Digitisation increases the return on capital and thus further increases the already large gap between the few who are owners of digital machines and platforms and the many others who are getting relatively less and less for their work. This is why a new way of overcoming the old division between capital and labor is needed, at least to secure one’s old age. Several Economists are proposing a completely new concept that resolves a longstanding economic riddle by making every single person a shareholder of the new digital machines and algorithms. They call the concept “DigiPension”.
In today’s world, robots and algorithms take over more and more of people’s work. That has also been the case since the Industrial Revolution, again and again. But while machines have taken over activities, sooner or later the people affected have found other meaningful tasks.
Paul Spahn, Professor Emeritus of Goethe University in Germany stated that in that process, to date they became even wealthier than before. That’s no surprise, because what better thing can happen than machines doing the work and people benefiting from the goods and services produced? And since such processes have usually gone well for society, we have become slightly negligent toward further automation through digitization.
According to Paul Spahn, transformation processes of this kind only went well as long as machines could not work alone. They were productive only if operated, controlled and further developed by people. It also didn’t hurt that, contrary to the early naysayers, manufacturing plants could be multiplied at will. That process ultimately benefited the working people for a simple reason: The more machines there were, the more they needed people to operate them.
Christian Rieck, Professor for Finance at Frankfurt University of Applied Sciences argued that for this reason, Marx was wrong. It was not the case, as his script had predicted, that the capital owners were gathering more and more wealth, while the working population continued to become impoverished. On the contrary, after a transitional phase, the operation of these machines required well-trained people, so that a wealthy middle class could emerge for the first time in the wake of the Industrial Revolution.
Christian Rieck noted that the digital future of the economy will drastically change this benevolent scenario. While machines used to replace muscle power and manual work, today they are increasingly replacing mental activities. While the strategy of shifting towards brain work, ambitious as it is, will only pay off to a limited extent, at some point at least simpler services will be replicated using algorithms as “artificial intelligence.” And thus the people holding these jobs will become replaceable. This must have a negative impact on participation in economic growth, wealth distribution and social stability.
Dr. Chris Kutarna, a Fellow of the University of Oxford stated that from the point of view of distribution, all this is critical as long as people see themselves split into the two groups mentioned: Capital owners and people who make a living from their work. Economists usually agree that this gap can only be bridged by employee participation in productive capital. One promising way to do this is by saving in shares.
According to Dr. Chris Kutarna, achieving this participation with traditional methods such as tax incentives or investment wage models have long been tried but have not been very successful because they are based on income. This approach also has the big disadvantage that it effectively excludes welfare recipients, people that would be particularly dependent on wealth accumulation.
Unfortunately, saving by investing in stocks still seems to too many today as if it were purely a matter for the rich. But what is insufficiently understood at this critical juncture is that in this arena digitization offers completely new opportunities. It allows the acquisition of personalized shares in productive capital, even for smallest amounts, without significant collection costs. Older incentive models to invest modest amount of income in stocks for pensions still had to fail simply because of the high transaction costs during the analogue era.
Dieter Thoms, Professor of Philosophy at the University of St. Gallen said that today, however, such transactions are no longer handled by people, but processed digitally, so that the costs for the transactions are almost zero. This applies even to the smallest amounts, which in principle creates the room to make any person a mini-capitalist, no matter how poor or rich they are. According to Dieter Thoms, the only condition is that saving accrues over time steadily and consistently
The Digital Economy
POLARIZING GLOBALIZATIOIN IN TROUBLE
The ruling ideology of the world order is anchored on the powerful human vice of unadulterated greed. Almost everything we do in our world system, collectively or otherwise, is based on this principle, even though it is not explicitly stated as such by the global status quo. The economic aspect of the system upholds exploitation and competition as the alpha and omega of collective existence. Its political governance, which espouses certain aspect of democracy, mostly representative/electoral democracy, is dictated by the ‘rule of money’, to a very large extent. Such a regime of plutocracy is pronounced in the core countries of the west, particularly in the United States of America. After WWII, the US became the reigning hegemon and managed to dictate global policies, economic and more, without effective impediments, despite the socialisms of the day. The globalization thus promoted, willy-nilly, ruled the planet, up until now!
As always, we are quick to qualify the existing globalization as a polarizing one. If it weren’t so polarizing, there wouldn’t be myriad challenges against it, given its very short existence (post WWII). One of the hallmarks of the current polarizing globalization is its violent expropriation, both from nature as well as from the weak peripheral societies. This has been done, to a large extent, by a cleverness of stealth dimension! By leveraging the on-going destructive ideology of commodification, which has given rise to excessive monetization, the system managed to hoodwink all and sundry, including its latest victim-Maoism! The current globalization utilizes various tools to promote its objectives. To this end, its core ideology of greed has been elevated to a sacrosanct religion of global prominence, with money as its supreme deity! Such a totalitarian doctrine stifled inquiries all over the modern world, even in those countries that were once regarded as relatively liberated/enlightened (Nordic, etc.). Generally speaking, the system as a whole has lost its propensity to engage in critical reflections. This attitude is no more confined in the realm of social thoughts, but has also encroached into the world of natural philosophy or what is now called the hard sciences!
The institutions that actively promote the polarizing globalization of our times are quite numerous. Suffice is to mention only the significantly influential ones. From the indoctrination mills of the global universities to institutions of global economic governance, (IMF, WB, WTO, etc.) from the machineries of global political governance/dominance, (UN, NATO, etc.) to the integrated media, consisting of the entertainment industries, including spectator sports, (which must fall under the category of entertainment, per force, rather than a vocation promoting healthy living) are the main tools of the prevailing unsustainable globalization. The ever-canny global status quo has thoroughly mobilized, almost all of the world’s sheeple, (human mass) into worshipping its religion. Anything that is construed as lying outside the kingdom of greed is shot down viciously. However, there have now emerged issues that are not lending themselves for the usual facile narrations. What is proving difficult to hide for the ever-manipulative status quo is the natural phenomenon that resulted from man’s obsessive interference in the workings of nature. Climate change, species destruction, acidification of the oceans, diminishing of resources, inadequate sink for all our pollution, etc., are gradually entering the consciousness of the sheeple, wherein hope resides!
Despite the overwhelming power (military, finance, media, etc.) of the establishment, there are still brave souls across the planet willing to expose the system’s comprehensive objective. Chelsea Manning, Julian Assange, Edward Snowden are amongst the vanguards. Unfortunately, the wretched in Africa still lack determined souls willing to ‘rock the boat’, so to speak. After half a century of flag independence, we Africans are still wallowing in the sickening world of ‘black skin white masks’, as if we are still in those days of colonial affliction (psychopathology of colonization), as thoroughly explained by the Martinique psychiatrist Frantz Fanon! Luckily and at the global, an increasing number of people along with activist-intellectuals are moving towards liberation of thoughts and sustainable of deeds. At the same time, the establishment continues to become visibly moronic!
Gov’t shrivels the black market
38 import items face suspension in new decision
Experts opine for stringent regulations in the contraband market as government suspends the import of 38 items in its latest move to squash the black market.
On Friday October 14, the Ministry of Finance (MoF) sent a letter to the financial sector’s regulatory body, National Bank of Ethiopia (NBE) ordering banks to suspend letters of credit (LC) of 38 items, selected by Customs Commission as per the direction of the National Macroeconomic Committee. The 38 items were selected as a lesser priority import item as steps taken by government intensify to tackle the illegal remittance and parallel market.
Fikadu Digafe, Vice Governor and Chief Economist at NBE, said that the commodities that are suspended from import for an unspecified timeframe are not included on the NBE priority import items’ list.
“Most of them are using the foreign currency accessed from parallel markets and illegal remittance,” he said signaling that some of the LCs are being used for formality upon which now government has taken strict measures.
He said that some of the commodities are consuming huge amount of foreign currency, “for instance the total car import consumes half the import amount.”
“When this decision becomes effective, the demand for access to foreign currency from illegal money markets and illegal remittance will fizzle out, which will consequently narrow the gap between the legal exchange rate and parallel market,” Fikadu expressed his expectation.
He also expressed that an indirect benefit will be attained by the local industry and production following the halting of the LCs for import.
“We have ample brewers or biscuit and sweat factories but such kind of commodities are imported, and thus these new step will lead to the locals to capitalize on the advantage leading to local production in the country,” he explained.
He explained that the foreign currency that is allocated to the 38 items will be transferred for other sectors like import of raw materials for the manufacturing industry.
Most experts that Capital asked for comments on the issue applauded the latest decision of the government. One of the business community members said that the beverage industry in particular, the alcohol drink business, consumes huge amount of foreign currency, “So the latest move will have meaningful results in stabilizing the illegal exchange market whilst saving the foreign currency for other basic items.”
According to the new decision, the import of private automobile has been halted except that of duty service vehicles and electric cars.
“The car import business is one of the most corrupt sectors to which some government officials have involvement from way back. However, the new decision cuts the import of fuel cars, thus we will see a shift of import of electric cars with the same resource,” experts said.
Experts also suggested for government to pay a close attention to the contraband market including illegal remittance citing that illegal import barrier would lead to a stabilization of the legal market.
In the past couple of weeks the government has taken several measures when sudden spikes occurred in the parallel market. Following these measures, the past two weeks has seen the black market registering immediate retraction to its regular rates prior the frenzy.
Some of the commodities excluded from accessing the foreign currency are beverages, packed foods and seafood, chicken and pork luncheon meat, sweets, beauty items, juice, cigarette, perfume, fireworks, bags and wallets, umbrella and carpets.
Financial intelligence services have also announced that action against entities that perform betting operations has been taken. The service stated that during its monitoring, it confirmed that entities that carry out betting operations are participating in the purchase of foreign currency on the black market using a large amount of money collected from the public.
To this end, the service has frozen the bank accounts of 13 betting companies and 109 of their operators involved in the illegal black market purchase of foreign currency, including tax evasion, with prosecution to be filed.
Trade ministry lifts price cap of agriculture commodities exports
Following the decline of hoarding of commodities, the Ministry of Trade and Regional Integration (MoTRI) has decided to lift the price cap on agricultural commodities export. However, experts opine that such moves have the potential to harm the sector.
Slightly over a year ago, MoTRI which is responsible for the follow up of the export sector introduced price caps on the aim to tackle unfair competition on access to commodities at the trading platform of the Ethiopian Commodities Exchange (ECX).
Following the introduction of the caps, the ministry in consideration of the international market has been providing weekly upper caps on the prices for major export commodities such as oil seeds and pulses trading.
Experts recall that price caps were rolled out because exporters we aggressively focused on the foreign currency that they were earning without really paying attention to the market.
“Exporters were giving their own prices left right and center against the international market to get the foreign currency which has affected the market expanding unethical practice on the export business,” experts said, adding, “They exported at lesser prices than they paid at the local market. Exporters major goal was securing hard currency for their import business.”
They said that such erratic practices had contributed to value loss and hoarding, “the export business has not been profitable because of exporters shipping their commodity at lesser price points than they paid at the trading floor, but the cap has been changing this narrative.”
“As a result the government has decided to control the market and has harmonized the prices with international price points,” they added.
They said that lifting the price cap would be disadvantageous to the country since the initial motive was to create harmony and a calm market in the sector.
However, Kassahun Gofe, State Minister of MoTRI, argued that the government introduced the price cap when hoarding was taking place at its peak.
“When exporters buy the commodity at high price points they hoard the commodity, thus the price cap was introduced to mitigate that. Now that the stock has balanced out we have seen it best to lift the cap,” Kassahun told Capital.
“Lifting the cap with the principle of free market will allow exporters to buy products at competitive price points, but if the cap was to continue the trading practice without the ECX will prosper leaving out the platform. So we decided to lift the price cap,” the State Minister who is export responsible for the sector explained.
“We lifted the cap to boost the export market,” he added.
Regarding the concern of mismatch of local market and hard currency sales of the commodities, he said that the country is a price taker and thus, “It will not relate with that.”
Some exporters that Capital interviewed estimate that even if the cap is lifted, the price will not see exaggerated rate as the past.
“This time higher price against the international market will not be given by exporters since they will not access the foreign currency as per the recently introduced directive of National Bank of Ethiopia,” experts opined citing their expectation.
“In the past, we gave exaggerated price points to buy oil seeds or pulses since we would take the foreign currency to import commodities and make a profit from it, but now the government takes 70 percent of the hard currency from export earnings and partner banks take 10 percent. So doing trade with 20 percent of the hard currency is not feasible, because of that exporters shall only target profits from export trade meaning they buy the product at reasonable price points at the trading platform or at contract farming deals,” exporters said.
The new product that has been produced this harvest season is getting into the market from Mid October. Experts said that the result of the new decision of MoTRI will be seen in the near future.
Experts say that despite the challenge in the northern part of Ethiopia, which is a major source of oilseeds particularly for the high quality sesame seeds, the harvest is expected to be higher. Similarly the harvest of pulses is expected to be very impressive for this season.
However experts stated that currently traders are highly engaged on the deal of contract farming to access to commodity as opposed to the trading floor of ECX.
MoTRI noted that exporters who access to commodity through contract farming scheme ought to pass through ECX for quality test and grading.
However experts argue that, “ECX is a trading platform and not an accessing platform.”
Experts pointed out that the contract farming scheme that is not following the proper system is said to indirectly dysfunction the trading platform.
