We Don't Need More Austerity: We Need Luxury Communism
A paradise for everyone is within our grasp.
What keeps you awake at night says a lot about your social status. Some struggle to get enough shut-eye because their minds are focused on work, money troubles, because they are anxious about a failing relationship or a big ambition that remains unfulfilled. More often, and more easily solved, it's simply because of that venti Starbucks Americano you had at 8PM combined with your compulsion to watch Youtube videos at quarter past two in the morning.
But while you and I watch a smorgasbord of videos on the world's most poisonous snakes and cuddly puppies until our eyeballs feel like someone has glazed them in salt, Johann Rupert, the billionaire CEO of the company which owns luxury brands such as Cartier, MontBlanc and Chloe, tosses and turns in his bed made of bank notes. He is unable to put his weary mind to rest as he contemplates technological unemployment, the rise of the machines and a coming social revolution.
Starring at the Financial Times "Business of Luxury Summit" in Monaco, the South African tycoon spoke of a coming wave of unrest whose causes are technological and whose grievances – a crumbling middle-class in the Global North and high growth that works for very few in the Global South – won't be solved by politics as usual. "That's what keeps me awake at night", he said.
Adopting the language of social movements to have emerged in the aftermath of the global financial crisis, Rupert spoke of how, "We cannot have 0.1 percent of 0.1 percent taking all the spoils... it is unfair and it is not sustainable." Rupert's conclusion was both enigmatic and ominous and he ended on a rather gloomy note for such a glitzy event, "we're in for a huge change in society... get used to it. Be prepared." Even CEOs of luxury brand conglomerates, it turns out, don't see much of a future for a world of Mad Max capitalism alongside global elites whose lives look like a Rich Gang video.
Yet Rupert's misgivings make sense given his background. As someone whose personal fortune has been amassed in the luxury goods sector, his primary concern is how rising inequality could eventually lead to declining demand for the sunglasses, handbags and jewellery that his brands are renowned for around the world. While the global elite is happy to flaunt its wealth for now, they'll be less keen driving their Lamborghinis around if the streets are filled with angry have-nots looking to heckle the nearest have-everything. Luxury product merchants could be in trouble.
In that respect, the recent victory of anti-eviction activist and ex-squatter, Ada Colau, in the race to become the Mayor of Barcelona is a sign of things to come. It is politicians like Colau, the Greek Prime Minister Alex Tsipras and Pablo Iglesias, the leader of a radical-left party which could form Spain's next government, who are the leading edge of something which Rupert fears is much, much bigger.
Perhaps most interesting is that Rupert's analysis about our post-crash world is less about greed and "nasty bankers" stealing all the money, and more a structural take on how automation, information technology, robotics and artificial intelligence represent a significant challenge to capitalism. These factors could create jobless growth and the paradox of an ever-greater number of products – manufactured ever more efficiently – but with rising unemployment and underemployment, falling real wages and stagnant living standards.
Touching upon all of that, and more besides, Rupert asked how "society [is] going to cope with structural unemployment" which he claims will be accompanied by "envy, hatred and social warfare... it will affect us". That "us" refers to the array of oligarchs, billionaires and chief executives Rupert was speaking to.
But while over the weekend a luxury goods magnate was eager to square up to the biggest challenges of our age, the chancellor of the exchequer remains in a fantasy world. On Wednesday night George Osborne spoke of how he wanted Britain to adopt a "new settlement", only running budget deficits under extraordinary circumstances.
Given that Britain's budget deficit – how much more the government spends than it earns through tax revenue – currently stands at over £90 billion, Osborne's claim to only ever run surpluses in the future is absurd. This is the man who promised to eliminate the deficit by this year after moving into Number 11 half a decade ago; his government has completely failed to do that with the deficit still almost two-thirds what it was when he took office. That fact is barely discussed by much of the mainstream media, which is all the more strange because it's the biggest political flop since Tony Blair being Middle East Peace Envoy.
Osborne's newly stated desire for Britain to only run surpluses sounds like a debt addled Essex-boy estate agent getting the gear in off his third credit card but outlining his plan to get an ISA, pension plan and premium bonds this time next year. Would you take that guy seriously?
Treasury figures show that over the last half-a-century only seven years have produced a budget surplus. While British governments were expected to balance the books in the 19th century – as well as the first three decades of the last one – that stopped when Britain left the gold standard in 1931. Balancing the books simply isn't as big a deal as Osborne is suggesting.
In fact, this is all quite hypocritical. While Margaret Thatcher is the political heroine of both the Prime Minister and his Chancellor – the ideological spirit animal of George's plan – it will probably come as a surprise to many that the "Iron Lady" ran fewer budget surpluses – just two – than Brown and Blair. Indeed Maggie T's time in office was marked by deficits higher than anything under Labour before the crash, something nobody, including Labour themselves, seem capable of mentioning. Nevertheless, Osborne's vision for a surplus means more Thatcher-esque austerity. For you and me that means bad services and crap jobs.
In all honesty what the Chancellor is now suggesting is completely at odds with how modern economies work and it is difficult to understand what he really means by the "extenuating circumstances" under which deficits would be permitted. Surely a financial crisis where we were literally hours from the "collapse of our economic and political system as we know it" would count? Well, that was the situation in 2008. Without running large deficits after the last crisis, the economy would have fallen off a cliff just like the US did after 1929.
While Rupert's vision is that of a dystopian, socially fragmented future, Osborne's ambition is to return to the economics of the Victorians. The former see a world whose politics are increasingly incapable of resolving the problems of its time, while the latter pines for the ways of the steam-age.
But we live in a world not of steam, but of silicon, solar and synthetic biology. Yes, technology challenges existing business models and maybe even capitalism as we know it. The solution isn't economically illiterate nostalgia or wringing your hands about inevitable social unrest. Rather seeing "structural unemployment" – as Rupert calls it – as a threat, we should take it as an opportunity to build a society where we can have much more and work much less.
That would mean the shift to an economic system where the fruits of the most powerful technologies humans have invented are shared more equally among us. If we embraced work-saving technologies rather than feared them, and organised our society around their potential, it could mean being able to live a good life with a ten-hour working week. The alternative looks more like ten hours of minimum-wage work and spending the rest of your time worrying about making rent.
Rupert's losing sleep over it, but robots and computers doing the hard graft could mean respite from the over-worked fatigue that's hijacked our world. You look after your nan a lot more, spend more time in bed with your partner and ride a driverless tesla motorcycle while listening to a music that you don't pay for and has no adverts.
That is the political adventure of our lifetime – I call it fully automated luxury communism. Cartier for everyone, MontBlanc for the masses and Chloe for all. That a luxury goods magnate has a better handle on the future of capitalism than our Chancellor illustrates the idiocy of those who presently govern us. If we want something else, something better, we are going to have to come up with it ourselves.
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