Blueprint for the Future: In Search of Global Economic Solutions (Part 1 of 2)

Is capitalism the end of the road for human economic history? If not, what comes next? I have previously explored these questions at length, and as such, for the sake of the present discussion, I want to peer into the future as to the course of human economy going forward in light of current political and economic themes affecting the marketplace. I think a worthwhile comparison can be drawn between forecasting the economy and some elements of science fiction in that economic analysts and hard science fiction writers both try to formulate an accurate presentation of future conditions based on present circumstances; in this way, I hope to elaborate on future hypothetical scenarios in order to get an idea of a blueprint for possible solutions to the current global economy.

I. Business as Usual or Birth Pangs?

Are current events business as usual or are they the birth pangs for superstructural economic change? Might the next global financial crisis be the last for the global capitalist system?

Our current economic situation on a global level is quite precarious, to say the least. Politico's Seung Min Kim recently wrote how "the federal government could hit the debt ceiling sooner than expected" thereby bringing about a "debt-limit doomsday." Interestingly enough, even the Wyoming legislature is considering taking measures in the event of doomsday that include possibly creating an alternative currency. I have previously discussed at length issues related to fears of another global recession, doomsday, and superstructural change of the capitalist system.

From a free market, laissez-faire perspective, the current economic situation could hypothetically lead to a point where (in the spirit of Ayn Rand's "Atlas Shrugged") individuals and firms withdraw from the economy in sort of a "Galt's Gulch" scenario. Akin to Ayn Rand's or Francis Fukuyama's perspectives, one might say that we are near the end of history whereby liberal democracy and capitalism make for the final stage of human civilization. However, there is nothing so constant as change. Whereas it may be fair for one to speculate (per Rand's viewpoint) that "civilization is the process of setting man free from men" to the point where Galt's Gulch laissez-faire camouflaged enclaves become the wave of the future, it is also true that on social levels no man is an island.

In light of global issues including overpopulation, youth unemployment, and climate change, one can perceive both sides of the debate between government intervention and allowing the market to work without government interference. On the one hand, the market may need regulation to deal with various unseen issues. On the other hand, too much governmental interference can stunt growth and hinder economic development while compromising civil liberties. From Rand's perspective, providing a blueprint for functional economy for the future and a just global society is relatively simple: Reduce government down to only those sectors which are necessary to protect man's rights. Rand: "The only proper functions of a government are: the police, to protect you from criminals; the army, to protect you from foreign invaders; and the courts, to protect your property and contracts from breach or fraud by others, to settle disputes by rational rules, according to objective law."

Even if laissez-faire capitalist enclaves are indeed the way of the future in sort of a post-capitalist "doomsday capitalism" global superstructure, it helps to take into account Karl Marx's theory of history. To do this, we have to separate the historical politically-ideological conception of Marx's ideas from Marx's macro-historical philosophical perspective. In other words, we have to unhinge Marx's historical materialism from what many regard as the superficial history of so-called "communism". In today's economic climate, Marx may have viewed current events as being the birth pangs for superstructural change. In this sense, every economic superstructure gestates in the womb of the previous superstructure; ancient society gestated in the womb of primitive communism, feudalism gestated in the womb of ancient society, and capitalism gestated in the womb of feudalism. Thus, Marx believed that socialism would gestate in the womb of capitalism...continuing on towards a state of communism, the end of history.

It is important to note that Marx viewed this historical progression not in terms of morality or what-ought-to-occur, but in terms of property relations and the interaction of the forces of production. Gerald Cohen summed up two central principles regarding this macrohistorical economic progression in light of the USSR: (1) "No social formation ever perishes before all the productive forces for which there is room in it have developed" and (2) "New higher relations of production never appear before...[they] have matured in the womb of the old society itself." Thus, "a capitalist society does not give way to a socialist one until capitalism is fully developed in that society, and that socialism does not take over from capitalism until the higher relations which characterise socialism have matured within the antecedent capitalist society itself." Cohen also noted that "premature attempts at [socialist] revolution, whatever their immediate outcome, will eventuate in a restoration of capitalist society."

Let us take, for example, Galt's Gulch. (Arguably, the Galt's Gulch from "Atlas Shrugged" was a feudal territory, but for the sake of discussion, let us imagine a hypothetical Galt's Gulch that has developed from feudalism into laissez-faire capitalism.) So you find yourself in the distant future living in a laissez-faire hamlet with a population of around 30,000 citizens isolated from the rest of the planet. After decades of laissez-faire policies, the enclave comes to be effectively dominated economically by a small group of wealthy entrepreneurs. By that time, the number of banks in existence within the enclave has shrunk, so members of the enclave are left with only two options: Astra Bank and Atlas Bank. These two banks later merge, and owing to barriers to entry, Astra-Atlas Bank has a monopoly when it comes to commercial and investment banking in Galt's Gulch. Most of the enclave is indebted to this one bank with most of the property being owned by the bank but rented out in a limited fashion to the citizens.

Eventually, Astra-Atlas Bank comes to own pretty much every piece of real and personal property in the community and has sufficient marketing power to effectively dictate daily living standards to the inhabitants in the enclave. Even at that point, Marx might suggest that in the development of Galt's Gulch, if the enclave is indeed isolated from the rest of humanity, at some point the enclave will undergo "superstructural change". So when a critical amount of the enclave finds itself unemployed and/or starving, crime may increase and taxes may be sought against the wealthy in order to spread the wealth. Alternatively, Rand might have suggested that the enclave would retain a sense of market equilibrium between all the citizens owing to the governing structure of the society, protecting man's rights. That being the case, for government and economy, there is nothing so constant as change. As I discussed previously regarding seasteading libertarian hamlets, there is no guarantee that a purely laissez-faire city-state would remain laissez-faire forever.

It is significant to note that from Marx's perspective, the enclave would neither necessarily "convert" to socialism nor would the enclave's structure change because the workers "ought" to rebel against the wealthy. The new superstructure gestates in the womb of the previous superstructure. Marx appears to have viewed the economic development in terms of the relations between the productive forces in society, a sort of natural evolution. Ergo, there are two sides to the coin. On the one hand, one could contend that the laissez-faire capitalist enclave would always remain the way it began in the spirit of objectively-defined ethics and proper moral standing. Or on the other hand, one could contend that the laissez-faire capitalist enclave would be subject to the same historical materialistic progression, the same process, as greater society, i.e., in terms of the development of the productive forces. Thus, from Marx's perspective, even Galt's Gulch (if the productive forces developed to such a point) would eventually evolve into a state of socialism owing to the course of capitalism. Marx's perspective seems to suggest that if and when capitalism runs its course, if left secluded and isolated with the development of the productive forces, Galt's Gulch would eventually evolve into a sort of socialist enclave: if only hypothetically, Galt's Gulch would eventually become Galt's Commune.

(If it is the case that capitalism is merely a step in the human socio-economic historical process, what really is the purpose of historical capitalism, and what does this mean for the stock market and the global economy in the coming decades? I will explore these questions and more in "Blueprint for the Future: In Search of Global Economic Solutions (Part 2 of 2)"...)