Capitalism is an adaptive system. But like all adaptive systems there is a limit to that adaptation, it then breaks down.
Adam Smith, John Stuart Mill, did not expect Capitalism to last.
Karl Marx saw it breaking down. The internal contradictions, abundance amidst scarcity.
What Marx did not comprehend, was the existence of Kondratieff Waves, fifty year long cycles. Technical innovation leads to investment, then overcapacity, surplus of capital, financialisation, then a down turn.
Kondratieff using the limited data he had access to, showed the existence of these waves. Joseph Stalin was delighted, it showed the superiority of the Soviet system, Capitalism was collapsing. Until he learnt the downturn would be followed by an upturn. He then had Kondratieff executed.
Mercantile Capitalism, Industrial Capitalism.
But in human history, a blink of an eye. Capitalism is not set in stone, it is not inevitable. Capitalism did not build the pyramids. Feudalism lasted far longer than Capitalism.
Workers driving up wages drove innovation.
We are twenty years on from end of last wave. No sign of an upturn. Workers are not driving up wages.
We have precarious workers, low wages, de-skilled, temporary, zero hours, McJobs.
We have atomised workers, serfs working for death star apps, engaged in reverse auctions, bidding against each other to drive down wages, working and environmental conditions.
The cost of stuff is the labour, materials and capital. More recently knowledge. Sell higher than cost, and make a profit. Cut costs and make more profit or have a competitive advantage.
Can cut costs by driving down wages or increasing productivity.
From 1973, US wages have flat-lined. We see a similar pattern in the UK.
Henry Ford made the point, he paid his workers high wages, they could afford to buy what they made.
First half of cycle, make money by investing in making stuff, second half through money.
Workers used to have money in their pockets. No longer true, or what they have, is expensive money, pay day loans.The result is town centres turning into ghost towns.
Compared with France, productivity in UK is 20% lower, wages in France are higher. When wages are higher, employ better quality workers. When wages are low, does not matter quality of workers and if need to increase output, simply employ more workers.
That was how the Soviet Union worked. If they need to increase output open a second factory.
The 1973 oil criss with OPEC holding the world to ransom, saw a big increase in fuel efficiency. With falling oil prices, no incentive to improve fuel efficiency (not unless raise fuel taxes).
COP21 in Paris excluded aviation and shipping.
We need to keep 80% of known carbon reserves in the ground, if we are to keep global temperature rises below 2C.
In UK, the government is pushing fracking.
This winter has seen widespread flooding (as was seen two winter’s ago). We have known for at least a decade, that global warming will mean more frequent storms, more intense storms, warm air holds more moisture, the more energy in the system, the more violent the storms.
China is an offshore manufacturing site for the West. Moving to low carbon economy grants them a competitive advantage over the West.
China is the low-carbon superpower. Eight of the world’s largest solar companies are Chinese. The second biggest wind company is Chinese.
China invested $90 billion in renewables last year. It installed more solar in the first quarter than currently existed in France.
China installed 23 GW of wind power in 2014.
We are seeing the same curve as with computers, price halving every 18 months, the power doubling.
Contrast with oil and coal, where costs are rising, and that is before we even account for the externalised costs.
The marginal costs of renewables is tending to zero. Wind and sun are free.
The average world cost of solar in 2010 was $400 per MW-h. It fell to $130 in 2014. It is now below $60 in the best locations.
Wind is cheaper than oil or coal. Last year, price of wind generated electricity in Texas went negative, ie users were being paid to take the electricity.
Capitalism relies on the market self-correcting. It failed to self-correct during the 2008 banking crisis.
The market relies on price as a signal in the market. If prices fall to zero, the market cannot function.
Trillions of dollars of confected money bailed out the criminal banks. Quantitative Easing handed money to the rich and helped inflate bonuses for bankers, pumped up share price and property.
The rich do not voluntarily hand money to the poor. It has to be syphoned off through taxation and taken by violence. If you wish money to go to the poor, then give it directly to the poor.
Low taxation policy of George Osborne means corporations are sitting on a £750 billion cash mountain. They do not invest. It should be put to productive use.
Anyone worth more than a billion dollars, should be stripped of their surplus billions, a billion should more than suffice.
It has been suggested an alternative currency for Greece.
Cheap labour will be replaced by robots.
If drive down wages and/or employ robots, who is to buy the output?
If increase productivity for same number of workers, who is to buy the stuff they produce? If reduce the workers and produce the same amount of stuff, who is to buy the stuff when laid off workers have no money in their pockets?
A crypto-currency could pay a Basic Income, it could pay for what communities agree is work that needs doing. But it begs the question, how is it created, who decides? Implies a central authority which goes against the philosophy of crypto-currencies.