Sciencefictional Economics I: Does capitalist dystopia inexorably progress to societal collapse?
Post-capitalist dystopia has been science fiction’s stock and trade since the 1960s. Whether in the permanently impoverished and violent NYC housing project featured in Thomas Disch’s 334 (1972), the shantytown which grew up around the earthquake-incapacitated San Francisco Bay Bridge in William Gibson’s Bridge Trilogy (1993, 1996 and 1999), or the drought-ravaged American Southwest under the control of lawless gangs and even-more-lawless local governments of Paolo Bacigalupi’s The Water Knife (2015), average folk struggle to eke out an existence at the margins of a collapsed society. While environmental and other factors can be contributory, the central flaw of capitalism that leads to collapse is inequality and the subsequent power disparities.
Academia caught up with science fiction in 2014 with the publication of Thomas PIketty’s Capital in the Twenty-First Century. The economist took a historical approach, drawing a very tight correlation between increasing inequality and economic dysfunction. However, he failed to answer the question, “So what?” with the same level of rigor. In stepped the stalwarts of conventional economics, the OECD and the IMF, and the studies of both groups supported the thesis that increasing inequality is inversely correlated with economic growth. One can’t paint with too broad a brush—in China, for example, it seems economic growth is driving inequality—but at least in Western capitalist economies it appears that inequality poses a serious threat to future economic stability.
So, how does this work? This question lands us in the realm of guesswork, but some reasonable-sounding ideas have been proposed: (1) Inequality leads to high-quality education for the wealthy that opens opportunities but standardized-test driven, often violent conditions in schools for the poor, with few paths toward higher education. An uneducated workforce is a drag on economic growth. It’s really hard to argue with this point, regardless of your political orientation. (2) Inequality leads the poor to be incapable of envisioning exit from poverty and leads to fewer seeking work, training or educational opportunities. There is at least strong anecdotal evidence that this factor can play a role in depressing an economy. (3) Inequality leads to social dysfunction. You’d think that would be hatred of the rich, and in some cases it is. But the powerful learned divide and conquer back in the times of the Roman Empire if not before. If I am a wealthy person and I can convince you your problems are caused by immigrants, Blacks, gays, unions, fill in the blank, you are less likely to question what I am doing. But as we’ve seen recently, you also might put on Klan robes and attack those you have been convinced to blame for your economic situation. It has recently been revealed that the main goal of Russian-derived fake news on social media is to decrease social cohesion in the US, so we spend our time hating each other rather than turning our attention to Russian actions in Europe, Central Asia and elsewhere. It’s working.
Piketty also failed to provide a path forward. He writes that the only solution is a wealth tax of at least 2%, a very large inheritance tax, and a progressive income tax with very high rates at the upper end, perhaps 90%. Then he says it’s politically impossible.
To limit the length of this blog post, let’s say he’s correct, and let’s not deal with any other alternative. (I recently blogged about the experiment in anarcha-feminism undertaken by the Syrian Kurds that is the first potentially successful anarchist state to develop since Franco crushed the Spanish anarchists; here’s a link.) Even so, certainly there are greater or lesser degrees of inequality possible with our current models. We science fiction writers may be fortunate enough to be able to observe a real-world test of the effects of varying the degree of inequality on a capitalist system: Trump’s proposed tax overhaul.
Right off the bat, let’s be truthful and point out the conservative arguments for which there is indeed empirical support. Lowering the corporate tax rate will increase investment and lead to economic growth. The US has one of the highest corporate tax rates in the world. Although you wouldn’t think something so logical would need proof, study after study has shown that if you take money away from a corporation via taxes, they invest less, because they have less money to invest. Let’s grant a second point to the conservatives: tax returns are too damn complicated. If Trump really can allow 90% of Americans to file their taxes on a postcard, as he claims, they won’t be paying tax preparers to do it for them. Let’s say for the sake of argument that this means one hundred million people will save one hundred dollars a piece. (I pulled those numbers out of the air, but I can’t believe I’m not within two-to-three fold of accurate, which is good enough for my argument.) That’s ten billion dollars put in the hands of working and middle class people. If you give poor people money, they spend it. Consumption drives an economy. So, simplification by itself will cause economic growth.
Now we get to the point where economics contradicts conservative philosophy. Raising taxes on individuals does not cause them to work less. Behavioral economics is fact-based, not ideology based; this conclusion is from rigorous studies, not guesswork. Caveat: this is overall. A good conservative would bring up that many sole proprietorships have their income taxed as individual income. Sure, one wonders why they wouldn’t incorporate their business as an LLC, but there are indeed some people in this position. If I own a pizza restaurant and my income is taxed as individual income, and my tax rate doubles, I’m not going to have the money to knock down a wall and buy two new pizza ovens this year, so I can hire three new workers. Sure, this is a tiny fraction of the total number of people paying income tax, but one can at least grant conservatives that there do exist individual cases where fewer jobs would be created if the tax rates for individuals went up, even if the government spending that results from the increased tax revenue would create vastly more jobs.
Let’s also grant that there are lots of tax loopholes whereby big corporations and wealthy individuals pay very little tax. If loopholes could really be closed, the tax rate could go down. In actuality, corporate lawyers would just bill more hours, figuring out how to get around the new rules. Tax lawyers make de facto law by trying something where the current law is ambiguous and sometimes getting away with it. The auditors can’t catch 100% of questionable practices.
Moreover, there is reason for loopholes. Tax credits and deductions enable government spending by often more politically palatable means than tax increases. They can be hidden. The public doesn’t notice them. And sometimes, that means important things can be funded that wouldn’t otherwise be funded (and some corrupt-as-all-get-out things too).
Tax credits and deductions enable social policy. When the government wanted to encourage home ownership, they allowed deduction of mortgage interest. Americans give more, on average, than Europeans to charity, because Europeans expect their governments to fund things the US doesn’t fund. Get rid of the charitable deductions, and many charitable organizations will collapse. Europeans directly fund religion. The chief priest, chief rabbi and chief imam of Paris are all paid civil servants and tax money is allocated to fix the roof on their church, synagogue and mosque. Americans fund religion through the tax deduction for charities.
As you’d expect, the Trump plan will increase inequality. Likely, this will lead to an increase in poverty and even more anger. But I doubt we are close to collapse. For that, we’d need an exogenous shock to the economy. Like global climate change. In his young adult novel, The Drowned Cities, Bacigalupi predicts a US in which major cities are flooded, and the Chinese relief workers give up on us, abandoning America to the rule by gangs. The one truly noble character, a Muslim doctor working to treat poor people, is blown away by a gunman in Chapter two.
I give capitalism at least a few more decades. As writers, we live in the future, so post-capitalist dystopia will remain a viable economic philosophy for undergirding science fiction. I’ve written stories that follow this trope. I’ve also written some that don’t. Other narratives are worth exploring.
And not just in science fiction.