Economic Participation and Capitalism

Original content by Sendy Filemon – 10 Sep 2018.

Economy doesn’t exist without participants.

By it’s nature, capitalism means the increasing ownership of capital to an ever smaller group of people while decreasing ownership of capital from an even larger group of people.

When the capital removal reach a point where some people are totally without capital, these people exist but they are non participant to the economy.

The removal of people from the economy is a very slow counterweight to capitalism. We can see today that many millions of people are without access to capital but it doesn’t seem to affect the world economy. Seem.

Very slow counterweight because of several reason:

1. As capital accumulates, the layer of society above in which capital has been exhausted still have capital. The accumulation then continues until this layer then depletes their capital. The hollowing out of the middle class is an example of this. Jobs made redundant, wages got stagnant, yet living cost at certain standard continue to rise. When it reach a point where a layer of society have to lower their living standard, that layer is being depleted of their capital. But in the meantime, capital is accumulated upwards, and so the layer that has nt been exhausted of capital has more capital. Spending power is there, just from less number of spenders.

2. The higher layer of capitalism need participants in the economy. Investor needs people to fill jobs to capture a market opportunity, venture capitalist provide capital to entrepreneurs despite startups 90% failure rate in the hopes of having the 10% that works out spectacular.

3. People can create capital. People can open their own businesses. People can invent or craft goods and services that other want to use. And so, as long as people have a desire to be productive and a channel to convert their productivity to capital, people can create capital. But even here, we see a hollowing out effect taking place. Technology means there are more fields where investors need less people to capture market opportunity from the remaining spenders. And people can only create capital when they still have some capital to start so they access the fruit of civilization. Even opening a startup in a bootstrap way requires a bootstrap to start with. What are the job prospect of a jobless homeless man with no internet and no shower in the last month? What are the job prospect of a farmer’s child with no education and no land in a world that need less farm hands?

4. Society delay the hollowing out, a mix of reason from altruism or to ensure the falling out of society or to ensure the existence of the state in global economy. Charity programs give a jobless homeless man access to job posting and shower so he can seek and apply for jobs. Government give farm child with no land access to education so they can access the skill set to enter different trade in life.

But the slow removal of more and more people from the economy continues.

And that is a problem with increasing inequality, that it removes people from being participants in the economy and without participants, there’s no economy.

The poverty and inequality we see today (2018) is different that the poverty and inequality we see in pre modern era (e.g. Pre WW II for most of Asia and Pre Industrial Revolution for Europe).

At those times:

1. People have land to work on

2. That automation is non-existent requiring more and more labor

3. Economy hasn’t been transformed to a state where people can only access fruits of civilization with having capital.

The third reason is a prime reason why this time, inequality is different. In pre modern time:

⁃ In farming society people can trade work with food without money as go-between.

⁃ hunter gatherer society can forage and hunt without paying land ownership or use title. Clay, salt, and minerals can be extracted with no question on mineral rights. Tree barks, fibers, and sap can be collected by anyone willing. The earth and its resources hasn’t been bounded by ownership and use rights.

⁃ Craftsmen can form the clay into pottery, weave fibers into baskets, and trade them. They teach their design and techniques to kin and apprentice so they can make a living from it. Human knowledge hasn’t been labelled as Intellectual Property where capital is the only means to access it.

In short, in pre modern times, there are ways to access the economy without capital.

Factors such as industrialization, automation, legal definition of physical property, extension of that to intangible property, have all contributed to expansion of capital and capital influence in world economy.

But the expansion of capital also means that there are less and less means to access the economy without access to capital, and that’s why, this modern time inequality is different from pre modern inequality.

The influence of capital is such, society no longer have the tools to solve inequality without capital. What happens when entire government or state can no longer provide the assistance to the poor, which they use to buy goods and services, that would move the local economy. What happens when private healthcare provider stop to exist and governments or state cannot provide the healthcare for their residents. What happens when governments cannot provide education for children with no land and no skill. Venezuela comes to mind, economic migration comes to mind.

So as we consider the march of capital to reduction of economic participation, we should consider that the march is slow, but society lost the ability to stop that march.

Original content by Sendy Filemon – 10 Sep 2018.


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