by imtringued | 2025-09-11 08:18:57+00:00
>I often think about why this is happening now without invoking the default "evil rich people" hypothesis. I think it's because world population increased so fast in the last decades that there is simply not enough resources, land, high paying jobs for everyone to achieve a comfortable life.

You got it exactly backwards. Population growth meant lots of children that consume but don't produce anything. This generates demand for workers who produce but don't consume (e.g. parents). Now that population growth has stopped, there are no more new consumers and the existing consumers are saturating, because they already have everything they could possibly want, with the exception of high priced things like housing.

Rising house prices increase the obligation to work for money, but they don't generate demand for more work. This leads to demand saturation.

Rich people do not generate demand, because they invest their surplus only when they expect to obtain an even greater surplus, which means they increase supply, which leads to even faster market saturation. You can't invest your way out of saturation unless you are okay with negative returns.

Communism is wrong, because its appeal lies in the fact that people hate their bosses. It literally tells you employment is the problem even though there have been historical periods after wars where markets were not saturated and the demand for labor was high. Employment was objectively good for workers during those times.

To this day communists do not have a theory that explains why there is a structural demand deficit for labor. The obvious answer is the one I laid out above. There are people who provide more labor hours to the market than they consume labor hours from the market, leading to an accumulation of labor hour credits (some people call it money) and the corresponding labor hour debit (some people call it debt). The communists would object to this by invoking their reserve army of labor theory, but that doesn't actually explain anything, it just shuffles around who gets hired. The argument is that competition between workers leads to employers only hiring the most productive employees that are necessary to supply the total demand for labor, but if the total demand for labor is equivalent to the supply of labor, there wouldn't be a reserve army in the first place. A critique based on competition leading to exploitation decides who wins the game of musical chairs, but it doesn't tell us why there is a shortage of musical chairs to begin with.

Obviously, the problem is the duration difference between the labor hour credit and the debit. You can hold labor hour credits at no cost, which is a free lunch. Holding labor hour debit means paying a fee and having a deadline each month, but the true duration of the debit is equal to the credit that created it. The demand for free lunches is infinite, which artificially inflates the holding period towards infinity and since one persons credit holdings are another persons debit holdings, debit is increasing towards infinity as well. This is what allows the labor demand deficit to grow over time.

The solution to this problem is to reject neoclassical economics with its automatic assumption of equilibrium and to build institutions that encourage equilibrium formation. The truth is that it's not only communists that hate equilibrium. Capitalists hate it as well.