It was Karl Marx who, in the mid-19th century, identified the link between technological progress and political change. His analysis was spot on but his prescriptions were useless.
Basically, said Marx, capitalists would adopt newer labour displacing technologies to maximise their profits and would create a “vast army of the unemployed” who would then rise in revolt and take over all means of production. This would be absolutely heaven, he predicted.
But he reckoned without human frailty and in the end it all ended very horribly. In Russia the workers took over in 1917 and that disaster lasted for 84 years, the country finally surrendering to the capitalist instinct in 1991. China was a latecomer to the communist game. It was taken over by the “workers and peasants” in 1949. But in 1978 it handed production back to the capitalists.
The western world thought at the time that along with Marxism, the Left had also died. Since the main Marxian problem was the uneven distribution of wealth and incomes, it had cleverly invented the welfare state where the government would tax the rich to hand out some goodies to the poor. The state became Robin Hood.
Two basic features
That model worked well till about the end of the 20th century. But digital technologies have, since then, created conditions that resemble the 19th century of Marx. These have two basic features.
One is the skewed increase in the returns to finance capital. The other is the skewed increase in the returns to skilled labour. So the rich and the skilled have both done well while the poor, unskilled have been left howling at the moon. No country has escaped this fate.
And that is why the Left, which claims a universal monopoly on the impulse for economic change and social morality, is now staging a revival. In India, it must be noted, however, that it has always been present, because it’s a decent idea. But unfortunately it is represented by political low life.
Indeed, even our mainstream parties and major institutions are driven by basically Marxist ideas. In that sense, we can teach the world a thing or two about social and economic justice and assume yet another avatar of Vishwaguru-ism.
That said, the problem with the modern Left is that it is the inverse of the old Marxist Left in that it puts social change before economic change. It doesn’t want to tamper with the economic arrangements of production which have brought it many goodies. It also believes, unlike the Old Left, that the individual is more important than the group.
But it is very gung-ho on social change with all that stuff about LGBTQ+ and same sex marriage and all that. This places individual rights above social norms. But as the lawyer arguing against same sex marriage asked the Supreme Court, is there no place for conservatism in the Constitution? Be that as it may, at the core of this lies an entirely perverse demand saying that equality of opportunity isn’t good enough, there must be equality of outcomes as well. This is what our own system of reservations has been out — since 1950. The West needs to learn the consequences from us.
If accepted, this insistence on equal outcomes will have three consequences. We have seen all three in India.
One, it will demote merit as a criterion for recruitment and, two, it will reduce the rewards to skills of even those who are recruited. Intense capital usage will be accompanied by an army of the useless. Together these two will lead to a third consequence: a backward bending supply curve of labour.
Leisure versus money
This has started to happen in Europe and the UK. People now prefer more leisure to more money. The late PT Bauer, an economist with a good professional reputation, once wrote that the “natives” don’t respond positively to economic incentives. He was talking about Africa. It would seem the Europeans are no different.
We have already seen the first two in our government and public sector. That’s what our own emphasis on the equality of both opportunity and outcomes has led to.
The amazing thing is that even the Right in the West has given in to this Left demand that individual needs must be addressed before group needs. You only have to look at all the legislative changes in the last decade and a half.
It’s this revival of the Left and the surrender to its unreal demands by the rest that will eventually doom the West because of ever lowering labour productivity. Recall that it was this that destroyed the USSR. It will take time because of technological advantage and capital abundance. But without hard working people these, too, will lose their significance.