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American and European Workers in the New Economy

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It’s possible that we’re on the brink of historic collapse. Maybe not the Dark Age that Jane Jacobs suggests in her final book. Maybe the decline and fall of the Roman Empire is not an apt comparison. Maybe it will be more like the decline and fall of the British Empire. Or the breakup of the Soviet Union. Maybe only partial collapse, failure of some systems, here and there.

Is the era of labor-intensive capitalism over in the U.S. and Europe?

You can trace the demise of the factory to decisions made in the 1950s. The actual dismantling of American industry began in the 1970s. By 1982, the process was so advanced that we spoke of the industrial heartland as the “rust belt.”

The remaining labor-intensive parts of American industry were taken apart and exported during the globalization of the 1980s and 1990s. After the manufacturing base was hollowed out to a shell, the next labor-intensive sector to collapse was the construction industry.

Capitalism remains strong. But for the first time, capitalism doesn’t need many workers, at least not in America and Europe. What about the knowledge industry? Won’t that provide jobs? Google is big, but its workforce, not so much. Yes, there will be jobs for the lucky, the talented, the highly educated. But ask a recent college grad how easy it is to find a job.

We have what’s left of retailing. Count the vacant stores at your local mall. Walmart thrives. We have fast food. Many jobs, minimum wage.

The new capitalism is technology-intensive and finance-intensive. And coming soon, computers that “think,” to compete with slow, old-fashioned humans.

As manufacturing jobs slipped away, the financial sector created an illusion of growth and wealth.

The workings of the financial sector are a mystery to me. But the events of the past few years have caused me to view banking and finance with fear and loathing. Based on what little I know, the world financial system — many currencies and fluctuating values, with competing central banks and regulators — is dysfunctional and completely irrational. Finance is a crazy system, more likely to create chaos than order. It’s FUBAR (go ahead, look it up).

The institutions of finance have no soul or conscience to oppose corruption. American banks, corporations and wealthy individuals are awash in money, while average Americans, especially underwater “homeowners,” are awash in debt. For whatever reasons, the wizards of finance refuse to spend or invest.

If high-tech, high-finance, American and European capitalism can profit without much labor input, what happens to the surplus workers?

Economic, political and social systems will have to adapt rapidly, or risk collapse. The European Union looks kind of unstable. In the U.S., some states are financial basket cases. Maybe collapse is happening now.

— John Hayden

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