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I don't read any criticism of capitalism because there is basically none. 99% of it is just people claiming that some abstract bad thing in human society is du

I don't read any criticism of capitalism because there is basically none. 99% of it is just people claiming that some abstract bad thing in human society is due to "capitalism" without any sort of argument that would actually rise to the level of what I would call criticism.

imtringued 3y ago
Playing into the articles points to gain higher status among "capitalists"? Here is an easy one. Excess capital doesn't earn enough money to compensate for losses relating to depreciation, storage and maintenance costs i.e. the expectation is that capital income disappears in the long run. All further investment turns into consumption instead. That is kind of at odds with what people consider "capitalism" where the marginal productivity of capital is considered constant.
Tainnor 3y ago
In an unregulated market, capital very naturally tends to accumulate more capital - while, if you have nothing, it's very hard to build up capital in the first place. Which means that, if this continues indefinitely, more and more things belong to fewer and fewer people - which is exactly what we've been seeing over the last couple of decades.
- ethanbond 3y ago
  Also: externalities.
- gms 3y ago
  You have it backwards. Regulation has gone up a lot over the last two decades which is why you're seeing what you're seeing. Historically in America or current day in developing countries, the rate of growth in living standards negatively correlates with the amount of regulation.
  - Tainnor 3y ago
    You haven't responded to my main point: do you believe that a completely unregulated market doesn't lead to wealth accumulation in the hands of few people? It is of course true that some (bad) regulation, like protectionism of various sorts, can also lead to the same outcome in a different way.
    - gms 3y ago
      Yes, completely unregulated would lead to that. We need laws to protect against coercion and adjudicate in the case of disagreements between parties. Warring tribes where physical force wins is not a good place to be.
      - Tainnor 3y ago
        I don't think you're seeing the whole picture if you think only about physical force. People who are well off have more opportunities to start other ventures that make them even more well-off, and if they're especially powerful, they can use that influence to further their benefit. I don't think that's particularly controversial.
        mikeyouse 3y ago
        To wit, I live in a mid sized town in the Midwest - about 80 years ago a family started a business that was pretty successful and is on its third or fourth generation of ownership now — that’s all well and good but it’s insane how much of the town is owned or directed by them now. Do you want to buy a car, foreign or domestic? Host a convention? Rent a hotel room in the urban core? Put on a concert? How about go to the hospital or buy health insurance? Go to college? Send your kid to preschool? Build a commercial building? Capital begets capital.
        gms 3y ago
        It’s not easy to start successful ventures. Most new ventures fail. Even the best VCs only have a 30% success rate.
- fallingknife 3y ago
  But you are wrong. Inequality has not grown over the last 20 years. https://fred.stlouisfed.org/series/SIPOVGINIUSA https://fred.stlouisfed.org/series/SIPOVGINIUSA
  - Tainnor 3y ago
    Why are you only looking at income inequality, only in the United States and only in the last 20 years? Look at where that graph was in 1980, for example.
    - fallingknife 3y ago
      Because you said "over the last couple decades"
      - Tainnor 3y ago
        But I didn't intend 2000 to be an arbitrary cutoff. 1980 is important because it's right before Reagan- and Thatcher-style economics. And if you look at measures of wealth inequality (e.g. the share of wealth owned by billionaires), that's actually become worse especially during the pandemic.
- J_Shelby_J 3y ago
  This was described in adam smith’s original writings about “capitalism” and he was clear for the need in government intervention to maintain a free market long term.
  - Tainnor 3y ago
    Do you have a specific reference by any chance?
- Geee 3y ago
  This is a very good thing, and the reason why capitalism works. The idea of pure meritocratic capitalism is that capital is allowed to accumulate to those who use capital most efficiently. There are fewer of those, naturally. Increasing capital efficiency benefits everyone; it means less work and more production, i.e. there's more of everything and everything is cheaper. The actual issues of our current world happen because this pure version of capitalism doesn't happen. There's all sorts of things which lead to non-efficient people / organizations accumulating a lot of capital.
  - Tainnor 3y ago
    > there's more of everything and everything is cheaper And I don't believe that this is what we should optimise for. "More of everything, for cheaper" somehow doesn't seem to make people happier. I think that more shared ownership is more important, especially if you consider the effects of increased inequality on intangible goods such as democracy (e.g. how currently a few tech companies can influence global political discourse). But even if I was willing to concede your point, somehow most people who argue for "pure meritocratic capitalism" never seem to suggest that we should have a 100% inheritance tax. Because people being born into wealth is exactly one of the reasons why "non-efficient people" (a problematic term in and of itself, btw) end up accumulating a lot of capital. (I don't personally believe we should have a 100% inheritance tax, although I think it should be higher than it is right now in most places, but I think that this would be an almost inevitable conclusion of a "purely meritocratic" conception of economics.)
  - atmavatar 3y ago
    I feel like you're missing an important detail: in an unregulated market, it is often times far more efficient from an individual corporation's perspective to buy up or merge with competitors than to actually compete, whereas the societal-level efficiencies you're lauding come from competition itself. Without some form of regulation, capitalism trends towards monopoly, which is the antithesis of efficiency.
    - Geee 3y ago
      I don't think this is generally true. There are exceptions, such as a monopoly on some scarce natural resource. However, there's a quite limited market for such opportunities. It's extremely difficult if not impossible to completely corner some market, even without regulations. In general, it's not true that companies would merge without regulation. Why would Apple merge with Samsung? It doesn't make any sense. Usually, regulation causes monopolies to form. A prime example is the patent system, which literally grants a monopoly to an idea. There would be much more competition without IP protection laws, which in my opinion doesn't belong in capitalism. For example, if all Apple's patents and copyrights were openly licensed, there would be much more competition with higher quality, but cheaper products.
bdw5204 3y ago
I think terms like "capitalism" inherently spread confusion rather than clarity. Specifically, which of these systems do you mean by "capitalism"? 1) The status quo in the US where the economy is dominated by private corporations but the government has some regulations and some safety net. Also, corporations receive a significant amount of welfare from the government, generally control the regulatory agencies and some are primarily funded by the government either directly (NPR/PBS, Amtrak, etc.) or as its primary customer (defense contractors). 2) The system that existed in Gilded Age America where there was very little regulation but lots of corporate welfare and a US Army that would "remove" any American Indians who were causing trouble for the railroads. 3) The libertarian utopia where absolutely everything is privatized. 4) A system where everything except the police and military is privatized, there are virtually no regulations and there is no corporate welfare. Basically the more moderate form of libertarianism. 5) Basically the system we have in the US but with a larger safety net, more regulations and less military spending. In other words the European system that is one of the things commonly called "socialism" in US politics but it is also called "capitalism" when convenient to contrast it against other types of economies. 6) An economy where most people have a reasonable chance of eventually becoming running their own business and where large businesses are generally rare. In this system, creating a corporation might even require an act of a state legislature or the national legislature and would be generally rare and mainly for utilities like long distance transportation. This is the system that generally prevailed in the free states of the US prior to the Gilded Age. 7) The system that existed in the mid-20th century US that is somewhere between 1) and 5). Strong unions, regulations (often captured by corporations), large corporations that make stuff domestically, restrictions on imports, defense contractors exist, etc. The main distinguishing characteristic of this system is a high degree of income equality. CEOs don't make dramatically more than typical workers and even entry level pays a living wage. At one point, I would have defined "capitalism" as 3 or 4. Today, I'd define it as 6. Most people would probably define it as 1, 2 or 7 which is what I would call "corporatism". I'm also undoubtedly leaving out other definitions of capitalism. The term "socialism" is also unhelpful for the same reason. People who like "capitalism" or "socialism" define it as an economic system they like then use the other word to define a system they don't like. Then they talk past people who have different definitions of those terms. An argument about Venezuela or the USSR is not a reasonable argument to use against somebody who wants the Nordic model in the US or to go back to the mid-20th century economic system. An argument about corporate welfare or defense contractors is not a reasonable argument to use against a libertarian.

imtringued 3y ago

Playing into the articles points to gain higher status among "capitalists"? Here is an easy one. Excess capital doesn't earn enough money to compensate for losses relating to depreciation, storage and maintenance costs i.e. the expectation is that capital income disappears in the long run. All further investment turns into consumption instead. That is kind of at odds with what people consider "capitalism" where the marginal productivity of capital is considered constant.

Tainnor 3y ago

In an unregulated market, capital very naturally tends to accumulate more capital - while, if you have nothing, it's very hard to build up capital in the first place. Which means that, if this continues indefinitely, more and more things belong to fewer and fewer people - which is exactly what we've been seeing over the last couple of decades.

ethanbond 3y ago
Also: externalities.
gms 3y ago
You have it backwards. Regulation has gone up a lot over the last two decades which is why you're seeing what you're seeing. Historically in America or current day in developing countries, the rate of growth in living standards negatively correlates with the amount of regulation.
- Tainnor 3y ago
  You haven't responded to my main point: do you believe that a completely unregulated market doesn't lead to wealth accumulation in the hands of few people? It is of course true that some (bad) regulation, like protectionism of various sorts, can also lead to the same outcome in a different way.
  - gms 3y ago
    Yes, completely unregulated would lead to that. We need laws to protect against coercion and adjudicate in the case of disagreements between parties. Warring tribes where physical force wins is not a good place to be.
    - Tainnor 3y ago
      I don't think you're seeing the whole picture if you think only about physical force. People who are well off have more opportunities to start other ventures that make them even more well-off, and if they're especially powerful, they can use that influence to further their benefit. I don't think that's particularly controversial.
      - mikeyouse 3y ago
        To wit, I live in a mid sized town in the Midwest - about 80 years ago a family started a business that was pretty successful and is on its third or fourth generation of ownership now — that’s all well and good but it’s insane how much of the town is owned or directed by them now. Do you want to buy a car, foreign or domestic? Host a convention? Rent a hotel room in the urban core? Put on a concert? How about go to the hospital or buy health insurance? Go to college? Send your kid to preschool? Build a commercial building? Capital begets capital.
      - gms 3y ago
        It’s not easy to start successful ventures. Most new ventures fail. Even the best VCs only have a 30% success rate.
fallingknife 3y ago
But you are wrong. Inequality has not grown over the last 20 years. https://fred.stlouisfed.org/series/SIPOVGINIUSA https://fred.stlouisfed.org/series/SIPOVGINIUSA
- Tainnor 3y ago
  Why are you only looking at income inequality, only in the United States and only in the last 20 years? Look at where that graph was in 1980, for example.
  - fallingknife 3y ago
    Because you said "over the last couple decades"
    - Tainnor 3y ago
      But I didn't intend 2000 to be an arbitrary cutoff. 1980 is important because it's right before Reagan- and Thatcher-style economics. And if you look at measures of wealth inequality (e.g. the share of wealth owned by billionaires), that's actually become worse especially during the pandemic.
J_Shelby_J 3y ago
This was described in adam smith’s original writings about “capitalism” and he was clear for the need in government intervention to maintain a free market long term.
- Tainnor 3y ago
  Do you have a specific reference by any chance?
Geee 3y ago
This is a very good thing, and the reason why capitalism works. The idea of pure meritocratic capitalism is that capital is allowed to accumulate to those who use capital most efficiently. There are fewer of those, naturally. Increasing capital efficiency benefits everyone; it means less work and more production, i.e. there's more of everything and everything is cheaper. The actual issues of our current world happen because this pure version of capitalism doesn't happen. There's all sorts of things which lead to non-efficient people / organizations accumulating a lot of capital.
- Tainnor 3y ago
  > there's more of everything and everything is cheaper And I don't believe that this is what we should optimise for. "More of everything, for cheaper" somehow doesn't seem to make people happier. I think that more shared ownership is more important, especially if you consider the effects of increased inequality on intangible goods such as democracy (e.g. how currently a few tech companies can influence global political discourse). But even if I was willing to concede your point, somehow most people who argue for "pure meritocratic capitalism" never seem to suggest that we should have a 100% inheritance tax. Because people being born into wealth is exactly one of the reasons why "non-efficient people" (a problematic term in and of itself, btw) end up accumulating a lot of capital. (I don't personally believe we should have a 100% inheritance tax, although I think it should be higher than it is right now in most places, but I think that this would be an almost inevitable conclusion of a "purely meritocratic" conception of economics.)
- atmavatar 3y ago
  I feel like you're missing an important detail: in an unregulated market, it is often times far more efficient from an individual corporation's perspective to buy up or merge with competitors than to actually compete, whereas the societal-level efficiencies you're lauding come from competition itself. Without some form of regulation, capitalism trends towards monopoly, which is the antithesis of efficiency.
  - Geee 3y ago
    I don't think this is generally true. There are exceptions, such as a monopoly on some scarce natural resource. However, there's a quite limited market for such opportunities. It's extremely difficult if not impossible to completely corner some market, even without regulations. In general, it's not true that companies would merge without regulation. Why would Apple merge with Samsung? It doesn't make any sense. Usually, regulation causes monopolies to form. A prime example is the patent system, which literally grants a monopoly to an idea. There would be much more competition without IP protection laws, which in my opinion doesn't belong in capitalism. For example, if all Apple's patents and copyrights were openly licensed, there would be much more competition with higher quality, but cheaper products.

bdw5204 3y ago

I think terms like "capitalism" inherently spread confusion rather than clarity. Specifically, which of these systems do you mean by "capitalism"? 1) The status quo in the US where the economy is dominated by private corporations but the government has some regulations and some safety net. Also, corporations receive a significant amount of welfare from the government, generally control the regulatory agencies and some are primarily funded by the government either directly (NPR/PBS, Amtrak, etc.) or as its primary customer (defense contractors). 2) The system that existed in Gilded Age America where there was very little regulation but lots of corporate welfare and a US Army that would "remove" any American Indians who were causing trouble for the railroads. 3) The libertarian utopia where absolutely everything is privatized. 4) A system where everything except the police and military is privatized, there are virtually no regulations and there is no corporate welfare. Basically the more moderate form of libertarianism. 5) Basically the system we have in the US but with a larger safety net, more regulations and less military spending. In other words the European system that is one of the things commonly called "socialism" in US politics but it is also called "capitalism" when convenient to contrast it against other types of economies. 6) An economy where most people have a reasonable chance of eventually becoming running their own business and where large businesses are generally rare. In this system, creating a corporation might even require an act of a state legislature or the national legislature and would be generally rare and mainly for utilities like long distance transportation. This is the system that generally prevailed in the free states of the US prior to the Gilded Age. 7) The system that existed in the mid-20th century US that is somewhere between 1) and 5). Strong unions, regulations (often captured by corporations), large corporations that make stuff domestically, restrictions on imports, defense contractors exist, etc. The main distinguishing characteristic of this system is a high degree of income equality. CEOs don't make dramatically more than typical workers and even entry level pays a living wage. At one point, I would have defined "capitalism" as 3 or 4. Today, I'd define it as 6. Most people would probably define it as 1, 2 or 7 which is what I would call "corporatism". I'm also undoubtedly leaving out other definitions of capitalism. The term "socialism" is also unhelpful for the same reason. People who like "capitalism" or "socialism" define it as an economic system they like then use the other word to define a system they don't like. Then they talk past people who have different definitions of those terms. An argument about Venezuela or the USSR is not a reasonable argument to use against somebody who wants the Nordic model in the US or to go back to the mid-20th century economic system. An argument about corporate welfare or defense contractors is not a reasonable argument to use against a libertarian.