World ahead

Political decay, global disorder, new economic trends and AI

A major problem of human civilization is that it has uneven progress in various directions. One such major discrepancy is lag in our political science compared to Scientific and technological advancement. Human civilization has advanced on many frontiers - modern medicine, biotechnology, atomic physics, astrophysics, semiconductors and AI, sophisticated automation, marvels of engineering etc etc. But look around the world. Religion and superstition is still a dominant theme of political system in many countries of the world: the backward nations of middle east, my home country India (so called largest democracy in the world) and even modern nation like America (where Christian nationalism is surging).

A great leap in Science that began with enlightenment era was supposed to advance social thinking from the backwardness of religion and superstition. But this didn’t happen even after nearly four centuries. The problem is of course intertwined with our political systems which reinforces social backwardness. The problems with our political systems are many which ranges from domestic policy of nations to international policy of nation States. On domestic level, the political system of nations got stagnated. Schumpeter asserted that Democracy could not keep pace with Capitalism.

While Capitalism became sophisticated with technocratic governance and meritocracy of managerialism, democracy remained trapped in populism, incompetence, inefficiency and idiocy. Over time, the Capitalism started cannibalizing on political system and further degraded it for its own needs. That was the emergence of crony Capitalism. Capitalists financed incompetent political cretins who made regulations and policies in favor of Capital and against interests of rest of society. Thereafter, the politics went downhill and never recovered. Fast forward this decay of Political system by 5 decades - you get Donald Trump and modern Republican party …. and impotent Democrats.

(political party system in America is like game of ‘good cop-bad cop’ , the Republican party is bad cop which torments and abuses American people in worst ways. When American society get fed up with Republicans, the good cop (Democratic party) comes in to charm and cuddle the abused electorate. Note that there is never any accountability of bad cop who keeps coming back to inflict ever more abuses. The cycle continues.)

While America has the material resources - the technology and means - that are more than sufficient to provide decent living standards to the whole society but ironically the economic inequalities, social insecurity and tensions in society are surging. A strange paradox. The social fabric of America is torn apart from poverty, incarcerations, collapsing family structure, opioid crisis, extremism and mental health crisis. Why a modern nation with all the material means to fulfill social needs is limping in so many ways? Because its political system is dysfunctional, paralyzed and broken. It can’t do anything constructive on long term objectives. But this problem is not just of America. The same thing is in other modern nations with only difference being the degree of decay.

American psychiatrist Dr Bandy Lee, defines the current era as a Psychological age. Human specie is in a crisis where they are marching towards their own extinction. The path to extinction can be slow like global warming and destruction of environment by economic and industrial means. Or the path of extinction can be sudden by an intentional or accidental nuclear war. While humans developed the technology that can destroy itself and they degraded the very environment that sustains life, humans were unable to transcend their psychological barriers that leads them to a death drive.

On international level, the nation States and superpower rivalry has brought the world to a state where it has become habituated to live on edge of total annihilation. The world lives on hair trigger of Nuclear catastrophe with weapon stockpile that is sufficient to incinerate the world many times over. We gained technological capacity to invent these weapons of mass destruction before we developed political temperaments to live in harmony and cooperation. We thought of using Nuclear energy for economic development much later, rather we first built Nuclear weapons to destroy other nations. And then we kept on building the weapon stockpile.

The post world war 2 international order is now unraveling, creating more uncertainties and dangers for international peace. But if we recap the international scene from 20th century, there never was a solid foundation for global harmony. Colonialism and unipolar world order where British empire was the hegemon, followed by failed league of nations, followed by 20 years of crisis in Europe, followed by United Nations with elite club of superpowers who carved their sphere of influence, followed by collapse of soviet union and rise of US hegemony - the world was in long turmoil. Now with US hegemony dwindling, and world thrown into chaos of mindless trade war (declared unilaterally by US on the world), world desperately needs a new anchor for stability.

Historian Eric Hobsbawm described 20th century as the age of extremes. Humans discovered and invented so many great things that created such great material progress in a short span in human history. But humans also destroyed so much in such a short time. From two world wars, a cold war, countless conflicts, genocides and enormous structural violence - the violence, inequalities and death created was also unmatched in scale. While humans advanced so much in social, economic, institutional and technological direction, they also left a trail of mass death & human carnage along with it.

Also remember that tragic events of 20th century were not inevitable but brought about by our own blunders. The "Carthaginian peace" that created league of nations (and set the stage for world war 2), the policies that lead to cold war (immense waste of resources that created Nuclear age), the policies that lead to Russia becoming a gangster State (after collapse of USSR, Russia could’ve been incorporated into European security architecture & common markets) - all these things were clearly avoidable. Not out of compulsions but out of our foolish decisions & policies, the tragic events came about.

And just as our international tragedies were avoidable, our economic tragedies were also avoidable. Monetarism, supply side theory, Thatcherism and Reaganomics were crackpot doctrines that did immense damage in various parts of the world. The austerity imposed on Greece & other Euro countries was unnecessary. The shock therapy implemented in post Soviet Russia was unnecessary …. and foolish as it created a Gangster state. American austerity for deficit & debt reduction in wake of 2008 great recession was nonsensical which crippled the labor market for 7 years (and possibly set the stage for arrival of Trump).

To be sure, not all was bad in 20th century. Fortunately there were right leaders at right time in history who nudged the world in positive direction. Allies won second world war. New Deal and Keynesian thinking that drove US economy in 1940s to 60s was strongly progressive. The peace race of economic competition between US and Soviets had positive outcomes. The cold war ended without the most feared scenario - Nuclear war (we came close on several occasions and survived). But much of the good things that happened from 1940s to 1970s started to fizzle out in late 20th century. Thereafter, the hyper individualistic Neoliberal doctrine became the dominant theme.

On basic level, while humans were able to advance their understanding of natural science, they made little progress in formulating political and economic organization of society. Orthodox economic theory is a pseudoscience which masquerades as actual science. Although based on frivolous nonsensical tenets like Rational choice theory, general equilibrium, NAIRU, invisible hand, utilitarianism and artificial monetary constraints, the orthodox economics is however the economic foundation of most of the world. Academicians, students & professionals learn these theories and policy makers & bureaucrats use these theories to govern nations and international institutions.

On political level, the Classical theory of Democracy which is based on universal suffrage is also a frivolous and nonsensical concept (I strongly recommend Schumpeter’s book). The idea of universal suffrage is ingrained so deeply into people that they religiously believe that it’s the supreme universal concept of political science. Just like religion, the indoctrination of people with democracy starts at young age and they grow up to be disciples of this system. With life full of indoctrination, people lose ability to think outside ‘democratic system’. Most western intellectuals on political science are also either fools or intellectually dishonest who peddle Classical Democracy to people.

A new disruptive technological leap is on the horizon - Artificial intelligence. How much AI can mimic human intelligence isn’t the question. The contentious matter is how much application and limitation of AI would be and the trend indicates that it will be mostly Labor replacing technological transformation. The problem with emergence of AI is not AI in itself but actually our current social and political contracts. We live in a time where Labor power has largely dissipated, norms of liberal democracy greatly eroded and Oligarchical power is at the pinnacle. In such conditions, the AI will only put downward pressure on wages and living standards of labor.

The second industrial revolution and post war golden period improved living standards of society more broadly for two reasons. First was that mechanization of these times was mainly of Labor enabling technology. Secondly, the democratic governments played an activist and participatory role in supporting economy. Stabilizing aggregate demand, general welfare (social security), low unemployment and improving standards of living were explicit goals of government in this period. The result of both factors was that economies grew and living standards of common people also improved greatly.

Now look at the kind of political regimes currently in nations like US & UK. They use accountability sinks of free markets (invisible hand), bond markets (TINA doctrine) and monetary constraints (fiscal tightening & austerity) to justify regressive policies and cover up their general incompetence. Cultural populism (MAGA movement & Brexit), gaslighting (disinformation) and Kayfabe is the basis of political regimes which are now thoroughly corrupted and incompetent (Kakistocracy). Also look at Oligarchs and business community; the tech oligarchs like Elon Musk, Peter Thiel etc are delusional and malevolent elites who have accumulated unprecedented power over economy, politics, sociopolitical discourse (through their social media) and industry.

Combination of failed political regimes (Trump is prime example) with backing of malevolent and delusional oligarchs, and the environment where norms of liberal democracy gone, principle of rule of law in ruins and labor power largely dissipated, the new labor replacing technologies won’t be as beneficial to society as the technologies of second industrial revolution. There may now be a new trend in economic growth. Recall that in second industrial revolution, capitalists’ profit had a basis in providing material outreach to common people. The capitalists employed workers → workers produced goods & services → Capitalists sold this production in markets → workers purchased and consumed these goods. And capitalist made their profits in this process.

So if capitalists pay low wages to workers, there will be a deficient demand in economy and growth will suffer. So it was in Capitalists’s interest to maintain decent wages for workers. But now think of production, employment and consumption pattern in markets with sophisticated automation & AI robots. The Capitalists own vast majority of all wealth. They will produce goods & services with minimal workers as automation will do majority of tasks. There will be lesser employment. The goods & services will be increasingly consumed by wealthy people. Overall consumption may not decline but consumption share of wealthy will rise while that of common people (lower percentiles) will decline or stagnate.

The nature of goods and services will also change. There will be more demand for mansions, private Islands, yachts and super yachts, private jets, sports cars, life enhancing medical services & drugs (too costly for common people), exotic escort services (think of Epstein clients) etc and luxury goods in general. And common people will struggle to buy homes, afford education and healthcare (affordability crisis). The services, especially in tech sector, will continue to degrade. While you may have cheaper computers and smartphones, the services of eCommerce, streaming OTT, video games, social media, Uber etc will continuously degrade in experience. This is what’s termed as Enshittification phenomenon.

With vast amount of data and information flow in domain of digital technologies, one would’ve assumed that people will learn more, acquire greater knowledge and become more informed. But along with the possibilities also came all the destructive tendencies. Malignant use of digital Technology has reached epic proportions. We now have digital crypto currencies that are widely used for drug trade, extortion, money laundering, organized crime and all kinds of illegal activities. Digital currencies are also ways and means for bribery in politics. Social media companies have become platforms of hate, disinformation, conspiracy theories, addiction and promotion of socially destructive behavior in general. Disinformation on social media has even become a threat to process of democratic elections and tech companies are building algorithms that subvert political process.

Isn’t this a common theme? We develop technologies but fail to curb its destructive uses. And with advancing power of technologies, the potential threats of their abuse keep getting greater.

Here, I also assert that people should not fall for narrative of ‘Technology Trap’. This narrative is another spin-off of TINA doctrine which claims that current decline in employment and falling standards of living are inevitable endogenous developments of technological transformation. This is a half-truth. This narrative on technology trap is based on laissez-faire doctrine which presumes that markets are best mobilizing economic resources and those who’re not employed (or underemployed) are just out of luck in this whole process of technological transformation. But are markets efficiently mobilizing all resources in economy?

Look at state of America today. Infrastructure deficit alone is reaching nearly $4 trillion and growing every year. Roads, highways, water distribution, dams, electric grid, schools, hospitals etc - in dilapidated conditions. If you include the cost of green transition, trillions more are needed to make America into a sustainable economy in near future. The healthcare system of America is broken and condition of rural healthcare is reaching a crisis level. There’s a crisis of housing scarcity which is more prominent in blue States. And in service sector, US has shortages of teachers, nurses, doctors, engineers & other professionals which has to be filled. The profit motive of free market is insufficient to address these investment needs so government must fill the gap. When government starts fully investing in above mentioned areas, only then we can truly find out how much structural/technological unemployment is there.

It’s true that many technologies are labor replacing but we can’t miss the other critical factor, that is major lack of government investment and deficient demand in current economy. So blaming technology alone for unemployment is half truth which doesn’t reflect the full economic picture. After government fills the investment gap and stabilize economic demand, whatever unemployment still remains, there are ways to deal with it like Jobs guarantee program.

The withdrawal of government participatory role in economy is defining feature of Neoliberal era. This has resulted in accumulation of investment deficits in infrastructure, public services and other areas where profit motive doesn’t have much incentives. On a deeper level, the direction of technological advancement is also not a spontaneous phenomenon, but an outcome of complex process which includes government policies and private interests.

For example, a lot of 20th century technology is based on non-renewable energy. The private interests that owned the fossil Capital worked hard to convince the public and government that renewable energy is not cost viable and efficient for wider use. The fossil Capital also grabbed many government subsidies and favorable regulations for decades (even wars were fought for control of oil). But today we are realizing that renewable energy can be just as cheaper (or more) and can substitute many fossil based technologies (like ICE, coal & gas power etc). Bottom line is that the current renewable boom that has began in post pandemic era could’ve come earlier had we not prioritized our investments in dead end fossil Capital.

So the big picture is this. What we have is an underperforming economy and areas where private sector doesn’t mobilize resources. Modern economies also require more qualified labor force but higher education (scientific, technical, professional, skill oriented etc) is out of reach of average population which is creating scarcity of labor in many sectors. All these are areas where government can make investments in economy (for example, providing free college education). There is no technology trap that is dooming the nation. Technology trap exists only in an economy where government withdraws from its crucial role in economy and markets only work in areas to maximize profits (achieving micro-efficiency of corporations). There is a lot of slack, macro-inefficiencies and wasted opportunities in such economy.

Root of Problem

A fundamental problem of human civilization is its failure to resolve social conflicts. We could not reconcile the conflict of Labor and Capital, political ideologies (liberal democracy or Confucian socialism or communism), class conflicts (rich vs poor inequalities), differences of first world and third world societies, conflicts of religion (Hindu-Muslim, Jews-Muslims etc), conflicts of race (crisis of nationalism, Xenophobia).

The political and economic systems, and global institutions we created were supposed to resolve our social conflicts (domestically & internationally) but now it appears that our political and economic systems actually created/aggravated these conflicts. The political and economic systems we built were based on simplistic make-believe Utopian narrative - how things ought to be. These systems were not founded on our sociopolitical and socioeconomic realities but were founded on some idealistic position that we wished to achieve. In fact, there is no universal system that transcends space and time which can serve the needs of society. Yet, we religiously adopted liberal democracy and Neoliberal economics as universal principles.

When models don’t work, we have to amend them or change them altogether to fit the needs of society. But that did not happen. Our political, intellectual and plutocratic elites somehow convinced the rest of the society that models we are living in are the best of all possible alternatives. From this emerged the TINA doctrine of 1980s - there is no alternative - and our political & economic models became our shackles to which we tied ourselves.

Donald Trump is like a divine intervention, a wake up call that’s meant to tell us that our systems have failed. But don’t misplace your anger on him because he’s just a symptom of the problem - the failure of democracy itself. And it’s also the failure of economic system which created American oligarchs who financed, supported, sane-washed and normalized this madman to make him presentable to American society.

America was long held as beacon of liberal democracy but look at its state today. In her book Profile of a Nation, Dr Bandy Lee makes a pessimistic sweeping statement about America today :-

….. [a] third of the country has locked itself in a hall of mirrors that it believes to be reality; a third has driven itself mad with the effort of trying to hold onto the idea of knowable truth; and a third has given up even trying to do anything at all.

Is this an exaggeration? Look at 2024 elections in America which were arguably the most important in recent history. Trump, twice impeached, indicted on nearly 100 criminal charges including most outrageous crimes of insurrection, espionage and defrauding America was able to win elections by winning nearly 77 million votes. More importantly, 90 million Americans (more than third of eligible voters) didn’t even cast ballot in this high stake elections.

Adaptability is a human trait for survival which has positive and negative consequences. Lately, adaptability of society to tolerate failed political and economic systems has turned it into a situation of boiling frogs. We have become so accustomed to our failed systems that we have lost all ability to think outside of it.

We are at crossroads. One direction is where society wakes up to the failures of our systems and create new systems to lead into the 21st century. Other direction is what Tongdong Bai warns in last pages of his work. When people of goodwill and intellect fail to take the lead in reforming the system, the charlatans like Donald Trump will rise and seize our sociopolitical discourse proclaiming themselves to be the saviors. This road will be age of reaction and it will lead to extinction of civilized society and bring down the curtains on age of enlightenment that began nearly four centuries ago.

PS - There’s a situation in Venezuela. Picture says a thousand words.