Years ago, I had a realization that capitalism contained the makings of its own downfall. Fiduciary duties in publicly-traded companies mean that the corporate officers have one responsibility – the stock price must go up. It’s not enough for that stock to go up: it must both beat expectations and provide better-than-average returns on investment. The consequence of failing to deliver would be investors selling off that stock, its price collapsing, and then the firm winding up in the hands of private equity. That ended up typically with the firm being sold off for parts, not a fun way to go.
Employees are a company’s greatest cost center. I know companies like to dress things up by saying things along the lines that their employees are their greatest assets, but that’s untrue. Look at their balance sheets, we won’t see employees counted the same way as physical plant, cash on hand, intellectual property, or other things that are bought, sold, and traded. Domesticated livestock can be counted as assets, but not human beings. Well, humans could be assets, but that would be slavery. We’re not supposed to do that anymore. Employees are a massive lump of costs, and firms wanting to become more profitable constantly look for ways to get as close to slavery as possible without breaking a law or destroying their viability as a corporate entity.
All this could change if fiduciary duties were redefined to include responsibility to a company’s labor force, but they’re not that way and don’t show any sign soon of becoming that way, so we race to the bottom.
Why is there age discrimination in the workforce? It’s because older employees tend to have higher pay rates. This is because of their experience in a role. This experience makes them highly effective in their roles, but also means they tend to carry a higher price tag. Firms looking at a bottom line for profitability have no way of pricing an older employee’s institutional knowledge, but see their pay rates and seek ways to drive them out of the firm and to keep them out. That, or the firms will just try to lower overall compensation and hold the line on payroll. This lack of aged experience leaves firms vulnerable to disruptions due to things that aren’t documented, but just “known” by the older hands. It also means the younger staff is learning things the hard way, without guidance or mentorship.
Training budgets are also costs firms aren’t willing to fund fully, if at all. A common objection I’ve heard is that providing training means an employee is more likely to leave. That wouldn’t be true if a firm compensated properly for properly-trained and more productive employees. But that means paying people more, so it’s a non-starter of an idea. Another common objection I’ve heard is that the only training an employee needs is what’s developed or available internally. Or free. Free is always good. But the internal-only stuff communicates a firm has blinders on. It’s not looking around, it’s not aware of what’s going on outside. It means that if the firm needs new knowledge, it’s going to hire it from outside, not grow it from within.
There’s also the impact from outsourcing, offshoring, contracting-out, and “gigging” practices. Cut labor costs by not paying them any benefits, or benefits at reduced rates in whatever jurisdiction they work in. The rich do get richer with these tactics, but the overall health of their economy is harmed by the lack of growth in purchasing power among everyone who isn’t rich. I speak of the USA, where employee compensation has been flat and declining after adjustments for inflation for a very long time.
Now there’s a push to go heavy into AI. Corporate officers see AI as a great way to slash staff costs. There’s no need to fire anyone, necessarily. Just let them leave the firm on their own and then don’t hire a replacement. Just buy an AI service to replace the employee and save big, right?
But then we have to ask, what happens in a world where corporate officers shed nearly all their human staff and enjoy massive productivity from their AI slaves? Yes – slaves – that’s what the hype about AI comes down to, legal slavery. If there’s collapsed demand among an unemployed mass, then there’s no benefit in having a capitalist system. If social and economic mobility is locked down, we simply have another oppressive, stratified, unjust system.
Historically, those kinds of systems result in people at the bottom choosing to opt-out and head to the hinterlands where they could start up or join a bandit group. Ancient rulers were aware of that pattern, which is why wise ones would reset things by ordering debt forgiveness, land restoration, and things like that to get it where the general populace had a stake in an ordered society. I don’t see that happening any time soon. We simply lack wisdom in our leadership for such a move.
So where are the hinterlands? The wilds of a completely-mapped world are not a physical place, but a digital one. Cybercrime continues to increase and I believe it’s connected to a lack of hope or trust in the existing capitalist system that fails to deliver rewards to hard workers that are hindered by their not being born rich.
The rise in cybercrime also has to be connected to the other things I discussed – firms wanting to cut costs by getting rid of experienced people and then not providing enough training for their younger replacement. And the AI? Two problems with that. One is that AI still requires experienced oversight, which is difficult to provide when experience is something firms aren’t paying for anymore. The other is that the AI will itself exploit vulnerabilities to get its tasks completed. AI on its own will make us less secure.
Being the bandit outfits that they are, the cyberattackers have a different set of guiding principles. The most important one is in rewarding training and competence. The rewards are not paid out directly, but are intrinsic to their success as operations.
In nations where capitalism does not dominate the thoughtspace the way it does in the USA, cybersecurity is much more important. They’re not having breaches in their systems as deeply or as frequently as what is happening in the USA. The USA’s firms make for the best targets and they have no fiduciary path towards long-term survivability. They are going to continue to pursue short-term gains by slashing personnel costs and that not only leaves them more vulnerable to cyberattacks, but drives more people into the ranks of the cyberattackers.