Does Capitalism Have a Future?

A long-term structural weakness of capitalism is now coming to the fore. It is the technological displacement of labor by machinery, which for the last twenty years has taken the form of computerization and information technology. This displacement is now accelerating and threatening the existence of the middle class. My argument is not very original. Marx also had a technological displacement mechanism, based on factory machinery, although in his argument it is combined with a number of other theoretical mechanisms, including business cycles, falling rates of profit, and—in current Neo-Marxian theories—financialization and financial crisis. What I want to emphasize, however, is that the process of technological displacement of labor, driven to a sufficient extreme, will generate the long-term and quite possibly terminal crisis of capitalism, all by itself and without the other processes in Marxian and Neo-Marxian theory. Business cycles may be hazy and imprecise in their timing and variable in the height and depth of their swings, as are Kondratieff waves and world-system hegemonies on the global level. Financial crises may be contingent and avoidable through the right policy. No matter. The structural crisis of technological displacement transcends cycles and financial bubbles. It is the deep threat to the future of capitalism. Yes, there are short-term crises driven by financial, cyclical and other mechanisms; but what I focus upon here is a long-term structural shift, one that very likely will bring capitalism to an end within the next thirty to fifty years.

I make no claims for the purity or authenticity of the lesson that I borrow from Marx. Sociology today, if it believes in anything, believes in multiple processes, multiple causes, and multiple paradigms for dealing with our chosen aspects of the world. In an important sense, in sociology Weber has triumphed over Marx, and we all talk about the interpenetration of class, politics, and culture, and of gender too. Nevertheless, there are moments when the key feature of long-term structural change is at issue—above all the issue of structural crisis. Here, for all our multidisciplinarity and our celebration of intellectual diversity, is an occasion when it seems to me one line of theory stands head and shoulders above all others in dealing with the mechanisms of crisis and the direction of very long-term structural change. The theory I will extol is a stripped-down version of the fundamental insight that Marx and Engels had formulated already in the 1840s.

It is a stripped-down Marxism indeed. No labor theory of value, no reference to expropriation of labor from the means of production, no alienation from species-being. It makes no ontological claims and does not posit any final emancipation at the end of the crisis. I have stripped it down to a theory of long-term economic crisis; we need other lines of sociology for what happens in response to the crisis, and what arises politically and socially afterward. Moreover, it is not a theory of the conquest of the state as result of economic crisis, not by itself alone a theory of revolution—although at the end I will discuss what sociologists have learned about the causes of revolution. And although it has implications for the future of socialism, it is not a theory of socialism and what would make socialism work better in the future than it did in the past. No, it is a theory of crisis first and foremost.

Technological displacement is the mechanism by which innovations in equipment and organization save labor, thereby enabling fewer employed persons to produce more at lower cost. Marx and Engels argued that capitalists strive to increase profit in competition with each other; those who fail to do so are driven out of the market. But as labor-saving machinery replaces workers, unemployment grows and consumer demand falls. Technology promises abundance, but the potential product cannot be sold because too few persons have enough income to buy it. Extrapolating this underlying structural tendency, Marx and Engels predicted the downfall of capitalism and its replacement by socialism.

Why has this not happened in the 160 years since the theory was formulated? As is well known, where socialist regimes have come into power, the transition was not driven by capitalist economic crisis—nor indeed when they have fallen out of power. My point here is the absence of definitive capitalist breakdown through technological displacement. Marx and Engels focused on the displacement of working-class labor; they did not foresee the rise of the massive middle class of white-collar employees, of administrative and clerical workers and educated professionals. But this is why I now argue for the return of technological displacement crisis. Until the 1980s or 1990s, mechanization chiefly displaced manual labor. In the most recent wave of technology, we now have the displacement of administrative labor, the downsizing of the middle class. Information technology is the technology of communications, and it has launched the second great era of contraction of work, the displacement of communicative labor, which is what middle-class employees do. Mechanization is now joined by robotization and electronicization—an ugly and ungainly term to add to our vocabulary of ugly terms dictating our long-term future.

As the working class shrunk through mechanization, capitalism was saved by the rise of the middle class. Now computerization, the Internet, and the wave of new micro-electronic devices are beginning to squeeze out the middle class. Can capitalism survive this second wave of technological displacement?

In the past, capitalism has escaped from technological displacement crises by five main escape routes. I will argue that all five of these now are becoming blocked—dead ends.

ESCAPE NUMBER 1: NEW TECHNOLOGY CREATES NEW JOBS AND ENTIRE NEW JOB SECTORS

Pessimism about new technology has long been considered futile and wrongheaded. The Luddites in 1811 who broke machines that destroyed the jobs of handicraft workers did not see that their system of production was giving way to a factory system which would vastly expand industries and increase, for over a century, the numbers of factory workers. Development theory, formulated in the mid-20th century, held that the natural tendency is to move through the stages of primary, secondary, and tertiary labor sectors (i.e., extractive, manufacturing, and administrative or service work). But development theory was just an empirical generalization from a particular time in history; there is no guarantee that this process will go on forever. Agricultural labor went from a large majority of all jobs to about 1% in today’s advanced economies; manufacturing went from a height of some 40% to 15% or less. These figures show the magnitude of what technological displacement can do. A similar reduction in the administrative/service sector is plausible.

Schumpeter, the best theorist of capitalist innovation, theorizes that new products—and hence the major sources of profit—come on the market by reorganizing the factors of production into new combinations; this always involves what Schumpeter called “creative destruction.” Nevertheless, Schumpeter-inspired economists also rely on nothing more than extrapolation of past trends for the argument that the number of jobs created by new products will make up for the jobs lost by destruction of old markets.

None of these theories take account of the technological displacement of communicative labor, the escape valve that in the past has brought new employment to compensate for the loss of old employment. It has been argued that as telephone operators and file clerks lose their jobs to automated and computerized systems, an equal number acquire jobs as software developers, computer technicians, and mobile phone salespersons. But no one has shown any good theoretical reason why these numbers should be equal; much less why the automation of these kinds of technical and communicative tasks—for instance by shopping online—cannot drive down the size of the white-collar labor force. Technological displacement is ongoing as we speak. Within the past few years, checkout clerks in stores have been replaced by automated self-serve checkouts, cutting into one of the largest areas of lower-middle class service sector employment. At a higher skill level, professional journalists are being displaced by the downsizing or disappearance of newspapers, driven by competition from online news, itself deriving from a small number of paid journalists and a large number of amateur, unpaid bloggers.

Computerization of the middle class is not being compensated by the creation of new jobs at an equal rate. New jobs are created, but they do not match the number of jobs eliminated, nor do they replace lost income. This is a reason why job-retraining programs for displaced workers have failed to affect the rate of structural unemployment. Computerization and the Internet have generated new sectors of work: software design, website construction, numerous work-from-home online informational and consulting services. These latter tend to be low paying, not surprising given easy access by a growing number of competitors, many of whom provide their offerings for free. Although Information Technology (IT) generates new activities, it does not generate paying jobs at the same rate that it eliminates them. The proliferation of opinion blogs does not make up for the elimination of paid occupations in journalism.

Focusing solely on the paid employment generated by IT as compared to the jobs displaced by IT, and extrapolating trends over a period of decades, is it plausible that 70% or more of world employment will be computer programmers and designers of software and computer applications? Bear in mind that computerization is still in its youth, past its infancy but not yet into maturity. The metaphor is overly biological, but the point is that more sophisticated computation is still to come: Artificial Intelligence, in which machines take over higher cognitive processes from humans. When computer programming itself is done entirely by computers, as well as the creation of new applications, the displacement of middle-class labor will be nearly complete. Jobs for computer programmers will no longer be an escape route. It never has been an equalizer compensating for the numbers of jobs lost; and over time, the amount of job creation for humans compared to work taken over by computers will be a steadily decreasing slice—a channel whose walls grow steadily narrower.

In an advanced economy such as the United States, jobs in the service sector have grown to about 75% of the labor force, a result of the decline in industrial and agricultural/extractive occupations (Autor and Dorn 2013). But the service sector is becoming squeezed by the IT economy, itself little more than twenty-five years old. Sales jobs are rapidly becoming automated by computer-generated messaging and by online buying; in brick-and-mortar stores, retail clerks are being replaced by electronic scanners. Management positions too will come under increasing pressure as artificial intelligence grows.

There is no intrinsic end to this process of replacing human with computers and other machines. The displacement of human work will go on, not just for the next twenty years but the next hundred, even the next thousand years—unless something extrinsic happens to change the underlying mechanism driving technological displacement of work: capitalist competition.

The future world run by computers will not necessarily be that depicted by George Orwell in Nineteen Eighty-Four, where high tech is used for surveillance and autocratic state control. Orwell missed the economic dimension: how electronic high technology affects not just politics but employment. Similarly with the benign version of the future depicted in space age adventure films, the question of who owns the robots and computers never comes up. In the real world, the answer is: the big computer systems will be (and are) owned by big capitalist property-holders. The manufacture of IT hardware as well as software is capitalist enterprise. The popular communications companies (Facebook, Google, Amazon, Twitter, and whatever their names will be over the coming decades) show the same pattern as the historical development of any other form of capitalist enterprise: rapid innovation chained to other innovations, proliferation of competitors, winnowing out of many through the growth of a few, enthusiastic investment by financial markets, then financial pressure and collapse of former front-runners. Consolidation into oligopoly in the IT era happens just as it did in previous waves of new technology. Since the IT period is still quite new, it isn’t yet clear whether the pace toward oligopoly is different than in the era of the railroads or the era of the automobile industry; so far it looks like the current speed toward oligopoly is much faster than in previous periods. (This is a side question from the main issue of technological displacement of the middle class; as long as that goes on, whether there is a high degree of oligopoly or not does not much affect the long-term crisis of capitalism.)

But, one might object, Information Technology is different. Computerization is not just something that happens to big companies and big employers; it is something that ordinary people use and enjoy. Computers are not owned just by the capitalists; they are owned by all of us. That is like saying (in 1925 or 1955): automobiles are not capitalist industries; since I own one myself, I have the freedom to drive all over, escape, get laid in the back seat, drag-race on the highway if I want to. Enthusiasm for products of capitalist industry is part of what makes capitalism successful. That’s fine; enjoy it while you can. The fact that you can hear portable music at any time and place, post and view images and texts and all the other things that consumer IT devices enable contemporary consumers to do—all this says nothing about whether or not there are jobs for persons like yourself. The popularity of automobiles was not just consumer enjoyment; it reflected an industry which, for several decades, generated a large number of well-paying jobs. Subsequently, technological displacement and capitalist consolidation have drastically reduced jobs in the automotive sector. All the personal electronic devices of today that absorb people’s attention and enthusiasm will not fend off capitalist crisis, if these same consumers cannot find jobs. Eventually they will not be able to buy these devices, nor their producers to sell them. That is the shape of deep, structural capitalist crisis.

ESCAPE NUMBER 2: GEOGRAPHICAL SPREAD OF MARKETS

We tend to think of market spread as globalization, but globalization is only a quantitative difference in degree, not a qualitative difference in kind. Even within the confines of state borders, markets have grown by spreading to regions where a product was initially unknown; thus local conditions favored profit for the innovator coming from elsewhere. Geographical spread works in tandem with product innovation, keeping up the ongoing existence of market frontiers. Dynamic markets always have the buzz of newness, the cultural prestige of being a center or keeping up with a center, or the negative prestige of striving to escape from backwardness. The liberal version of this mechanism, on the global or interstate scale, is modernization theory or development theory; each part of the world successively ascends the stages, until presumably all will be fully developed, tertiary-sector service economies. We are now seeing this come into being, the argument goes, in India and China, the big nations of the Third World making their way inexorably to modernity.

The Neo-Marxist version of this process is World-System theory [Arrighi 1994; Chase-Dunn 1989; Wallerstein 1974–2011]. This is a less benign version of the geographical spread of capitalist markets; world market domination is buttressed by military power and political influence; the hegemonic center exploits the labor or raw materials of the periphery, with the aid of a transmission belt of semiperipheral regions. World-system theory complicates the pattern by a succession of hegemonies marked by major wars, and keyed to long Kondratieff waves of relative expansion and stagnation in world markets. But these cycles of serial hegemons—Spain, Holland, Britain, the United States, conjecturally China—logically come to an end when the periphery is exhausted, and every region of the globe is fully brought into the capitalist market. There are no more safety-valves, no more regions for exploitation; capitalist profit dries up.

Leaving aside the specific merits of world-system theory predictions, the point I would emphasize is that globalization of markets is now undercutting middle-class jobs. Internet technology makes it possible for white-collar workers in India—or anywhere else—to compete for jobs in servicing computerized businesses in the core capitalist regions of the world. Whereas in the past middle-class workers have been protected from competition to a greater degree than manual workers, this is no longer true; the Internet creates a much wider pool of workers who can access available jobs, especially if they do not have to physically move to a distant place of work. Contemporary globalization also involves much more rapid international travel. Managerial and professional workers physically move their expertise and their negotiating skills to entrepreneurial sites around the globe; this has the further effect of homogenizing upper-middle-class labor into a single labor market, raising the prospects of cheapening management costs, and displacing even high-level technocratic labor. Greater connectedness leads to greater competition for jobs, undercutting middle-class salaries. This process is relatively recent; the jet-set boom of the upper-middle class in recent decades is becoming vulnerable to the same structural displacement that the cost-cutting experts have visited upon their employees. High-level professional and technical specialists face a much more competitive and uncertain existence than ever before, when they were protected by national enclaves.

In the past, international migration provided cheap labor for centers of manufacturing, and more recently for the lower levels of the advanced service economies, thereby undercutting the working class of wealthier nations. Now as communications technology tends to spread cultural capital more homogeneously around the globe, it is middle-and upper-middle-class labor that is being undercut.

ESCAPE NUMBER 3: META-MARKETS IN FINANCE

If working-class and then middle-class labor are technologically displaced, can the slack be taken up by everyone becoming a capitalist? This argument has been advanced as employee pension funds have come to play a large role in financial markets, and as financial services firms have expanded and have aggressively marketed investments to a larger constituency. In countries like the United States, where home ownership is widespread, the inflation of housing prices brought opportunities not only to treat home ownership as a speculative investment, but to withdraw equity from inflated housing prices in the form of cash for consumer spending. These financial practices have been among the short-term sources of the recent economic crisis and especially the financial meltdown of 2008.

I am not proposing that our recent problems are the beginning of the end of capitalism. We will no doubt ride out this crisis, like other crises, in the short run, while leaving a certain amount of long-term damage. Financial crisis has been widely discussed. What I want to examine here is not short-run crises but the contributions of financialization to the displacement of middle-class labor.

Recent financial manipulations are examples of a deeper structural tendency in capitalism: the pyramiding of meta-markets upon each other in financial markets. Capitalism, ever since it entered its phase of self-sustaining growth or internally driven expansion, has connected markets for material goods and services with markets for financial instruments. Schumpeter [1939] defined entrepreneurial capitalism as enterprise carried out with borrowed money. Static markets merely reproduce existing stocks and workforces, unless new combinations are taken out of the circular flow of reproduction; this is done by borrowing against the future. Thus in Schumpeter’s [1911] view, banks are the headquarters of the capitalist system, deciding where new allocations for development will be made. But since financing is intrinsically speculative, its relationship with existing material arrangements can vary enormously. The upper atmosphere of the financial system can have many multiples of the value of what is actually bought and sold in material goods and services; we see this, for instance, in the vast amounts of money in international currency speculation in relation to the size of GDP, or the extraordinarily inflated sums in hedge funds, especially before the 2008 crash.

By pyramiding meta-markets I mean the historical tendency for any given financial market to give rise to a higher-order market in lower-order financial instruments. In real social practices, all monies are promises to pay in the future. Thus financial specialists can create promises to pay promises to pay, and so on up to almost any level of complexity. Loans, liens, equities, bonds, all these are relatively low levels of pyramiding. Short-selling stock market shares, bundling mortgages for secondary resale markets, leveraged buyouts, mutual funds, hedge funds, and other complex trading schemes are higher-order markets built upon the instruments of exchange. There is in principle no upper limit to how many layers can be added. Very large sums can be generated at higher levels, although the conversion of these monies into low-level goods and services is problematic. The illusion is created because they are all designated by the same unit of account—dollars, pounds, Euros—but these nominal amounts can rise so high that cashing them out in the real material world is literally impossible.

Pyramided financial markets have a high degree of social constructedness. Of course almost everything is socially constructed in some way, but some are much more remotely connected to material constraints than others. An army, for instance, has an important degree of social constructedness, especially in combat, where, as Napoleon said, the moral is to the material as three to one; nevertheless, an army with five times the size and weaponry of its opponent will almost always win, provided it maintains some minimal degree of social cohesion. In the world of pyramided financial instruments, the moral (i.e., the interactional processes of the network and its emotional moods) is to the material economy as something on the order of from six to one (which is the ratio between money loaned out and actual bank deposits) up to quite possibly hundreds to one in highly leveraged financial manipulations. As sociologists, we need to look at social constructedness not as a philosophical constant but as a set of variations, which can be theorized both in their static relationship to network structures, and in their dynamics of boom and bust over time.

My chief point here is that the more pyramided financial meta-markets are, the more volatile and crisis-prone they are, with booms and busts far out of proportion to what is happening in the low-level material economy. But there is an optimistic side as well—optimistic if you would like to preserve capitalism. Financial markets are intrinsically flexible, like giant balloons made out of magic material that can inflate to any size at all. This lends plausibility to the idea that everyone can become a finance capitalist, playing the great game of financial markets. And indeed popular participation in financial markets has grown a good deal during the late 20th century and the early 21st, through employee pension funds, millions of small stock market investors, and speculating through mortgaged home ownership in the Ponzi scheme of the inflationary housing market.

How far can this go? Can it save capitalism? It would surely be a rocky road, given the inherent volatility of financial markets, their tendency to booms and busts. This has been a long-term historical pattern, ever since the Dutch tulip investment mania in 1637 and the South Sea bubble in 1720. Speculative collapses have been so common that Schumpeter [1939] regarded business cycles as intrinsic to capitalism, and their presence a historical marker of the existence of self-driven capitalist dynamics. One could turn the historical argument around; speculative busts have always bottomed out and eventually financial markets have gone up again. Financial crises are in the nature of the capitalist beast, and the historical record suggests that we will always recover from any financial crisis. Again we have an empirical generalization without good theoretical basis. What happens when financial crisis is coupled with structural depletion of middle-class jobs, and a technological displacement crisis throughout virtually the entire labor force? Can income from the financial sector reach so far that it supplants salaries and wages as the primary source of income for everyone?

There are two possibilities here: either everyone becomes a capitalist living off of investment returns, or the financial sector itself becomes the major area of employment (i.e., the growth of financial labor). Taking the first of these, it is hard to envision a future in which everyone lives as a financial investor. It takes some initial accumulation of funds for your initial bankroll in order to start investing, the gambling stakes to get into the game. Small investors get started with their salaries, savings, and pensions; but these are just what would dry up under the technological displacement scenario. We are at the theoretical frontier here, and the future of political economy may well include things undreamed of in your philosophy, Horatio. But is it conceivable that in the future when everything is automated that entire populations will spend their lives as financial investors, a reserve army of gamblers in lifelong casinos? Not everyone goes on making money throughout their investment career; some people lose their investments even in good times, and during a speculative bust many people do. And once they wash out of the speculative market, do they ever get back in, barring gainful employment on their own?

Financial markets are intrinsically inegalitarian, concentrating wealth in the small number of big players at the top of the pyramid. It is precisely the advantage of better networking, insider viewpoint, first-mover advantages, and ability to ride out fluctuations better than small players that gives big players in higher meta-markets their capacity to make profits from the medium and small players in lower-order markets. Pyramided levels of monies illustrate Viviana Zelizer’s [1994] theory that money is not homogeneous but plural, diverse sets of specific currencies circulating within their own social networks. Those who play in the circuit of hedge funds, for instance, are a very restricted group of persons and organizations; small players are not even legally allowed into these markets. Perhaps this is beside the point; in the idyllic financial utopia of the future, core investors will become mega-rich, but smaller investors will get their share. Will this be enough to sustain consumer spending throughout the entire economy and thus keep the machinery of capitalism going? Not if financial markets tend toward ever-greater concentration, exploiting the smaller participants at the bottom.

For the second possibility: technological displacement can be expected to make inroads into employment in the financial sector. As I mentioned in the optimistic capitalist scenario, the financial market can prop up an otherwise diminishing middle class either by making everyone a capitalist, or making everyone an employee of the financial sector. Is this latter plausible—when all other work is technologically displaced, financial work will take up the slack? But why should technological displacement not take place within financial employment itself? We have seen a low-level version of this already, with online banking eliminating bank tellers and clerks, and banks downsizing their workforces even as they handle larger amounts of monetary instruments. The mantra of capitalist economists is that unskilled labor is displaced by more highly skilled professionals. But how far can the sector of financial professionals expand? Temporary run-ups such as seen during the 1990s may well prove to be a passing phase; and in any case it is hard to imagine that anything near a majority of workers in an automated future will have jobs as hedge fund managers. Still, this may be the best dream future capitalism has to offer—no one doing any real productive labor, everyone living as a financial manipulator. Maybe we will experience a phase of this, sometime later on in the 21st century; if so I would predict it will be the run-up to the last crash of capitalism.

ESCAPE NUMBER 4: GOVERNMENT EMPLOYMENT AND INVESTMENT

Now we come to escape routes that are not intrinsic to capitalism itself, but salvation from outside. Prominent among them is the Keynesian welfare-state solution. It was widely argued fifty years ago that capitalism was saved by the welfare states of the 1930s, 1940s, and 1950s—the liberal Left saving capitalism when the ideological Right proved incapable of saving itself. Can government spending solve the technological displacement of the middle class?

The main form of direct government hiring has been middle-class administrative jobs; thus any continuation of the trend to automate and computerize such jobs would contract government employment too. A sufficiently resolute political regime could resist this by refusing to automate jobs away. This kind of neo-Luddite policy was tried by British unions and socialist politicians from the late 1940s through the 1970s. Staying technologically backward for the sake of protecting employment would probably be demoralizing and politically unviable; it was this atmosphere in Britain that led to the Thatcherite reaction. Another version that has worked in the past has been military Keynesianism, the buildup of employment in military forces along with stimulating the economy through military production. But the contemporary military has gone high tech, promoting transformation into smaller fighting forces coordinated by computers, satellites, aerial sensors, and remote control surveillance and targeting devices. The military is the leading edge of robotization, and it is doubtful that even a World War-style all-out mobilization would ever produce the kind of massive militaries seen in the 20th century.

Besides direct government employment, there is government spending, the favorite tool of today’s stimulus packages. Most of those invest in material infrastructure—roads, bridges, airports, energy, as well as the so-called information highway. But these areas too undergo computerization and automation, adding to the trend of technological displacement. Even less likely to stem the tide of job displacement is government investment in the private sector. Especially with the mantra to carry out such investments efficiently, government assumes the role of capitalist or at least capitalist overseer, all too willing to cut labor costs, and therefore to cut employment.

Another version of market intervention is regulation of the private marketplace, mandating a shorter work week, and protecting jobs from cuts. These policies have been widely practiced by Continental European states, but have not done much more than slow the drift to technological displacement. On the whole, such policies tend to protect existing jobholders, but to freeze out youth. That problem could be solved by government deliberately hiring youth in massive numbers; this has rarely been attempted (except in the military version), although in Escape #5 I will suggest that this has been done surreptitiously through inflating educational credentialing.

In principle, political policies could do anything whatsoever, constrained only by political will, which is to say mobilized political power and its vision as set by political cultures. Obviously political cultures have a long way to go from here if the state is going to do anything significant about technological displacement of the middle class. Mixed “liberal” government policies propping up the private economy can keep capitalism limping along quite a way into the future. But the mixed approach is not likely to solve the long-term problem of technological displacement, as long as private profitmaking drives the economy.

We need to think of the pressure, not merely in present-day (US) terms of 10% unemployment with small fluctuations of a few percentage points, but into the computerized future where the base unemployment rate could be three or five times higher. In other words, a situation of massive employment crisis, and governments elected to take action by the welfare state pathway. Obstacles to this are easy to envision, since they fill the political sphere at present. One is the antitax movement, likely to continue strongly among small businesses including struggling Internet entrepreneurs, as the Internet exposes them to heavy competition. These push against government acting to bolster employment, thus contributing to system crisis. On the other side is the demand from political constituencies—above all the unemployed and underemployed, who are now coming increasingly from the ranks of the educated and therefore highly mobilizable population.

Contending forces are in play. Which ones will win, and to what extent? Unrestricted free-market capitalism, left to itself, has no way of heading off such crisis. Its favorite reforms—reducing taxes and government regulation, encouraging capitalists to engage in still further expansion in any way they wish—all have the effect of pushing technological displacement, as well as generating other kinds of problems including financial manipulations and crises. The pro-welfare state forces in principle may have a solution to unemployment, but they run up against the budgetary problems of the state. A state which funds an expensive welfare state opens itself up to the pressure of financial markets, risking destruction of the purchasing power of its currency. Thus it would appear that a welfare state policy is caught in a damned-if-you-do, damned-if-you-don’t position. But let us see this in a long-term perspective, not just as an immediate stumbling block in everyday politics. A state caught in a deep structural dilemma is moving toward a revolutionary breakdown of the system. The fiscal crisis of the state is one of the main components of state breakdown; we need only add the other two components, a split between state elites over which solution to seek, and mobilization of a radical movement from outside. The split between state elites here just means a radicalization of the opposition between those who maintain their alliance to the financial markets, and those who are committed to using the state to alleviate unemployment and inequality. In the context of 10% unemployment and a limping post-recession economy, polarization between these positions is not strong. But if we extrapolate this to 50% unemployment, and the deep depression sure to accompany it, the chances for full-scale state breakdown will be strong. At this point, a revolutionary overturn of the property system will be the most obvious solution, including seizing control of the financial system so that it cannot destroy a government’s own currency. Not just particular features of capitalism, but its institutional underpinnings, would give way.

ESCAPE NUMBER 5: EDUCATIONAL CREDENTIAL INFLATION, AND OTHER HIDDEN KEYNESIANISM

Credential inflation is the rise in educational requirements for jobs as a rising proportion of the population attains more advanced degrees. The value of a given educational certificate or diploma declines as more people have one, thereby motivating them to stay in school longer. In the United States, high-school (i.e., twelve-year secondary school) diplomas were comparatively rare before World War II; now high-school degrees are so commonplace that their job value is worthless. University attendance is now over 60% of the youth cohort, and is on the way to the same fate as the high-school degree. It is a worldwide trend; in South Korea, 80% of high-school graduates now go on to higher education. The main thing that inflated degrees are worth is to plough them back into the educational market, seeking still higher degrees. This in principle is an endless process; it could very well reach the situation of the Chinese mandarin class during the later dynasties [Chaffee 1985], when students continued sitting for exams into their thirties and forties—only now this would affect the vast majority of the population instead of a small elite. Different countries have gone through educational inflation at different rates, but from the second half of the 20th century onward, all of them have followed this path [Brown and Bills 2011].

Educational degrees are a currency of social respectability, traded for access to jobs; like any currency, it inflates prices (or reduces purchasing power) when autonomously driven increases in monetary supply chase a limited stock of goods, in this case chasing an ever more contested pool of upper-middle-class jobs. Educational inflation builds on itself; from the point of view of the individual degree-seeker, the best response to its declining value is to get even more education. The more persons who hold advanced degrees, the more competition among them for jobs, and the higher the educational requirements that can be demanded by employers. This leads to renewed seeking of more education, more competition, and more credential inflation.

Within this overall inflationary process, the most highly educated segment of the population has received an increasingly greater proportion of the income; at least this has been so in the United States since the 1980s. One should be wary about extrapolating this particular historical period into an eternal pattern for all times and places. Those at the top of the inflationary competition for credentials have benefited from several processes: [a] they were in the relatively safe havens when technological displacement was hitting, initially, the last of the decently paid manual labor force, and then low-paid clerical work. [b] The quality of work performance between different levels of the educational hierarchy has apparently widened. What has been insufficiently recognized is that the inflationary spiral in schooling has brought increasing alienation and perfunctory performance among students who are not at the top of the competition, those who are forced to stay in school more years but get no closer to elite jobs. Grade inflation and low standards of promotion are symptoms of this process. There is considerable evidence, from ethnographies of teenagers, of youth culture, and especially youth gangs, that the expansion of schooling has brought increasing alienation from official adult standards [Milner 2004]. The first youth gangs appeared in the early 1950s when working-class youth were first being pressured into staying in school instead of going into the labor force; and their ideology was explicitly anti-school [Schneider 1999; Cohen 1955]. This is the source of the oppositional youth culture that has grown so widely, both among the minority who belong to gangs and the majority who share their antinomian stance. Employers today complain that jobs in the lower half of the service sector are hard to fill with reliable, conscientious employees. But this is not so much a failure of mass secondary education to provide good technical skills (one hardly needs high-school math and science to greet customers politely or ship packages to the right address) as a pervasive alienation from doing menial work. The mass inflationary school system tells its students that it is providing a pathway to elite jobs, but spills most of them into an economy where menial work is all that is available unless one has outcompeted 80% of one’s school peers. No wonder they are alienated.

Although credential inflation is the primary mechanism of educational expansion, overt recognition of this process has been repressed from consciousness, in virtually a Freudian manner. In this case, the idealizing and repressing agent, the Superego of the educational world, is the prevailing technocratic ideology. Rising technical requirements of jobs drive out unskilled labor, the argument goes, and today’s high-skilled jobs demand steadily increasing levels of education. Thirty years ago, in The Credential Society [Collins 1979], I assembled evidence to show that technological change is not the driving force in rising credential requirements. The content of education is not predominantly set by technological demand; most technological skills—including the most advanced ones—are learned on the job or through informal networks, and the bureaucratic organization of education at best tries to standardize skills innovated elsewhere. In updated research on credential inflation vis-à-vis technological change [Collins 2002; Brown and Bills 2011], I have seen nothing that overturns my conclusions published in 1979. It is true that a small proportion of jobs benefit from scientific and technical education, but that is not what is driving the massive expansion of education. It is implausible that in the future most persons will be scientists or skilled technicians. Indeed, the biggest area of job growth in rich countries has been low-skilled service jobs, where it is cheaper to hire human labor than to automate [Autor and Dorn 2013]. In the current US economy, one of the biggest growth sectors is tattoo parlors [Halnon and Cohen 2006]: a non-credentialed occupation, small-scale business, low-paying and thus far immune from corporate control—and selling emblems of alienation from mainstream culture.

Although educational credential inflation expands on false premises—the ideology that more education will produce more equality of opportunity, more high-tech economic performance, and more good jobs—it does provide some degree of solution to technological displacement of the middle class. Educational credential inflation helps absorb surplus labor by keeping more people out of the labor force; and if students receive a financial subsidy, either directly or in the form of low-cost (and ultimately unrepaid) loans, it acts as hidden transfer payments. In places where the welfare state is ideologically unpopular, the mythology of education supports a hidden welfare state. Add the millions of teachers in elementary, secondary, and higher education, and their administrative staffs, and the hidden Keynesianism of educational inflation may be said to virtually keep the capitalist economy afloat.

As long as the educational system can be somehow financed, it operates as hidden Keynesianism: a hidden form of transfer payments and pump-priming, the equivalent of New Deal make-work setting the unemployed to painting murals in post offices or planting trees in conservation camps. Educational expansion is virtually the only legitimately accepted form of Keynesian economic policy, because it is not overtly recognized as such. It expands under the banner of high technology and meritocracy—it is the technology that requires a more educated labor force. In a roundabout sense this is true: it is the technological displacement of labor that makes school a place of refuge from the shrinking job pool, although no one wants to recognize the fact. No matter—as long as the number of those displaced is shunted into an equal number of those expanding the population of students, the system will survive.

The rub is on the expense side. The two main ways to pay for schooling (at all levels: elementary, secondary, tertiary, and whatever further levels become added on) are either by government provision or by private purchase. Both of these come under pressure in times of economic downturn and squeezed government revenue. In the years around 2010, both in the United States and many other countries, the costs of public education became such a substantial proportion of government budgets (especially at the local level) that they gave rise to movements to cut educational spending. In Chile, for instance, where 50% of the youth cohort now attends university, there is a struggle between the organized students demanding free university education for all and administrators and tax conservatives who push an increasing proportion of higher education into the private marketplace. Similar issues have roiled the student population in France and elsewhere. In the United States, where higher education is funded largely (and increasingly) by the students themselves and their families, there has been much concern over the amount of debt in the form of student loans—now (as of 2011) approaching 10% of GDP. If one extrapolates both the numbers of students extending their stay in schools in response to technological displacement, and the proportion of the economy made up by student debt, one can see that another twenty years or so of technological displacement and credential inflation will become enormously expensive to the system as a whole. What would happen if student debt rose to 50% of GDP, or 100%?

Education is a major cost of government, and this tends to limit future expansion. With higher costs, there are pressures to privatize, shifting the burden of funding to students or parents; but this too faces a limit as the middle class is economically squeezed. By 2012, there was a wave of publicity in the United States about what kinds of degrees are not worth the cost of acquiring them, in terms of the jobs one can get or one fails to get. Although one individual solution would simply be to drop out of the educational competition, the more popular choice among youth has been to seek specific vocational education, and there has been an upsurge of schools in areas like apparel design, computer programming, business, etc. But the shift to vocational education does not evade the dynamic of credential inflation, and we can predict increasing competition inside those vocational sectors, and rising inflation of vocational degrees. One indicator has been controversy, both in the political sphere and in accrediting and regulatory agencies, critiquing the low rate of job success for such vocational students, and denying them access to government loans. That is to say, the inflated value of educational degrees has become an explicit problem.

Information Technology is again being invoked as a solution. There is a rush toward university courses online, thereby achieving great economies of scale. Some of these are for sale, albeit at rates far lower than the cost of actual tuition at a bricks-and-mortar institution. Others are offered altruistically for free. Neither method will hinder credential inflation; indeed, both add to it, by putting still more educated persons on the market. As of now, the new kinds of credentials are being labeled as distinct from university degrees, and in that sense not directly competing with them. This remains to be seen; in effect a new form of cheap educational currency is being created, alongside a more traditional and expensive educational currency. If educational currencies are strictly like money, Gresham’s law would apply, and the cheap currency would drive out the expensive one. On the other hand, in economic sociology, as we know from Viviana Zelizer (1994) and Harrison White (2002), high-quality economic objects can exist in separate circuits alongside cheap ones, and that may well continue to be the case in the production of educational credentials.

The dilemma is this: efforts to make education cheaper have the effect of reducing employment in the educational sector itself; if a few famous universities monopolize teaching through online courses, and a few professors can do the vast amount of the teaching with electronic assistance, one more sector of employment becomes technologically displaced. The result is the same through the pathway of old-fashioned tax revolts; a short-term reduction in the population’s tax burden has the roundabout effect of reducing jobs available for that same population.

Of the five escape routes from capitalist crisis, continued educational inflation seems to me the most plausible. An expanding educational system driven by credential inflation reaches a potential crisis point within the educational system itself. This is not necessarily final. One can envision a series of such plateaus, stopping and restarting as our secular faith in salvation through education goes through disillusionment and revival. But if this becomes increasingly government sustained, it amounts to socialism in the guise of education. It is conceivable that liberal governments might find their way to keep expanding educational systems, using them as a Keynesian safety valve, and a form of transfer payments from the capitalists and the diminishing sector of the employed, to sustain the otherwise unemployed. But to get such a government might well take a near-revolutionary disillusionment with capitalism.

WHEN WILL FULL-BLOWN CRISIS HAPPEN?

Computerization of middle-class labor (since the last decade of the 20th century) is proceeding at a much faster pace than the mechanization of the manual labor force (which took approximately the entire 19th century and three-quarters of the 20th). Technological displacement of middle-class labor is not much more than twenty years old; whereas it took almost 200 years to destroy the working-class labor force.

Another estimate of the timing of future capitalist crisis is provided by world-system (W-S) theory. In earlier writing on the capitalist world-system, Wallerstein and colleagues presented a theoretical model of systemic long cycles. The core regions of the W-S in their expansive phase generate their advantage by resources extracted under favorable conditions from the periphery. Hegemony is periodically threatened by conflicts within the core, and especially by semiperipheral zones rising to threaten the hegemon. Eventually the core gets caught up with, just as increasing competition in a new area of entrepreneurial profit brings down the profits once gained by the early innovator; in this respect, the W-S operates like Schumpeter’s cycle of entrepreneurship, but on a global scale. With each new cycle, new opportunities for expansion and profit arise, under the leadership of a new hegemon. The crucial condition in the background, however, is that there must be an external area, outside the W-S, which can be incorporated and turned into the periphery of the system. Thus there is a final ending point to the W-S: when all the external areas have been penetrated. At this point the struggle for profit in the core and semiperiphery cannot be resolved by finding new economic regions to conquer. The W-S undergoes not just cyclical crisis but terminal transformation.

On the basis of past cycles, Wallerstein (also Arrighi, 1994) project the crisis of the W-S at approximately 2030–2045. My own estimate of the crisis point generated by the mechanism of technological displacement of the middle class depends on the rate at which structural unemployment grows. (This must be measured not merely in convenient technical terms such as, in the United States, the number of applications for unemployment compensation, but by our best measure of the proportion of the adult population unable to find work and driven out of the employment sector entirely.) An unemployment rate of 10% is painful, by American standards; 25% (found in crisis economies) is big trouble, but it has been sustained in the past. But when unemployment reaches 50% of the work-capable population, or 70%, the capitalist system must come under such pressure—both from underconsumption and political agitation—that it cannot survive. If we think such unemployment rates are unimaginable, let us imagine again, through the lens of technological displacement of all categories of work by electronic machinery. It is clear that the rate of technological displacement has accelerated in the last fifteen years. We could well reach 50% structural unemployment by the year 2040, and 70% not long after that. In gross terms, this agrees with the W-S projection of a terminal crisis of capitalism around the middle of the 21st century.

ANTI-CAPITALIST REVOLUTION: PEACEFUL OR VIOLENT?

If the crisis of technology displacement becomes severe enough—a highly automated, computerized world in which very few people work, and most of the population is unemployed or competing for menial low-paid service jobs—would there be a revolution?

Here we must leave economic crisis theory and examine theory of revolution. Since the 1970s, the theory of revolution has been revolutionized. Skocpol [1979], Goldstone [1991], Tilly [1995], and others, by their comparative researches on the rise and fall of state regimes, have established what can be called the state breakdown theory of revolution. Successful revolution depends on what happens at the top, not on disaffected and impoverished masses from below. The chief ingredients are: first, a fiscal crisis of the state; the state becomes unable to pay its bills, and above all to pay its security forces, its military and police. State fiscal crisis becomes lethal when it is joined by the second ingredient, a split among elites over how to deal with it. We could add secondary factors, back in the chain of antecedents, typically although not always including military causes; a state fiscal crisis often comes from accumulated military expenses, and elite deadlock is especially exacerbated by military defeat, which delegitimates government and provokes calls for drastic reform. Splits among elites paralyze the state and open the way to a new coalition with radical aims. It is in this power vacuum—what social movement theorists now call the political opportunity structure—that social movements are successfully mobilized. Often they do so in the name of grievances from the bottom, but typically such radical movements are led by upper-middle-class fractions with the best networks and organizing resources. As de Tocqueville recognized long ago, the radicalism of a movement is not correlated with the degree of immiseration; exactly what does determine the degree of radicalism is more in the realm of the ideological and emotional dynamics of exploding conflict, although just how to theorize this remains unfinished.

Virtually all revolutions, up to this point in history, have come not from economic crisis of capitalist markets, but from government breakdown. The key component is fiscal crisis in the government budget itself, but this is usually independent of major crisis in the larger economy. This means revolutions can continue to happen in the future, through the narrower mechanism of state breakdown, the state-centered fiscal crisis, elite deadlock, and ensuing paralysis of state enforcement apparatus. State crises are more frequent than full-scale economic crises. What happens when we put this in the context of the long-term trend to technological displacement of the labor force? Several things are possible: revolutions can happen in particular states, not necessarily those with the greatest amount of technological displacement. Or, revolutions can happen that do not act on a policy of solving technological displacement. But also, revolutions can happen which do take an explicitly anticapitalist turn.

Since history is driven by multiple causes, the future is like rolling multiple dice, as in the Chinese game Yahtzee—waiting for sixes to come up on all five dice simultaneously. Thus we could have the general anticapitalist revolution sometime in the future, through the right combination of state breakdown, perhaps plus war defeat, plus the omnipresent technological displacement.

The crisis of capitalism sets the agenda. At some point the politically mobilized populace will have to deal with it. This could happen by the classic route of state breakdown: the legitimacy of the state is called into question; the state itself stops functioning (paralyzed by fiscal crisis and/or political splits within its own ranks, mirroring political polarization outside); the monopoly over organized violence breaks apart, as police and the military lose organizational coherence and factionalize. This may or may not produce extensive violence, whether in riots and crowd suppression, or in civil war. In some moments of revolution (for instance the French Revolution of February 1848) the period of tense crisis was resolved with relatively little violence, as the existing regime lost organizational coherence, no one wanted to take charge of continuing the existing regime, and a new parliamentary power was quickly constituted. Similarly in Russia in February 1917, after several days of sporadic violence and wavering between crowds and soldiers, the Czarist regime ended in a flurry of abdications and refusals to pick up the reins. These cases also show that in ensuing months and years the new revolutionary regime may have trouble consolidating power, especially when restorationist movements mobilize against it, and later violence is often more severe than the initial revolutionary transition. Separating the revolutionary moment from its aftermath, the process of revolutionary state breakdown need not be very violent. Political sociology has not yet taken up the issue of under what conditions postrevolutionary consolidation of government is peaceful or violent. All we can say is that the range of violence seen in historical revolutions and their consolidation would also be possible in the terminal crisis of capitalism. The most dangerous possibility is that the prospect of anticapitalist revolution, seen by its enemies as the threat of violent change, would give rise to a neofascist solution: an authoritarian regime supported by popular movements nostalgic to save capitalism, which would carry out enough redistribution so that the massively unemployed population would be kept alive, but under a police state constantly on the alert for subversion. We do not know how to estimate the chances of an attempted fascist solution, compared to a democratic postcapitalism. Wallerstein has conjectured that it may be 50–50.

But a favorable alternative may be quite likely: the institutional transformation from capitalism to a noncapitalist system of political economy—an institutional revolution—could come about through peaceful political process. If the crisis of capitalism is severe enough—a majority of the population structurally unemployed, robots and computers doing almost all the income-generating work but owned by a small number of wealthy capitalists, the economy in deep depression—at some point a political party could win electoral power on an anticapitalist program. Some governing party or coalition would have to replace capitalist production, distribution, and finances with a system that redistributes wealth outside the system of labor market and profit-taking.

This kind of electoral politics might seem far-fetched in the political atmosphere on the present—just twenty years after the fall of the Soviet bloc, coinciding with an enormous market expansion in nominally communist China and with the triumph of market ideologies everywhere. But political moods are prone to wide swings every twenty or thirty years: think back through each twenty-year segment of the 20th century. If the structural trend to technological displacement continues to deepen, a vast reversal of opinion another twenty years into the future is not at all unlikely.

A peaceful institutional revolution is possible. The deeper the structural crisis of the middle class, the more mobilization for electoral politics is facilitated. Along that route lies the prospect for a relatively nonviolent transition.

COMPLEXITIES OF HOW STRUCTURAL CRISIS WILL UNFOLD

The world is the product of multiple intersecting causalities. Everything is clothed in particularities of locality, sequence, and memory. Thus the structural crisis of capitalism will have many variations. What is at issue here are not the names, dates, and dramas, but the big dimensions of complication—major processes that can drastically change the nature of the crisis as capitalism becomes too self-destructive to continue.

A host of processes and problems will complicate the future: aging populations, explosion of medical costs, ethnic and religious conflict, ecological crisis, huge intercontinental migrations, perhaps wars of varying scope. To keep the focus on the central point: how will these affect the technological displacement crisis? Some of them will exacerbate it; some will add pressures for state breakdown and thus raise the chances of revolutions, the rolling of multiple sixes on the dice. Will any of these complications turn back technological displacement, increasing middle class employment, creating new jobs to offset automation and computerization, and in sufficient degree that capitalism will be saved? Let us consider a brief checklist of complications, with these questions in mind.

Global unevenness. The mechanisms driving capitalist crisis operate with different intensity in different countries and regions of the world. An advanced crisis of technological displacement of middle-class work in the United States or in western Europe would not necessarily coincide with the depth of such crisis in other parts of the globe—China, India, Brazil, or other places of significance in future decades. Is it possible to have a successful anticapitalist transformation inside particular states while the rest of the world remains capitalist? This would depend on the size and weight of that particular state’s economy in the world; revolutions in small states with minor economies would have little influence and might easily be overturned; those in big states with a large proportion of the world-economy would be more robust and trend-setting. Given the tendency for militarily strong regimes to intervene in other regimes, to protect their own economic interests, and to support their ideological cousins, the staggered sequence of anticapitalist regime changes could lead to interventions of the sort we have seen in the aftermath of the 2011 Arab Spring. If there were a massive economic crisis in the United States, for instance, or the EU, in the year 2030, resulting in a shift to an anticapitalist regime, possibly some other still-thriving capitalist state (China, perhaps) would intervene to stop it. Whether such interventions are successful or not will depend on geopolitical factors of relative resources, logistical extension, and geographical position [Collins 1995].

Weighing against such scenarios is a larger process: the structural crisis of capitalism is a universal tendency. Even if local hitches occur, the advance of computerization and displacement of all kinds of work will continue everywhere. No one can remain the capitalist hegemon under these conditions for long. Postcapitalist regimes, with better redistribution, may be able to generate consumer demand and get their economies back into a growth mode, pulling ahead of recalcitrant capitalist states who will be stuck in their own crises.

Muddying capitalist crisis with other dimensions of contention. In a multidimensional world, many different conflicts go on at the same time. The future showdown of capitalist crisis will be mixed with other issues; and these often have emotional and dramatic qualities that put them in the forefront of public attention.

To mention only a few: Religion—at present, contention most vehemently between militant Islamists and their opponents (Christians; Hindus; secularists of the post-Christian West; the post-Communist successor states, etc.); not ruling out the possibility of other axes of religious conflict in the future. Race/ethnicity/national identity—conflicts ranging among struggles over distribution of the spoils of office, quotas and government regulation of ethnic access to resources (affirmative action, etc.), policing borders against immigration, exclusion of immigrants, territorial disputes, and ethnic wars. But also movements to promote interethnic harmony or integration, which may be opposed in turn by movements seeking the particularistic ends listed in the previous sentence. There are also a host of transient issues that take up most of the political attention space most of the time. These involve scandals, corruption charges, personalities, atrocities, moralistic issues sometimes elevated to the status of “culture wars.” But what makes structural crises more important is that they are indeed structural; they concern inescapable conflicts in the institutional arrangements that affect the material and organizational basis of ongoing social life. Unlike scandals, structural issues do not blow over; they can be ignored for a while but they continue to produce their effects.

Overlaying by particularistic issues is inevitable. Conflicts over ethnicity, religion, gender, lifestyle, etc., can either reinforce the capitalist crisis, or muddy it enough to retard or prevent a revolutionary transformation to postcapitalism. Such conflicts could also reinforce the crisis and the transformation, if large numbers of people are mobilized via their identities as suppressed and injured ethnic groups, religions, gender, etc., and perceive their grievances as coinciding with their interests in opposing the capitalist system. Overlay of particularistic identities upon class mobilization has often happened in past revolutions, and seems likely in the future. On the other hand, the overlaying most of the time diverts attention from economic issues, and has often served as the mobilizing base for reactionary movements, opposing reform of the system because of ethnic, religious, or other hostilities to the reformers. Again we should invoke the depth of the future capitalist crisis. If it is as deep as the theory indicates, there will be no way out of it, except a postcapitalist transition. All the ethnic, religious, lifestyle, and other conflicts will only be so much noise, stringing along the crisis until finally an alignment of mobilized political forces comes about that solves the problem by postcapitalist transition. The long-term result is not whether the transition will occur, but how long it will take.

War. The capitalist crisis envisioned for the mid-21st century might well be connected with wars. Anticapitalist revolution in one state could lead to subsequent wars, as the result of outside intervention to restore a procapitalist regime; or internal civil war exacerbated and sustained by outside aid and intervention; or by another path, an aggressive post-revolutionary state promoting export of revolution, thereby generating wars elsewhere. This is not inevitable; there are pathways by which a revolution (particularly a peaceful political transition) would not be followed by wars. Rather than trying to predict the contingent variety of the future, let us ask the overarching question: would wars save capitalism, or add to its crisis? Wars on the whole promote revolutions, especially on the losing side; but also sometimes on the winning side, through war expense contributing to fiscal crisis of the state. Would a war victory by a state attempting to uphold capitalism, in a world where anticapitalist movements are strong, be able to sustain capitalism by force? It might be able to do so for a period of time. But a deep crisis of massive technological displacement of work could not be solved in this way. Even this war scenario only retards the postcapitalist transformation.

Ecological crisis. Long-term climate change, destruction of natural resources and other results of human activity are producing massive consequences and endangering life and livelihood in the future. The question is: will the ecological crisis generate shifts in capitalism, such that the capitalist crisis will be overcome (the solution to the ecological crisis solving the capitalist crisis)? Or will the crises combine, making each other worse, and thereby motivating a joint solution, or a joint failure of solution?

Ecological crisis could mesh with capitalist crisis; the other prong of the alternatives, that ecological crisis would help capitalism survive, seems remote. Green industries will not generate enough employment to offset technological displacement, especially since green industries are likely to take the high-tech path of further computerization and automation. The disastrous effects of ecological crisis, although horrific to contemplate in terms of human suffering, would hit some regions of the world earlier than others. Ecological change will create new advantages and opportunities for some regions. Some low-lying parts of the world will be inundated. Other places will become relatively uninhabitable, because of drought, heat, pollution, etc. At the same time, some cold regions will become more habitable; melting ice caps will open new oceans, for instance, favoring Russia, Canada, and other regimes adjacent to these frontiers. The combination will bring about massive pressures for migration. There also could be huge population losses, amounting to a humanitarian disaster, perhaps killing hundreds of millions of people. Nevertheless, the cold eye of history centuries from now will report that even if 10% of world population were lost (or some such figure), much of the human world did survive and adjust.

Now bring the ecological crisis into juxtaposition with the crisis of capitalism generated by high-tech displacement of middle-class work. The massive flux of refugees from the ecologically devastated areas into the habitable regions would add more competition to an already crowded labor market. Cheap, expendable labor, which already drives down the life-chances of the majority made superfluous by automation, would further exacerbate the economic crisis. Some new employment would open up, in migrant ethnic enclaves, and on the geographical frontiers where the earth will become more habitable. But ecological crisis seems unlikely to break the overall trend of the technological displacement crisis. Displaced populations, fleeing from places no longer inhabitable, and the antimigrant movements that would likely follow, might add a further muddying or retarding effect on the solution of capitalist crisis. On the humanitarian side of the scale, compassion within the part of the world that welcomed such survivors could further channel emotional energy to the movement for a transition beyond capitalism and its problems. On the whole, ecological crisis seems likely to further enhance the likelihood of the anticapitalist scenario.

Of crucial importance is timing. The most careful predictions about the ecological crisis suggest that major destruction of human habitat would occur around AD 2100. It is at this point that sea levels will rise enough to inundate low-lying coastal areas; agriculture will be ruined in major populated regions; water shortages will become dire. But projections for full-scale capitalist crisis come sooner: around AD 2030–2050. The capitalist crisis will have priority, because it will hit crisis proportions first.

THE POSTCAPITALIST FUTURE AND POSSIBLE OSCILLATIONS AMONG ECONOMIC REGIMES

What comes after capitalism would have to redistribute massively from current arrangements of the private holding of wealth generated by capitalist enterprises and financial maneuverings; such redistribution would go to the large majority of the population displaced by the computerization and mechanism of all forms of labor, including much of what is now managerial and professional employment. The program of redistribution would also be the occasion to take control of what are now the financial institutions underpinning the disastrous trajectory of capitalism. Perhaps such postcapitalist institutions could be constituted in a more decentralized form than the classic 20th century experiments with state socialism.

Will the end of capitalism be the end of history? Certainly not. It will not eliminate politics. Hopefully postcapitalist regimes will be democratic; certainly there will be stronger efforts this time around, recognizing that democracy is not simply a bulwark of capitalism, but has value in itself. And politics always has the potential for new changes of direction.

Will the anticapitalist revolution make people happy? Durkheim [1893] argued that the level of happiness in human history is always about the same (perhaps we should say the level of unhappiness); new situations create new desires and new levels of comparison. In any case, conflict is intrinsic to human organization. One thing we have learned from the history of socialist regimes in the 20th century is that they have their own struggles, and that we should not expect too much from them. Chiefly they have the merit of not being capitalist, the merit of escaping from capitalist crisis.

I would not even predict that anticapitalist regimes would be permanent. Quite possibly they themselves will change, either through electoral shifts, or future revolutions another fifty to one-hundred years down the road. There is no deep reason why socialist regimes should be more peaceful than capitalist ones. As Max Weber argued, all organizations of state power strive for power prestige, when opportunities in the world-arena exist; and the military-expense path to revolution can be repeated again—in fact it was what brought down the U.S.S.R. [Collins 1995]. Far from being the end of history, future centuries may see a series of oscillations between capitalist and socialist forms, and perhaps others not yet envisioned.

It has been argued that the experience of state socialist regimes has been too unpleasant, not to say disastrous, for them to become attractive again. That has to be put in balance with the potential horrendousness of a future capitalism where a tiny elite owns all the big businesses and sells or operates all the computer equipment and the robots, leaving the great bulk of the population to scrap among themselves for jobs servicing the elite and their machines. I am not predicting the revival of utopian socialism with its grandiose hopes, but only a phase when political actors, recognizing the flaws of the alternatives, choose the escape route when one system becomes too crisis-ridden to bear. When capitalism gets bad enough, there will be turns to socialism. When state socialism has cleared up the problems for a while, its own onerous characteristics may well give rise to a reaction. Hence oscillations between the two kinds of systems of political economy, over future centuries.

Postcapitalism likely will not end all economic inequality. Past experience with socialist regimes shows they have cut the level of inequality by about one-half—compare Gini coefficients of socialist and capitalist societies, and the drastic increase in inequality following the downfall of the U.S.S.R. After socialism does something to fix the rampant inequality generated by capitalism, and to restore decent terms of employment to the majority, people may well become bored and disgruntled. Another fifty years down the line, there could be a repeat of the disenchantment with communism that took place in the 1980s. The centralized planned economy of the future may or may not be authoritarian; certainly it would have all the computerized technology, the robots, and means of coordination and surveillance to produce a heavy-handed social presence, even in its more benevolent forms. Power politics inside this kind of system will not go away, and that is another pathway toward future contention.

In addition to disgruntlement with future socialism, there would likely be rebirths of the market. If spaces are allowed inside a planned economy (and presumably in liberal, mixed forms there would be), trading networks would grow up, entrepreneurs would generate new enterprises, perhaps trumping centralized planning with their greater innovativeness. The snake in the garden, investment and finance, could make its reappearance, setting off new rounds of speculation and pyramiding meta-structures of financial manipulation. If socialist regimes are sufficiently democratic, capitalist movements might vote themselves back into office, and dismantle part or all of state direction of the economy. If the regimes are more authoritarian, the theory of revolution is back in play, waiting for circumstances that bring about state breakdown and openings for regime change. If in the distant future—for instance, the 22nd century, or the next—capitalism is restored, that too is not the end of history. If it is restored with the same tendencies to self-destruction as current capitalism, the world would see yet another repetition of swings between capitalist and anticapitalist arrangements of the economy.

In sum, the long-range future—however many centuries forward one can imagine—is likely to be a series of swings between the respective weaknesses of centralized state planning and rampant market economies. We are most certainly not looking at the emancipation of humanity, either way, but at a realistic oscillation between the horns of a socioeconomic dilemma.

CONCLUSION

I want to underline the schematic nature of my analysis. I have concentrated on a long-term structural trend in capitalist labor markets, which is at the crux of the growing inequality inside capitalism. The ongoing phase of high-tech innovation—computerization, robotization, the replacement of human communicative labor with machines—is in full swing today, and will surely become much more extreme with each passing decade. Fully advanced Artificial Intelligence does not yet exist that would closely mimic human capacities for flexible and creative cognition. The nearer AI gets to that standard, the higher the ranks of the workforce it will be able to replace. One can envision a future, perhaps less than fifty years from now, when almost all work is done by computers and robots, with a few human technicians and repair personnel. Robots are the equivalent of working-class manual labor, and factory robots have already contributed to displacing the bulk of decently paying manufacturing jobs. More advanced robots, with capacity for mobility and equipped with sensors and onboard computers, could develop into humanoid robots that would take over upper-working-class and middle-class skilled work, and then displace managers and expert professionals as well. This will not resemble the thrilling fantasies of science fiction. The real threat of the future is not some Frankensteinian revolt of the robots, but the last stage of technological displacement of labor on behalf of a tiny capitalist class of robot-owners.

Whatever the details of the technologized future turn out to be, the structural trend—the technological displacement of labor—pushes toward capitalist crisis, over and above whatever short-term, cyclical or contingent crises occur. This tendency toward increasing inequality also will undercut consumer markets, and thus eventually make capitalism unsustainable. Schematically the only way to solve the crisis will be to replace capitalism with a noncapitalist system, which means socialist ownership and strong central regulation and planning. How and where the transition will occur is much more historically singular and complicated than my theoretical scheme.

The bottom line remains: technological displacement of the middle class will bring the downfall of capitalism, in places where it is now dominant, before the 21st century is over. Whether these transitions will be peaceful or horrific remains to be seen.

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