'The further we go the harder it is to rule an economy socialistically, through physical indicators’

Futurologist Konstantin Frumkin on the future of money and banks. Part 2

'The further we go the harder it is to rule an economy socialistically, through physical indicators’

What will replace capitalism? What will happen to money? Who of the authors of fantasy and cyberpunk literature predicted our future? Read about this and many other things in the second part of the interview of Konstantin Frumkin.

“If the labour market is a net, it doesn’t matter who owns the means of production”

Communism existed for 70 years and faded. Capitalism will likely come to an end one day. Which of the “isms” do you think will replace it in the future?

There aren’t nay “isms”. The ideas of what will happen after capitalism in world social literature are doing very bad now because the power of previous socialist ideas is too great. As a rule, left philosophers like Paul Mason talk about the future that will come after capitalism. They are direct descendants of socialists of the 19-20th centuries more or less. And they create such media hype that no other ideas succeed.

Capitalism stays on three pillars: the market, private property with means of production and wage labour. We should think about what can happen to them. I don’t see that the market will be replaced in the near future. It can happen in a very remote future, and it will happen when artificial intelligence distributes everything, but an alternative isn’t seen so far.

Very interesting processes take place in the sphere of wage labour. What once was done by a company that had an owner, a director, heads of departments and subordinates nowadays can be done by a network that doesn’t have directors, where people have temporary relationships. In other words, the companies can be destroyed, blurred through complex relations of outsourcing. For instance, it used to be a common situation when you needed a programmer, you hire a programmer and he becomes your subordinate in the firm. Now he can be outsourced and with whom you have civil law relationships. If one tries to extrapolate this situation, we can imagine that wage labour will disappear in the future, labour relations are replaced by civil law relationships, there aren’t directors and subordinates but there is a huge complex network of individual entrepreneurs. In other words, every person is a sole proprietor who works in different projects.

Photo: Mikhail Kozlovsky
What once was done by a company that had an owner, a director, heads of departments and subordinates nowadays can be done by a network that doesn’t have directors, where people have temporary relationships. In other words, the companies can be destroyed, blurred through complex relations of outsourcing

This system is good because it is very flexible. Nobody has to be dismissed and hired. People connect to the net and immediately disconnect as soon as the project ends. In this situation, private property stops being topical because in classical capitalism I am the owner of the factory and I have machine tools, while you don’t have them, this is why you come to me and as a wage worker use my machine tools and receive a salary. If we are a net, it doesn’t matter who owns the machine tools. The machine tools will likely be leased in a leasing company for the project, while an investment or financial institution will provide money for them. So network capitalism or network economy is a viable alternative to classical capitalism.

The important moment is that the idea of network economy eradicates all our fears that are popular in films and books about an awful future of the world with the dictatorship of large corporations. I don’t believe in it in general because a corporation is an unlucky dependent creature that manages nothing but itself is located in the logic of the market and competition. It can’t make a step to the right or to the left because it is subordinate to looking for market effectiveness. Why should Ford or Mitsubishi that consider every penny of prime cost think about political dictatorship? But this gigantic structure will be blurred, and a big financial fund will remain after Mitsubishi whose financing will make all projects circulate in the net. Corporations in this sense of the world won’t stay, they will be blurred in the net. And it is worse because it won’t be possible to find subjects of power one can cite.

“Banks and financial structures are the modern wheel authorities hold

It seems that the further we go the more resources of the world pass into banks’ hands. What does the concentration of money, factories and power in hands of bankers lead to?

That's not exactly true, but there is something behind it. Financialisation of the economy, as it is called in literature, is behind it. It isn’t that all power or assets are in bankers’ hands, but a greater share of enterprises’ profit turns out in the hands of different financial institutions, not only banks. Partly it is linked with what I said in the previous answer. A classic corporation in the 19-20th century that has its own factories, offices and full-time staff starts to play a less important role nowadays. The world becomes flexible. Today a plant is opened, while tomorrow it is closed. Today the sector exists, while tomorrow it will close and transferred to China, then it will close in China and transferred somewhere else.

The capitalistic economy is managed through the management of financial resources. Money, financial tools are the tool of economic power. It is the buttons, the leverage an economy is ruled by. The further we go, the more difficult it is to rule an economy socialistically, that’s to say, through physical indicators. Socialistic management was the following: “We send 10 tonnes of steel there, here we send 20 tonnes of spare parts”. Today we say that financial structures (banks, funds, exchanges, investment companies) are a system of economic management whose task is to distribute resources to more promising and effective areas.

Photo: Maksim Platonov
The capitalistic economy is managed through the management of financial resources. Money, financial tools are the tool of economic power. It is the buttons, the leverage an economy is ruled by

When the state tries to rule the economy, it deals with the regulation of financial resources. If power decides that we need solar energy, what will it do? It will allocate public money for it or provide benefits, while it is anyway an action in financial lingo. The infrastructure of power is money management infrastructure. In other words, state banks, state development institutes are all different monetary funds. Now economic power is carried out through money management infrastructure. It is like drivers who man the car with the help of the wheel. Banks and financial structures are the modern wheel authorities hold.

What’s the attitude of modern people to money when only some number is left on the screen?

Firstly, there is no difference between digital and paper money from an economic perspective. It is credit money without internal value, and their form factor doesn’t matter. In this respect, the transition to digital money is a very important technical fact, but not an important fact in the evolution of money.

Secondly, the world is moving towards more controllable money. This is why our attitude to money will be as if it is a problem. There will never be a time when you will get money and it is yours, do what you want in the future. Even today we understand that our flow of money is an interest of the tax service, interest of financial monitoring. Everybody cares about where you got money from. The bank asks where you got the money it is considering if it should grant you a loan or not. An embassy of a foreign state asks if you have money to decide whether to grant you a visa or not. An insurance company asks for this to calculate your comprehensive insurance tariff. This general interest in your money will only go up. You will have to think about money and take into account that a lot of institutions and your partners think about your money. You will have to think about how to demonstrate your financial status to take out a loan, good insurance and visa.

Photo: hightech.fm
Looking at the Chinese social rating, we should understand that it is a primitive, partly senseless system, but with time this will happen everywhere, but in a more delicate way

Now I will omit a lot of intermediate steps. In the end, it won’t matter how much money you have now, a holistic assessment of your identity as creditworthy, solvent and reliable partner will matter. Instead of money, there will come ratings and evaluations of economic entities, particularly people. And not only regarding their financial flows but also their behaviour. Those who are recognised reliable, solvent, creditworthy will be able to afford a lot. What we have recently heard about the Chinese social rating is, in my opinion, a terrible, hastily done system. Nevertheless, it contains the prototype of where the world’s financial systems go. And now, looking at the Chinese social rating, we should understand that it is a primitive, partly senseless system, but with time this will happen everywhere, but in a more delicate way.

“Cyberpunk was the best source of predictions”

As a connoisseur of fantasy literature whose predictions tend to become a reality at times, could you tell us about an image of the future planet that seemed to you interesting?

Polish writer Jacek Dukaj’s novel Perfect Imperfection is one of my recent serious impressions. It gives quite a specific vector of humankind’s development. In a word, this novel has two key ideas. The first idea is the creation of artificial intelligence with different degrees of perfection and different integration of AI in a human body. It has three types of such a progress ladder that live together: standard biological people, technically transformed people-cyborgs and pure artificial intelligence that exists in advanced computer systems.

The second idea is the following: to accelerate the speed of computers thus improving the performance of AI certain physical conditions are needed because there are certain technical restrictions to accelerate the computers because they heat up, miniaturisation reaches some limits. All this leads to the appearance of something like local parallel universes to create advanced ideal AI. It is not entire universes with stars and planets but small nests of the parallel space with another speed of time. It is what humankind will certainly work on and what it will try to get.

What three books on the future would you recommend our readers who want to have a look what’s beyond the horizon?

Answering your question, I will say that Dukaj continues the tradition of Stanisław Lem’s thoughts considering the technologies he witnesses, I mean Dukaj. If we are talking about the books that predict the future but aren’t obsolete at the same time, I would name Lem’s book Summa Technologiae, which is far from being new, where the crucial areas of technological progress are described in general. This book won’t get obsolete for long. It talks a lot about virtual worlds, block of human feelings so that identity will feel inside the virtual world. It talks a lot about the development of artificial intelligence and the miniaturisation of technology.

Photo: Maksim Platonov
Now computer and information technologies became the most powerful sphere of technological development. If so, it turns out that cyberpunk was the most accurate and best source of predictions because it is literature focused on the future information technologies

Also, I would recommend Lem’s Observation on the Spot. In my opinion, it is in general one of the best fantasy compositions in the history of literature. It deeply discusses the problem of substitution of the human body for artificial parts. By the way, Lem’s forecast of the future of technologies is interesting. One of the new inventions is called ethicsphere — it is a cloud of nanorobots that can be assembled for a variety of constructions. In other words, they can turn into any thing you need and even replace some cells of a human body.

I would especially recommend reading these authors, Lem and Dukaj. Generally speaking, everything is very bad when it comes to forecasts, there aren’t good among them.

Why?

As Niels Bohr put it, “Prediction is very difficult, especially if it's about the future”.

Are there any authors nowadays who depict an image of a glittering future, a utopia where everybody is happy?

Nobody depicts that people are unhappy in those novels I already talked about. Utopia requires a very biased view of things when we divide things into good and bad, and then say that there will be a society where we leave only the good ones. It is a feature of not the future but our biased view on the present. For instance, we dislike criminality and misery, we cross them out, while we do like a scientific paper, it means everybody will be a scientist in the utopia. It is not a very happy society. It is a society fitting in certain ideals, while all ideals are different. We see forecasts of the future that don’t have any global catastrophes where the Earth isn’t home to sufferings. We see a future in which humankind achieved big new possibilities, it isn’t anti-utopia in the classic sense of the word, it is a normal forecast.

Now we became witnesses of a situation where the pace of technological progress is relatively slow. It is much slower than the one in the late 19th or early 20th century and till the 70s. Now computer and information technologies became the most powerful sphere of technological development. If so, it turns out that cyberpunk was the most accurate and best source of predictions because it is literature focused on the future information technologies. Jacek Dukaj’s is an example of a very good cyberpunk. Or I can give an example of Greg Egan’s novel Permutation City that has very interesting thoughts.

Talking about Russian authors, I would recommend the novel 2048 by a writer nicknamed Marcy Shelley. The description of excessive complication of society that arose under the influence of, first of all, information technologies and partly biotechnologies are important there.

By Matvey Antropov
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