The next phase of capitalism
Resistance and hope
A few weeks ago, I was reading through the class notes of my former colleague, Sampie Terreblanche. Terreblanche was an expert in economic thought. Those in his class were schooled in the economic epochs of history: feudalism, mercantilism, capitalism. ‘The Formation of the Western Economy’ was many a Stellenbosch student’s introduction to world history, and South Africa’s position in it.
Among his class notes, I found an undated piece likely intended for a third-year class. A line from it strikes me immediately:
The Golden Era of capitalism abruptly ended when the Egyptian-Israeli war of 1973 broke out.
War clouds are on the horizon again, precisely fifty years after the Yom Kippur War of October 1973. The horrific Hamas attack on Israelis and Israel’s response in Palestine has increased the possibility of a larger conflict involving other actors – Iran, Jordan, Egypt, but inevitably also NATO and the United States. Russia is still fighting in Ukraine. Azerbaijan is preparing to invade Armenia. And the likelihood of a Chinese invasion of Taiwan seems more likely by the day; Chinese TV channels broadcast programs about what a Taiwanese invasion would look like, the Chinese military has published an attack plan, and the country’s military and air forces, writes Noah Smith, conduct regular exercises around Taiwan, exercises that look very much like the published attack plan. We are simply naive, he writes, if we don’t view a Taiwanese invasion as a strong possibility. The era of peace, in which America as a superpower, for better or worse, could keep the rest of the world in check, is over.
Of course, this has significant implications for us here at the southern tip of Africa. Our government is in a loose alliance with the Russians and Chinese. The ANC’s support for Palestine was clear after a recent summit. It’s not hard to predict which side of the uranium curtain we’d be on if China invaded Taiwan and ignited a third World War. Next year’s election is important not only to turn the economy around but could also have far-reaching implications for our foreign policy.
But even if a global war doesn’t happen – and America’s commitment to protecting Taiwan is critical to preventing such a war – the current conflict in the Middle East still feels like a turning point. Just like in Ukraine, it’s a war broadcasted on smartphones. Open up X (formerly Twitter), and there are images of human rights abuses. As Eric Hoel writes, ‘our new pastime is watching people die’.
This emphasises something about the new artificial intelligence-driven attention economy that many of us are only now coming to grips with.
What do I mean by a new era, a new epoch? Let’s take, in the tradition of Terreblanche, a snapshot of the eras of economic development. The Berkeley economic historian Brad de Long, author of ‘Slouching Towards Utopia’, recently wrote on Substack that he would divide the last 500 years into six epochs.
Commercial-imperial capitalism began in the 15th century and would continue until the end of the 18th century. It was characterised by European powers establishing overseas empires and trade routes, with innovations such as joint-stock companies and banking systems. Its contributions to humanity were significant, leading to the exchange of goods and ideas, but it also had significant negative impacts, such as colonisation and exploitation of indigenous populations.
The second era, from the late 18th to the 19th century – let’s simply call it Steam-power capitalism – was dominated by the rise of the Industrial Revolution. The central innovation was the steam engine, which powered factories, ships, and trains. This enabled faster manufacturing and transportation of goods, stimulated urban development, and changed the nature of work.
The third era – Applied Science capitalism – was characterised by the systematic application of scientific principles to industrial processes. Major innovations during this period – from the late 19th to early 20th century – included the use of electricity in factories and the invention of the telephone. These inventions led to a significant increase in productivity and better communication systems.
Next comes Mass production capitalism. This era, from the beginning to the middle of the 20th century, was responsible for the rise of assembly lines and the standardisation of products. The automotive industry, led by figures like Henry Ford, is a good example. Mass production techniques made goods more affordable and accessible to a larger portion of the population.
The fifth era, from the late 20th century to the beginning of the 21st century, is Global Value Chain capitalism. It is characterised by the sophistication of global value chains, where different parts of a product might be manufactured in various countries. Innovations in logistics, technology, and communication facilitated this model, making products diverse and often more affordable. This phase brought about an intensified globalisation of trade and production.
And then the sixth era, from the beginning of the 21st century: Attention-Information capitalism. The rise of digital platforms, social media, and Big Data analysis plays a central role in this era. Companies compete for user attention and gather data, which is then used for targeted advertising or other commercial purposes. This phase has reshaped the way we communicate, consume content, and perceive value in the digital era.
The observant reader would identify a few trends from these eras. Firstly, they are speeding up. The pace at which new technology develops means our ability to be more productive increases exponentially.
Secondly, each era also has political consequences. For instance, Steam-power capitalism saw the birth of the labour movement and the rise of political parties representing the interests of the working class. Global Value Chain capitalism was associated with the end of the Cold War and consensus around neoliberal policies that led to a wave of deregulation and privatisation.
Thirdly, economic change also brings about social revolutions. Just think about the era of globalisation. Mass media and the internet suddenly connected ordinary people all over the world. Pop culture, especially music, movies, and TV series, became global phenomena. Awareness of the environment and movements gained momentum, and there was a greater emphasis on human rights and inclusivity.
And what comes next? I asked ChatGPT for options to predict the next era. It came up with four good ones:
Bio-Robotics capitalism: This era merges biology and robotics, transforming industries from healthcare to agriculture and blurring the lines between organic and mechanical, raising ethical and identity questions.
Nano-capitalism: Driven by nanotechnology, this era transforms industries by manipulating materials at atomic levels, especially in medicine, energy, and material science.
Cosmic-capitalism: Centered around space exploration and colonisation, this phase emphasises the commercialisation of extraterrestrial resources and innovations in space travel.
Virtual-reality capitalism: This era is characterised by the monetisation of virtual and augmented realities, creating economies within entire virtual worlds and reshaping industries to serve virtual inhabitants.
Each of these would have its own political, social and cultural consequences. But given the pace at which these will arrive – perhaps all at once – it is unclear whether our formal and informal institutions will be able to cope. And therein lies the crux of our evolution: As technology advances rapidly, our challenge becomes not only to harness its potential but also to ensure our societal structures evolve at a pace that can accommodate, regulate, and guide these transformations for the betterment of humanity.
That is, of course, if there is no third World War. Here’s ChatGPT’s grim prediction for an alternative dystopian era:
After a global nuclear war in the late 2020s, the world enters a Post-Nuclear capitalism. Cities transform into underground refuges or protected biodomes, and technology focuses on detoxification and sustainable agriculture. With scarce resources, uncontaminated food and water become invaluable. Former nations break into local survival groups, emphasising community and mutual support. While some try to reclaim the earth, others turn to space for a future. Resistance and hope define this era.
Resistance and hope, a fitting motto for South Africans and the world today. Sampie would have appreciated that.
An edited version of this post appeared (in Afrikaans) in Rapport on 12 November 2023. The image was created using Midjourney v5.2.
Phenomenal piece. Well done!
Loved this article. Thanks.