People can be thought of as an amalgam of two things. There is the physical, animal aspect of humanity that must be fed, clothed, housed etc. Then there is the non-material part of the organism which also requires nourishment. This intangible part of humanity requires at least the society of others and a sense of meaning for its maintenance.
It has been natural for humans to cooperate in the satisfaction of these needs. The progress of industry, producing ever more with fewer hands, is the group’s answer to humanity’s animal needs, and organised religion is the same for our requirement for community and meaning.
It is self-evidently true that association with others provides an advantage in getting the things we want. In many cases it’s a necessity; having a baby requires a breeding pair, and the value of association must be the first thing a person knows. There are two sides to this association coin. On the one hand, we associate with other people to achieve common goals, and on the other, we associate with the vast assortment of tools and methods contrived by our ancestors. This body of technology and knowledge makes up the practical part of our cultural heritage.
Douglas, the engineer, described this latter association as a lever in his book Credit-Power and Democracy, first published in 1920:
The industrial machine is a lever, continuously being lengthened by progress, which enables the burden of Atlas to be lifted with ever-increasing ease. As the number of men required to work the lever decreases, so the number set free to lengthen it increases. 1
The power of the ‘lever’ to solve problems is so second nature and ubiquitous that we fail to notice its importance. The contribution of past inventors, entrepreneurs and industrialists to the problems of production is by far the most important feature of the real economy. This accumulated bank of tools and knowledge is the means by which civilisation has shifted from agrarian societies, to our current situation, where fewer than two per cent of people concern themselves with food production. We marvel at the capabilities of artificial intelligence, but rarely acknowledge that it has been built upon thousands of years of applied science and discovery. AI is a particularly good example because its substantive content and value is literally the sum of human knowledge insofar as it exists on the internet.
If we agree that association with others and the use of the lever is profitable, the question becomes, to whom does the profit belong? We could say as a general rule, in the case of living associations, the profit is due to those who contribute directly to the generation of value, the intended result. With respect to the lever, the situation is more complicated.
Since the vast majority of people responsible for the lever’s length are now dead, they are no longer in a position to benefit from their contribution. But the advantage of industrial progress remains. This advantage manifests as increased production and the unemployment of people now living.
Use of the lever generates a volume of production which has for a long time exceeded the requirements of those directly employed in its use. This surplus belongs to the community, not as a share of ownership in industry, but as a claim to the products which are the result of its use.
The benefits of our associations do not follow these principles of association. Presently the financial services industry is so placed as to be able to skim a substantial share of the benefits of other associations, without having to contribute any value to the associations themselves. Professor Werner confirms this view:
The national income accountants have been struggling for decades what to do with the financial sector, why? GDP is created by national income accounting by adding up value-adding activity. This is where the financial sector has a problem. What is the value added? And it’s been so difficult that essentially the national accounting statisticians have to make up a fictional value and just add it on to GDP. Because essentially there is no value added, there’s value extracted. 2
The parasitic nature of finance is so draining it represents the greatest risk to the breakdown of other associations, of society itself. From the family where both parents must work to cover the mortgage, to businesses going under because they can’t make loan repayments; from student loans to credit card debt, finance is atomising people and deterring our preference for action. It’s massive financial sector profits during a ‘cost-of-living crisis.’ It’s all going to the value-extraction industry.
To this conundrum we add the positive feedback loop of industrial progress, the lever, entering a new phase; with AI, the machine itself lengthens the lever. The CEO of OpenAI, Sam Altman, in his conversation with Rogan, talks as though some sort of Universal Basic Income (UBI) is a given:
So, I think there’s things we’re going to do that are good to do but not sufficient. So, I think at some point we’ll do something like a UBI or some other kind of, like, very long-term unemployment insurance but we’ll have some way of redistributing money in society as a cushion for people as people figure out the new jobs. 3
If it is to be done it matters very much how it is done. It cannot be funded by taxation and must not come as debt; credit volume must be pegged to production instead of some bureaucratic conception of living standards and we don’t want conditions. No CBDCs, and especially no RFID chips. This is all waiting in the wings. Worryingly, one of the fastest areas of job growth is fintech. If we allow the usual suspects to design the financial architecture in the AI world, we’re going to get more of the same.
In economic parlance we need an injection of credit on the demand side which correlates to the increase in supply which has come about as a result of the lever. This would reflect our real situation. The price/income gap is mostly the charge in prices of factory and machine costs which must be paid for twice by the consumer; first in the initial purchase and then in maintenance and depreciation charges. The facts in the machine world are just not finding their way in to the figures on the financial side.
If, hypothetically, we could stop using the machine there would be an inevitable reversion to a simpler, more labour-intensive mode of production; could be worse. I suspect that result would be sightlier than an industrial wasteland (de)populated by bloated, VR slaves, which is what we’ll get for failing to acknowledge industrial progress in the price system.
None of these problems are new but they are on the cusp of becoming more acute. Finishing with the next bit of Douglas’ quote from above:
It is true that, owing to the defective working of an outworn financial system, the lengthening of the lever has been offset by obstacles to its beneficent employment, but these very obstacles, by raising up a worldwide unrest, will secure a rectification of the means of distribution, which is the first step to a better state of things. 4
1. Douglas, CH. 1920. Credit-Power and Democracy. Cecil Palmer, London.
2. Richard Werner – Brilliant Interview. March 2017. Available at: https://www.youtube.com/watch?v=HLVHbY66ioA. Retrieved 23.10.23
3. The Joe Rogan Experience. 7.10.23. #2044 – Sam Altman. From: 6min. Austin, Texas
4. Douglas, CH. 1920. Credit-Power and Democracy. Cecil Palmer, London.