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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 u

by 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.
  - Tainnor 3y ago
    > It's extremely difficult if not impossible to completely corner some market Are we forgetting how Microsoft absolutely dominated the PC market in the 90s and early 2000s? How today, there's basically two mobile operating systems that can determine much of today's mobile experience? I agree that IP laws serve to entrench monopolies (although they also have the effect of encouraging development (e.g. of expensive drugs) in the first place - so it's a double edged sword). But so do a lot of other, much more "natural" mechanisms such as network effects, brand recognition, etc. I feel like the libertarian, "pure capitalism" world view only makes sense if you think that consumers are omniscient and perfectly rational, but we know fully well how neither of these things are true. I used to work for a company that would just buy up a bunch of smaller companies and then drive them into the ground. The smaller companies had the better tech, but the large company had a user base, a brand and money.
    - Geee 3y ago
      The point about operating systems is that these are new technologies. Free markets require time to resolve. It's natural that an inventor (especially with IP protections) has an market advantage for a period of time. It's important, that at longer time scales, the market evolves towards decentralization. It's true that there are a lot of natural centralizing forces, such as network effects. Not sure how to resolve those. However, getting back to the original point, no matter how you think about it, capital efficiency requires that 'a few' manage the capital, because naturally there are 'a few' who manage capital better than the rest. The problem is selecting those few. I think it's a misconception to argue that capital shouldn't centralize in principle, or that it's a morally bad thing. Also, efficiency in a free market is really about fulfilling the needs of people according to their free will in the most efficient way possible. There's no forcing function to produce more if people don't want to consume more. In Soviet Union, they were very efficient at producing some stuff, but they made stuff that no one needed (they made lots of cheap shoes in big factories, which no one wanted). I.e. there's a difference in being efficient in isolation, and efficient at fulfilling needs of the market.

by Geee 3y ago

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.
- Tainnor 3y ago
  > It's extremely difficult if not impossible to completely corner some market Are we forgetting how Microsoft absolutely dominated the PC market in the 90s and early 2000s? How today, there's basically two mobile operating systems that can determine much of today's mobile experience? I agree that IP laws serve to entrench monopolies (although they also have the effect of encouraging development (e.g. of expensive drugs) in the first place - so it's a double edged sword). But so do a lot of other, much more "natural" mechanisms such as network effects, brand recognition, etc. I feel like the libertarian, "pure capitalism" world view only makes sense if you think that consumers are omniscient and perfectly rational, but we know fully well how neither of these things are true. I used to work for a company that would just buy up a bunch of smaller companies and then drive them into the ground. The smaller companies had the better tech, but the large company had a user base, a brand and money.
  - Geee 3y ago
    The point about operating systems is that these are new technologies. Free markets require time to resolve. It's natural that an inventor (especially with IP protections) has an market advantage for a period of time. It's important, that at longer time scales, the market evolves towards decentralization. It's true that there are a lot of natural centralizing forces, such as network effects. Not sure how to resolve those. However, getting back to the original point, no matter how you think about it, capital efficiency requires that 'a few' manage the capital, because naturally there are 'a few' who manage capital better than the rest. The problem is selecting those few. I think it's a misconception to argue that capital shouldn't centralize in principle, or that it's a morally bad thing. Also, efficiency in a free market is really about fulfilling the needs of people according to their free will in the most efficient way possible. There's no forcing function to produce more if people don't want to consume more. In Soviet Union, they were very efficient at producing some stuff, but they made stuff that no one needed (they made lots of cheap shoes in big factories, which no one wanted). I.e. there's a difference in being efficient in isolation, and efficient at fulfilling needs of the market.