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Karl Marx and Milton Friedman Would Agree: We need Innovation in Government

January 2, 2013

This is a guest post by Edan Yago. He is a entrepreneur who studied neuroscience and philosophy. He comes from a long line of rebels and freedom fighters. His family fought Nazis as partisans and fought the Apartheid government of South Africa. Yago has continued this tradition in Israel where he was a conscientious objector to the military and has volunteered in both Jewish and Arab schools teaching the principles of freedom.  –Editor

The future is going mainstream. Publications like the Economist, Forbes and the New York Times have finally figured out something that has been obvious to us for a while now – technology is moving at breathtaking pace; but, at the same time, we are experiencing a “great stagnation”, because vested interests are doing their best to limit change. Specifically, innovations like P2P sharing, virtual currencies, 3D printing, online education and DIY health monitoring are threatening the business models of large established players – everyone from big media to taxi unions. These vested interests are fighting back by smothering innovation with a blanket of labyrinthine regulations and patents.

What this boils down to is that our future is being stolen from us – because of a mismatch between the pace of technological change and governmental change.



For the last couple of decades, starry-eyed futurists, singulatarians and transhumanists have espoused a crazy “techo-utopian” idea: Technology is going to make things so cheap that abundance, rather than scarcity, will become the norm. Futurists have been the recent champions of this idea but they did not invent it. Intellectual giants of the past have been animated by this vision, which they could see as clearly emerging from the trends of technological progress.

John Maynard Keynes published an essay in 1930 – Economic Possibilities for Our Grandchildren – in which he predicted that, by 2030, society would become so rich that “for the first time since his creation man will be faced with his real, his permanent problem — how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.” Not long after, in 1932, Bertrand Russell wrote “In Praise of Idleness”, where he suggested that technological and scientific progress should make it possible to reduce the work day to only 4 hours. However, way ahead of these two giants and far more influential, was a thinker for whom the increasing productivity provided by capitalism was the central idea in this thought.  In 1848, Karl Marx described in the “Communist Manifesto”, a “society that has conjured up such gigantic means of production” that it needs to deal with an “epidemic of over-production.”

Marx realized that at some point, capitalism would make things so cheap, that capitalists could no longer be able to make a profit. When this happened, the capitalists would fight to limit abundance. Marx also predicted something else, that Big Business would try and capture whatever benefit could be squeezed out of technology to reduce its reliance on labor. So workers (the 99 percent) would find themselves, on the one hand, competing with technology for an ever decreasing slice of the pie and, on the other hand, forbidden by law to take advantage of technologies that could empower them. In other words, Marx predicted both DRM and outsourcing. It is this combination of being restricted from either end that brings Karl Marx and Milton Friedman to agreement – this is not a free market, it’s a rigged game.

Which is why we are now seeing right-leaning publications like the the Financial Times agree with the likes of Paul Krugman. The FT noted that “companies have an interest in sabotaging progress and efficiency because not doing so could lead to the sort of abundance that might make it impossible to monetise anything” and linked this to thoughts by Krugman, who believes this helps account for decades of wage stagnation in America.

This war, with technology and individuals on one side and Big Business and Big Government on the other side has only just begun. As technology increasingly has the potential to empower individuals at the expense of centralized power, the steps that vested interests will need to take to hold back the tide of progress will become increasingly draconian. We need to reorient our thinking around this problem. In a world where Marx and Friedman would agree with Krugman, Keynes and even Ray Kurzweil, the old political divides are increasingly irrelevant. Technological change is the dominant fact of our modern existence. We must figure out how to adapt our governments and rules to take advantage of progress. The new dividing line in politics is between those who are ready for an evolution in society and those who want the past to control the future.

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  2. September 12, 2013 1:03 am


  3. valueprax permalink
    January 3, 2013 3:15 am

    The conclusion of this piece is unclear. What, concretely, is the author calling for?

    • Bobby Emory permalink
      January 27, 2013 6:51 am

      We need to decide whether we want to reform society to grow as new technologies become available or we want to help the current establishment maintain control. I would suggest that enabling technology is a good argument to use against establishment control. And by calling out the establishment on their attempt to prevent the rest of us from getting the advantage of new technology is a way to drive a wedge between the establishment and our fellow citizens.

      It is not true that the purpose of the USA government is to use force to help Disney make more money off Mickey Mouse (after the first 20 years).

      (Other’s suggested conclusions requested.)


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