Why does capitalism make people rich?

Originally answered on Quora January 3, 2024

Globalism allows capitalists to reduce labor costs, which is usually the largest overhead costs, by (1) exploiting cheaper labor in developing countries where COLA is much lower and (2) through technological innovations that reduce the need for labor and allow for production, marketing and distribution on larger economies scale to ever larger consumer bases. While global capitalism, particularly on the manufacturing side, still seeks cheaper labor in the developing world and does have a sordid history of abusing unorganized workers the actual MO of capitalism from the very beginning is not to pay lower wages elsewhere in the world, but to make labor redundant in the long run; cheaper labor is only sought out as a stopgap for the development of labor reducing tech.

During the industrial revolution it was replacing human and animal toil with machines especially in the mechanization of agriculture where most of humanity had made their livelihood for several thousand years. Between the American revolution and the turn of the 20th century the proportion of the U.S. adult population employed in agriculture fell from 90% to about 40% and today it has stagnated around 1-2% all the while food has been produced on ever larger economies of scale to meet the needs of larger populations. Manufacturing was the next big industry to be automated. In the 1950’s the proportion of the U.S. adult population employed in manufacturing peaked at about 30%; today it hovers around 8–9% and not all of that replacement occurred as a result of offshoring. Much of it is simply replacing human toil on assembly lines with robots. Going from this:

To this:

Will inevitably result in a lower demand for labor in that industry.

We are now on the precipice of the “4th industrial revolution” as the Davos clique calls it, where labor will be made redundant by automation and artificial intelligence in manufacturing, tech and service sector that employs the majority of the U.S. adult population as well and unlike prior industrial revolutions that were steady enough to allow for labor market adjustments the rapid rate of change will displace millions of workers from labor markets altogether perhaps making some form of BIG necessary for displaced workers to survive.