average citizens. We saw early examples of resets during the administration of Theodore Roosevelt in the 1900s with the creation of antitrust law, and in 1914 with the creation of the progressive federal income tax, allowing systematic redistribution of wealth back down the pyramid, making it more diamond-shaped. Another major democratic reset happened between the administration of Franklin D. Roosevelt in the 1940s to Lyndon B. Johnson in 1960s. That thirty-year era saw massive new rights, entitlements, and wealth distributions go to the middle class. We got things like social security, medicare, fair labor standards, the GI bill, and civil rights. Higher education became vastly more affordable and was heavily subsidized at the time.
Positive deregulation to enhance competition and entrepreneurship has also been done periodically by both parties, but such legislation is more commonly introduced by Democrats. They’ve done positive degregulations in our transportation, communication, utilities, and other industries. One of the most important in recent times was introduced by Al Gore in 1991. It effectively made the internet public property, allowing massive new entrepreneurship to emerge on an open public platform. We’ve also seen negative deregulation, which acts to decrease competition and grow the pyramid, and that tends to happen in industries like finance, banking, and insurance. Both parties do this too, but such legislation is far more commonly sponsored by Republicans. The latest moves by the Trump administration to repeal network neutrality and give handouts to the corporations and the rich are just a recent example of this.
So as technology has continues its relentless accelerating wealth creation, the diamond gets periodically hammered back into a pyramid. No “conspiracies” or planning is required for this re-feudalization to occur. It is primarily a result of how technology and capital work together. In a world with ever growing technological and business opportunities, those with capital gain wealth far faster than those without it, raising economic and social inequality. Economists call it the law of accumulation, and we’ll a discuss it in our section on Inequality Cycles in Chapter 6 (Models). The information revolution, which began in the 1960s, has been largely responsible for massive new wealth creation at the top, and as corporations and the rich have grown in influence relative to the rest of us, they’ve increasingly reshaped the rules of society to their benefit, to reduce competition and further the growth of that inequality.
In 2014, the OECD published a report causally linking rising inequality to reduced economic growth, via reduced lack of investment in education by the poor, the poorer they become. That’s a convenient mechanism for a conservative institution like the OECD to get behind, and it at least opens the door for deeper discussion of inequality reduction. But I am convinced that this is a minor mechanism, and there are far more corrosive, and controversial, elements of plutocracy that need to be demonstrated by academic studies published by major universities and institutions. Most obviously is that the the super rich act aggressively to reduce competition at the top, the richer they get. I’d bet that the slowness of our recovery since 2008 is at least partly (30%? more?) caused by the extreme new levels of concentration of wealth we are seeing in the hands of the 1% globally.
In countries like Israel for example, about 20 families control about 50% of the value of the Israeli stock market, and own 25% of Israeli firms. Many anticompetitive practices and collusion occur naturally in industries where there is extreme oligopoly. Israel is in some ways a bellwether country for business dynamics that we can expect to occur later in other countries. After America, Israel is the most unequal wealthy country in the world. Today, twenty one percent of Israelis presently live in poverty. The country was a lot more equal in the 1950s, in the earlier years of its social democracy. Read about the Israeli kibbutzim if you want to understand their initially fervent, and far too socialistic, commitment to economic and social equality. There are exceptions to this oligarchic control. The information technology industries are the most obvious. Read Senor and Singer’s Start-Up Nation, 2009, for some great examples of information technology and defense innovation in Israel in recent years. But when industries don’t move fast enough, as most don’t, the rich can gain and maintain control of entire industries, turn the rules in their favor, and innovation and fair competition greatly slows down.
What about America? See this chart at left, from the White House OMB in 2012, to see in one glance what has happened to American workers since the 1950s under Eisenhower, the last era in recent decades in which corporate power was still strongly checked by government. Payroll taxes, which were less than 5% of federal income in the 1950s, have grown to almost 40% today. They are now almost as much as the individual income tax as a source of government revenue. As we’ve said, this is simply double taxation of the middle class.
Our current tax system has become massive transfer of wealth away from the middle class to the rich, which have now almost entirely escaped any meaningful payments to society for all the privileges they enjoy. Payroll taxes are a deeply regressive system that takes money from the majority of workers, but exempts the rich. Because these taxes are capped at $117,000 in annual income, folks who make more than this pay nothing on every additional dollar of income.
Payroll taxes are regularly raised, putting ever more of the burden of government funding on the middle class. If they weren’t capped, and were assessed based on income each individual makes, in any form, they would be far less. Corporate taxes, meanwhile, have dwindled to virtually nothing, and all the rich extensively shelter their personal income in corporations.
As this article by Mark Gongloff, HuffPost Business 5.22.2013 reminds us, the next time you hear a CEO like Tim Cook at Apple say “we pay all the taxes we owe,” think of this chart. That view is a joke. The reality is that Americans live in a vastly more feudal society than we did just sixty years ago. The diamond has been hammered back into a pyramid, and it’s time for another democratic reset.
Fortunately, foresighted investors like Warren Buffett have long pointed out economic inequality as the single greatest problem presently facing America. I recommend watching any of his interviews, like this one at right, to understand how massively positive America’s economic future is with respect to accelerating innovation and wealth creation, while at the same time how threatening are the inequalities of that wealth creation. Buffett has long mentioned that he pays far less in percentage terms in taxes than the line workers in his companies, all without using any income tax shelters, and that reality deeply disturbs him, given the implications of rising inequalities to fabric of our society and the quality of our democracy. In this 12 min video, which should be required viewing for all of those who complain about our current world, he explains how strong our capitalist system is, and at the same time, how shameful it is that at least 20% of American families live in near-poverty, in households with less than $21,000 of annual income.
So what’s the good news? World futurists Andrey Korotayev and Leonid Grinin have published a well-argued, data-rich book, Great Divergence and Great Convergence (2015), which argues that technology has given us six hundred years of increasing social economic divergence, in our leading societies. Yet at the same time they show we’ve been in six decades of increasing economic, political and social convergence, at the global level. So while individual nations are still seeing growing rich-poor divides within them, globally, poor nations and rich nations get closer together in economic, political, and social power every day. The world is becoming one global superculture, and the plutocrats can’t stop that natural developmental transition. They can only delay it for a time. But since we all have the vote, and since individual intelligence will continue to grow, via our sims, and since the world will become more transparent and connected and regulated, via technology, it’s obvious it will become more and more like a single global organism. Natural organisms don’t continue to diverge. After a phase of evolutionary divergence they converge on the optimum relationships, including the optimum differences in wealth and opportunity between rich and poor. Our biological economy transitions from evolutionary experimentation to developmental regulation, and from that point forward, evolution only continues in new, higher domains of complexity, as in the evolution of ideas and technologies, markets that will be increasingly dominated by intelligent machines, not biology. We humans, by contrast, finally reach a dynamic equilibrium that is most adaptive for our biology, which unlike our technology, changes so slowly that it is effectively unchanging.
What will that convergent future political economy look like? Some aspects pf it have been in the wings for decades. In 1969, President Richard Nixon, a Republican, proposed a negative income tax as the foundation of his welfare reform program. Every family with less than $10,000 of annual income would have received payments from the government, to maintain a floor of $1600/year ($10,000 in 2016 dollars) for every family of four. It would have been paid for by a progressive income tax on the rest of Americans. This would have been the start of a basic income guarantee, and a great step forward, but Democrats objected to the low numbers, and Nixon himself became of two minds on the policy. See this excellent article by Rutger Bregman, The Correspondent, 5.17.2016, for the details.
As an example of our present state of economic inequality, as Gar Alperovitz outlines in What Then Must We Do? (2013), mean wages haven’t gone up in the US for the last four decades, while the top 1% (3 million Americans) now make as much money as the bottom 180 million Americans, representing almost 60% of our society. Asset inequality is even worse. A 2014 study shows that the top 0.1% of Americans (300,000) now own as much wealth as the bottom 90%, 286 million of us. The 400 richest Americans, a group plenty small enough to be called a collusive oligarchy, now control as much wealth as the bottom 50% of Americans. These are sickening statistics.
The highest marginal tax rates on the wealthy were 91% in 1950, and are 20-35% today. Corporate taxes have fallen from 32% of federal revenues in 1952, to 8% in 2011. Corporations now effectively control many of the institutions of American democracy, a condition that wasn’t true in the 1950s, and there is vast economic concentration in most of our most lucrative industries (banking, insurance, health care, energy, broadcasting, telecom, transportation) with most wealth flowing through a very small number of corporations, which act as policy cartels.
For a financial industry example, the average inflation-adjusted size of US banks has increased more than fivefold since 1984, while the number of banks has dropped from 14,000 to barely 7,000, and continues to rapidly drop. The top four US banks now hold nearly 40% of US citizen deposits, and from 2006-2012, the top six increased their relative assets from 55 to 60% of US GDP, during the bank bailouts. This advanced economic concentration in several of our wealthiest industries, and the corruption, oligopoly policies and unfair profit extraction that come with such concentration, now appears immune to any kind of antitrust regulation. Both the breakups of Standard Oil in 1911 and AT&T in 1984 were fully reversed by legal re-mergers a few decades later.
Also, the more expensive running for political office has become, the more the entire process is owned and run by and for the wealthy as well. It cost all US Presidential candidates $92 million to run for election in 1980. By 2008, candidates were spending $1.1B. By 2012, it cost $2B, doubling in just four years. And with the recent Citizens United court decision, corporations have lost any remaining restrictions on their campaign spending. Out of the wealthiest 21 OECD countries per capita, the US now ranks 19th in public spending on social programs as a percentage of GDP. No reasonable futurist should expect this spending ratio to improve anytime soon.
In our near-term future, the more biased our political systems becomes toward ownership and operation by the wealthy—the clearest term for this is plutocracy—and by our largest corporations, the plainest term here being corporatism, the more implausible any reform strategies seem. Understanding this state of affairs is thus an important insight for anyone doing economic, political, and social foresight work, and one of the basic concepts that must be addressed in any good foresight guide.
It helps to realize that wealthiest Americans live, as always, in a truly different world. They don’t have to worry about our failing public schools, lack of health care, good middle-class and lower-income jobs, or most other collective problems. They aren’t affected by the poor quality of our modern security systems like the TSA, which has yet to figure out how to trust and pre-clear the vast majority of American citizens for their airline flights, because their corporate jets aren’t subject to intrusive security screening. Unfortunately, they can often profit directly from the inefficiencies and waste in our finance, health care, defense and security industries, via ownership interests. In short, they are to a large extent unaccountable, and are likely to remain so for some time to come.
What’s more, our new American plutocracy, with its corporate-owned mass media, has been increasingly effectively used since the rise of the neocons in the 1980s to polarize the American political scene. Rather than seeking compromise and action, we now have privately-funded think tanks, pundits and slick 24/7 news networks pandering to political polarization and noncooperativity. This noncooperativity between our newly-built churches of “right” and “left” is not new. It has happened several times before in many countries in times of middle class stagnation. Don’t expect it to go away anytime soon, because the polarization strategy, continually reinforced by media and party representatives, seeking, or falsely creating, fresh new stories to offend us is an effective way both for each party to generate interest and outrage, and an effective way for the right to keep creeping overregulation and socialism at bay. Both think they are making the world better by polarizing the debate, meanwhile the government becomes deadlocked and ineffective as any kind of check against the ever-growing power of corporations and the wealthy.
The Global Financial Crisis of 2007-8 briefly highlighted inequality and job concerns in the US, but massive state financial support of the economy via quantitative easing, and continued deflation due to relentless technological advance have kept inequality and jobs secondary political issues, for now. Yet with recent bank bailouts and other corporate welfare initiatives during the crisis ($700M in the 2008 TARP program alone), American citizens increasingly hold the opinion that the US political economic system no longer reflects average voter values. Other than low-impact “leaderless protests” like the Occupy movement of 2011, they just don’t know what to do about it, yet.
Things have taken a particularly sour turn with the election of the nativist plutocrat Donald Trump as President in 2016. His “alt-right” followers more closely resemble the American Confederacy of the U.S. Civil War era than the classic conservative Republican party. They don’t listen to evidence that contradicts their beliefs, they seek to undermine the power and value of science, and they openly champion feudal values, where the new lords are the richest among us. We’ve got growing media and social polarization, a new proliferation of fake news, and it seems like we are farther from a democratic reset than ever.
Fortunately, there are solutions ahead, which will arise as our technological abundance grows, but only some of them, like basic income, are being talked about today.
We’ve attempted the most predictable solutions with the periodic election of Democrats to our presidency (Clinton, Obama) and other offices. But in a deeply plutocratic environment, Democrats are as hamstrung as Republicans. They must serve the rich and the corporations to get anything done. As Michael Parenti describes in America Beseiged (1998), the two parties have become increasingly identical as corporate wealth has grown vs. the state. Today we have a government of Republicrats and Demopublicans, to use Parenti’s terms, both catering almost exclusively to the interests of the rich. Our choices are Coke and Pepsi, and neither typically will or can empower the middle class.
The rich, as we have said, are content to see both parties lose their values and become politically deadlocked and ineffective. Clinton managed to balance the government’s budget after years of deficits, and Obama managed to get the JOBS bills passed to help small business, but we are hard-pressed to find more examples of benefits for the average person from Democratic administrations. Even “Obamacare” couldn’t be passed without premium hikes, a major defeat for his administration that rightly angered many Americans, and has fueled calls for a rollback from the right.
That attempt at reform was a lesson in how hard it is for modern governments to try to restrain the rate of profit growth in the medical-industrial complex, which has grown to be the second-largest industry in developed economies, after finance. The US spend three times as much on health care as we do on defense during peacetime. Health care may eventually grow even larger than finance, as our average age keeps growing and as medicine gets ever more useful and personalized.
The election of Trump, a right-populist demagogue, in 2016, was a predictable effort by frustrated middle class voters, particularly those in the South and Midwest, to improve their lot, as the first-level solution of turning to the left has proven ineffective. A Trump presidency may be good for big business for a while, and help us roll back some of the political correctness and regressive leftism that we’ve seen from the liberals in recent years, but it will likely just make things worse for small business, where we really need the help. We may see at least a media focus on good US jobs and manufacturing, and a long-needed social stigma against corporations doing business here that don’t commit to keeping a strong technical competency here at home.
In the Trump administration, I would love to see a government body producing, or a subsidy for private production, a series of numbers on the ratio and quality of US jobs provided, per dollar of domestic revenue earned, for every major public and private corporation doing business here. That would be an example of Trump “walking his talk” in a way that might actually benefit America. But in reality, as a politician, he may not even have that level of power. Such a bill would likely die in committee, and be attacked by the corporate-owned media. It is directly adverse to the interests of the plutocracy. Like Reaganomics in the 1980’s and Bush II in the 2000’s, one of the few things we can predict with 99% certainty is that we’ll see even greater wealth distribution to the rich from the rest of society during his administration.
History shows that in its early stages, plutocracy has many advantages. Plutocratic systems get more done, more efficiently. Then they become inefficient, and the country swings back to a more democratic state, in a natural cycle. Then too much democracy becomes ineffective, and leaderless, and the next wave of technological change creates opportunities for plutocracy again. We describe this as the Political-Economic Pendulum in Chapter 8.
We’ve been growing our economic plutocracy strongly since the 1980s, when incomes between the deciles of American society started diverging again, after decades of converging during the New Deal and WWII. As seen in this Mother Jones chart of Piketty and Saez 2012, we’ve now reached levels of inequality previously seen in pre-Depression 1920’s America.
We’ll inevitably see a swingback to a more democratic state, meaning a set of real and broad improvements to our social contract that rival the massively positive ones our grandparents and parents got in the 1940’s (free education, health care, social security, civil rights, etc.). It’s just going to take a little bit longer before we get organized enough to make those changes happen.
We aren’t saying that wealth and income inequality, as measured by the difference between the highest and lowest deciles of society, won’t continue to grow. That may very much be in the cards for us. Physicist and Evo Devo Universe scholar Adrian Bejan and Marcelo Errera published a fascinating 2017 paper arguing that such inequality is developmental. What we are saying is that the size and strength of the middle class, and the particulars of its social contract, is clearly a free evolutionary choice, which varies widely today between one developed society and the next.
We can unfortunately predict that the democratic reset we need on our growing plutocracy is not going to come from an American president anytime soon, given our current gerrymandered and polarized political system. For example, even if a more entrepreneurship-friendly and S&T-aware version of Bernie Sanders (a candidate who fell far short of what is needed on both counts) is eventually elected on a populist surge in a few years time, their administration would most likely be legislatively hamstrung by our plutocrat-controlled Capital Hill, and their message would be largely neutralized by our plutocrat-owned mass media.
One current reality is that the American people don’t yet realize the centrality of information science and technology, entrepreneurship, and virtual immigration (global technical workforce remotely employed by our entrepreneurs) policy to modern wealth creation. Another problem is that leading corporations can effectively use their political influence in our captured legislatures and regulatory agencies to limit any policies that would seriously develop S&T, entrepreneurship, or virtual immigration, as all of those and related policies would threaten their current business models. Thus a middle class oriented populist that directly championed these issues would presently be unelectable. They’d have to come in under a different set of agendas and then switch focus, making the prospect particularly difficult at present.
Consider the cartels in the US telecommunications industry. They are unified in a strategy of slowing deployment and denying gigabit fiber to the home as long as possible, as that response maximizes current profits and prevents real competition, like true internet television, from developing. America invented the internet but we were 30th in the world in cost per megabit in 2014, and I doubt we are better ranked today. There is likely little overt conspiracy, just structural oligopoly and the deep bias against innovation and competition that results from it. We see this across the economy but most obviously in what we will call, in Chapter 5, the FEMMIT complex of the world’s most wealthy and influential industries. Trump is presently doing what he can as of this writing to dismantle net neutrality and serve the telco lobbies, so we can expect continued poor broadband development and telco oligopoly growth for his administration, at least.
Thankfully, accelerating science and technology continues almost regardless of political environment. In the fastest moving industries, especially information technology, at least outside of telecommunications, oligopolies are continually being disrupted by new entrants. Exponential innovation, and its exploitation by entrepreneurs, can’t be stopped. They can delay broadband growth for years, but they can’t stop it.
This Guide predicts that the next major democratic reset, with competitiveness and entrepreneurship reforms, social contract expansions and wealth redistributions mirroring the 1930s and 1940s, will come from the continued acceleration of information technology, with the most powerful applications being our personal sims and the high-bandwidth and multisensory connectivity and knowledge web behind them, and a series of sim-coordinated mass activism movements, headed by millennial opinion leaders, that brings us individual-empowering and redistributive reforms. We’ll see reforms like a living wage Basic Income Guarantee, constitutional amendments, campaign finance amendments, and a great many new forms of digital empowerment of the average voting citizen.
Accelerating information technology, and its use by entrepreneurs will increasingly give each of us new tools for mass collaboration and mass civil action. Over the next fifteen years, information technology will deliver a suite of increasingly powerful and personalized software tools and platforms that will start modeling our interests, and lobbying to protect and advance them in the world. The most powerful of these tools is what I call a personal sim, and we’ll discuss it in Chapter 2. Sims will allow us to collaborate, entertain ourselves, learn, buy, vote, and sponsor initiative legislation that truly advances our own interests, as we will see.
Second, we will eventually see a social movement, run by well-spoken opinion leaders, to use these new technologies to incite mass social actions (non-unionized strikes, walkouts, protests, etc.) that will put broad and unprecedented pressure on our dysfunctional and rich-focused governments to institute these changes. As an inspiring example of that, I’d like you to think about Lech Walesa, the Polish electrician whose organizing efforts over the 1970s and 1980s, eventually imitated by others who saw his successes, became one of the primary sparks that motivated others to end eighty years of Eastern European Communism.
Virtually no observers at the time thought political and economic structures could change so quickly and peacefully, in so many countries. But they did. The kleptocratic regimes that followed in the most corrupt countries were often not much better, but Poland, Estonia, the Czech Republic, and many other countries have been great exceptions, signaling the possibilities of good governance. For more on how mass actions have always been the most fundamental creator and legitimator of the state, and their irresistable force once they reach a certain threshold in size, see the excellent A Force More Powerful: A Century of Non-Violent Conflict, 1999, or watch the film of the same name.
These insights make me predict a strong swingback from plutocracy in many digitally advanced countries in the next few decades, one that ushers in a Basic Income and related reforms, perhaps in our industrialized democracies first, and other democracies soon after. I expect it will be a mostly peaceful social revolution, but there will also be conflict, and a number of modern Walesas, as we all need leaders to follow. Mostly, however, it will be amazing new forms of technological interconnectivity and intelligence, that will drive this democratic reset.
A hundred and seventy years ago, when the telegraph was invented, utopian futurists imagined that it would melt away our differences, make borders irrelevant, and create new empathy between human beings. But as futurist James Hughes has observed, it didn’t have the bandwidth to fulfill that vision. Visionary thinkers have imagined the same for the airplane in the 1920s, the personal computer and video phones in the 1970s, and they are now imagining it for shared virtual and augmented reality devices in the 2010s. Are these visions justified to any degree?
We are seeing a progressively less violent and unempathetic world today, and I do believe that is mostly a direct result of our ever-growing connectivity and bandwidth. I would argue that the growth of our global digital culture and connectivity are primarily responsible for steadily decreasing severity of violent actions, per capita, over the last century, as reported so well in Stephen Pinker’s The Better Angels of Our Nature: Why Violence Has Declined (2011). I’d also say that the accelerating loss of minor languages on Earth today another direct effect of our increasing bandwidth and connectivity. While we are losing some cultural diversity in that process, and foresighted people are trying to reduce that loss by recording what we’re losing, on balance I see this accelerating de-babelizing of our global society as a good thing. It will only increase empathy and cooperation for us to all be able to speak the same languages. After millennia of evolutionary diversification, a great new development, an emergent unification, is now occurring. We’re becoming one global supersociety, as we’ll discuss.
But it isn’t just digital bandwidth or connectivity that empowers people. It’s the intelligence of the digital medium itself. What we are beginning to understand is that technology is itself a learning system, one that will eventually come alive and wake up, and in the long meantime it will become an ever more intricate extension and amplification of our biological selves. In short, our “digital selves” are emerging, as we’ll discuss in Chapters 2 and 10, and our coming personal sims will increasingly understand and look after our values, and help us organize and be politically active in very powerful new ways.
That doesn’t mean plutocracy ever goes away. As a form of governance it is as necessary as democracy, and too much of either has historically been shown to be nonadaptive. Just as too much plutocracy tends to corruption, authoritarianism, and anticompetitiveness, too much democracy tends to bureaucracy, socialism, and anticompetitiveness. The sweet spot for innovation, for technical and social progress, is fair, regulated competition, and reasonable rewarding of individual and corporate initiative, but to a degree that doesn’t disempower the state or its citizens.
This apparent fact of nature means that countries will naturally swing between both states, ideally not getting stuck at either end for too long. Since it becomes increasingly dysfunctional, I have faith that our current excesses of plutocracy will be rectified, and for some decades afterward, it will be most accurate for sociologists to describe our most developed nations as primarily social democracies again. It is our activisim that will have to restore the balance.
Economic historian Walter Scheidel in The Great Leveller: Violence and the History of Inequality from the Stone Age, to the Twenty-First Century (2017), gives a wealth of evidence from the history of all types of governments so far that only major system shocks, including pandemics and plagues, deeply economically damaging (“great”) depressions, mass-mobilization warfare, and powerful, and usually violent, social revolutions have caused reversals of inequality over the years. Almost all political reforms that are initiated within a plutocracy only slow inequality growth, at best. Scheidel observes a plutocratic system is generally too rigged to self-correct, via internal mechanisms.
Most of the system shocks Scheidel cites are rapidly disappearing from our ever more interdependent and automated society. But personal sims, an artificial intelligence application discussed later in this chapter, are going to keep accelerating in power and intelligence, and I predict they’ll soon be as or more powerful than the other systemic forces described above. More generally, the force of regular entrepreneur- and technology-driven creative destruction, discussed in our section on the Political-Economic pendulum, in continually accelerating industries like infotech and nanotech, will also continually shock our economic system back into a more innovative, less plutocratic state.
Creative destruction is the less powerful of the two great leveling forces, as it only occurs reliably in markets undergoing rapid technological change. In all other markets, the degree of real competition and innovation depends on the quality and cost of access of education, our legal structures, the impartiality of our courts, and the strength of our institutions. In many industries in capitalist plutocracies, oligopolies have grown strong enough to buy up early competition and limit the rise of new players. But fortunately, the more information technology infects all industries, the more periodic creative destruction we’ll see in those industries, as they become continual learning zones.
In my view, personal sims are the major solution, the most powerful “social revolution” ahead. The smarter the sims get, the more we’ll use to guide us to the intersection of our current values and evidence-based changes to our economic and political system that we expect will maximize social progress. We are heading into a new and exponentially more intelligent form of democracy, one that hasn’t existed historically before, which greatly limits the conclusions we can draw from Scheidel’s past data.
Scheidel never mentions creative destruction in his otherwise very impressive work. The idea that we will all soon have increasingly intelligent personal software assistants (personal sims) interpreting our world for us, and helping us with our purchases, actions, activism, legislation crafting and passing, candidate and party selection, and necessary constitutional amendments, is also missing from his forward analysis. Yet that is the kind of democracy that is, fortunately, in the cards for our children. If we’re lucky, and get busy making it, we adults will see it as well.
So while it is easy to get depressed when we learn the facts of modern plutocracy, it is quite uplifting to realize that science and technology will continue to grow exponentially in power and intelligence in coming years, far outstripping our global elite. Very soon intelligent personal software will be advising us in what to learn, what to buy, who to associate with, and how to vote, and we’ll all be living in a very different kind of democracy. You may not believe this story, but would you have believed me in 2002 if I’d told you cars would be driving themselves legally in some states within a decade (Nevada, March 1, 2012)?
In the latter half of this century, our machines may get so smart they will surpass all humans on the planet in their wealth and capabilities, a topic futurists call the technological singularity. They are also likely to offer us several ways for our memories and minds to enter their world, a topic futurists call uploading. Both of these coming events are far more evidence-based than most folks realize today, so we will discuss them in this Guide.
What the most informed experts argue about today is no longer whether such events are possible, or will happen, but when they will happen. So we’ll cover those controversial topics in Chapter 2. Whether we want to hear it or not, we are rapidly headed for a much different world. With good foresight, ethics and cooperation, we can also make it a much better world.