Capitalism — which is only a synonym for ‘the industrial revolution’ — or the product of widely aggregated savings — is now folding up for two highly correlated reasons.
The first is that people in the advanced countries are increasingly distrustful both of the probity of the financial sector and the competence of governments in maintaining the value of money. Because of this, people are not saving as they ‘ought’ to be saving to keep economic growth going, nor that pensions, whether private or state — both with black holes in them, actuarily speaking — are going to be worth much in future years.
Some would say that this is a temporary phenomenon due to the 2008 financial crisis and that, with care, and austerity budgets for the next 20 or 30 years then all will be well again — at least in the advanced countries.
But the other reason which makes this unlikely is that there are no more high-class status goods available to be mass produced — thus neutralising any incentives people used for hard work and hard saving. There is only one imaginable consumer good left which is not yet available and this is the family helicopter or family airplane. And the reason we can’t have those is the same reason as we can’t all have beautiful mansions in the countryside. There isn’t the space — in this case, airspace.
The investment in growth industries of today — education and health care — with a wealth of innovation to come — is not going to come from one-off investments from the aggregated savings of millions, but from individuals for the benefit of one’s children or oneself. The post-industrial era is going to require a quite different pattern of investment and financial circulation. the institutions of commercial banks, investment banks, and central banks — as we know them today — will probably not be part of it. Maybe the unregulated ‘shadow banks’, already turning over more money than the regulated ones, are already taking over.