What we are experiencing now is reversion to the norm. The post-ww2 period was a special moment when a lot of things lined up to produce a capitalism that was relatively egalitarian, but that was the result of the USA being the only intact industrial economy left, and owning the world reserve currency, and so on. It was never going to last, and it will never happen again. We’re already bringing back sweatshops and extreme inequality.
In 1949 (just after WW2), Einstein wrote: "The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil."
Einstein was not a sociologist, but it's an indication that about "egalitarian capitalism" is not exactly true.
I think it has to be acknowledged that this quote comes from an article titled "Why Socialism?" explaining why people should be socialist. It's not exactly intended as a neutral observation.
I did say “relatively”. As in relative to when 11 year olds were mining coal.. but you’re right, in absolute terms there’s no such thing as egalitarian capitalism, and even during the period I talked about it required 90% tax rates on the super wealthy.
>We’re already bringing back sweatshops and extreme inequality.
Inequality is always going to swing back and forth. Eventually the American electorate will get so fed up with it they will vote in a party promising to do something about it.
Two alternative viewpoints I have that are radically opposed:
What if government regulations warp capitalism and give protectionism and favoritism to certain companies while excluding the rest and not allowing for the free market to work?
What if unregulated capitalism has cannibalized itself and destroyed the free market by way of big fish eating up all of the small ones and now we're left with a bunch of huge corporations with outsized power and no threat from competition?
Well, the synthesis is that capitalism is not just an economic system, and that in reality economics cannot be divorced from social and political spheres. Government regulations warping capitalism are in large part a consequence of capitalism.
Think about it, is it ever possible to orchestrate a society where money buys you media, re-election campaigns, charity and favours, without those having the most money wielding the above-mentioned elements to ensure they keep having the most money.
In other words, the social organization is a consequence of economic organization, which explains why it is impossible for a truly free market to ever exist.
It's not possible either to completely get rid of government, because the State is necessary to uphold property.
I've tought about it as well, and came to a different conclusion, which is that class divides inevitably bring violence and collapse. I think if it would be possible to engineer a society where everyone's class interests would be more or less the same we wouldn't have such issues.
This is the correct answer. Look at what happened at the end of the Wilson administration when Andrew Mellon took over as Treasury Secretary as a prime example.
> Rather, she targets ‘economism’ - a particular set of economic theories and assumptions, plus a layer of incentives we’ve built atop them. Neither updating our theories to better match reality, nor redesigning the incentive structures that underlie economic outcomes require an exit from capitalism.
While that may be true, I think the reason we got here is because Capitalism inherently incentivizes those types of theories, assumptions, and incentives. You can argue that an ethical Capitalism is possible sure, but that would require labor power and a strong state to prevent the erosion that we have seen in the last half decade.
It's not a productive word really because it almost poisons every discussion based on whether someone's broadly sympathetic to 'capitalism' or not. Even when people actually agree this can cause meaningless confusion.
What I think is very valuable within our system is markets as a tool. There's no functioning replacement yet for allocating resources through something like a market at large scale. Even socialism sympathetic economists like Oscar Lange recognised this a long time ago.
What's wrong with the status quo I think is markets as an ideology, confusing social ends or larger objectives with the outcomes markets or capital produce. There is too little coordination in society, too little forward thinking and planning at a high level. It shows in the covid pandemic into which we stumbled like fools despite knowing it would happen at some point, the way we're screwed every time a wildfire breaks out despite we know it'll happen. I think it's glorifying capitalism as a way of life rather than a tool that produces these failures.
Is such planning possible? Decentralized models work because centralized planning doesn’t.
I concur with the aims. Solving pandemics, climate change and nuclear proliferation require a different toolset than what succeeded for reducing global poverty.
It is not like decentralized planning always work better. It depends on the task. What works in my opinion is iteration, feedback and experimentation. You don’t merely dogmatically state centralized or decentralized work better. Instead you experiment, iterate and refine. You learn from others.
Can centrally planned iteration and testing work better? I’m not trying to be dogmatic - I’m trying to look for a 3rd option beyond centralized and decentralized.
Sure, research and development in bell labs was pretty good. Doubt we'd get all that stuff from random people without exotic equipment and cash. Of course they made risks of their own money, not other people's money
Centralized planning didn't work. And my assumption has always been that it was the result of a slow-to-respond system. Today we have a way to react to economic signals almost instantaneously. I think it's worth trying again in a smaller way i.e. centralized planning of the meat industry (someone smarter than me can figure out what industry is actually best to do a trial run of modern centralized planning).
You don't think meat packing is centralized? How you you think factories do their work? Where do you think subsidies come from? What does centralized mean?
Why would I want a man in Washington to guide Montana in the form of government though?
I don't think anyone denies that omniscient, well intentioned planners would be very efficient, but subjectivism and the calculation problem mean that you will never have the former, and political economy explains why you will not acheve the latter.
Spontaneously ordered systems are also better at dynamic adaptation to exogenous changes (such as technological ones).
How can political economy explain away something that's already succeeded? It's how Singapore moved from the third world to first, in the words of LKY, how Taiwan and South Korea got rich, how China has dragged people out of poverty, arguably also how the US navigated a huge portion of the cold war, by strategic thinking and determining clear goals, and then leaving the how to less centralised systems to figure out.
The 40s to 70s broadly were an era in which there appeared to be a pragmatic balance between strategic planning and decentralized execution, in which markets where tools, serving national interest. It's also probably the era in which we saw more technological progress than at any other point.
Bringing up 'political economy' in this context is what produced the old saying 'Economists are the sort of people that see something work in practise and ask if it works in theory', it's exactly a symptom of the dogmatism that I think is plaguing us.
Every planned economy that has existed has used price signals by the end user in order to fix these issues. Planned economies are made to run an economy without markets, not without prices.
As long as you have an end-user price signal, subjectivism is not an issue and the calculation problem becomes a computational issue that can be solved.
But in many cases the calculation problem is smaller than the problems in a specific market.
It seems clear that a whole economy cannot be centrally controlled but that does not mean that parts of it isn’t better controlled by planned economics than be market economics.
It would be wrong to assume one size fits all.
One can also have hybrid systems. Where the value of market decisions is understood but where a central planner has some important insights which he can use to tweak a market to work better.
The term "capitalism" is not (as you appear to be implying) synonymous with "market economies". In fact they are two separate economic concepts.
There have been economic systems that had free markets (feudal lords bought and sold goods in market economies) and there were also examples of capitalist enterprises that existed without free markets (some people would argue the Soviet Union fits this description, but if you prefer a less contentious example, most capitalist countries when they are functioning under a war economy have some form of central planning).
Capitalism refers to an economic system where the way in which production is organised is through an employer-employee relationship.
I think it is also important to add that it is a system where capital plays a significant role in the economy unlike say a feudal economy where land was the most important factor in the economy.
While I realize that land is a distinct factor of production in the land-labor-capital-entrepreneurship model, in common usage I'd say land is the ultimate capital.
Capitalists exploit ownership to generate profit for themselves. Sometimes that's ownership of something they produced, like a machine or a building or a work of the mind. More often, it's something produced by labor that they exploit for profit. And sometimes it's something they didn't produce, but manage to own and profit from nonetheless, like land and natural resources.
Land can certainly be produced. It's very expensive, and quite limited, but things like the Dutch polders or Dubai's Palm Islands. Or for that matter much of San Francisco, Shenzen, and several other major cities.
Well, using capitalism to explain other issues is just a consequence of being a Materialist.
If you adhere to a materialist understanding of the world, you come to the the conclusion that most of the features of our environment (which is validated by analysis) find their roots in the material organization of our world. And the material organization we are operating in is "capitalism". Which is why it applies so much.
I think part of the confusion comes with the understanding of what capitalism is. Capitalism isn't markets, we had markets before capitalism. Capitalism is the economic organization where:
* Production is organized under private ownership
* Social relations are dominantly monetary relationships
* Labour is dominantly done for wages
* Production is done for profit
* A market system is used to structure productive relationships
* A de-facto class system which divides workers and owners
That's what capitalism is, and when people, especially academics say that something is caused by capitalism, they refer to capitalism as defined, loosely, by those elements. Capitalism is not a tool, it is a state of being. Markets are a tool, that have wonderful advantages. Markets aren't an ideology, capitalism is a group of ideologies that promote markets as much as possible. For an extreme example, in the USSR, food production was overwhelmingly mediated by markets. Was that capitalism? No, because it was not done for profits, and because production was not based on wages.
Everyone agrees that markets is an amazingly useful tool and is fit for many applications, except some which lack a good grasp of economics, or others which are deluded into abstracting economics from society and which therefore miss when they are not fit for the task. What people don't agree with is that capitalism is a system which should be perpetuated, and the two are perfectly consistent positions to hold.
I agree with your assessment of what "capitalism" means, but it's still not a productive term to use if people are constantly confused and misunderstand it. In my experience, many people understand "capitalism" to mean nothing more than "rich people wielding power", so I try to avoid using it in contexts where confusion is possible.
I can't listen to the podcast at the moment. But, along a similar theme Doughnut Economics tries to imagine adjustments that are required to traditional economic models from the 19th and 20th century that are required to keep the biosphere productive for humans.
An idea that stuck with me is that markets are powerful tools that need to be embedded into other systems but arent self regulating systems all by themselves. It seems too often in debates on big problems the argument is simply we need a market solution not how is the system designed to best utilize a market.
> It seems too often in debates on big problems the argument is simply we need a market solution not how is the system designed to best utilize a market.
"We need a market solution" is politician for private interests want to change laws so that they can expand their businesses.
While I agree, it’s kind of throwing the baby out with the bath water. Carbon taxes are also a market-based solution which aligns well with public interests, for example.
I'm not far into it yet, but this isn't the first time that I've heard this thought from Zen practitioners - that the practitioner should not blame capitalism for their problems. It makes me want to look further into Zen to see what leads people to this line of thinking.
It’s the same reason why libertarianism is so popular in Silicon Valley. Billionaires want and can afford complete freedom from the government. Including taxes, including regulations, including responsibility for the consequences of their actions. So they will seek out any teaching that (if corrupted far enough) will justify those desires and actions. But they’re just as happy to enforce all the things they hate on you, because their belief is a corruption of libertarianism. They don’t actually believe it, it’s just an excuse to not pay taxes.
Like libertarianism, SV has a way of taking exactly what they want from Zen and leaving the rest of the beliefs lying in a pile behind them. The Zen teacher Les Kaye famously said about Steve Jobs that he understood “the art, not the heart” of Zen.
If SV really cared about Zen, would we have unskippable ads? Would we have “like” buttons? Would we have auto-playing Netflix movies while you’re merely sitting still in a menu?
They don’t care about Zen. They never have. What they care about is making themselves feel better about the horribly un-Zen-like things they inflict on their audiences. Zen is just a coping mechanism to stroke their ego a little more.
For Capitalism to work properly the government needs to be be empowered, and properly able, to enforce rules that prevent any one organisation from becoming so powerful that it corrupts and undermines the whole system. We don't have that today.
Its important to prevent individual companies from doing it but its also important to prevent groups of companies and even entire industries from doing it.
The Government is empowered. We know that because they have broken up companies in the past for that reason. The issue is Congress is not willing to do it (you can ponder the why for yourself). A solution may be to throw out the politicians before destroying our whole system.
That is one of the key ideas of social democracy, the belief that different economic powers in society must be balanced. Society is viewed as being made up of different interest groups who’s interests must be balanced in a fair and civilized manner.
I agree with this if you add "properly incentivized" to that list of conditions. As of now, in the U.S., it seems like the power exists, but not the motivation, and that's at least as big a problem as the other way around.
The problem isn’t capitalism as such but the mindless worship of capitalism. The belief that more capitalism is always better than less.
In particular in America capitalism has become a holy cow. If you suggest ideas from socialism you are labeled a dangerous radical and taken off the air.
The so called “liberal media” are bastions of capitalism. One can only look at the scathing criticism and scare mongering about Bernie Sanders.
When it comes to capitalism there is unfortunately a lot of pearl clutching. You are not say something negative about capitalism and positive about socialism in polite company.
Capitalism's basic meaning is that the means of production are owned by private parties.
Putting them under government ownership instead doesn't seem like the solution to anything, unless you are very sure that the government will follow your ideological beliefs, not be corrupted by its newfound direct power over peoples lives, and not get taken over by populists.
> unless you are very sure that the government will follow your ideological beliefs
And even if you are very sure, you have to be sure the future government will follow your idealogical beliefs as well - people die; power changes hands; social movements and political fads come and go...
>Putting them under government ownership instead doesn't seem like the solution to anything, unless you are very sure that the government will follow your ideological beliefs, not be corrupted by its newfound direct power over peoples lives, and not get taken over by populists.
Don't forget that you have to be sure the government has the perfect knowledge to price things correctly even it's otherwise a good government. This is actually the main reason that centralized planning is frowned upon by capitalists. Without competition to drive price discovery, the market ends up being super inefficient and people end up under-served or output resources don't collect enough input resources to sustain themselves.
One problem with the term "capitalism" is that it means such different things to different people. For example, feudalism is not generally considered capitalism by those that are anti-capitalist, but feudalism was still private ownership of the means of production.
Or, in the Democratic primaries, Bernie Sanders railed against capitalism, whereas Elizabeth Warren embraces the term, and they both had very similar policies. They were talking in different ways to appeal to different crowds that have different definitions of capitalism. And it creates tribal responses for some supporters.
Feudalism was not private ownership of the means of production.
Indeed, uner feudalism, the means of production were not commodified, and de facto the lord did not have the right of ownership to the land, because he was only allowed to use it in one very specific way. Therefore, lacking the right of exclusive control, feudal property does not fulfill the definiton of private property.
This is why feudalism is universally understood not to a form of capitalism.
Well that's a very different definition than "private control of the means of production," however. People focus on different aspects of the myriad definitions of capitalism, and the term becomes meaningless unless some part of the conversation first defines what sort of definition or aspect of "capitalism" one is talking about. However, people often experience a tribally-motivated response to the word before the meanings can be focused on. I'd doesn't make the word "capitalism" useless but it does make it difficult to start a discussion with a general group of people when leading with the word rather than the specifics that one would like to address.
I agree, we do need a very specific and structured definition of capitalism which analyzes it as a social and political system. Which has been done and achieved consensus almost two hundred years ago, but now it's become almost taboo to mention :)
But yes, confusion about these definitions is due to the fact that we haven't had a serious remise en question of the social order in the anglophone world since the end of WW2.
As for my definition of private control of the means of production, I think it's fairly uncontroversial to say that if someone may not decide how to use something then they are not owners of such a thing, but merely hold a license to it. It's the same argument for why you can never own a copy of proprietary software, only own a license to it :)
We also need to remember that new inventions often emerge because there are lots of bad ideas and an extremely small number of good ones. Before the ideas are put into practice, it's hard to know which are which.
That's why we have so much innovation in capitalism, but we had so little in communism. Just like in evolution, we need hundreds of companies doing hundreds of pretty similar but slightly different things. 90 will fail, 9 will survive, one will become the next Google or Facebook.
The government is no better than us at predicting success, it may even be worse, but it usually prefers a small number of big and ambitious projects over lots of small ones. Instead of embracing failure and thinking what to do about it, it tries to prevent failure, no matter the cost.
Capitalism is not the problem, the problem is that people continue to do business with companies that operate with disregard for the long term consequences of their business practices.
If humans are innately short-sighted and tribal/selfish creatures, any system of organization that assumes otherwise is problematic. That seems to be the case with capitalism.
A society with a strong education system that perpetuates cultural values of long-term sustainability could get by with less explicit regulations, but I don't see us getting from here to there.
And even if we got there, such a utopian capitalist society would be fragile and prone to corruption towards over-exploitation. Other systems are needed to maintain balance -taxes, political advertising regulations, labor laws, etc
80 comments
[ 3.2 ms ] story [ 166 ms ] threadCapitalism taken to its fullest extreme is greed out-of-control. This is where the US is right now.
Einstein was not a sociologist, but it's an indication that about "egalitarian capitalism" is not exactly true.
Inequality is always going to swing back and forth. Eventually the American electorate will get so fed up with it they will vote in a party promising to do something about it.
I think this view point sprouts from envy.
"Capitalism when balanced is near perfect."
Capitalism is a level of balance. Similar to common law.
I think this is a rather lazy dismissal.
What if government regulations warp capitalism and give protectionism and favoritism to certain companies while excluding the rest and not allowing for the free market to work?
What if unregulated capitalism has cannibalized itself and destroyed the free market by way of big fish eating up all of the small ones and now we're left with a bunch of huge corporations with outsized power and no threat from competition?
Think about it, is it ever possible to orchestrate a society where money buys you media, re-election campaigns, charity and favours, without those having the most money wielding the above-mentioned elements to ensure they keep having the most money.
In other words, the social organization is a consequence of economic organization, which explains why it is impossible for a truly free market to ever exist.
It's not possible either to completely get rid of government, because the State is necessary to uphold property.
Doesn't seem like there's a solution.
If you think about it, human beings corrupt any system they're in.
Hierarchy is hardwired into our DNA.
How do you overcome human nature?
https://www.nature.com/scitable/knowledge/library/primate-so...
While that may be true, I think the reason we got here is because Capitalism inherently incentivizes those types of theories, assumptions, and incentives. You can argue that an ethical Capitalism is possible sure, but that would require labor power and a strong state to prevent the erosion that we have seen in the last half decade.
What I think is very valuable within our system is markets as a tool. There's no functioning replacement yet for allocating resources through something like a market at large scale. Even socialism sympathetic economists like Oscar Lange recognised this a long time ago.
What's wrong with the status quo I think is markets as an ideology, confusing social ends or larger objectives with the outcomes markets or capital produce. There is too little coordination in society, too little forward thinking and planning at a high level. It shows in the covid pandemic into which we stumbled like fools despite knowing it would happen at some point, the way we're screwed every time a wildfire breaks out despite we know it'll happen. I think it's glorifying capitalism as a way of life rather than a tool that produces these failures.
I concur with the aims. Solving pandemics, climate change and nuclear proliferation require a different toolset than what succeeded for reducing global poverty.
Why would I want a man in Washington to guide Montana in the form of government though?
Spontaneously ordered systems are also better at dynamic adaptation to exogenous changes (such as technological ones).
The 40s to 70s broadly were an era in which there appeared to be a pragmatic balance between strategic planning and decentralized execution, in which markets where tools, serving national interest. It's also probably the era in which we saw more technological progress than at any other point.
Bringing up 'political economy' in this context is what produced the old saying 'Economists are the sort of people that see something work in practise and ask if it works in theory', it's exactly a symptom of the dogmatism that I think is plaguing us.
Every planned economy that has existed has used price signals by the end user in order to fix these issues. Planned economies are made to run an economy without markets, not without prices.
As long as you have an end-user price signal, subjectivism is not an issue and the calculation problem becomes a computational issue that can be solved.
It seems clear that a whole economy cannot be centrally controlled but that does not mean that parts of it isn’t better controlled by planned economics than be market economics.
It would be wrong to assume one size fits all.
One can also have hybrid systems. Where the value of market decisions is understood but where a central planner has some important insights which he can use to tweak a market to work better.
There have been economic systems that had free markets (feudal lords bought and sold goods in market economies) and there were also examples of capitalist enterprises that existed without free markets (some people would argue the Soviet Union fits this description, but if you prefer a less contentious example, most capitalist countries when they are functioning under a war economy have some form of central planning).
Capitalism refers to an economic system where the way in which production is organised is through an employer-employee relationship.
Capitalists exploit ownership to generate profit for themselves. Sometimes that's ownership of something they produced, like a machine or a building or a work of the mind. More often, it's something produced by labor that they exploit for profit. And sometimes it's something they didn't produce, but manage to own and profit from nonetheless, like land and natural resources.
If you adhere to a materialist understanding of the world, you come to the the conclusion that most of the features of our environment (which is validated by analysis) find their roots in the material organization of our world. And the material organization we are operating in is "capitalism". Which is why it applies so much.
I think part of the confusion comes with the understanding of what capitalism is. Capitalism isn't markets, we had markets before capitalism. Capitalism is the economic organization where:
* Production is organized under private ownership * Social relations are dominantly monetary relationships * Labour is dominantly done for wages * Production is done for profit * A market system is used to structure productive relationships * A de-facto class system which divides workers and owners
That's what capitalism is, and when people, especially academics say that something is caused by capitalism, they refer to capitalism as defined, loosely, by those elements. Capitalism is not a tool, it is a state of being. Markets are a tool, that have wonderful advantages. Markets aren't an ideology, capitalism is a group of ideologies that promote markets as much as possible. For an extreme example, in the USSR, food production was overwhelmingly mediated by markets. Was that capitalism? No, because it was not done for profits, and because production was not based on wages.
Everyone agrees that markets is an amazingly useful tool and is fit for many applications, except some which lack a good grasp of economics, or others which are deluded into abstracting economics from society and which therefore miss when they are not fit for the task. What people don't agree with is that capitalism is a system which should be perpetuated, and the two are perfectly consistent positions to hold.
[0] https://en.m.wikipedia.org/wiki/Socialist_calculation_debate
https://www.kateraworth.com/doughnut/
An idea that stuck with me is that markets are powerful tools that need to be embedded into other systems but arent self regulating systems all by themselves. It seems too often in debates on big problems the argument is simply we need a market solution not how is the system designed to best utilize a market.
"We need a market solution" is politician for private interests want to change laws so that they can expand their businesses.
Like libertarianism, SV has a way of taking exactly what they want from Zen and leaving the rest of the beliefs lying in a pile behind them. The Zen teacher Les Kaye famously said about Steve Jobs that he understood “the art, not the heart” of Zen.
If SV really cared about Zen, would we have unskippable ads? Would we have “like” buttons? Would we have auto-playing Netflix movies while you’re merely sitting still in a menu?
They don’t care about Zen. They never have. What they care about is making themselves feel better about the horribly un-Zen-like things they inflict on their audiences. Zen is just a coping mechanism to stroke their ego a little more.
Meaning that it’s not a design issue it’s a political issue.
This is a little dramatic. There are no companies that qualify for the size of "undermining the whole system".
In particular in America capitalism has become a holy cow. If you suggest ideas from socialism you are labeled a dangerous radical and taken off the air.
The so called “liberal media” are bastions of capitalism. One can only look at the scathing criticism and scare mongering about Bernie Sanders.
When it comes to capitalism there is unfortunately a lot of pearl clutching. You are not say something negative about capitalism and positive about socialism in polite company.
Putting them under government ownership instead doesn't seem like the solution to anything, unless you are very sure that the government will follow your ideological beliefs, not be corrupted by its newfound direct power over peoples lives, and not get taken over by populists.
And even if you are very sure, you have to be sure the future government will follow your idealogical beliefs as well - people die; power changes hands; social movements and political fads come and go...
Don't forget that you have to be sure the government has the perfect knowledge to price things correctly even it's otherwise a good government. This is actually the main reason that centralized planning is frowned upon by capitalists. Without competition to drive price discovery, the market ends up being super inefficient and people end up under-served or output resources don't collect enough input resources to sustain themselves.
Or, in the Democratic primaries, Bernie Sanders railed against capitalism, whereas Elizabeth Warren embraces the term, and they both had very similar policies. They were talking in different ways to appeal to different crowds that have different definitions of capitalism. And it creates tribal responses for some supporters.
Indeed, uner feudalism, the means of production were not commodified, and de facto the lord did not have the right of ownership to the land, because he was only allowed to use it in one very specific way. Therefore, lacking the right of exclusive control, feudal property does not fulfill the definiton of private property.
This is why feudalism is universally understood not to a form of capitalism.
But yes, confusion about these definitions is due to the fact that we haven't had a serious remise en question of the social order in the anglophone world since the end of WW2.
As for my definition of private control of the means of production, I think it's fairly uncontroversial to say that if someone may not decide how to use something then they are not owners of such a thing, but merely hold a license to it. It's the same argument for why you can never own a copy of proprietary software, only own a license to it :)
That's why we have so much innovation in capitalism, but we had so little in communism. Just like in evolution, we need hundreds of companies doing hundreds of pretty similar but slightly different things. 90 will fail, 9 will survive, one will become the next Google or Facebook.
The government is no better than us at predicting success, it may even be worse, but it usually prefers a small number of big and ambitious projects over lots of small ones. Instead of embracing failure and thinking what to do about it, it tries to prevent failure, no matter the cost.
A society with a strong education system that perpetuates cultural values of long-term sustainability could get by with less explicit regulations, but I don't see us getting from here to there.
And even if we got there, such a utopian capitalist society would be fragile and prone to corruption towards over-exploitation. Other systems are needed to maintain balance -taxes, political advertising regulations, labor laws, etc
With a growing size of government, every conversation becomes a conversation about your life.