So the vital question now is whether another technological fix is occurring or is likely to soon occur. There are new dynamic industries like microelectronics and biotechnology. But the problem is that so far they have not been big enough to provide a satisfactory fix, especially for the labor market in the West, where the new industries tend to be more capital-than labor-intensive. The decline of manufacturing industry in much of the West has generated unemployment there which the newer industries have not been able to much reduce. Recent innovations like computers, the Internet and mobile communication devices do not compare with railroads, electrification and automobiles in their ability to generate profit and employment growth. The “Green Revolution” has been the recent exception, providing a great boost to agricultural production, mainly in the poorer countries. Also important has been the expansion of the health and educational sectors, which are more labor intensive and in which the labor is more intellectual and more middle class. Their expansion is likely to continue, as the length of life, and especially of old age, and educational credentialism continue to increase.
Randall Collins is quite persuasive in his enumeration and then rejection of various possible scenarios whereby human societies might fight against the scourge of declining employment. Yet the reverse is happening right now. Economic expansion over the last few decades has actually produced a growth in global employment, greater even than the substantial rise in world population. Between 1950 and 2007 job growth was about 40% higher than population growth. In the Organization for Economic Cooperation and Development (OECD) an organization representing the richer countries of the world more people are also working than ever before, though the absolute number of unemployed has also risen because the population is larger and a higher proportion of the population seeks jobs, including far more women. The liberation of women in the formal labor market has been the biggest problem for employment in the West. But the global unemployment rate remained fairly stable between the 1970s and 2007, at around 6%. Even through the Great Recession ILO statistics collected by the International Labor Organization reveal that global employment has continued to grow, though at only half the rate before the crisis and unevenly distributed across the world. It fell in 2009 in the developed economies, including the European Union (by 2.2%) and its neighbors, and in the ex-soviet Commonwealth of Independent States (by 0.9%), but it grew in all the other regions of the world. The employment-to-population ratio also fell back in the advanced countries, and in east Asia, but elsewhere by 2010 this ratio was back to the 2007 level. Unemployment is as yet a Western (and to a lesser extent a Japanese) not a global problem.
The West’s loss is the Rest’s gain, and the world as a whole benefits. Yet the future of labor markets in the advanced countries may be labor shortages, not high unemployment. The length of life is still growing and the birth-rate has fallen below the level necessary to reproduce the population. Europe, Japan and North America will need substantial immigration to make up the gap. Since these demographic tendencies are likely to continue as other countries become more developed, overall world population is predicted to begin falling in the second half of the 21st century. These are reasons why mass unemployment may not eventuate and precipitate the end of capitalism.
As Collins says, there is no necessary reason why capitalism should be indefinitely capable of generating enough creation to compensate for the destruction. There has simply been a long period in which this happened. But equally, there is no necessary reason why creative destruction should end. Who knows what new needs the development process will create? I suggest one further creative sector later.
But supposing the pessimism of my colleagues is correct. This might produce one of two alternative futures which seem to me to be more likely than capitalist collapse. The first is a rather pessimistic capitalist scenario in which structural employment remains high and a “2/3–1/3” society emerges. Two-thirds are well educated, highly skilled, in regular employment, doing quite well, but with a third excluded from this society. The poor might receive enough welfare and charity to keep them from revolting, or they might be repressed. They would be a minority, so their chances of successful revolution would be small. It is a distinct possibility that the included would not sympathize much with the excluded. They might have negative views of them as worthless dropouts, scroungers, welfare queens, etc. In some countries ethnic or religious minorities would be overrepresented among the poor, and negative ethnic/religious slurs would be added to these stereotypes. The excluded might become a hereditary lower class, reinforcing the gulf between included and excluded. Most of the included would vote to maintain this gulf, while many of the excluded would not vote. The extent of welfare might continue to differ across the West, with countries like Sweden and Germany being willing to keep the poor within mainstream society, while countries like the United States might not. We can recognize this pessimistic scenario, for it is already present in the United States, and sociologists have perceived its rise in Europe too. It would be the final demise of the working class—but not of capitalism. It would produce an asymmetric class structure such as existed through most of history, now with capitalists well organized, workers divided and less organized. Social institutions survive even when they do not perform very well, unless counterorganization emerges among the oppressed.
It has not yet emerged, and this scenario is especially chilling for leftists—a more exploitative but unchallenged capitalism. Never has the global left been so weak as today. The World Social Forum, a global organization of radicals headquartered in Porto Alegre, Brazil has been a significant force in the period during which Southern protests against Northern/Western oppression were rooted in global capitalist exploitation by the West. But the “South” is developing yet also ceasing to exist as a coherent whole. This is now evident in recent climate change discussions in which China, India and Brazil have joined forces with the West and Japan to delay emissions reductions, against the objections of poorer countries.
The second alternative scenario is more optimistic. It agrees that capitalist markets will fill up the planet and that profit and growth rates will fall. But it suggests that this will stabilize into an enduringly low-growth capitalism. That would not be new, of course. Capitalism’s great breakthrough came in 18th and 19th century Britain. Yet the British growth rate never exceeded 2% in any one year. The British success story was rather that an average growth of just above 1% per annum continued for a very long time. In the 20th century, however, the pace quickened. Between the wars, the most successful developing countries (Japan, its colonies, and the Soviet Union) achieved historically unprecedented growth rates of around 4%. Then in the late 20th century China and India (and now others) achieved growth rates of around 8%. Though those rates have endured for at least two decades, they will inevitably decline. Then Africa and Central Asia might do even better. But they all have a lot of time before they might be reduced down to the 1% level of the historic British success story. Maybe the American and European rates might decline more quickly to this level but in the current Great Recession only a few countries saw negative growth rates, and then only for a year or two. Why should a growth rate of 1% be a capitalist crisis? Why cannot capitalism continue as a low-growth global system, which it was for much of its history? The 20th century—more precisely, the period 1945 to 1970 in the West and the end of the 20th century in the East—would then be seen as exceptional. This low-growth scenario would also reduce the role of speculation and downgrade the power of finance capital, with repeats of our present Great Recession (which are at present quite likely) becoming less likely. Of course, as labor conditions improve throughout the world, that is very good news. Then all of humanity might live in an almost steady-state economy, like the Japanese have already done for the last twenty years. The future of capitalism might not be tumultuous, but boring.