Since the "start" of the financial crisis in 2008 (I use quotes because the crisis had been growing for perhaps a few years prior to that, and how does one define the start for something that is not a single discrete event?), the debate that has occupied the airwaves and newsprint, and bandied about by the general public, is that of capitalism vs socialism. Specifically, the bailing out of the banks and other private institutions that were running amok, taking on risks that even the most reckless individual would shy away from, by governments and public institutions (thereby converting the private losses of a few into the public debt of millions). Capitalism has obviously been severely dented as a result of the crisis, and the recovery has been exceedingly slow, with threats of a double dip recession worrying investors and pundits alike.
But don't let capitalism's loss fool you into thinking that socialism is somehow going to make a comeback across the developed world. Socialism is an equally flawed system and, in its extreme form of communism, can be regarded as even more dangerous than capitalism. Some amount of socialism will always be retained even in the most capitalistic of economies (the rallying cry for small government does not mean "no" government!) as there are some economic activities that are just not effectively managed by the private sector.
The real debate, however, is not so much about the ownership of assets, or the fact that capitalism tends to be regarded as for-profit while socialism is usually deemed to run at a loss. The hidden menace that we don't pay much attention to is the vicious circle of mass production and the mass consumption that is engenders. Mass production is THE defining characteristic of the industrial age, with its focus on economies of scale, automation across industries, and the resulting workforce reduction. The inventors of the steam engine were rightly impressed by the ability of their invention to reduce human toil in the fields and mines - society back then was in need of such an step change. But they could scarcely have imagined the radical transformation of society that the past two hundred and fifty years has brought about.
While mass production has been around for a while, its coupling with mass consumption occurred only after the second world war, when the population of the US and, to a lesser extent, the UK, having been deprived of all but the bare necessities during the war years, were suddenly able to buy all kinds of "consumer goods" to make their lives comfortable beyond belief. Thus, the age of the consumer was born and has been the primary export of the West to the developing world ever since (while one might argue that infrastructure leads the way, there is no denying that the ultimate aim is to convert the world into a giant shopping center for the largest corporations to sell their wares).
So why is this a bad thing, you say? After all, mass production has allowed so many people to improve their standard of living by making products more affordable for them to buy. While that is true, the unfettered continuation of mass production is likely to soon reach a critical point in a world where resource limitations will be harder to mitigate as in the past. This is because while production and consumption are linked i.e. they drive each other, the coupling is extremely loose, so that one can use raw materials and energy and produce vast quantities of some new product, only to have the consumption not match it. In the natural world, any kind of "wastage" is easily handled through recycling back into the various ecosystems. But in the man made world, wastage cannot be recouped as easily.
Furthermore, by touting the virtues of economies of scale, the producer is driven to make the largest amount of product possible irrespective of whether there is sufficient consumption - only because the unit cost is the lowest. And the consumer, seeing the amount of product available (the overflowing shelves in large supermarkets in contrast with the limited quantity available in a corner shop) is driven to consume more through absurd pricing that penalizes lower consumption. We've all seen the 2 for 3$ deals, when buying one item would cost $ 2.50. No matter how little value you have for two, you are driven to make that purchase.
What does mass production then make the manufacturer do? Lower costs naturally - recovering the cost of selling products so cheaply can only happen if the input cost is lowered. And this is where workforce reductions come in. Ironically, companies are out there selling their products to the same people who no longer have a job that pays them money to buy those products (the reverse of Henry Ford's visionary step of paying his workers double the prevailing wage so that they would buy his cars!). One would expect this to be a self regulating system, and that a company would soon run out of consumers and have to reverse its trend. While a few have done it, the vast labour pool in the East, and the economics that make a machine a better option over a human will take a long time to overcome.
Futurists always tend to project a society living in harmony with nature - only making things that it needs, as efficiently as possible, harnessing energy and materials as per its requirements. This is not too different from an Amish society or a tribe living in a forest. Perhaps this picture is painted because the alternate of business as usual production and consumption is so ingrained in the reality that the diametric opposite is what people gravitate towards. Till we get such a society though, the production-consumption nexus will continue to rule our lives.
But don't let capitalism's loss fool you into thinking that socialism is somehow going to make a comeback across the developed world. Socialism is an equally flawed system and, in its extreme form of communism, can be regarded as even more dangerous than capitalism. Some amount of socialism will always be retained even in the most capitalistic of economies (the rallying cry for small government does not mean "no" government!) as there are some economic activities that are just not effectively managed by the private sector.
The real debate, however, is not so much about the ownership of assets, or the fact that capitalism tends to be regarded as for-profit while socialism is usually deemed to run at a loss. The hidden menace that we don't pay much attention to is the vicious circle of mass production and the mass consumption that is engenders. Mass production is THE defining characteristic of the industrial age, with its focus on economies of scale, automation across industries, and the resulting workforce reduction. The inventors of the steam engine were rightly impressed by the ability of their invention to reduce human toil in the fields and mines - society back then was in need of such an step change. But they could scarcely have imagined the radical transformation of society that the past two hundred and fifty years has brought about.
While mass production has been around for a while, its coupling with mass consumption occurred only after the second world war, when the population of the US and, to a lesser extent, the UK, having been deprived of all but the bare necessities during the war years, were suddenly able to buy all kinds of "consumer goods" to make their lives comfortable beyond belief. Thus, the age of the consumer was born and has been the primary export of the West to the developing world ever since (while one might argue that infrastructure leads the way, there is no denying that the ultimate aim is to convert the world into a giant shopping center for the largest corporations to sell their wares).
So why is this a bad thing, you say? After all, mass production has allowed so many people to improve their standard of living by making products more affordable for them to buy. While that is true, the unfettered continuation of mass production is likely to soon reach a critical point in a world where resource limitations will be harder to mitigate as in the past. This is because while production and consumption are linked i.e. they drive each other, the coupling is extremely loose, so that one can use raw materials and energy and produce vast quantities of some new product, only to have the consumption not match it. In the natural world, any kind of "wastage" is easily handled through recycling back into the various ecosystems. But in the man made world, wastage cannot be recouped as easily.
Furthermore, by touting the virtues of economies of scale, the producer is driven to make the largest amount of product possible irrespective of whether there is sufficient consumption - only because the unit cost is the lowest. And the consumer, seeing the amount of product available (the overflowing shelves in large supermarkets in contrast with the limited quantity available in a corner shop) is driven to consume more through absurd pricing that penalizes lower consumption. We've all seen the 2 for 3$ deals, when buying one item would cost $ 2.50. No matter how little value you have for two, you are driven to make that purchase.
What does mass production then make the manufacturer do? Lower costs naturally - recovering the cost of selling products so cheaply can only happen if the input cost is lowered. And this is where workforce reductions come in. Ironically, companies are out there selling their products to the same people who no longer have a job that pays them money to buy those products (the reverse of Henry Ford's visionary step of paying his workers double the prevailing wage so that they would buy his cars!). One would expect this to be a self regulating system, and that a company would soon run out of consumers and have to reverse its trend. While a few have done it, the vast labour pool in the East, and the economics that make a machine a better option over a human will take a long time to overcome.
Futurists always tend to project a society living in harmony with nature - only making things that it needs, as efficiently as possible, harnessing energy and materials as per its requirements. This is not too different from an Amish society or a tribe living in a forest. Perhaps this picture is painted because the alternate of business as usual production and consumption is so ingrained in the reality that the diametric opposite is what people gravitate towards. Till we get such a society though, the production-consumption nexus will continue to rule our lives.