The Information Society and the Welfare State

I’m reading The Information Society and the Welfare State: the Finnish Model by Manuel Castells and Pekka Himanen. One of the sections that caught my attention follows:

The global trend is for the informational economy to connect to its network those who are valuable to it (and to add further value to them) but to disconnect those who are valueless (and thus further weaken their chance of acquiring any value). This results in increasing social injustice in the form of income inequality, polarisation, poverty, and social exclusion. Those individuals who are least valuable to the networks of informational capital are left on their own, in a position from which it is very difficult for them to change their fate(Castells, 2002).

This relates to an idea that I’ve been trying to express for many years about capital accumulation and injustice. For the excluded, there is not a great deal of return on investment (of labor) and 100% of the return is needed for survival (no accumulation). Part of this equation is the “disconnect from the network” resulting in low returns. The other result of “disconnect” is the impossibility of capital accumulation due to expense: being poor is expensive.

On the other end of the spectrum, once critical mass has been reached, capital generates capital rather than work. Likewise, as this investment capital increases, a larger share of it is accumulated rather than required for personal need: capital accumulation increases at an increasing rate.

How does the “Finnish model” escape this polarization? Certainly the welfare state plays a partial role by buffering the transitions into the extremes. The basic needs of the valueless are subsidized and the accumulating capital of the valuable is taxed. Perhaps by buffering the transition, the middle class are prevented from “slipping” into the extremes?