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> Few thinkers have done more than Marx to define and describe capitalism. The emphasis on material determinism which was the poor child of history and philoso

> Few thinkers have done more than Marx to define and describe capitalism. The emphasis on material determinism which was the poor child of history and philosophy was genius but the near fanatical fixation on dialectical materialism just tainted the rest of his work to the point of irrelevance. While most historians and economist agree that the contributions of Marx made their field more down to earth by extending their studies with the human condition and material limitations, none would say that they based their research on Marxist dogma. While the problems he raised were not invalid, the vast majority of Marx's core predictions never came to be and the solutions to the problems he exposed were based more on messianic prophecies than on meticulous reasoning. Conditions gradually improved as opposed to a "liberating" revolts. Economies didn't collapse enough often to make it impossible to recover, the proletariat never shared any kind of unifying will based on their misery and in fact revolutions were always led by well fed and well educated petits bourgeois including Engels and Marx. > People should worry less about market structure and incentives. We have serious issues to repair in the financial markets What else would you propose and that would act both as a motivation and as a limitation without resorting to micromanagement?

vidarh 6y ago
A whole lot of his predictions didn't come to be in part because of his predictions. E.g. Germany got the worlds first modern healthcare and pensions insurance because Bismarck, terrified of a repeat of the uprisings of 1848 as Marxist and other revolutionary groups gained support, pushed through massive healthcare and pension reforms that became a blueprint for large parts of Europe. As such we really can't tell what the world would have looked like had his ideas not gained traction. But other than that, we don't really know whether or not he'll be right or wrong, because the core proposition of his predictions were that capitalism would start seeing crises once it had exhausted the ability to expand into new markets. And there he certainly did massively underestimate the extreme growth the world would see in population and how long it would take capitalists to fully expand into underdeveloped markets. In that respect Marx biggest demonstrable failure was that he was too optimistic about the rate of expansion of capitalism. Whether or not he'll be right about capitalism "eating itself" by being so efficient that it will drive the price of labour towards zero and so destroy the very markets it depends on, is not something we can really tell until we see how capitalism behaves once most countries have taken the "easy gains" of a developing economy. Once growth in China, India and Africa flatlines, we'll be able to get a real idea. A key question will be whether at that stage capitalism continues to drive down cost, and if it does whether or not sufficient redistribution happens to counter it and at a minimum maintaining purchasing power.
- TeeMassive 6y ago
  > A whole lot of his predictions didn't come to be in part because of his predictions. That doesn't make any logical sense. At best it means self-contradictions: "The model fails because of itself". > E.g. Germany got the worlds first modern healthcare and pensions insurance because Bismarck, terrified of a repeat of the uprisings of 1848 as Marxist and other revolutionary groups gained support, pushed through massive healthcare and pension reforms that became a blueprint for large parts of Europe. And Marxists actively frowned upon those gradual increment in workers welfare because it directly contradicted a core tenet of Marxism that only a "real" revolution of the proletariat could increase workers' condition, which wasn't the case. Social democrats are not Marxist, were always frowned upon as "Marx-falsifiers" and even without Marxism, revolts, revolutions and civil wars happened well before Marx. > But other than that, we don't really know whether or not he'll be right or wrong, because the core proposition of his predictions were that capitalism would start seeing crises once it had exhausted the ability to expand into new markets. Sure, there never was a total lack of new markets but there was also many capitalist economies that did not have direct access to those markets and yet they never collapsed as Marx predicted. If anything, it means that it doesn't have that much of an impact on a capitalist economy's survival. And it's not like economists are not aware of scarcity of resources, labor and market, and in fact those factors come into play although not in a "total lack of new markets" but in a more gradual way. > Whether or not he'll be right about capitalism "eating itself" by being so efficient that it will drive the price of labor towards zero and so destroy the very markets it depends on, is not something we can really tell until we see how capitalism behaves once most countries have taken the "easy gains" of a developing economy. Once growth in China, India and Africa flatlines, we'll be able to get a real idea. Developing countries such as African countries and China and India are already seeing their remuneration increasing at tremendous rates, this can be seen by all metrics ranging from alphabetization rate going up to fertility rate going down. Yet the pre-Covid economy was soaring amid those factors. This goes directly against Marx predictions, those were not dampening the wellness of the global economy, and it's not like new populated continents were discovered. And a big factor for this, as it was for Malthusianism's failed predictions, was technology and automation, whose potential was never truly considered.
  - 6y ago
totalZero 6y ago
> What else would you propose and that would act both as a motivation and as a limitation without resorting to micromanagement? I touched on the big relevant one right now: moral hazard of bailing out companies when they should naturally fail and get pruned away so that healthier competitors can buy their assets and take their customers. We just need to take our hands off the wheel for a second, because we're steering hard to one direction. If you knew that some airlines would fail and others would succeed, you'd try to pick winners instead of just buying some airline ETF. There are technical issues that need to be resolved because they damage price discovery. Short selling, locate requirements, failure to deliver...GME showed us that all of these technical functions of the market are broken and lose consistency when taken to the extreme. Little technical issues can have large qualitative consequences. Margin is another example. Archegos was a red flag. Point being, instead of worrying about market positioning and participant motivation, we have plenty to fix with broken regulations, easy monetary policies, and excessive corporate welfare. To loop back to index funds...Any strategy in a high-lift bull market is going to be beaten by "buy and hold." The article suggests that correlation is a result of passive investment, but in actual fact the causality is reversed; passive investment is driven by people who watch the correlation and decide that stocks only go up. There's no reason to trade tactically or selectively in a one-way environment. If you fix the environment, you presumably change the behaviors, with no need to think about carrots and sticks.

vidarh 6y ago

A whole lot of his predictions didn't come to be in part because of his predictions. E.g. Germany got the worlds first modern healthcare and pensions insurance because Bismarck, terrified of a repeat of the uprisings of 1848 as Marxist and other revolutionary groups gained support, pushed through massive healthcare and pension reforms that became a blueprint for large parts of Europe. As such we really can't tell what the world would have looked like had his ideas not gained traction. But other than that, we don't really know whether or not he'll be right or wrong, because the core proposition of his predictions were that capitalism would start seeing crises once it had exhausted the ability to expand into new markets. And there he certainly did massively underestimate the extreme growth the world would see in population and how long it would take capitalists to fully expand into underdeveloped markets. In that respect Marx biggest demonstrable failure was that he was too optimistic about the rate of expansion of capitalism. Whether or not he'll be right about capitalism "eating itself" by being so efficient that it will drive the price of labour towards zero and so destroy the very markets it depends on, is not something we can really tell until we see how capitalism behaves once most countries have taken the "easy gains" of a developing economy. Once growth in China, India and Africa flatlines, we'll be able to get a real idea. A key question will be whether at that stage capitalism continues to drive down cost, and if it does whether or not sufficient redistribution happens to counter it and at a minimum maintaining purchasing power.

TeeMassive 6y ago
> A whole lot of his predictions didn't come to be in part because of his predictions. That doesn't make any logical sense. At best it means self-contradictions: "The model fails because of itself". > E.g. Germany got the worlds first modern healthcare and pensions insurance because Bismarck, terrified of a repeat of the uprisings of 1848 as Marxist and other revolutionary groups gained support, pushed through massive healthcare and pension reforms that became a blueprint for large parts of Europe. And Marxists actively frowned upon those gradual increment in workers welfare because it directly contradicted a core tenet of Marxism that only a "real" revolution of the proletariat could increase workers' condition, which wasn't the case. Social democrats are not Marxist, were always frowned upon as "Marx-falsifiers" and even without Marxism, revolts, revolutions and civil wars happened well before Marx. > But other than that, we don't really know whether or not he'll be right or wrong, because the core proposition of his predictions were that capitalism would start seeing crises once it had exhausted the ability to expand into new markets. Sure, there never was a total lack of new markets but there was also many capitalist economies that did not have direct access to those markets and yet they never collapsed as Marx predicted. If anything, it means that it doesn't have that much of an impact on a capitalist economy's survival. And it's not like economists are not aware of scarcity of resources, labor and market, and in fact those factors come into play although not in a "total lack of new markets" but in a more gradual way. > Whether or not he'll be right about capitalism "eating itself" by being so efficient that it will drive the price of labor towards zero and so destroy the very markets it depends on, is not something we can really tell until we see how capitalism behaves once most countries have taken the "easy gains" of a developing economy. Once growth in China, India and Africa flatlines, we'll be able to get a real idea. Developing countries such as African countries and China and India are already seeing their remuneration increasing at tremendous rates, this can be seen by all metrics ranging from alphabetization rate going up to fertility rate going down. Yet the pre-Covid economy was soaring amid those factors. This goes directly against Marx predictions, those were not dampening the wellness of the global economy, and it's not like new populated continents were discovered. And a big factor for this, as it was for Malthusianism's failed predictions, was technology and automation, whose potential was never truly considered.
- 6y ago

totalZero 6y ago

> What else would you propose and that would act both as a motivation and as a limitation without resorting to micromanagement? I touched on the big relevant one right now: moral hazard of bailing out companies when they should naturally fail and get pruned away so that healthier competitors can buy their assets and take their customers. We just need to take our hands off the wheel for a second, because we're steering hard to one direction. If you knew that some airlines would fail and others would succeed, you'd try to pick winners instead of just buying some airline ETF. There are technical issues that need to be resolved because they damage price discovery. Short selling, locate requirements, failure to deliver...GME showed us that all of these technical functions of the market are broken and lose consistency when taken to the extreme. Little technical issues can have large qualitative consequences. Margin is another example. Archegos was a red flag. Point being, instead of worrying about market positioning and participant motivation, we have plenty to fix with broken regulations, easy monetary policies, and excessive corporate welfare. To loop back to index funds...Any strategy in a high-lift bull market is going to be beaten by "buy and hold." The article suggests that correlation is a result of passive investment, but in actual fact the causality is reversed; passive investment is driven by people who watch the correlation and decide that stocks only go up. There's no reason to trade tactically or selectively in a one-way environment. If you fix the environment, you presumably change the behaviors, with no need to think about carrots and sticks.