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Can transforming capitalism solve global inequality?

Posted By Felistus Mbole, Friday, September 20, 2019

Felistus Mbole a member of our Emerging Fellows program checks the possibility of resolving global inequality in her ninth blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

Global wealth has been increasing and is predicted to grow by 43% in the next 10 years. While global poverty has reduced in the last few decades, this wealth is mainly driven by markets and is held by a tiny proportion of the population. The current form of economic structure is defined by short-termism. It is focused on optimising returns to owners of capital at the expense of all else and the long-term good of the society. It is not sustainable. Can capitalism be transformed to solve global inequality? What could it transform to?

 

A good place to start in exploring the possibility of transforming capitalism for the prosperity of society is to first understand what is broken. Businesses have one key agenda: to optimise profits. Yet capitalism does not operate in isolation but within the broader society which has clear planetary boundaries. Businesses need to demonstrate this consciousness and should be held to account regarding serving the long-term good of society. Natural resources are limited and likely to be depleted in future unless deliberate action is taken to ensure sustainability. It cannot be profits at whatever cost to the environment. Measures such as green taxation for business could lead to a more sustainable economic system.

 

A heightened sense of industry self-regulation driven by an appreciation that, in the long-term, society together prospers or perishes could trigger the right change. Another pillar to sustainable capitalism is the need for economic inclusion. This can be realised through government policies aimed at taxing business resources and not labour which would lead to unemployment and further inequality. Businesses could also invest in upskilling their workers to fit within the new business environment.

 

The current wave of digital technology characterised by use of personal data and machine learning has fuelled unprecedented economic growth. The challenge is that this wealth is not shared equitably across society. The gap between the rich and the poor continues to widen. This situation is likely to get worse in the future as more low-skills jobs get taken over by machines and unemployment rates rise globally. It can be addressed through the effective use of taxes to equip the labour force with skills that would enable them to effectively engage in the emerging digital economy.

 

What can governments do to transform capitalism for the prosperity of society? Effective regulation of markets could transform the economic system of the future. This would include consumer and data protection. As the economy becomes more data driven, personal data should be made more public and portable across businesses. This could lead to greater benefit to the owners of data and reduce the current monopolies that have entrenched inequality.

 

The digital wave is sweeping through all sections of society. Many governments are transitioning to the use of digital platforms for delivery and payment for public services. Considering this and the growing use and importance of digital rails in the economy, digital infrastructure should be made a public good just like roads and other physical infrastructure. This might not necessarily mean nationalisation of the existing private investments. By assuming this responsibility, states could drive economic inclusion. Ensuring that the majority have access to the infrastructure and skills that are needed to gainfully engage with the emerging digital economy in the long-term will reduce the economic divergency.

 

Finally, a broader stakeholder representation in business ownership and governance could make capitalism more sustainable in future. The biggest aspect of capital in today’s data driven businesses is the knowledge and skills which is brought in by management and other employees in the business. This argues for an employees’ share in the profits and wealth of the businesses thus reducing inequality. Capitalism could transform itself by taking on cooperative characteristics to avoid potential future crises.

 

Capitalism has proven itself effective in delivering goods and services to the global society, but its long-term sustainability is threatened. It could transform itself to serve the collective good of the society and solve global inequality.

 

© Felistus Mbole, 2019

Tags:  capitalism  equality  global inequality 

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Will technology fuel or quench capitalism?

Posted By Felistus Mbole, Tuesday, July 23, 2019

Felistus Mbole a member of our Emerging Fellows program inspects the dual role of technology in her seventh blog post. The views expressed are those of the author and not necessarily those of the APF or its other members.

 

We are living in a technological era like no other. The latest forms of internet and communication technology has made the world a global village. People can connect in real time across the globe. It is only three decades since the worldwide web came into being and roughly half of the global population has internet access according to UN’s International Tele­communication Union (ITU). Technology today is synonymous with internet and digital connectivity. Our lives have become so centred around internet connectivity and the opportunities that this creates.  It is hard to image life without digital communication. Will this new wave of technology quench or fuel capitalism?

 

The connectedness through digital technology has had clear benefits for society. Digital technology has possibly brought greater development than any other technology before it. It has enabled unprecedented levels of communication and the accompanying economic, political and social benefits. For instance, more people in Africa today have access to mobile phones than electricity. Mobile money is becoming a way of life for many, with about half of Kenya’s GDP estimated to be driven by it. This said, a significant digital divide, that is the gap between people who are digitally connected and those who are not, exists. The main reason for this digital divide is the cost of access in terms of data or airtime and the digital devices. Other reasons are poor connectivity and lack of digital skills.

 

Technology has long been established as a key driver of income inequality. In the emerging digital global economy, the economic gap between those digitally left behind and the owners of the technology is growing. The benefits of digital technology seem to be consolidated in the hands of a few. Digital technology has the power to change the market structure in a manner unlike any other technology. Disruptive digital innovations have changed the functioning of markets, resulting in the emergence of new dominant players with substantial long-term rents. Copyrights and intellectual properties out of these innovations give innovators an edge that their competitors cannot easily bridge.  It is a case of the winner taking it all, at least in the short-term. The impact of digital technology on society has been profound. Six of those on the Forbes list of top ten billionaires globally have made their wealth out of digital technology. They have mined their wealth out of data, the new oil.

 

Data is the lifeline of global capitalism today. It is the oil that lubricates the current economy.  A lot more data traverses the globe each day than goods and services combined. Big data companies such as Google and Facebook collect huge amounts of data from the population at minimal cost and sell it to others at a fortune. The data collected from the public can be used to improve services and products, making them more targeted and relevant. It can be used by security agents to fight crime and terrorism. Data has also been used to monitor and manage health related challenges. Data has however, been used to predict behaviour and worse still, to nudge human behaviour into the most profitable outcomes for business. Shoshana Zuboff terms this kind of data usage ‘surveillance capitalism’. It is not about the clients but centred on the business, promoting capitalism. Initially, it was individuals under surveillance. Now it is communities and soon it will be the whole of society.

 

Based on the current trajectory, technology will fuel capitalism even further in future. The progression towards a more connected world and artificial intelligence will generate massive amounts of data. This will present greater opportunities for capitalism and promote higher levels of inequality if unchecked. We are likely to see emergence of more stringent data protection regulations in future in an effort to guard against abuse of data. Innovation is good for the economy. Appropriate tax and innovation policies can help make the benefits of technology more inclusive. These could act to quench the fire of capitalism.

 

© Felistus Mbole, 2019

Tags:  capitalism  equality  technology 

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