The Capitalist Crisis: Black Swans on the Horizon

The Invisible Hand That Grips Us All
We hear endless discussions about innovation, economic growth, and geopolitical conflicts. Yet one powerful force driving all these phenomena remains largely unexamined in our daily discourse: capitalism.

Beyond the Façade of Democracy
Most societies today operate under either democratic or authoritarian systems, at least on paper. But is there truly democracy anywhere? What we experience is merely a simulation of "demo-crazy." In our workplaces, most bosses function as dictators. The real governing force transcending political systems is capitalism itself, far more powerful than any democratic ideal.
This crisis didn't begin in recently; it had been brewing for centuries.
Capitalism isn't simply markets, competition, or innovation, it's a specific economic arrangement where production for profit remains in private hands. This system has transformed our planet, lifted billions from poverty, and created unprecedented technological wonders. Yet today, it stands at a precipice of its own making, with crises converging at an alarming rate.
The Great Inversion: How Markets Became Masters
For most of human history, markets served communities. People created goods, exchanged them for money, and used that money to buy different goods, what Marx described as the traditional market formula: product → money → different product. Capitalism flipped this equation: money → product → more money. This subtle inversion changed everything. The purpose wasn't to create useful things, but to generate profit above all else.
During the post-war boom (1945-1973), this system appeared to work magnificently. Profits and wages rose simultaneously, creating a "golden age" when the working class became a consuming class. For perhaps the first time in history, ordinary people could afford televisions, cars, and vacations. Capitalism seemed to have fulfilled its promise of prosperity for all.
Then came the 1973 oil crisis. Western markets crashed, euphoria vanished, and profits plummeted. Companies faced an existential choice: bankruptcy or reinvention. What followed was not a rational correction but a fundamental restructuring of global capitalism that has led directly to our current predicament.
The European Union's Complex Origins
Few realize that while the European Union had deep political roots dating back to post-World War II reconciliation efforts, corporate interests played a significant role in shaping its final form. In 1983, major European corporations met in Paris at the initiative of Volvo CEO Pehr Gustaf Gyllenhammar to form the European Round Table of Industrialists (ERT). Rather than competing, these industrial leaders chose to collaborate, creating a vision for a unified market with standardized regulations.
This corporate vision significantly influenced European integration, providing momentum for the 1992 Maastricht Treaty that established the European Union. While not solely responsible for the EU's creation, the ERT's lobbying demonstrated how capitalism quietly shapes political structures while maintaining the façade of purely democratic processes.
The Three Fatal Strategies
As profits faltered in the 1970s, corporations deployed three strategies that would fundamentally alter the global economy:
1. Wage Suppression
The attack on labor began in earnest. Companies systematically undermined unions and workers' bargaining power. Reagan and Thatcher provided political muscle, but the strategy was economic: decouple wages from productivity to boost profits. The results are stark: worker productivity grew 61.8% from 1979-2020, while wages increased only 17.5%. This wasn't an accident, it was policy.
You experience this strategy directly when your raises fail to match inflation, when full-time positions disappear in favor of "gig work," when benefits vanish while executive compensation soars. The middle class, the economic engine that drives consumer spending, began its long decline.
2. Financialization
After the 1929 crash, financial regulations had constrained Wall Street's riskiest behaviors. By the 1980s, these safeguards were dismantled one by one. The most critical blow came in 1999, when the Glass-Steagall Act, which had separated investment banking from commercial banking since 1933 was repealed through the Gramm-Leach-Bliley Act.
This deregulation unleashed a new form of capitalism: money → more money, bypassing production entirely. Banks could now use your savings deposits for speculative investments. Combined with exotic financial instruments like mortgage-backed securities and credit default swaps, this created an explosive cocktail of risk that would detonate in 2008.
By 2007, the financial sector generated about 30% of all American corporate profits while employing only 5% of private-sector workers, a stunning divergence from productive economic activity.
3. Privatization
As economic instability grew, corporations identified a new profit frontier: essential services. During downturns, luxury goods suffer while demand for water, electricity, healthcare, education, and transportation remains stable. These sectors, traditionally state-owned, offered reliable profits regardless of economic conditions.
The privatization wave transferred these public assets to corporate control often with disastrous consequences for accessibility and affordability. From water systems to education, what were once public rights became market commodities.
The Fundamental Contradiction
These three strategies created an insurmountable problem: How could people with stagnant wages continue consuming the products capitalism needed to sell? The "solution" was debt, massive, unsustainable household debt.
Financial institutions encouraged borrowing with initially low interest rates that often rose unexpectedly over time. American workers found themselves crushed between two capitalist forces: employers who wouldn't pay living wages and banks promoting dangerous levels of debt. When the bubble inevitably burst in 2008, taxpayers not those who engineered the crisis paid the price.
The middle class declined from 61% of US households in 1971 to just 50% by 2021. This wasn't just a social tragedy—it undermined capitalism's own foundation. Any economist will tell you that a healthy economy requires a robust middle class. By destroying its most essential component, the system sabotaged itself.
The AI Black Swan Lurking in Plain Sight
This brings us to Nassim Taleb's powerful concept of "Black Swan events" highly improbable occurrences with massive consequences that, in retrospect, we convince ourselves were predictable. Taleb argues that humans are wired to create narratives that make the past seem orderly and predictable, even when it wasn't. We constantly underestimate uncertainty and extreme events.
The 2008 financial crisis was a textbook Black Swan, a seemingly impossible collapse that experts failed to predict. Rather than learn from this catastrophe, we doubled down on the same strategies, creating an even more vulnerable system.
Today, we face a new potential Black Swan of unprecedented scale: the convergence of AI technology with unrestrained capitalism. What makes this a true Black Swan isn't the technology itself, which is developing in plain view, but the unpredictable cascading effects when profit-driven AI collides with our ecological, social, and economic systems.
The Three E's: AI's Hidden Costs Behind the Profit Mirage
While AI companies promise limitless growth and unprecedented profits to investors, the true costs remain largely invisible on balance sheets. These externalized costs create the conditions for a genuine Black Swan event, one where damage accumulates silently until catastrophic thresholds are crossed. The impacts fall across "the three E's":
Economy:
AI venture capitalists and tech companies promote automation as pure efficiency, a path to greater productivity and profit. What they don't account for is the unpredictable societal cost when jobs disappear faster than new ones emerge. A 2013 Oxford study estimated that 47% of US jobs face high risk of automation.
The Black Swan isn't automation itself; it's the potential collapse of consumer purchasing power when a critical mass of middle-class jobs vanishes without replacement. Capitalism faces a fundamental contradiction: it needs consumers with disposable income, yet AI-driven automation predominantly benefits capital owners while eliminating the very jobs that create consumers. This isn't factored into quarterly earnings reports or growth projections.
Ecology:
While tech CEOs tout AI as environmentally friendly "digital" technology, the physical reality is starkly different. The ecological footprint of massive data centers remains largely hidden from public view. According to Bloomberg's 2025 investigation, data centers consumed over 1.6 billion gallons of water in just three U.S. counties during a single year, with AI driving unprecedented expansion. In Mesa, Arizona, Google's data center consumes enough water to supply 1,500 average homes annually while the region faces severe drought conditions.
The Black Swan lurks in the ecological tipping points we approach: water tables depleted beyond recovery, regional aquifers exhausted for tech profits, and communities forced to compete with tech giants for basic resources. The water-intensive cooling systems required by high-performance AI computing create localized resource crises that don't appear in corporate sustainability reports. This resource extraction happens quietly, invisible to consumers who see only sleek interfaces and "cloud" services.
Energy:
AI companies promote energy efficiency in their marketing while obscuring their massive power requirements. According to Bloomberg's 2024 analysis, training a modern AI model like GPT-4 consumes as much electricity as approximately 22 American homes use in an entire year. Running a single query on a large language model uses as much energy as fully charging your smartphone.
The Black Swan here is the collision between AI's exponential energy hunger and our limited energy infrastructure. Bloomberg reports that data centers already consume 4% of all U.S. electricity, more than many major industries, and that figure is projected to reach 9% by 2030 due to AI expansion. In regions like Northern Virginia, data center concentration has already sparked grid constraints and delayed housing development.
What happens when the next generation of models requires energy that simply isn't available? Tech companies are already securing power contracts that exceed the capacity of entire regional grids, while the energy costs remain externalized rather than factored into AI development decisions.
The AI Black Swan: Profit-Seeking Creating Unforeseen Destruction
What makes AI development a true Black Swan risk isn't the technology itself but how capitalism's profit imperative blinds us to accumulating harms until they reach catastrophic levels. The financial incentives driving AI development systematically ignore externalities that don't appear on quarterly reports.
Consider these hidden dimensions:
Cultural Dissolution
AI systems trained on massive datasets strip human creativity from its context, repackaging it as seemingly unlimited "content." This commodification of culture represents an unprecedented extraction of human creative value, one that happens invisibly, without compensation to creators. The Black Swan lurks in what happens when creative professions collapse, when art becomes mere prompts and outputs, when cultural production is divorced from lived human experience.
Knowledge Degradation
Today's AI models are trained on high-quality human knowledge, books, articles, code, and research papers created through careful human judgment. Yet as AI-generated content floods the internet, future models will increasingly train on synthetic material of questionable quality. We face potential cascading degradation as each generation of AI learns from increasingly synthetic, detached information. This represents an educational ecosystem collapse that no profit-seeking entity has incentive to prevent.
Social Cohesion
Perhaps most dangerously, AI amplifies existing social divisions through engagement-optimizing algorithms. These systems exploit our psychological vulnerabilities to maximize screen time and data extraction. The unforeseen consequences emerge not in the technology but in our social fabric, rising extremism, declining trust in institutions, and the transformation of citizens into monetizable attention units.
The true Black Swan isn't visible in economic projections or corporate roadmaps. It's hidden in the accumulated damage to our resources, communities, and democratic institutions as AI deployment races ahead guided solely by profit maximization.
Reclaiming Our Future: The Imperative of Ethical AI Governance
We still have time to avert these Black Swan scenarios. Unlike truly unpredictable events, these dangers are visible if we choose to see them. The path forward requires a fundamental shift in how we govern emerging technologies, particularly AI systems that consume vast resources while reshaping our economic and social landscape.
Ethical AI governance must become our central priority. This isn't about stifling innovation; it's about ensuring that technological advancement serves humanity rather than extracting from it. Such governance begins with acknowledging the full ecological footprint of AI systems. Every data center must undergo rigorous environmental impact assessments that account for water withdrawal from local watersheds, energy consumption relative to regional capacity, and heat generation affecting surrounding communities. The days of tech companies depleting aquifers while drought-stricken communities suffer must end.
Beyond ecological accounting, we need governance frameworks that recognize AI's broader societal impacts. When systems automate work that once provided livelihoods, we cannot simply celebrate efficiency while ignoring displacement. Meaningful AI governance requires transparent assessment of labor impacts, with transition pathways developed alongside automation strategies. The externalized human costs must become visible on balance sheets and in boardrooms.
Perhaps most importantly, ethical AI governance demands democratic oversight. When algorithms shape information flow, influence elections, manage critical infrastructure, and determine resource allocation, their development cannot remain solely in corporate hands pursuing quarterly profits. We need representative governance bodies with actual authority, not merely advisory ethics boards that rubber-stamp decisions after they're made.
This governance must also extend to the raw materials of AI: our collective cultural heritage and personal data. When companies extract billions of creative works or personal expressions without compensation to build commercial systems, they engage in a form of digital enclosure of the commons. Ethical AI requires proper attribution and compensation to the creators whose work makes these systems possible.
True change requires shifting from an extractive mindset to a stewardship approach. Technology governance isn't about choosing between innovation and responsibility, it's about ensuring that AI development internalizes its true costs rather than externalizing them onto communities, workers, and ecosystems that lack the power to resist. It means rejecting the false promise that unregulated market forces will somehow optimize AI for human flourishing rather than profit maximization.
The moment for implementing robust AI governance is now, before entrenched interests make change impossible. The technology's trajectory remains unwritten. We can choose a path where AI systems augment human capability while respecting ecological limits, or we can continue the current course where the pursuit of technological capital accelerates environmental degradation and social disintegration.
This isn't a choice between progress and stagnation. It's a choice between mindful development that benefits humanity broadly and extractive development that enriches a few whiles undermining our collective future. The imperative for ethical AI governance couldn't be clearer: our water, our energy, our communities, and our future depend on it.

I highly recommend these 2 article power & water by Leonardo Nicoletti