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I wish more people could have Thomas Piketty's balanced view on capitalism. Too often it is treated as some sort of game where you have to pick sides whether y

I wish more people could have Thomas Piketty's balanced view on capitalism. Too often it is treated as some sort of game where you have to pick sides whether you are for or against capitalism. Especially in America there seems to be a kneejerk reaction to any calls for regulations or moderations of the effects of the free market. Usually it is dismissed without further discussion with "look what happened in the east block countries!" But I think Thomas Piketty has a very good point in his book that if you in fact favor capitalism, you ought to be open to regulation of it. The alternative is what we have seen again and again in history, inequality gets so bad that we get uprisings and revolutions. Inequality is breeding ground for radical ideas like communism. Otto von Bismarck understood that and gave Germany the beginnings for a welfare system. Not because he really cared about workers but because he understood the dangers of inequality with respect to radicalization of the poor. Today we can see the same thing starting to play out in America. The US have now been on a path towards ever higher inequality for many years and we can see it reaching a breaking point. Politics is getting ever more radical. Donald Trump and Bernie Sanders would never had gotten the support they got without the economic fundamentals having shifted so much. We already know what high inequality leads to in modern times, because we have seen it play out in South America again and again. They oscillate between one political extremist or populist after another. I think if the US doesn't actually seriously try to reduce inequality, the US risks ending up with its own Hugo Chavez character, or alternatively a right wing authoritarian. And if inequality doesn't cause revolutions, there seems to be a good case for it causing asset bubbles. We saw this in 1929 which market the end of a dramatic wealth inequality increase, just as 2008. I think it will happen again because the fundamental problems have not been solved.

tomcam 10y ago
Where in the USA is the market not regulated?
- ebalit 10y ago
  I don't think GP meant that the market should have rules but that capitalism should be regulated (as an organism is) to maintain inequality at the sweet spot where it is efficient, instead of letting it rise and getting fever.
  - tcbawo 10y ago
    We've lost long-form and investigative journalism as a counter-balance, but we've gained ubiquitous surveillance and crowd-sourcing social media. Traditional corruption is much easier to see. "White collar" corruption runs rampant. There will be a period of adjustment as our institutions adapt, die, or new institutions arise. I am optimistic as long as the powers that be favor the creation of wealth rather than appropriation.
- kashkhan 10y ago
  is wealth regulated, and do you have a wealth tax?
  - WalterBright 10y ago
    Wealth is taxed by inflation.
    - tasty_freeze 10y ago
      Yes, if you hide it under your bed, or have it in some investment vehicle which isn't itself tied to inflation.
      - WalterBright 10y ago
        If it is tied to inflation, then it is taxed on the "income" it generates.
      - slashcom 10y ago
        But if you have it tied into an investment vehicle, then you're taking some risk and putting that wealth to use.
        dools 10y ago
        Government treasuries are a risk free asset: the government is never constrained in its ability to meet payments in USD.
    - dredmorbius 10y ago
      Currency, and currency-denominated assets (e.g., loans) are reduced in value by inflation. Real wealth -- land, plant, equipment, labour, intellectual capital -- are not currency-denominated, and are not affected by inflation. Invest in real assets (and avoid bubbles). You're inflation-proofed.
      - WalterBright 10y ago
broke_wagon 10y ago
Communism isn't some "radical" boogeyman, it's just a process to eliminate inequality. (Why should there be any inequality at all?) We don't need to be diminutive about relatively different ideas; that's unhelpful at best.
- hash-set 10y ago
  Yeah, tell that to the millions of dead left in its wake.
  - quadrangle 10y ago
    There have been nowhere near enough actual trials of communism to conclude anything fully. The core examples were all poorer countries with various problems, corruption… To reject communism as a concept over the atrocities of Stalin et al is as reasonable as rejecting capitalism because the U.S. was built on slavery and the genocide of first peoples. The atrocities were real, and they did connect to economics, but to just assert that capitalism is the slavery of U.S. history or that communism just is gulags and bread lines is extremely short-sighted. Neither system was anything like the core principles of the economic models (which are just models, so we should reject anyone who focuses only on the models and not on practical reality, but we can't treat each real-world case as the definitive case either).
    - darawk 10y ago
      While you are right, many people (e.g. Hayek) argue that collectivism entails authoritarianism and control. That the two are inextricably linked, due primarily to the local knowledge problem. I'm not necessarily arguing that that is the case just trying to explain why people make this argument. The idea is that, logically, any economically communist country will, by definition, eventually come to resemble the Soviet Union, China, and other negative instances. We can debate whether or not that is so, but I think it's a legitimate debate to have, especially being that all known examples have in fact worked out that way.
    - 4WIW 10y ago
      You can say the same thing about National-Socialism or any other ideology out there. There are just not enough countries to try them all on, and I am not sure why should we...
hash-set 10y ago
You sound like a rambling fool. For starters, no one alive today has even experienced capitalism. What we have in the US is a joke, a complete, miserable joke. It's a system to transfer wealth to the top while avoiding any real accountability for that act. So don't get all righteous like you know anything about regulation or any of it. You can keep your communism, too. Bunch of murderous idiots is all they ever are.
- timecube 10y ago
  If you want to make the silly argument that anything other than completely free markets isn't capitalism, stop calling authoritarian state capitalism "communism".
- sctb 10y ago
  Calling another user a rambling fool is not OK on Hacker News, and even if it were true we would prefer it to such uncivil comments as this. Please stop.
WalterBright 10y ago
Again and again? Uprisings and revolutions occur in unfree countries. (And in the US, the armed revolt happened in the slave states!)
dools 10y ago
If you want to encourage a more sober view of capitalism, then you need to help change people's creation story of money. Here is an article I wrote on the subject: https://independentaustralia.net/politics/politics-display/we-once-had-full-employment-and-we-can-do-it-again,9554 https://independentaustralia.net/politics/politics-display/w...
BobTheCoder 10y ago
I agree people seem to be either "the free market solves all problems" or "capitalism is slavery and must be destroyed" (but don't focus on an actual viable alternative). I'm chipping away on my own alternative which is a bit of a hybrid. Competition and inequality between individuals but not between groups within society. https://opensocialism.com/tldr-for-software-people https://opensocialism.com/tldr-for-software-people is a good intro for IT people.
- eevilspock 10y ago
  I applaud the effort, and I wish more people focused on a first principles approach to fixing society as you do. But I strongly disagree with some of your claims, and stopped reading as a result: "Software people are in a great position to design a new system" What makes you believe this? Many people, myself included (and I write software), think software people would be poor at this. People, society and culture aren't code. Social and emotional intelligence are critical. "We are great at being objective and not being caught up in the zealotry that is coupled with the classical systems of capitalism, communism etc." With all due respect, are you kidding? That is very naive to say the least. To say more, it smacks of Silicon Valley arrogance and smugness, against which, as you may be aware, there is a rising distrust and backlash.
  - BobTheCoder 10y ago
    > What makes you believe this? Many people, myself included (and I write software), think software people would not be so great at this, because society isn't code. Social and emotional intelligence are critical. I think there are in general 3 areas of information that are useful when contributing to the development of a societal system. Those being: * Research (History / modern economic research) * The Cutting Edge (Technology / modern business, project and team management / open source model) * Domain Knowledge (Specific and detailed knowledge of a particular domain) Software people have 2 of the 3. Plus they can collaborate easily using the open source model. I think wikipedia is proof that great things can be done without requiring "experts" with a great collaboration model. I also think that a lot of economics is not relevant if you are going for a "no free enterprise" based system. > "We are great at being objective and not being caught up in the zealotry that is coupled with the classical systems of capitalism, communism etc." > With all due respect, are you kidding? No one is perfect and we aren't free from bias. However, a big part of our jobs is choosing between options eg. technologies. We strive to diminish our egos and bias to make good choices. I think this attribute is very useful for the topic of societal systems which tends to be extremely polarizing (eg. https://www.reddit.com/r/Anarcho_Capitalism/ https://www.reddit.com/r/Anarcho_Capitalism/).
ignasl 10y ago
"capitalism capitalism capitalism" - Absolutely all countries are capitalistic including USSR and North Korea. The only difference is who controls the capital. To be for or against capitalism is the same as to be for or against the wind. Ironically in free market capitalism capital actually belongs to people and the more left leaning the country is the more capital and power belongs to some of the selected few who got there not because of their merits but for being good politicians or in worse cases by simply using power and intimidation. Results are always bad.
- sangnoir 10y ago
  How does your theory explain Nordic countries vs the UK/US? They are more to the left and yet more equitable.
gilgongo 10y ago
While the idea of government intervention in the free market is classically dismissed by right-wing politics, the reality of the past 40 years has been heavy intervention by US and many other Western governments. However, unlike the forms of left-wing intervention that free-market thinkers decry, this intervention takes the form of tax breaks, bail-outs and guarantees against market failures by governments to industries and individual corporations. This has produced what's been called "socialism for the rich" in many countries, where financial institutions are free to act without fear of any consequence of negative repercussions. Just as steel mills were in Soviet Russia, or rice farmers in Mao's China. Witness this week's apparent bailout guarantee by the UK government to Nissan, the TTIP, or the way the Japanese government behaved towards its financial sector in the 1990's.
- aminok 10y ago
  A tax break is not government intervention.. And no, it hasn't been all 'right-wing' intervention, though I'd certainly agree that there has been a lot of that. There's been a ton of new 'left-wing' intervention in the form of growing welfare programs and authoritarian prohibitions on free association a la affirmative action, anti-private-discrimination laws, etc.
  - vanderZwan 10y ago
    When you are a sculptor, you can (among other materials) use clay or marble. With clay, you start with nothing and fill up the space until you get the shape you desire. With marble, you start with a slab and cut out the bits until all that is left is the statue you desire. You're claiming that only one of these two things is sculpting, and the other is not.
    - aminok 10y ago
      The government doesn't own what we receive in private trade. Taxing what we earn is government intervention. This is the conventional understanding. What you're doing is what Orwell describes as doublespeak.
cm2187 10y ago
> inequality gets so bad that we get uprisings and revolutions Poverty I think has more to do with political unstability than inequality. Having a large share of the population who cannot sustain a decent (for that time) way of life will create political tensions, not so much Paris Hilton's lifestyle. I am much more worried about long term, mass unemployment in Europe for instance, than with the concentration of wealth of a few silicon valley billionnaires. That's kind of the debate "no one should be rich" vs "no one should be poor". A lot of Piketty's focus is on the former where I think we should focus on the latter.
aminok 10y ago
I think anti-free-market ideologies like Piketty's are deeply authoritarian and violent. What does it mean to reject the free market? It means rejecting a right of a person to 1. keep what they receive in private trade, and to 2. engage in any voluntary interaction they wish with another consenting adult, especially if it involves the exchange of currency (god forbid!). As a corollary to this, it means prying into people's personal affairs to determine how much in income tax they owe (tax laws that profoundly violate privacy rights by forcing people to disclose how much currency they received in private trade and from what sources) and whether they engaged in prohibited voluntary interactions with other consenting adults (interactions like one person letting another stay at their home for a short-duration in exchange for an amount of currency). In my opinion, this deeply misguided mentality that Piketty and you exhibit is responsible for billions having their human rights violated on a systematic basis, and probably a similar number of people having shorter, less fulfilling lives than they otherwise would have.
- vanderZwan 10y ago
  You reject an entire line of thinking before even reading into it, because you make assumptions about what you think a few key-words mean in a particular context.
  - aminok 10y ago
    You're assuming I didn't read it. Maybe you're psychologically projecting.
    - vanderZwan 10y ago
      No, I'm concluding it because I have read it so know disconnected from reality your interpretation is.
      - aminok 10y ago
        This is a low value comment. A substantive comment would identify parts of my argument that you believe are disconnected from reality, and would substantiate the claim with logical arguments.
juic3 10y ago
By the time enough people notice or are willing to admit to themselves whats going on, its usually past the point of no return. It gets past the point where reasonable fixes and solutions can be applied. Especially hard when there is a lot to loose. Try convincing any manager in a large corp, with 2 kids about to head to college/a mortgage/family healthcare bills or some combo of those three to take a difficult decision and 90% of the time you will fail. Fact of life. Over time I have come to the conclusion it really depends on the kind of leaders we prop up. Yes we prop them up. Every time we go along with whatever the empire needs defending justifications they come up with to do the next dumb thing. While we like to believe we are lucky that Zuckerberg or Page&Brin landed up in the positions they did rather than a Larry Ellison controlling Google or Murdoch controlling Facebook. I think we just need higher expectations. I would rather support a Mark Shuttleworth or a Jimmy Wales, or even a Elon Musk. The difference being they have clear stated visions for the future that doesn't just benefit them and their corp but everyone. These days I actively work against people who I see working to strengthen their positions at the expense of others.

tomcam 10y ago

Where in the USA is the market not regulated?

ebalit 10y ago
I don't think GP meant that the market should have rules but that capitalism should be regulated (as an organism is) to maintain inequality at the sweet spot where it is efficient, instead of letting it rise and getting fever.
- tcbawo 10y ago
  We've lost long-form and investigative journalism as a counter-balance, but we've gained ubiquitous surveillance and crowd-sourcing social media. Traditional corruption is much easier to see. "White collar" corruption runs rampant. There will be a period of adjustment as our institutions adapt, die, or new institutions arise. I am optimistic as long as the powers that be favor the creation of wealth rather than appropriation.
kashkhan 10y ago
is wealth regulated, and do you have a wealth tax?
- WalterBright 10y ago
  Wealth is taxed by inflation.
  - tasty_freeze 10y ago
    Yes, if you hide it under your bed, or have it in some investment vehicle which isn't itself tied to inflation.
    - WalterBright 10y ago
      If it is tied to inflation, then it is taxed on the "income" it generates.
    - slashcom 10y ago
      But if you have it tied into an investment vehicle, then you're taking some risk and putting that wealth to use.
      - dools 10y ago
        Government treasuries are a risk free asset: the government is never constrained in its ability to meet payments in USD.
  - dredmorbius 10y ago
    Currency, and currency-denominated assets (e.g., loans) are reduced in value by inflation. Real wealth -- land, plant, equipment, labour, intellectual capital -- are not currency-denominated, and are not affected by inflation. Invest in real assets (and avoid bubbles). You're inflation-proofed.
    - WalterBright 10y ago

broke_wagon 10y ago

Communism isn't some "radical" boogeyman, it's just a process to eliminate inequality. (Why should there be any inequality at all?) We don't need to be diminutive about relatively different ideas; that's unhelpful at best.

hash-set 10y ago
Yeah, tell that to the millions of dead left in its wake.
- quadrangle 10y ago
  There have been nowhere near enough actual trials of communism to conclude anything fully. The core examples were all poorer countries with various problems, corruption… To reject communism as a concept over the atrocities of Stalin et al is as reasonable as rejecting capitalism because the U.S. was built on slavery and the genocide of first peoples. The atrocities were real, and they did connect to economics, but to just assert that capitalism is the slavery of U.S. history or that communism just is gulags and bread lines is extremely short-sighted. Neither system was anything like the core principles of the economic models (which are just models, so we should reject anyone who focuses only on the models and not on practical reality, but we can't treat each real-world case as the definitive case either).
  - darawk 10y ago
    While you are right, many people (e.g. Hayek) argue that collectivism entails authoritarianism and control. That the two are inextricably linked, due primarily to the local knowledge problem. I'm not necessarily arguing that that is the case just trying to explain why people make this argument. The idea is that, logically, any economically communist country will, by definition, eventually come to resemble the Soviet Union, China, and other negative instances. We can debate whether or not that is so, but I think it's a legitimate debate to have, especially being that all known examples have in fact worked out that way.
  - 4WIW 10y ago
    You can say the same thing about National-Socialism or any other ideology out there. There are just not enough countries to try them all on, and I am not sure why should we...

hash-set 10y ago

You sound like a rambling fool. For starters, no one alive today has even experienced capitalism. What we have in the US is a joke, a complete, miserable joke. It's a system to transfer wealth to the top while avoiding any real accountability for that act. So don't get all righteous like you know anything about regulation or any of it. You can keep your communism, too. Bunch of murderous idiots is all they ever are.

timecube 10y ago
If you want to make the silly argument that anything other than completely free markets isn't capitalism, stop calling authoritarian state capitalism "communism".
sctb 10y ago
Calling another user a rambling fool is not OK on Hacker News, and even if it were true we would prefer it to such uncivil comments as this. Please stop.

WalterBright 10y ago

Again and again? Uprisings and revolutions occur in unfree countries. (And in the US, the armed revolt happened in the slave states!)

dools 10y ago

If you want to encourage a more sober view of capitalism, then you need to help change people's creation story of money. Here is an article I wrote on the subject: https://independentaustralia.net/politics/politics-display/we-once-had-full-employment-and-we-can-do-it-again,9554 https://independentaustralia.net/politics/politics-display/w...

BobTheCoder 10y ago

I agree people seem to be either "the free market solves all problems" or "capitalism is slavery and must be destroyed" (but don't focus on an actual viable alternative). I'm chipping away on my own alternative which is a bit of a hybrid. Competition and inequality between individuals but not between groups within society. https://opensocialism.com/tldr-for-software-people https://opensocialism.com/tldr-for-software-people is a good intro for IT people.

eevilspock 10y ago
I applaud the effort, and I wish more people focused on a first principles approach to fixing society as you do. But I strongly disagree with some of your claims, and stopped reading as a result: "Software people are in a great position to design a new system" What makes you believe this? Many people, myself included (and I write software), think software people would be poor at this. People, society and culture aren't code. Social and emotional intelligence are critical. "We are great at being objective and not being caught up in the zealotry that is coupled with the classical systems of capitalism, communism etc." With all due respect, are you kidding? That is very naive to say the least. To say more, it smacks of Silicon Valley arrogance and smugness, against which, as you may be aware, there is a rising distrust and backlash.
- BobTheCoder 10y ago
  > What makes you believe this? Many people, myself included (and I write software), think software people would not be so great at this, because society isn't code. Social and emotional intelligence are critical. I think there are in general 3 areas of information that are useful when contributing to the development of a societal system. Those being: * Research (History / modern economic research) * The Cutting Edge (Technology / modern business, project and team management / open source model) * Domain Knowledge (Specific and detailed knowledge of a particular domain) Software people have 2 of the 3. Plus they can collaborate easily using the open source model. I think wikipedia is proof that great things can be done without requiring "experts" with a great collaboration model. I also think that a lot of economics is not relevant if you are going for a "no free enterprise" based system. > "We are great at being objective and not being caught up in the zealotry that is coupled with the classical systems of capitalism, communism etc." > With all due respect, are you kidding? No one is perfect and we aren't free from bias. However, a big part of our jobs is choosing between options eg. technologies. We strive to diminish our egos and bias to make good choices. I think this attribute is very useful for the topic of societal systems which tends to be extremely polarizing (eg. https://www.reddit.com/r/Anarcho_Capitalism/ https://www.reddit.com/r/Anarcho_Capitalism/).

ignasl 10y ago

"capitalism capitalism capitalism" - Absolutely all countries are capitalistic including USSR and North Korea. The only difference is who controls the capital. To be for or against capitalism is the same as to be for or against the wind. Ironically in free market capitalism capital actually belongs to people and the more left leaning the country is the more capital and power belongs to some of the selected few who got there not because of their merits but for being good politicians or in worse cases by simply using power and intimidation. Results are always bad.

sangnoir 10y ago
How does your theory explain Nordic countries vs the UK/US? They are more to the left and yet more equitable.

gilgongo 10y ago

While the idea of government intervention in the free market is classically dismissed by right-wing politics, the reality of the past 40 years has been heavy intervention by US and many other Western governments. However, unlike the forms of left-wing intervention that free-market thinkers decry, this intervention takes the form of tax breaks, bail-outs and guarantees against market failures by governments to industries and individual corporations. This has produced what's been called "socialism for the rich" in many countries, where financial institutions are free to act without fear of any consequence of negative repercussions. Just as steel mills were in Soviet Russia, or rice farmers in Mao's China. Witness this week's apparent bailout guarantee by the UK government to Nissan, the TTIP, or the way the Japanese government behaved towards its financial sector in the 1990's.

aminok 10y ago
A tax break is not government intervention.. And no, it hasn't been all 'right-wing' intervention, though I'd certainly agree that there has been a lot of that. There's been a ton of new 'left-wing' intervention in the form of growing welfare programs and authoritarian prohibitions on free association a la affirmative action, anti-private-discrimination laws, etc.
- vanderZwan 10y ago
  When you are a sculptor, you can (among other materials) use clay or marble. With clay, you start with nothing and fill up the space until you get the shape you desire. With marble, you start with a slab and cut out the bits until all that is left is the statue you desire. You're claiming that only one of these two things is sculpting, and the other is not.
  - aminok 10y ago
    The government doesn't own what we receive in private trade. Taxing what we earn is government intervention. This is the conventional understanding. What you're doing is what Orwell describes as doublespeak.

cm2187 10y ago

> inequality gets so bad that we get uprisings and revolutions Poverty I think has more to do with political unstability than inequality. Having a large share of the population who cannot sustain a decent (for that time) way of life will create political tensions, not so much Paris Hilton's lifestyle. I am much more worried about long term, mass unemployment in Europe for instance, than with the concentration of wealth of a few silicon valley billionnaires. That's kind of the debate "no one should be rich" vs "no one should be poor". A lot of Piketty's focus is on the former where I think we should focus on the latter.

aminok 10y ago

I think anti-free-market ideologies like Piketty's are deeply authoritarian and violent. What does it mean to reject the free market? It means rejecting a right of a person to 1. keep what they receive in private trade, and to 2. engage in any voluntary interaction they wish with another consenting adult, especially if it involves the exchange of currency (god forbid!). As a corollary to this, it means prying into people's personal affairs to determine how much in income tax they owe (tax laws that profoundly violate privacy rights by forcing people to disclose how much currency they received in private trade and from what sources) and whether they engaged in prohibited voluntary interactions with other consenting adults (interactions like one person letting another stay at their home for a short-duration in exchange for an amount of currency). In my opinion, this deeply misguided mentality that Piketty and you exhibit is responsible for billions having their human rights violated on a systematic basis, and probably a similar number of people having shorter, less fulfilling lives than they otherwise would have.

vanderZwan 10y ago
You reject an entire line of thinking before even reading into it, because you make assumptions about what you think a few key-words mean in a particular context.
- aminok 10y ago
  You're assuming I didn't read it. Maybe you're psychologically projecting.
  - vanderZwan 10y ago
    No, I'm concluding it because I have read it so know disconnected from reality your interpretation is.
    - aminok 10y ago
      This is a low value comment. A substantive comment would identify parts of my argument that you believe are disconnected from reality, and would substantiate the claim with logical arguments.

juic3 10y ago

By the time enough people notice or are willing to admit to themselves whats going on, its usually past the point of no return. It gets past the point where reasonable fixes and solutions can be applied. Especially hard when there is a lot to loose. Try convincing any manager in a large corp, with 2 kids about to head to college/a mortgage/family healthcare bills or some combo of those three to take a difficult decision and 90% of the time you will fail. Fact of life. Over time I have come to the conclusion it really depends on the kind of leaders we prop up. Yes we prop them up. Every time we go along with whatever the empire needs defending justifications they come up with to do the next dumb thing. While we like to believe we are lucky that Zuckerberg or Page&Brin landed up in the positions they did rather than a Larry Ellison controlling Google or Murdoch controlling Facebook. I think we just need higher expectations. I would rather support a Mark Shuttleworth or a Jimmy Wales, or even a Elon Musk. The difference being they have clear stated visions for the future that doesn't just benefit them and their corp but everyone. These days I actively work against people who I see working to strengthen their positions at the expense of others.