A Game of Musical Chairs
A Game of Musical Chairs
Some turning points in history are impossible to miss. They involve battle-cries and the clash of weapons, gatherings making decisions that can never be undone, and equally obvious events. Then there are the turning points that slip past unnoticed by most of the people whose lives they will overturn. I’ve come to think that one of those latter is taking place around us right now.
One of the very few announcements I’ve seen so far didn’t involve bugles or proclamations. It appeared in a news story covered in a few corners of the tech industry press last month. The story’s simple enough. Ryan Breslow, founder and returning CEO of hotshot financial-tech company Bolt, laid off the company’s entire human resources department and replaced it with a smaller and more focused team with much more limited responsibilities. His explanation for the change? “We had an HR team, and that HR team was creating problems that didn’t exist,” he was quoted as saying. “Those problems disappeared when I let them go.”
Let’s discuss the context while you let the implications of that statement sink in. Bolt, a typical California tech industry startup, was founded by Breslow in 2014 and operated for a while out of his college dorm room. It rose into the ranks of tech-industry’s “unicorns”―privately held startups with a notional value above $1 billion―and embraced all the habits that made tech industry employees resemble an unusually coddled aristocracy: a four-day workweek, unlimited personal time off, extravagant creature comforts at the office, and all the rest of it.
Breslow stepped down in 2022 after the company’s paper value dropped below the $1 billion mark, but was brought back as CEO last year to save the company from cratering. He promptly started cutting extravagances and laying people off. His rationale for the layoffs was telling. “There’s a sense of entitlement that had festered across the company, and people who felt empowered, felt entitled―but weren’t actually working hard,” he said, “and that was the number-one thing I had to battle. Ultimately, most of those people just had to be let go.”
Read that last quotation over again. There’s the call of the bugles ringing out over the battlefield, announcing the end of an era.
To make sense of what’s going on, it’s going to be necessary to talk about social classes, and that requires confronting the most fashionable and least useful theory of social class in circulation these days, the one that’s associated with the name and legacy of Karl Marx. Marx didn’t invent the idea of analyzing social conflicts using class as a framing device. That was introduced into modern thought by Giambattista Vico, who wrote a century and a half before Marx’s time, and Vico got it from ancient Greek historians such as Polybius.
The Greeks had good reason to think in class terms, since bitter political struggles between aristocratic and populist factions were familiar events in the city-states of ancient Greece. The same analysis can be useful in other contexts. The problem with Marx’s approach to class conflict is that he put a rigid teleological spin on it―that is, he insisted that class struggle has to follow a preordained course from the invention of private property straight through to the supposedly inevitable revolution of the proletariat. With that one simple trick he turned what might have been a thoughtful analysis of social conflicts into a pseudosecular apocalyptic mythology responsible for some of the worst human rights abuses of modern times.
When I started work on the analysis of American class conflict that ended up in my book The King in Orange, for that reason among others, I discarded the entire structure of Marxist class analysis and used a different frame. The question I used was simple enough: how do different groups in today’s America get their income? It so happens that if you look at American society that way, it sorts itself out readily into four broad classes, which we can call the investment class, the salary class, the wage class, and the welfare class. These mean exactly what they sound like. People in the investment class get most of their income from returns on investment. People in the salary class get most of theirs from a monthly salary with benefits. People in the wage class get most of theirs from an hourly wage with no benefits, and people in the welfare class get most of what income comes their way from welfare programs. People in each of these classes have many interests in common, and those typically conflict with the interests of people in the other classes.
I’ve had enough people try to challenge this last point that it’s probably necessary to give some examples. Consider housing prices; when those rise, the salary class benefits, since homeowners gain equity, but the wage class suffers, because rents take more of their income. Consider wages: when those drop, the salary class benefits from a lower cost of living, and from higher corporate profits boosting their pension funds, but the wage class suffers. This is why unrestricted illegal immigration, which boosts real estate prices but drives down wages, is loved by the salary class but hated by the wage class. Of course people in the salary class love to insist that they’re being compassionate and the wage class is a bunch of racists, but dressing up naked financial interests in moralizing drag is a common habit of theirs, as it is of most educated classes.
It’s crucial to keep history in mind, too, because classes are anything but permanent. In 1826, for example, the class structure in the United States was completely different. There was a wage class of modest size, and an investment class, though it was very small. The welfare class didn’t exist yet, since the poor were usually just left to starve, and the salary class barely existed as a microclass of hangers-on to the rich and powerful. Far larger than any of these was the proprietor class―the class whose wealth came from their own labor at farms or businesses they owned. At the top, though its power was already waning, was the landowning aristocracy: plantation owners in the South and their equivalents elsewhere, who back in colonial times had imported the European model of big landed estates worked by tenant farmers or slaves. Then there was the slave class, especially but not only in the South. It was a very different society.
It was also poised on the brink of convulsive change. The great crisis of the 1860s broke the power of the aristocracy and catapulted the investment class to power. The slave class was officially abolished, though in much of the country it simply morphed into a sharecropper class and took generations more to be absorbed into the lower end of the wage class. Around the same time, the salary class began its rise to power, as the rising investment class found it needed a growing white-collar sector in the burgeoning industrial economy it created.
That’s roughly where things stood in Europe, too, when Marx wrote. To give him credit, he saw the core flaw in the economy of his time: for reasons ranging from structural issues to raw greed, the investment class paid the other classes as little as it could get away with, and this meant that people in industrial societies could never afford to consume as much as industry produced. The overproduction that followed drove a boom-bust cycle that made 19th century economic history a moonscape of stock market crashes and bitter depressions. Marx was right, too, that something had to give, but he was dead wrong about what would happen when the breaking point arrived.
What happened in place of Marx’s imaginary revolution of the proletariat was a seizure of power by the salary class. This replaced the unfettered capitalism of the late 19th and early 20th century with the unchecked bureaucracy of the late 20th and early 21st centuries. Roosevelt’s New Deal was the vehicle for that seizure of power here in the US, but events along the same lines took place throughout the industrial world. In the usual way, the new bosses fixed some of the problems the old bosses had never gotten around to addressing, and the rest of the population benefited for a while. As usual, though, the new system had its own inescapable problems.
NYU professor Clay Shirky has done the best job explaining the critical issue. His Shirky Principle runs as follows: “Institutions will try to preserve the problem to which they are the solution.” They do this, as Shirky explained and I discussed in a post a while back, because keeping those problems in existence justifies the continued funding of the institutions themselves and the more than ample salaries of their employees. Consider, just for example, the billions upon billions of dollars spent on homelessness, climate change, or any of the other fashionable causes of the salary class, which somehow never manage to do anything about those problems.
That’s not an accident; the point of those expenditures is to pay for ever-inflating salary class incomes, and solving the problems would interfere with that primary purpose. What Shirky doesn’t seem to have realized, and Ryan Breslow learned from experience, is that bureaucracies also can, and do, invent problems to justify even more salary class hires and even higher expenditures. Nor do bureaucrats have any incentive to solve the problems they created—quite the contrary.
It’s an immense issue. Even in a society facing few challenges, a system that gobbles up ever more funding while generating a steady stream of fashionable faux-problems so it can pretend to try to solve them, and pay themselves lavishly for making the effort, is hard to justify. In a society like ours, which is already cracking under the growing pressure of genuine problems, ignoring those serious issues so that bureaucrats can obsess about, and not solve, problems that they themselves have dreamed up, while soaking up resources that might be used to solve the rising tide of real challenges, is the kind of error that ends civilizations.
What’s more, these fatally counterproductive habits didn’t stay locked away in the government bureaucracies that originally spawned them. The revolving-door system by which salary class personnel move freely from government to corporate to nonprofit bureaucracies, and the way that access to the salary class ended up being restricted to graduates of a shared system of higher education, guaranteed the spread of these same habits all through the institutions that the salary class came to dominate. These, in turn, drove the rise of a culture of institutionalized irresponsibility in which the core rule was that nobody in the salary class, especially in its higher reaches, must ever have to face the consequences of their own failures.
That rule was never ironclad, of course. The vicious internal politics spawned by bureaucracies made it convenient on occasion for the winners in some conflict to force the defeated party to take responsibility for some crass stupidity or other. Only in the last few decades, however, has that rule really started to slip, and when that happened the reasons for punishment were restricted to a narrow range of violations of salary-class cultural norms. Punishing anyone for failing to do a job adequately was still mostly off the table, and “failing upwards” remained standard.
It’s important to realize what was going on, not least because the phenomenon I have in mind here―the rise of cancel culture―has been misunderstood by its opponents as thoroughly as it has been misstated by its partisans. The specific bits of wrongthink that were brandished about as career-ending weapons in the era of cancel culture were never the point of the exercise. The problem was that the endless metastatic expansion of public, corporate, and nonprofit bureaucracies was running into its own limits to growth.
This happened because the US global hegemony that made bureaucratic overgrowth temporarily feasible was breaking down, and the unbalanced patterns of exchange that kept an outsized share of the world’s wealth flowing into the United States were unraveling as well. A system that left real problems unsolved, and manufactured an endless supply of ersatz problems to justify its metastatic expansion, was facing increasingly harsh blowback from the consequences of all those unsolved problems, and the mismatch between ever-inflating budgets and ever-decreasing results became a massive political liability as well. As these factors started to bite, members of the salary class began turning on one another, trying to make sure that in the inevitable game of musical chairs, they wouldn’t be the ones left without a place to sit. Cancel culture was one of the ways this expressed itself in real time.
All this is the unspoken background to the crisis of our time. The US, and the Western industrial nations more generally, have a fantastically overinflated and even more spectacularly ineffectual salary class, presiding over a system that vacuums up a huge share of each nation’s wealth and accomplishes very little with it―other, that is, than providing an ever-growing mass of salary class employees with their income, their benefits, their identities, and an assortment of perks ranging from in-office yoga studios to opportunities for corruption, sometimes petty, sometimes on a scale that would make African dictators drool with envy. It’s an unsupportable situation, and Ryan Breslow’s comment is a straw in the wind, alerting the prescient to a gathering storm.
This, in turn, is where AI comes into the picture.
As I’ve noted on this blog more than once already, the term “AI” is a misnomer, because the programs in question aren’t intelligent. All they do is generate statistically likely sequences of words, pixels, or computer commands in response to prompts. That doesn’t mean that these programs are useless; they’re already taking over a vast amount of brute-force calculation, prediction, text generation, and more. It just means they won’t live up to the most enthusiastic predictions made by their cheerleaders.
The cheerleaders are essential, though, because AI provides a perfect smokescreen for the wrenching economic change now under way: the mass purging of unproductive salary class positions from the whole landscape of government, corporate, and nonprofit bureaucracies. You can sell Americans on anything, no matter how wretchedly unsatisfactory it is, by labeling it as progress. That’s what’s being done now, with AI being used as a justification for firing useless workers, deleting unnecessary departments, cutting office staff down to scales that actually make sense, and shutting down the classroom-to-cubicle pipeline that once poured new graduates into salary class jobs. We can expect that process to accelerate dramatically in the years ahead.
That’s not the only force pushing the same way. As the federal government slashes expenditures to prepare for the inevitable default on our national debt, a whole landscape of jobs paid for directly and indirectly by reckless government borrowing is going away forever. This is being pitched by the media as a matter of partisan politics, but that analysis misses the most important part of what’s happening. It’s not partisan conflict but class conflict that’s driving this change.
What we’re seeing, to spell things out even more clearly, is the onset of a dramatic decline in the size, wealth, and influence of the salary class. This will involve an intensification of the ongoing game of musical chairs, as members of the salary class compete ever more savagely for a dwindling number of jobs. The music for the game is being provided by a resurgent investment class, with the current crop of Silicon Valley godzillionaires leading the band, but it’s being supported at the voting booth and elsewhere by the wage class, many members of which see a genuine opportunity to further their own interests at the expense of their soi-disant betters.
The reaction of the salary class to all this is worth watching. It’s been entertaining, if nothing else, to watch them begin to notice that the people they’ve spent decades mocking and reviling as ignorant bigoted hicks genuinely resent that treatment. I haven’t seen many take the next step and realize that the interests of their class and the wage class really are opposed, and that many members of the wage class realize this. Quite the contrary, most salary class people reject that idea with quite some heat, and insist that if the wage class knew what was best for it, it would ally with the salary class against the investment class, as it did back in the 1930s.
That train left the station a long time ago, however. Most people in the wage class know all too well that the only result of such an alliance would be to restore the salary class to its former privileges, with no benefits worth mentioning going to the wage class. What’s more, the salary class has lied to the wage class so often that the thought of trusting “the suits”―yes, salary class readers, that’s what many people in the wage class call you―gets bitter laughter these days. Readers who were around in the 1980s will remember how the suits insisted that the factory jobs then being eliminated would surely be replaced by high-paying service jobs; those who weren’t sound asleep through the Obama years will recall how another round of suits, headed by Obama himself, insisted that everyone would be able to keep their doctors and plans, and see their health insurance costs go down, once Obamacare was passed. Those are only two of a long, long list of whoppers inflicted on the wage class, and yes, they remember such things.
Those of my readers who recall the demolition of the American wage class in the 1980s, in fact, have already had a tolerably good preview of what’s on its way as salary class members discover to their horror that it’s their turn on the chopping block. It’s not just that millions of people will find their current jobs and livelihoods going away forever, though that’s traumatic enough. It’s also that an entire world of businesses, organizations, movements, and social habits supported by those livelihoods is also going away. Of course most salary class employees make much more than wage class people ever did, and so the knock-on impact will be on a correspondingly greater scale. It’s going to get ugly, and millions of people are going to get hurt, just as millions in the wage class got hurt when the US industrial economy got offshored in the 1980s.
Still, it’s not as though we have other options. The decline of US global hegemony means the end of a scheme whereby, until very recently, the 5% of humanity that lives in the United States got to enjoy a quarter of the world’s energy supplies and industrial products and a third of its raw materials. That vast extravagance, and the equally huge but temporary imbalances in patterns of global wealth flows and distributions that made it possible, underlie everything that most Americans think of as normal lifestyles.
The news next to nobody wants to hear is that those lifestyles are going away forever. All of us will have to get used to living much more frugally in the years ahead. Yes, this applies to our kleptocratic upper class too―the supposed net worth of the wealthy these days is mostly a matter of financial hallucinations propped up by a baroque system of absurd overvaluations of notional assets that will not stand even the feeblest price discovery. It’s a long road down for all of us, and those who think they are perched in the catbird’s seat just now face the unwelcome realization that they have further to fall than most.
What makes this state of affairs all the more challenging is that the factors driving the descent aren’t limited to the ones discussed in this post. Deep down, under the surface churn of politics and economics, is a slow but potent undertow that most people have been desperately trying not to talk about for more than half a century now: the dependence of the entire global industrial system on relentlessly finite material realities. We’ll pick up that theme in an upcoming post.
Source: Ecosophia
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