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The economy doesn't need your labor OR your consumption

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One thing this article doesn't mention is that the Financial Times opinion piece cited at the end -- you can get past the paywall by Googling "Financial Times end of consumption" -- is by Robert Skidelsky, who was until fairly recently a Conservative and a life peer.

Thanks Joyce, that article is fascinating:

Until fairly recently economists envisaged three stages of economic development.

First, there was the stage of capital accumulation started by the industrial revolution. The Marxist historian Eric Hobsbawm called it the age of capital. Society saved a large part of its income to invest in capital equipment. The world gradually filled up with capital goods.

This stage, economists thought, would be followed by the age of consumption, in which people began realising the fruits of their previous frugality. They would save less and consume more, as the returns to new investment fell and the possibilities of consumption expanded.

Then would come the third and final stage, the age of abundance. With a surfeit of consumption goods, people would start swapping greater consumption for greater leisure. The world of work would recede. This was supposed to be the end point of the economic phase of history.

Much of the world has not yet reached the age of consumption. The Chinese, for example, still save and invest on a colossal scale. Our problem is that western societies remain stuck in the age of consumption. We are much, much richer than we were 100 years ago, but hours of work have not fallen nearly as much as productivity has risen, and we go on consuming more than ever. We seem unable to say “enough is enough”. Why not?

Three reasons:

1. Variation. The continued improvement in the quality of goods, plus customization on a mass scale, stimulates the appetite for serial consumption, keeping up the hours of work.

2. Insatiability. Having more seems to make us want more. Because wants are relative, not absolute: The richer we become, the more we feel our relative poverty.

3. Winner-take-all. The rich raced ahead of everyone else, capturing most of the fruits of increased productivity. The result has been to leave big holes in our consumption society. A lot of people still do not have enough for a good life. In Britain, 13m households (21%) live below the official poverty line; America is worse.

This partly explains the huge rise in debt, as people aim to compensate for stagnating incomes by borrowing. A worse problem in America is that many citizens don't even realize what's happening:

"Only 42 percent of Americans believe that inequality has increased in the past ten years, when in fact the increase has been tectonic."

Robert and Edward Skidelsky, the authors of the FT piece, have written a book that favors dividing employment as a solution to the new problem of underemployment of a large part of society: "How Much is Enough? The Love of Money and the Case for the Good Life..."

Has anyone else read Player Piano by the wonderful Kurt Vonnegut Jr?

This is a fascinating topic. Thanks for sharing, Joyce!

Three questions come to mind:

1) Is a large human society capable of existing without interpersonal competition?

2) If #1 is true, is that society capable of advancing / innovating?

3) If these kinds of changes are not implemented globally and simultaneously, would not the first societies to adopt this model be overtaken / conquered by the societies still in the consumption or investment stages?

I obviously don't have the answers, but I'm curious whether anyone has thoughts about these.

1) Eh, I think people will always find a way to compete. Why does competition have to be about shit you buy rather than shit you do?

2) It's a good question and obviously no one knows. I do think that in a lot of areas of life, probably we've innovated kind of enough... or at least to the limits of our environmental and knowledge resources at the moment.

3) Not to be ridiculously optimistic about it, but let me suggest a different way to think about it. Here in Silicon Valley, we have an awful lot of extremely wealthy and well-educated and lucky people. Yes they have bigger houses than you and me... but no one here gets social status by having a bowling alley in their house. They may or may not play golf, but they don't seem to care much about their golf score either. They do spend more than the average bear on cars and that type of toy :) -- but in my experience, the wealthy of Silicon Valley do a lot less conspicuous consumption than any other group of comparably nouveaux riches.

As far as I can tell, the only thing that gets you social status around here is the extent to which your advice is valuable to other businesspeople. If no one wants you to invest your time and money in their enterprise, you are dunzo here -- no matter how big your yacht might be.

Now, by no means is Silicon Valley representative of America at large. But are we being overtaken or conquered by consumers? I think not. :)

reminds me of

In an era where technology improves based on Moore's Law, the only rational short-term play is to focus on the uniquely human abilities that technology can't replicate.

Skills like statistical analysis can be replaced; traits like compassion and inspiration cannot.

The long-term play, of course, is for us to upload our intelligence into electronic form so we can combine our uniquely human abilities with the power of electronics.

Skills like compassion don't necessarily pay the bills, though :(

Skills like compassion don't currently pay the bills. One day they might.

Sort of makes me think of the The Brand Called You but in the world we have, no one's really willing to pay for anything they can get done cheaply. And there's certain biases around certain types of work that influence how much one could expect to earn, like in the sex industry.

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