The Disruptive Forces Transforming the Economy
There are three fundamental forces disrupting the conventional order, and everyone with their eyes open sees them at work every day:
1. Essential resources are becoming more expensive.
2. The system of expanding credit/debt to fund more consumption (i.e. “growth”) has reached marginal returns and is failing.
3. Networked software, automation and robotics are reducing the need for human labor on a global scale.
As a result of these three structural forces, economic instability is not going to go away any time soon. Technology leapfrogs the obsolete and inefficient; no wonder conventional sectors and the market for traditional 9-to-5 jobs are both stagnating.
The realization that ever-expanding debt and consumption are unsustainable has given rise to a new understanding of the economy called Degrowth (French: décroissance, Spanish: decrecimiento, Italian: decrescita).
From the perspective of sustainable prosperity, growth based on ever-expanding debt-based consumption is the road to ruin.
This shift from debt-based consumption to a more productive sustainability is bringing profound changes to the nature of work itself and social arrangements in the workplace.
Though we can’t foresee all the ramifications of networked software, automation and robotics, we can predict one aspect of this systemic disruption: technology will disrupt the most expensive, least efficient sectors of the economy because that’s where the greatest reductions in cost can be reaped.
In our economy, these are healthcare, education, government and national defense, all traditionally viewed as stable sectors with guaranteed job security. That is changing, as the soaring costs of these sectors now exceed the economy’s ability to fund them. If an economy expands by 2% each year and healthcare costs rise by 5% each year, eventually healthcare runs out of oxygen—there isn’t enough income generated by the economy to fund its continued expansion.
Few “experts”—academics, pundits and advisors—have accepted the reality of these forces or thought through the interacting consequences. As a result, we’re on our own in setting a course and navigating the inevitable storms ahead as the old system lurches from crisis to crisis, weakening further as every politically expedient reform fails to address these structural realities.
Outmoded Career Advice Is the Norm
Though the transformative power of these three forces is self-evident, remarkably, conventional career counseling is still stuck in the past, offering three basic bits of advice:
1. Choose a career that aligns with your core talents and interests.
2. Get as many credentials as you can -- degrees, certifications, etc. -- because the gatekeepers who do the hiring require them.
3. Since the goal is secure employment, try to get a job in the government or a big corporation.
In my view, the conventional advice has it all backward. What worked in the past is no longer working because the economy and the nature of work are both being disrupted by forces that cannot be controlled by those threatened by these fundamental changes.
In the conventional view, a college degree prepares one to enter the workforce. This is no longer true, as higher education has largely failed to keep pace with technology and a fast-changing economy.
As for adding more credentials to keep ahead of the pack—degree inflation dooms this strategy for all but the few who manage to secure multiple degrees from elite universities. And even this is no guarantee of lifetime security for everyone, as the number of open slots in gatekeeper-dominated institutions is much smaller than the rapidly expanding pool of over-credentialed applicants.
What matters more than credentials is the ability to keep learning new skills over one’s entire productive life.
And while it’s certainly solid advice to align one’s work with one’s talents and interests, even this advice misses the key dynamics of the emerging economy—which I define as the parts of the economy that are thriving on innovation rather than depending on cheap credit and asset bubbles for their survival.
The thriving parts of the economy rely less on gatekeepers and credentials and more on skills, flexibility, professionalism, mastery and networks of collaboration.
In the emerging economy, security arises not from institutional promises but from a diversity of skills and income streams and a flourishing network of other trustworthy, productive people.
As a result, the goal for jobseekers isn’t just to identify one’s talents and interests but to acquire a diverse suite of flexible skills and a network that enables you to put these skills to good use.
In this view, work isn’t what you do between 9 and 5: it’s a lifestyle informed by a flexible, open perspective and guided by entrepreneurial values.
In terms of values, conventional career advice is based on the idea that happiness and fulfillment require institutional security and ever more consumption. But the more we learn about happiness and fulfillment, the more apparent it becomes that family, community, meaningful work and networks of trustworthy collaborators and friends are the sources of happiness and fulfillment, not the accumulation of institutional promises and more stuff, which turns out to have little impact on happiness or fulfillment.
The Dynamics of Economic Transformation
Capitalism and technology are both disruptive by their very nature. That mature industries shrink or disappear is not the fault of one policy or another; that process of creative destruction (a term coined by economist Joseph Schumpeter) is the heart of capitalism and technology.
Many have attempted to keep technology safely locked up so it can’t creatively destroy their regime or industry. But technology is a genie that cannot be kept in the bottle. To quote Bob Dylan: those not busy being born are busy dying. Every nation or industry that tries to protect itself from technological transformation either stagnates or fails.
One aspect of capitalism that disturbs many people is the mobile nature of capital—that capital will flow to the highest return, regardless of national borders or religious, national and ideological loyalties.
Though many attribute this mobility to base greed, capital that doesn’t seek to expand will fall victim to creative destruction: the only way innovation and productive investment can occur is if less productive investments and quasi-monopolies are dismantled.
This is true not just of financial capital (cash), but of human and social capital—what author Peter Drucker called the new means of production in the knowledge-based economy.
This will have implications for every worker seeking to escape the corporate rat-race or build a career.
One feature of capitalism that is rarely noted is the premium placed on cooperation. The Darwinian aspects of competition are widely accepted (and rued) as capitalism’s dominant force, but cooperation is just as intrinsic to capitalism as competition. Subcontractors must cooperate to assemble a product, suppliers must cooperate to deliver the various components, distributors must cooperate to get the products to retail outlets, employees and managers must cooperate to reach the goals of the organization, and local governments and communities must cooperate with enterprises to sustain the local economy.
Darwin’s understanding of natural selection is often misapplied. In its basic form, natural selection simply means that the world is constantly changing, and organisms must adapt or they will expire. This dynamic is scale-invariant, meaning that it’s true for individuals, enterprises, governments, cultures and economies. Darwin wrote: "It is not the strongest of the species that survives, or the most intelligent, but the ones most adaptable to change."
These new ideas, techniques and processes trigger changes in society and the economy that are difficult to predict. The key survival trait is not so much the ability to guess the future correctly but to remain flexible and adaptive.
Ideas, techniques and processes which are better and more productive than previous versions will spread quickly; those who refuse to adapt them will be overtaken by those who do.
This creates a dilemma: we want more prosperity and wider opportunities for self-cultivation (personal fulfillment), yet we don’t want our security to be disrupted.
But we cannot have it both ways. Those who attempt to preserve the current order while reaping the gains of free markets find their security dissolving before their eyes as unintended consequences of technological and social innovations disrupt their sources of wealth and mechanisms of control.
The great irony of free-market capitalism is that the only way to establish an enduring security is to embrace innovation and adaptation, the very processes that generate short-term insecurity. Attempting to guarantee security leads to risk being distributed within the system. When the accumulated risk manifests, the system collapses.
Why This Matters
Why do these characteristics of free-market capitalism matter to jobseekers?
Opportunity is not randomly distributed; it results from what I call the infrastructure of opportunity. If there is no mobility of labor and capital, no transparent markets for labor and capital, no creative destruction of corrupt, obsolete, inefficient systems, weak rule of law, weak property rights, no self-organizing (i.e. transparent, decentralized) access to credit, limited means of cooperation, little room for innovation and no understanding of the essential role of risk in adaptation, opportunities for successful adaptation (what we might call prosperity) are intrinsically scarce. Virtually all bets made in this environment will be lost because there is no fertile ground—it’s a desert for opportunity.