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Business class and the useless class


Comments / {{hitsCtrl.values.hits}} Views / Thursday, 11 July 2019 00:00


 

 By Jayasri Priyalal

The great economists such as Adam Smith and David Ricardo embraced capitalism as a system that would bring in greater prosperity to communities. Capitalism emerged as an efficient economic system for human emancip ation, defeating feudalism towards the end of the 18th century. 

Class consciousness was fundamental to many teachings of political ideologies that came into being with the advent of the first Industrialisation in the late 18th century. 

Karl Marx

Karl Marx, an economist who sharpened his philosophy and political theories by analysing the power balance in the capitalist system, and who was critical of the aspiration of market fundamentalism, had a different view, arguing that there is enormous scope for human emancipation beyond capitalism. 

Against the market and price theories of Adam Smith and David Ricardo, Marx propagated an efficient production system to strike a balance between the surplus of labour and surplus of production, which he interpreted as an antidote for exploitation by the capitalists. 

Karl Marx authored the famous ‘Das Kapital’, highlighting the deficiencies of the capitalist economic system. The social evolution from feudalism to capitalism, Karl Marx analysed through a class stratification process. 

Karl Marx was a true believer in the social revolution which he propagated for a working class to secure their legitimate economic power which was taken away by the industrialists and capitalists for their profits. 

The class stratification ranged from bourgeois (French term) the class that owns means of production –property owing middle class – to proletariate that holds only the capacity to provide manual labour, which is commonly known as the working class. 

Owning collective production and distribution system, Karl Marx proposed communities can experience greater prosperities through communism beyond the capitalist system which propelled the first Industrial Revolution. And, together came the system of industrial capitalism. 

Although he expressed hope for a better communist regime, Karl Marx had not written a manifesto for a communist political system. Communism boomed as an alternative political system to the exploitative capitalist system, which itself breathed its last a few decades ago for which Karl Marx need not bear the blame. 

If Marx is reborn today, I am sure he will be writing the book titled ‘Das Communism’, analysing the blunders committed by ill-conceived communist political ideologies of dictators bringing untold human sufferings in the name of revolution from Angola to Cambodia.

Industrial capitalism which originated from the industrial revolution era increasingly getting out of date, it works only in Communist China with state patronisation. Debt-fueled Casino Capitalism is in the lead in many other economies. 

For decades the world has been following the mythical neo-liberal economic model for shared prosperity; at the exploitation of the environment and depleting the natural resources to the hilt in the name of economic growth.  

In this era spearheaded by the technological revolution, the success in the past is not going to repeat the success in the future, as such no one can reignite the working class revolutions as the working class is fast diminishing

In short for the sake of increasing economic value, an unsustainable financial system was in place, destroying all social values, creating an untenable path towards a dead planet for the future. Freedom of choice is championed and a big club owns everything and spends billions for lobbying politicians for their advantage.

Economic growth was the mantra; everybody is in a mad rush to grow the economic ‘pie’ to own a larger piece of the pie. Unfortunately, whether it is in Capitalist systems or the Communist regime, the perceived mythical economic pie is still in the sky. 

After decades of trials and errors, booms and busts, now there are two classes left with, one the privileged class, the 1% of the super-rich fighting for eternal immortality, and the 99% of the sandwiched class struggling with inequality of income, wealth, education and health care at the dawn of the era of acceleration of the Fourth Industrial Revolution (FIR). 

This article is looking at the changes and challenges unfolding in the current FIR era. History was narrated in the previous paragraphs for the reader to formulate an idea as to how the current socio, economic and political system remains incompatible with the information communication technology driven interconnected digital world. From the first industrial revolution, we are carrying debt-burdened financial baggage, which has no utility value for the future. 

We have outdated political-administrative structures, old and useless performance and productivity measurement indicators. 

On top, in many representative democracies, all political parties and the political leaders are bankrupt with innovative, fresh ideas as many of them are clueless. Many are still fighting past ideological battles and fast becoming Twitter Tigers. All these structures and institutions survive merely to maintain the status quo of ill-conceived prosperity of the business class. 

Business Class

The Business Class referred in the title should not be confused with the airline privileges which comes with payment of the higher fare. The phrase is used to understand the challenges unfolding in the new technoculture where everyone will have to fight against the irrelevance and not against the exploitation as experienced in the first industrial revolution. 

In this write-up Business Class is comparatively analysed with the Useless Class; a new definition given by Prof Yuval Noah Harari is his best-selling book 21 Lessons for the 21st Century; segregating a group of the population getting marginalised in the current era of Fourth Industrial Revolution. The useless class will be left out of traditional production and consumption in the economy, yet they have to survive in a 24X7 economy.

In this era spearheaded by the technological revolution, the success in the past is not going to repeat the success in the future, as such no one can reignite the working class revolutions as the working class is fast diminishing. Moreover, the monopolies of the industrial and investment capital – Business Class – is also evaporating with the constant digital disruptions particularly impacting heavily on the banking and finance industry that championed of industrial capitalism. Financial intermediation was the main line of business of banks through accumulating and disbursing the surplus investment capital for broader economic goals in the past. As at present for any intermediation, technology has solutions ranging from the internet to blockchain. Now banks can only survive with financial disintermediation competing for side by side with the FINTECHS and other data-rich Digital Dictators. 

Very soon, the digital disruptions will force banks to choose between the mobilisation of savings and mobilisation of data. This assertion applies to powerful central banks as well; because printing money for facilitating economic transactions will be replaced with digital payment systems. Quantitative easings to shower easy money to Business Class as subsidies through the age-old public, the private partnership will disappear with the central banks.

The unrestrained globalisation and the casino capitalism crashed in 2008, unfolding the global financial crisis and the economic meltdown. 

Since then, day by day, the unethical profit engineering scams of the global financial powerhouses are unravelling. The Economist (4-10 May issue) reveals that as at present the stress tested, well-capitalised banking system holds $ 7 trillion globally, as core capital cushioning the risks of the total portfolio of assets to the tune of $ 100 trillion in commercial banks. 

Against this amount, the entire financial assets accumulated in the private sector is estimated to be around $ 318 trillion, as stated in the Credit Suisse 2018 Global Wealth Report. Wealth, as described by the report, is a combination of household financial assets like stocks, and non-financial assets that include real estate and individual belongings. 

UN Development Program estimates a further sum of $ 300 trillion is sitting outside as assets of the global shadow finance industry. They can be as a part of private equities undeclared assets kept in tax heavens managed by few private wealth managers together with expert investment bankers. 

The facts and figures above reveal the financial power of the Business Class vis-a-vie the Useless class. 

The financial net-worth of the Business Class will remain in tack as long as the status quo of the current impotent financial system preserved. For that to happen; the political power of the Useless class restrained and critical thinking of civic conscious citizens need to be stopped. 

This feature is now visible in all representative democracies from developed to developing world, the champions of liberal values who calls for greater prosperities for societies are tax dodging businessmen. They know the art of neo-liberal economic model how it helped them to siphon their wealth out of formal systems in the name of free trade without tax and tariffs. Getting this speculative investment capital out of the so-called Business Class to stimulate economic growth in the real economy, to uplift the Useless class to take ownership to drive sustainable growth will be a mammoth task. In conclusion, the writer would want to highlight as to how the deficiencies of the skill formation of the Sri Lankan education system is impacting on the Useless Class. Ever increasing numbers of the unemployed graduates on the island is an indication to assess as to how our young men and women are getting marginalised to grab opportunities unfolding in the era of the fourth industrial revolution. They are full of talents but unable to match with employment opportunities in the job market as they lack the x-factor skills and competencies. Prof. Yuval Noah Harari writes, and I quote: “ In the twenty-first century, we might witness a creation of a massive new unworking class: people devoid of any economic, political or even artistic value, who contribute nothing to the prosperity, power and glory of society. This ‘Useless Class’ will not be unemployed-it will be unemployable.”

The writer is the Director, Finance Sector,  Professionals &  Managers  Group Activities at UNI Asia & Pacific based in Singapore. 

 

 


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