Jonestown 1

Oliver Jonestown
Dr. Silver
16 April 2015
The Future Evolution of Capitalism
Can Capitalism1 survive? That is the question answered in the negative by Marx,
Schumpeter, Rogge, and Rifkin. In fact, analysis of futurist predictions, particularly in light of
Schumpeters argument, allows for the possibility that capitalism will survive.
Rifkins The Zero Marginal Cost Society predicts an explosion of technological growth in
the next half century, dubbed the Third Industrial Revolution.2 Advances in a variety of fields3
will boost[] productivity to the optimum point in which each additional unitapproaches near
zero marginal cost so that products are nearly free (Rifkin 2014, 3-4). Prosumers,
consumers who have become their own producers, (4) will demand less from the market
economy; they will possess the means to produce energy, to process raw materials into consumer
goods, and to process waste into water and other raw materials. Solar energy, 3D printing, and
water purification are currently subject to economies of scale, but as technology improves, it will
become more affordable for households to implement it and share its benefits in what Rifkin
calls collaboratism. This will become possible in part due to miniaturization of technologies
currently viable only at a very large scale (Kurzweil 2005, 82). The Internet of Things,
made up of a Communications Internet, an Energy Internet, and a Logistics Internet that
work together in a single operating system, continuously finding ways to increase
efficiencies and productivity in the marshaling of resources, the production and

1 What is capitalism? Succinctly, it means private ownership of the means of production, as opposed to government ownership. MerriamWebster defines capitalism as follows: an economic system characterized by private or corporate ownership of capital goods, by investments that
are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free
market.It is important to distinguish this from corporatism, crony capitalism, and other systems that may be variants of capitalism, but are not
equivalent. Rifkins story of the eclipse of capitalism relies on the mistaken understanding of capitalism as a system in which there is corporate
ownership of the means of production, and thus he conflates a decentralization, miniaturization, and dissemination of capital ownership with the
eclipse of capitalism.

2 Hereafter TIR
3 Renewable energy, communications, robotics, et cetera

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distribution of goods and services, and the recycling of waste, and eachenable[ing]
the others (Rifkin 2014, 14-15),
will also cause an enormous leap in productivity (Rifkin 2014, 73).4 Since near zero prices will
drive profits to near zero, and since collaborative ownership and production will cut out the
corporate middleman, customers will need to buy less from profit seeking firms, and thus Rifkin
predicts the eclipse of capitalism, which will only persist as an aggregator of network services
and solutions (Rifkin 2014, 2), as well as in allocating land and other non-producible resources.
Kurzweil also begins with a discussion of technological growth, predicting that the cost of
making any physical product will be reduced to pennies per pound, plus the cost of any
information guiding the process (339). Machines will render most current uses of human labor
obsolete; by 2030, virtually all routine physical and mental work will be automated (340).5
I will assume that the predictions about technological improvements are correct,6 and examine
the economic implications of said improvements, attempting to discern whether Rifkin is correct
4 A few examples: A household with a solar array can implement an algorithm that will automatically reduce energy consumption and reroute
power into the main grid when it is in demand. Similar systems would improve waste processing. In other areas, cheapened RFID technology will
enable more efficient transportation of goods and of people. Rifkin does not emphasize the implications for waste reduction, but imagine that as
you prepare to throw away last decades computer, an automated system alerts you that someone across town would pay $25 for it. You press
OK, box it up, and leave it on your porch, and your mailman picks it up. A couple hours later, when it arrives at its destination, your bank
account is credited with $23.50, accounting for the cost of transportation and arbitrage. Granted, you can currently do this via Craigslist, but
transaction costs are prohibitively high for many people whose time has a high opportunity cost. Imagine you need to travel across the country for
a conference and do not want to pay for a plane ticket. You enter the destination on your phone, and instantly view a list of hundreds of options,
ranging from riding along with various people going by car, numerous routes by bus and train, and rental cars. Again, services exist to inform
travelers of their options, but the transaction cost of ridesharing and the like is prohibitive. Suppose you want to show up a few days early for
the conference, but your hotel reservation cant be extended. You instantaneously view a list of untenanted apartments, guest rooms, and currently
unoccupied college housing. Again, couchsurfing websites and travel agents can enable the same services, but it is anything but convenient. The
idea of the Internet of Things is that all of these functions will be rolled into one system, that all the relevant information is available to
computers that will reduce transaction costs (to near zero, of course) and exponentially increase the number of transactions, both between
prosumers or simple consumers, and between consumers and producers.

5 Briefly, Kurzweils singularity is best understood as the point in time at which technology progresses so far as to render speculation as to its
subsequent effects futile. Kurzweil claims that we will be able to reverse engineer the human brain and copy it neuron for neuron into a computer,
and that computing power will increase enough to make this feasible. As a result, human ingenuity and computing efficiency will meld to form a
transhuman intelligence so potent as to defy comprehension. Much of Kurzweils book is devoted to demonstrating that this breakthrough is
impending by examining trends in technological growth. While the economic implications of a technological singularity defy comprehension, the
predictions Kurzweil makes to argue for the possibility of such a singularity have similar economic implications to Rifkins, insofar as he claims
that productivity will increase exponentially.

6 The scope of this paper does not allow for examination of the statistics Rifkin and Kurzweil use to predict technological growth and
subsequent eclipse of capitalism or humanity, respectively. Economic analysis of Kurzweils conclusion of a transcendent technological
singularity is likewise beyond the scope of this paper, so I have used his work largely to corroborate Rifkins claims of technological growth,
growth that Kurzweil claims will lead to said singularity.

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in predicting the eclipse of capitalism. I will define T1 as a point in time at which technology has
reached the levels predicted by Rifkin and Kurzweil, but before Kurzweils singularity has
reached fruition. In other words, I will assume that Kurzweils singularity does not take place
very soon, or does not transpire at all, and thus that there is a considerable amount of time after
T1 during which society adjusts and could potentially discard capitalism. Rifkin claims that
capitalism will be eclipsed due to collaborative ownership, miniaturization, and other aspects of
the TIR, but in fact, he does not argue that the means of production will be owned any way other
than privately. His prediction is that individuals, not corporations, will possess the means of
production, but that is compatible with capitalism. Even if the means of production are owned
collectively by groups of people, it is still capitalism as long as the government does not own
them. The meaning of private ownership in the definition of capitalism does not mean
individual or corporate, but simply non-government, and ownership will remain private unless
the government seizes it. Given that Rifkins basic argument for the eclipse of capitalism is
misguided, I will consider the possibility of a genuine end of capitalism, in which government
assumes an unprecedented level of control of the means of production.
What will the period beginning at T1 look like? Technological innovations7 will make the
production of most first order goods nearly costless. Producing what a contemporary consumer
in a developed nation needs to subsist comfortably will be very inexpensive. This includes
energy, clean water, sanitation and waste disposal, health care, evolved forms of the computer
and cell phone, entertainment, food, housing, and clothing, to name a few. This production will
require little or no human labor. Most types of manual labor and skilled labor will become
obsolete in tandem with the maturing of automated systems, which are already replacing human
7 Technological innovations is used broadly to include integration (Rifkins Internet of Things), as well as miniaturization and proliferation of
existing technologies (Solar energy, for example).

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labor as quickly in the white-collar and service industries as in the manufacturing and logistics
sectors (Rifkin 2014, 126). Scarcity will be, if not a thing of the past, a trait of far fewer goods
currently in production (and perhaps a trait of new goods we cannot imagine). A final assumption
is that the Third Industrial Revolution ends with a plateau in technological improvement lasting
long enough to reach a somewhat stable equilibrium.
We are faced with concrete questions, the most pressing of which seems to be, What will
everyone do once machines are doing their jobs? What will those who arent involved in
maintaining and developing machines and directing technology to safe and beneficial
applications do in exchange for those goods and services8 that they cannot produce themselves
(albeit a small quantity)? One humans subsistence, comfort, even luxury, will require a fraction
of one humans labor. In a Keynesian analysis, at least, there would be unprecedented levels of
technological unemployment. How will this be resolved? To discuss, firstly I have partitioned the
population according to their potential roles in the economy, as follows.9
1) Necessary people
a. Those who develop, administer, and maintain the technology of production
i. Engineers, programmers, technicians, scientists, executives
b. Those who perform services seen as essential but not fully automated
i. Medical, bureaucratic, and legal personnel, secretaries
ii. Academics
2) Useful people not essential to maintaining the production of necessities of life
a. Purveyors of culture and entertainment
i. Producers of goods like fine wines, fine dining, interior decorating, haute
couture, and other goods that are desirable in part for the human elements
in their production, despite access to automated production of similar
products.10

8 Goods and services that most people will likely not be able to produce themselves include land, healthcare, repairs and maintenance, and legal
services.

9 There is clearly overlap between some of these categories, but the important distinction is that Group 3 does not overlap with the others to any
significant degree. They possess neither productive skills nor capital. These categorizations are informed by Rifkin and Kurzweils predictions
about labor markets and the production process in general, but they are original.

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ii. Musicians, artists, authors, athletes, film and television producers, and
other entertainers.11
b. Purveyors of vice
i. Sex workers
ii. Drug designers, producers, and distributors
c. Purveyors of convenience
i. Maids, personal assistants, cooks, butlers, other home staff
ii. Wait staff, chauffeurs, other service industry workers12
3) People who have neither salable skills (in terms of the above uses of labor) nor capital but
are physically and mentally sound
4) People who are unsound, physically or mentally
5) People with enough capital to sustain themselves without directly working for others
a. Those who own enough land to subsist in a pre-TIR lifestyle
i. A household owning 50 acres of land could subsist using current
agricultural methods and sources of energy.
b. Those who own enough land and TIR technology to subsist
i. A household owning less than one acre of land, TIR renewable energy
sources, water/waste cycling devices, 3D printers, and greenhouse
technology could subsist on its own produce.
c. Those who own enough TIR technology to sell some products or services
involving TIR technology, without having to do direct labor for hire or owning
land
i. A household owning moderate quantities of TIR technology could
exchange energy, water/waste cycling, 3D printed products, et cetera for
other things needed to subsist, including rental of living space.
ii. An individual owning enough TIR technology could make accounting
profit by leasing it.
Groups 1, 2, and 5 can provide for themselves, so Group 3 is the social problem,13 even
though many of Rifkins predictions would make subsistence easier for Group 3. Prosumers
possess their own means of production,14 available in inexpensive, miniaturized forms. But 3D
10 Some would prefer to have a human help them design their wardrobes or decorate their homes, even if an algorithm could come up with one
that was equivalent in all appearances.

11 Rifkin and Kurzweil both argue that these functions will become automated as well, but it is likely that some of those wealthy enough to
afford it will demand the real thing.

12 Some will prefer a human to perform these functionssee the preceding note.
13 Group 4 will be small in proportion to the whole population and no political reforms or adjustments are needed to provide for their
sustenance.

14 3D printers, waste/water/air cycling and renewable energy sources

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printers, air and water cyclers, and solar cells are not free, and each will require complementary
goods that will not be free.15 Most importantly, people need land to live on. A sizable portion of
the population will have to pay rent or go in debt to purchase a home.16 Where exactly will this
money come from? Rifkin neglects questions like this. Some proportion of Group 3 will be in
unfavorable circumstances despite the mitigating effects of technology. There will still be some
goods and services that members of Group 3 cannot produce for themselves, because they lack
capital.
While lacking salable skills, members of Group 3 will still have options for income.17
Skilled labor is not the only thing humans can sell. By virtue of being human, they possess
valuable attributes. Their genomes and other biological information would be valuable for
medical and biological sciences. Their organs (whether risked in lotteries, sold outright, or
pledged in the event of death), are also valuable in the same fields. They could sell their privacy;
video and audio feeds of the interior of their homes (whether comprehensive, or excluding
bedroom and bathroom) would be of value to marketers, sociologists, medical researchers,
psychologists, and other academics, as well as voyeurs, whether sexually motivated or otherwise.
They could sell unskilled labor in various forms: filling out surveys, testing products in use
participating in political demonstrations, or participating in psychological experiments or
marketing experiments. Finally, they could sell their dignity in ways not outlined above. The
15 Repairs, maintenance, and raw materials including precious metals
16 The cost of building and maintaining a home will diminish greatly, though likely not as much as that of other goods like clothing,
technology, and food. However, the land it occupies will always be scarce. Land is the fixed factor that cannot be produced in greater and greater
quantities, because it cannot be produced at all. In fact, the entire argument that a portion of the population will not be able to provide for
themselves can be made on the sole basis of land, the perennially scarce resource. Even if every single other good is free, people will still desire
land to live on, and its prices will be determined by supply and demand. If the wealthy demand land for business purposes (a new solar energy
facility) or consumption (a large estate with a game preserve), they will presumably be willing to pay top dollar for it, and the members of Group
3 will not be able to compete to buy or rent it.

17 Presumably, they could develop skills that place them in group 2c, but the assumption that defines their group is that they lack the gumption
or ability to do so, and the ranks of the unemployed in developed countries today suggest that numerous people will fall in this category.

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productive classes will likely have members who would pay otherwise useless people to do
various and sundry generally demeaning things. They could serve as decorations, furniture, or
amusement in ways that required no skills. That is, some members of groups 1 and 2 would hire
skilled wait staff, dancers, and other entertainers, but others, less humane and more sadistic,
might hire members of Group 3 to remain motionless in bizarre poses, perform various antics, or
participate in games like Fear Factor. The desire to see other humans humiliated should not be
underestimated. Even if sex workers (people experienced in pornography, prostitution, and the
like) are affordably available, some members of Groups 1 and 2 will demand the same services
performed by people with no particular desire, aptitude, or qualification for that type of work.18
Not all of these options for the unskilled are inhumane or undignified. But low-wage workers are
presently discontent with their employment in part because they recognize their own
disposability and interchangeability. As Weber said, in a rationalized, bureaucratic society each
man is a little cog in the machine, and, aware of this, his one preoccupation is whether he can
become a bigger cog.19 Clearly, Group 3 are the smallest cogs in the post-TIR society, and being
paid for nothing more or less than being a submitting human would be even more unfulfilling
and disheartening to most than is wage labor today, even if the mode of submission was simply
selling ones information in some way as opposed to overtly selling ones privacy, sexuality, or
dignity. It is likely that Group 3 would be far from content with their lot in life, even if they can
acquire comfortableeven luxurious by todays standardssustenance with only a few hours a
week of labor or a few personal sacrifices (predominantly privacy).

18 While many of these things are illegal, the trend in most developed countries (and some developing ones) is toward decriminalization or
legalization of vice. Even if they remain illegal, the black market for them will grow as Group 3 loses the ability to perform traditional labor at a
reasonable price. In addition, technology will facilitate easier evasion of prohibitionsnote the plethora of functional, low-risk (in comparison to
street-corner transactions) online drug marketplaces operating on the TOR browser.

19

Quoted in J. P. Mayer, Max Weber and German Politics, 2nd ed. (London, Faber and Faber, 1956), pp. 126-127.

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This brings us to the Schumpeter argument. In Capitalism, Socialism, and Democracy, he
maintains that capitalism brings about its own demise, differing from Marxs argument in that
Schumpeter believes that capitalism enriches rather than impoverishes the masses. The
proletariat (Group 3) will be easily swayed by specious arguments against the system that has in
fact improved their standards of living immeasurably. Rogge addresses the issue as follows:
We begin with the principal beneficiaries of capitalismthe masses. Why do they not
defend the system that has made them the most affluent people in the history of man?
Because they do not connect their affluence with the capitalist system, because they are
incapable of understanding any economic system as such, because they are more aware of
their daily frustrations and insecurities under the system than they are of their long-run
gains from the system, and because they are taught by the intellectuals in society to resent
the capitalist system and its central figurethe businessman. (Rogge 1979, 25)
Overeducated intellectualsthose who wield the power of the spoken and written word and
whose main chance of asserting [themselves] lies in [their] actual or potential nuisance value
(Schumpeter 1975, 147)will portray the system as unjust. Capitalisms wealth creation has
made education more widely available, but those who are successful in school feel that they
deserve success in subsequent activities, and often receive fewer rewards and accolades from the
market or society in general than in academics (Rogge 1979, 29). They resent and attack the
economic system, and the working poor can be easily persuaded to attribute daily
troubles.frictions and disappointments (Schumpeter 1975, 145) to capitalism. The
bourgeoisie (Groups 1, 2, and 5) lacks the political power and rhetoric to preserve the institution
that enables their profitable free enterprisecapitalism. Schumpeter describes them as
politically helpless (138) and limited to rationalist and unheroic means (137) in defense of
the social order. In addition, as Rogge notes, the type of aggressive, ambitious, effective person
who succeeds under capitalism is also likely to rise to power under most other economic

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arrangements (27-8). Thus, they lack incentives to defend capitalism, which will fall into
disfavor and become regulated out of existence or discarded for a new legal structure.
Schumpeter argues that there are better and worse times for the implementation of
socialism, whatever form it may take. To Schumpeter, the effects of creative destruction through
entrepreneurial competition are the most important benefits of capitalism that would be lost
under socialism. As a result, the transition to socialism would be least harmful if it takes place
during a plateau in technological and economic growth, or once capitalist evolution
permanently slackens down (Schumpeter 1975, 194). If technological growth has slowed to a
near-standstill, and few innovations are being made in production, then there is little creative
destruction sacrificed due to socialism. This suggests that it would be best if the transition to
socialism takes place after the TIR. If socialism is implemented prior to that, salutary innovations
will be prevented or impaired. Of course, it is hard to predict at a given point in time whether
innovations are impending (in other words, whether capitalist evolution will continue through
creative destruction) or not, but Rifkin thinks there will be a plateau. If there is, Schumpeter
would recommend that socialism is not implemented until that point.20 Once that happens,
however, Group 3 will be chronically unemployed, in Keynes view due to technological
unemployment. That is the situation that must be addressed.
Given certain assumptions,21 Group 3 would have the political power to enact whatever
economic policy they want. They could theoretically institute full scale communism, a

20This is not entirely a vain hope; the creative destruction of the TIR would employ some human labor in the process of automating production
and developing TIR technology, and only after they are fully automated would demand for human labor be extremely diminished. It would
require human labor to build a factory and build and arrange all the robotic machines in it. Likewise, human labor is required to put together 3D
printers. Only once those automated methods of production are capable of self-replicating does human labor become unnecessary.

21 Firstly, government must be representative. Secondly, Group 3 must form a majority of the voting base. Thirdly, Group 3 must not be
divided by social and foreign policy issues.

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totalitarian dictator, or sweeping redistributive measures within the market system.22 It is unlikely
that Group 3 would be unified enough to institute full-scale communism or other forms of
totalitarianism.23 Instead, the bourgeoisie would likely accept reforms within the market system,
as they have in most developed nations to date. With such a large proportion of the population
unemployed, a complete subsistence package of some sort would be the only policy likely to
satisfy Group 3. With the price of subsistence (the poverty line) as inexpensive as is predicted,
the productive classes could easily agree to finance a comprehensive safety net without much
sacrifice.24 Assuming that innovation slows down and does not influence returns on capital and
labor (in other words, assuming that the TIR ends in a technological plateau for the relevant
timeframe), the incomes of Groups 1, 2, and 5.c.ii would comprise the entirety of GDP, and
could finance subsistence for 90% of the population at negligible direct monetary cost. In order
to prevent a real revolution, they would acquiesce to policies like an extravagant negative
income tax or basic income guarantee. In this way, the capitalist system could persist and most
efficiently sustain the parasites who cannot or do not contribute to it.25 This allows creative
destruction and private capital ownership, and is more capitalist than socialist as far as the role of
22 This is already reality, but future, more explicitly socialist reforms are still possible.
23 This is because of the weakness of the third assumption in note 24. Any group with an economic interest conflicting with that of Group 3
would try to create division within the masses in order to weaken their agenda.

24 The cost to the productive members of society is twofold; firstly, they lose the cash value of transfer payments and associated administrative
and clerical costs, which would be diminutive as noted. Secondly, they lose the value of the labor that Group 3 would have performed if they
were not sustained with tax money. While some of this value is morally questionable (sex work and other degrading occupations), some of it
has tangible benefits to society, notably biological data used for medical purposes. Value of this sort is deadweight loss when redistributive
measures enable Group 3 not to work. An important aspect of this lost value is the lessened incentive for exceptional productivity by Groups 1, 2,
and 5. While the disincentive effects of tax policy on productive people with moderate to high incomes have been discussed thoroughly, notably
in terms of the Laffer curve, there is another hidden cost in the elimination of services that would have been performed by Group 3 were they left
to fend for themselves. If Group 3 had to work to survive, they would perform various services as noted in the second paragraph following the
class division, and Groups 1, 2, and 5 would be motivated to be more productive in order to purchase such services. Imagine that you can easily
provide all the material goods you desire with a small amount of labor (the situation for members of Groups 1, 2, and 5). What could motivate
you to work longer, harder, or more inventively? Clearly, the only remaining objects of desire would be the services of other humans. While the
first things that come to mind may be morally questionable, the fact remains that many productive people would in fact demand human labor in
some form, and that if it was not available, the incentive for productive people to be more innovative, creative, and productive would be reduced.
Of course, a member of Groups 1, 2, or 5 could hire another member of 1, 2, or 5 to perform some service, but then society loses the benefit of
whatever that person was doing beforehand.

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government in production is concerned; by providing a safety net, the government has some
control over the means of consumption, but does not seize the means of production.
While there will always be those who aspire to laissez faire as well as those who wish for the
nanny state to do more26 than give money directly to the figurative toddlers of the populace, the
only functional compromise is the minimal yet potent policy outlined above. Until we are willing
to agree on completely relinquishing either personal freedom or a safety net, the best safety net is
one that does not infringe on the freedom of productive members of society beyond the cash
value of its tax burden.27

References
Kurzweil, Ray. 2005. The Singularity Is Near: When Humans Transcend Biology. New York:
Penguin Group
Mayer, J. P. 1956. Max Weber and German Politics, 2nd ed. London: Faber and Faber.
Rifkin, Jeremy. 2014. The Zero Marginal Cost Society: the Internet of Things, the Collaborative
Commons, and the Eclipse of Capitalism. New York: Palgrave Macmillan.
Rogge, Benjamin. 1979. Can Capitalism Survive? Indianapolis: Liberty Press.
Schumpeter, Joseph. 1975. Capitalism, Socialism, and Democracy. New York: Harper and Row.

25 One possible scenario would be that Group 3 receives sustenance, but is required to submit to invasions of privacy by the government,
notably biological data for medical purposes. This information could then be used directly by the government, auctioned to the highest bidder, or
published for general access. Given currently increasing intrusions by governments into privacy of their citizens, especially with regard to
medical information, this scenario seems quite feasible.

26 Social services, job training, education, and other rehabilitative measures are not strictly redistributive.
27 As well as the deadweight loss as described in note 27.