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The "Ugh, Capitalism"[0] articles always seem to assume that capitalism started in the last 20 years or so. Which is obviously false. If the company lost its cu

The "Ugh, Capitalism"[0] articles always seem to assume that capitalism started in the last 20 years or so. Which is obviously false. If the company lost its culture of safety that's definitely bad, but of course that culture developed under capitalism in the first place. How does a constant factor (capitalism) explain a change? The finance industry is a much larger part of the US economy than it has been in the past [1], which does seem like a problem and likely the cause of many of these issues. I'm not sure about the right solution, but it's definitely not to end capitalism. [0] https://www.infinitescroll.us/p/ugh-capitalism https://www.infinitescroll.us/p/ugh-capitalism [1] https://equitablegrowth.org/the-rising-financialization-of-the-u-s-economy-harms-workers-and-their-families-threatening-a-strong-recovery/ https://equitablegrowth.org/the-rising-financialization-of-t..., Figure 1

raziel2p 3y ago
A simple answer may be that capitalism used to be more regulated than before. Not in all areas/industries, but overall - and if not in theory, at least in practice. Maybe the art of lobbyism, legal work, and public relations has gotten more advanced, for example, or company profits have become large enough that they can blatantly break laws and just pay the fine.
- deleted 3y ago
  [deleted]
- jpadkins 3y ago
  The federal register (sum of all US federal regulations) is orders of magnitudes larger than it was 40 years ago. I don't think a quantity argument is interesting (there is definitely more regulations). Possibly there is a quality argument to made: Due to the regulator capture process (large corporations have seized control of the federal government), the effectiveness of regulations have decreased a lot while the volume has increased. This also serves as a barrier to entry for competition, while also profits for compliance.
  - raziel2p 3y ago
    This is not what I meant to imply either. More laws can lead to less regulation, if the added laws are full of loopholes that can be abused. Definitely agree with you on the quality/quantity argument: Simplifying laws and regulations should be more on the political agenda IMO.
- meowfly 3y ago
  I agree with you, but it's also worth noting that Boeing is one of the "too big to fail" industries tightly coupled to the government. It's too valuable to the DoD to let fail. There are several industries (microchips have recently become one) where finance has figured out the normal rules around competition don't matter. Boeing can capture the upside and there is virtually zero risk of bankruptcy or being nationalized from mistakes.
- Ekaros 3y ago
  I think it is pretty clear that regulation or at least effectiveness of such must have peaked in relatively recent past. Going back century or two certainly had capitalistic practises, but also much lesser regulations in many places like food or safety of products. Now interesting question is when did the effectiveness or regulation peak?
- acdha 3y ago
  I’d extend that to say “regulated” in both the legal and broader social senses - not just comparing government regulation before and after the Reagan/Thatcher era but also things like connection to places: smaller businesses are more likely to be run by someone who feels some responsibility to look after their community and workers, which certainly wasn’t perfect but still better than what happens with huge multinationals whose senior leadership probably isn’t even in the same time zone and certainly aren’t worried about going to church/the country club with people who will ask them why they’re polluting so much or decided to lay off a bunch of people right before Christmas. I don’t want to oversell that kind of thing as a factor but I really think there’s a cost to scale when a business reaches the point of impersonality where you don’t even know or have much concept of the existence of the people affected by your decisions.
pohl 3y ago
Would you mind quoting the passage in the present article where the assumption that capitalism started in the last 20 years or so is made?
bsder 3y ago
> How does a constant factor (capitalism) explain a change? Regulations. Short-term-itis mostly got rolling with people like Icahn in the 1980s and asset stripping. All that got rolling due to changes in regulations around finance. And then tech and VCs poured accelerant on the flames.
p_l 3y ago
A lot of it is slow realisation that this was always the "end game" of capitalism. Beware Marxist terms, but then he kinda coined the "capitalism" term too! Big simplifications ahead. Capitalist is an entity who makes money because they own capital. Any actually productive activity (like investments into products/factories/people/etc) are secondary to extracting rent from owning the capital. Now, for various reasons, few different things dominated over economy in the past: 1) Rate of return on investment for actual production, investment, etc was bigger than for rent extraction. Some of this was due to wars shaking things up, some of it was due to non-availability of (2) 2) Ability to grow capital purely by speculation was limited by physical & legal issues. This is where financial industry/engineering comes in - you can spend all your efforts on pure speculation, do corporate raiding etc. and be shielded from consequences. Same with earning money just by moving money around exploiting sub-second price differences. 3) (2) was less acceptable in the past - but became very much so in the present, even if there's constant grumbling about Wall Street - hell, the amount of people who claim that "maximizing shareholder value" is an actual law you're obligated to follow should be good point about it. 4) Corporate entities are a lot like paperclip optimizers - individuals in them can be individually moral and the corporate entity can still be an amoral profit chaser, especially in face of external stockholders. However, in the past, they faced different limits (legal & physical), different stockholders (less volatility and short-term juggling), and different social pressures. All of the above combines with increased disconnect in many countries between different social groups and people starting to think that maybe, maybe, there's something weird. Then they look into how some people have been pointing that this is the "pure capitalism", maybe started calling it "late stage capitalism" to compare with more encumbered earlier forms, etc.
- FrustratedMonky 3y ago
  Exactly -> " Corporate entities are a lot like paperclip optimizers " We are so scared of AI paperclip optimizers, but don't see that humans are machine s that optimize to have as much sex and food as possible. Our society is optimizing for producing Doritos and Taco Bells and McDonalds and Porn. Wasn't there a George Carlin bit about men only went to the moon so they could brag and get laid? All our better 'accomplishment' can be reduced to sex. Art, Music, Writing, is sex. And, Capitalism just smooths the way to the lowest common denominator. Unless people wake up and put limits on it, like a regulator on an engine so it doesn't blow up.
thelastparadise 3y ago
> How does a constant factor (capitalism) explain a change? You show me the incentives and I'll show you the outcome.
FrustratedMonky 3y ago
Yes. Capitalism has created a lot. As the pure simple form of transactions of value. I build x, you build y, barter is inefficient, so we use money to smooth it out. Adam Smith, yada, yada, yada. The problem is that Capitalism is not static. It is an evolving system. Many people that are Capitalism cheer leaders are proponents of a very simplified version, that they want to 'get back to' even thought it generated Robber Barons. As it evolves, it warps society. It forces people into constraints of decision making, across all layers. Management wants a bonus, so they push for 'cheaper at all costs', short term quarterly goals, and it warps government by buying off politicians, lobbying, and middle managers or line workers, they have kids to feed, bills to pay, they aren't fighting back/rocking the boat. So this whole situation continues to evolve, until it reaches a breaking point. Marx was not the only one that called this out. He is just the one everyone hates on. Even thought his work defined the word 'capitalism', and most of the more 'academic' side of his work is just doing what economist do today. What he pointed to was the end-state of the system as it grows, it's inevitable crash. Many others besides Marx have pointed out the trend. Nietzsche was expressly not-Marx, and also identified the same trends and end state of Capitalism. You can find examples going back to Plato. When wealth generation is the only drive, the society eventually collapses.
- p_l 3y ago
  In many ways Marx works are continuation of Adam Smith's, who is explicitly calling against "rent extraction" and that landlords are curse on society and economy - which in mostly agrarian economies meant landlords held the means of value of production. It's very ironic to later see fervent defense of rent seeking under the banner of "Adam Smith Institute" (at least an org named so locally) :/
  - FrustratedMonky 3y ago
    Have to agree. The Right, worship Adam Smith, and Hate Marx. But when I read Adam Smith, it sounds kind of what would be called socialist from the right. Marx was doing economic theory. He was paid to write the 'C Manifesto'. Not that he didn't also believe, but he did do actual economic work, it wasn't just all propaganda calling for a revolution. There was theory behind it.
camgunz 3y ago
Compared to other economic systems, capitalism hasn't been around for very long. How fast do you want things to happen before evaluating the economic incentives? My point here is that incentives can work over time and interact with environmental factors. You're making essentially the same argument Larry Summers made against greedflation, "I don't think corporations suddenly became more greedy, so this can't be a phenomenon". Sure, greediness didn't change, but the economic and political environment did, giving the actors cover to collectively raise prices. It's the same as an algal bloom, the initial amount of algae was constant, but at some point the amount of fertilizer in the water increased and it multiplied at greater rates. Or, empirically, you're making an argument against evaluating any economic system. The fall of the USSR couldn't have been due to communism, because communism was in effect the whole time. The fall of Empire X couldn't have been due to feudalism/mercantilism, because feudalism/mercantilism was there the whole time.
Buttons840 3y ago
What if we replaced capitalism with a focus on consumer choice, competition, and free markets? I'm being a bit flippant with that question, because supposedly capitalism is all about consumer choice, competition between companies, and free markets. But I often feel that people who defend "capitalism" vigorously will turn around and say "meh" when shown a market with little consumer choice and little competition. Their blood pressure will go up 20 points while defending capitalism, but they barely blink an eye at a market without competition. How often do consumers have only 2, or fewer, choices? So much for customer choice, so much for competition. I want to see a political cartoon that shows 2 panels, the first is "the free market ideal" with a bustling market filled carts selling food and goods, the next panel is "the free market reality" showing a bunch of tired people waiting in line for one of two computer terminals, and both computer terminals are operated by the same guy and one of the is broken. We need to stop talking about capitalism vs Marxism and instead talk about consumer choice and competition between companies. Are we happy with the amount of consumer choice we have? Are companies competing by trying to offer the best goods and services they can, or are they exploiting consumers and making profits by moving money around and rent seeking? We need to talk about IP laws and what makes a free market "free". We need more talk about the underlying principles and less talk about politically charged buzzwords. I've tried to capture all this before in a question I ask: What does it mean when the things that (supposedly) happen in a healthy capitalist society aren't happening?
- FrustratedMonky 3y ago
  This might be because lawmakers equate 'capitalism' with 'big business', and thus are in favor of large mergers. If you try to discuss splitting a company, or denying a merger, you are called a communist for standing in the way of business. The concept of 'competition' in capitalism is somewhat lost now.
  - orwin 3y ago
    It's because capitalism isn't about competition or free market? It's about extracting rent on capital, hence the name?
safety1st 3y ago
I started tuning out of this article when it referred to the market Boeing is in as a "free market." I assume the article's author is not a moron, so I don't know how he can lie and distort reality with such a straight face. I mean at this point the story is older than most of the people who read HN, 1) US government "deregulates" an industry, 2) this amounts to allowing the executives of the largest firms in the industry regulate themselves, 3) said individuals float between the top firms and various lobbying or regulator jobs and craft new policy which entrenches said firms. Witness the decline for example in the number of US defense contractors, there used to be hundreds a few decades ago, and now there are only really five that matter. Boeing is one of them of course. We know and have known for hundreds of years what happens when a firm becomes a monopoly, they cut costs even as their prices and profit margins go up, because they have no competition to keep them customer focused. Jesus Christ, Defector.com and David Roth, Boeing's markets are the polar opposite of a free market.
- raziel2p 3y ago
  Could this just be a naming issue? I would argue that a totally free market (as opposed to a regulated competitive market) will systematically lead to monopolies and corruption. Maybe your definition of "free" is different from mine (and potentially the author's).
  - from-nibly 3y ago
    A totally free market will lead to a regulated one in an attempt to create monopolies. Monopolies are created by regulation, not broken up by it.
    - rickydroll 3y ago
      A truly free market has guardrails to prevent cheating such as monopolies, price fixing etc etc. The current fetishized free market is one of the avenues for monopoly creation. see Standard Oil, IBM, AT&T. In this kind of free market, if there is no outside influence such as government regulation or crowdsourced guillotines, the person with the most Capital will just buy up all the competitors and on the market. There are regulation-based monopolies are relatively rare. there are examples of natural monopolies such as cable companies using regulation to enhance the power of a natural monopoly. One important regulation-based Monopoly is the one created by patents and copyrights. one fix is to make patents automatically license-able under RAND https://mpeg-g.org/knowledge-base/what-is-a-rand-license-rand-terms/ https://mpeg-g.org/knowledge-base/what-is-a-rand-license-ran.... Inventor is rewarded, everyone gets to use it, pubic licensing terms.

raziel2p 3y ago

A simple answer may be that capitalism used to be more regulated than before. Not in all areas/industries, but overall - and if not in theory, at least in practice. Maybe the art of lobbyism, legal work, and public relations has gotten more advanced, for example, or company profits have become large enough that they can blatantly break laws and just pay the fine.

deleted 3y ago
[deleted]
jpadkins 3y ago
The federal register (sum of all US federal regulations) is orders of magnitudes larger than it was 40 years ago. I don't think a quantity argument is interesting (there is definitely more regulations). Possibly there is a quality argument to made: Due to the regulator capture process (large corporations have seized control of the federal government), the effectiveness of regulations have decreased a lot while the volume has increased. This also serves as a barrier to entry for competition, while also profits for compliance.
- raziel2p 3y ago
  This is not what I meant to imply either. More laws can lead to less regulation, if the added laws are full of loopholes that can be abused. Definitely agree with you on the quality/quantity argument: Simplifying laws and regulations should be more on the political agenda IMO.
meowfly 3y ago
I agree with you, but it's also worth noting that Boeing is one of the "too big to fail" industries tightly coupled to the government. It's too valuable to the DoD to let fail. There are several industries (microchips have recently become one) where finance has figured out the normal rules around competition don't matter. Boeing can capture the upside and there is virtually zero risk of bankruptcy or being nationalized from mistakes.
Ekaros 3y ago
I think it is pretty clear that regulation or at least effectiveness of such must have peaked in relatively recent past. Going back century or two certainly had capitalistic practises, but also much lesser regulations in many places like food or safety of products. Now interesting question is when did the effectiveness or regulation peak?
acdha 3y ago
I’d extend that to say “regulated” in both the legal and broader social senses - not just comparing government regulation before and after the Reagan/Thatcher era but also things like connection to places: smaller businesses are more likely to be run by someone who feels some responsibility to look after their community and workers, which certainly wasn’t perfect but still better than what happens with huge multinationals whose senior leadership probably isn’t even in the same time zone and certainly aren’t worried about going to church/the country club with people who will ask them why they’re polluting so much or decided to lay off a bunch of people right before Christmas. I don’t want to oversell that kind of thing as a factor but I really think there’s a cost to scale when a business reaches the point of impersonality where you don’t even know or have much concept of the existence of the people affected by your decisions.

pohl 3y ago

Would you mind quoting the passage in the present article where the assumption that capitalism started in the last 20 years or so is made?

bsder 3y ago

> How does a constant factor (capitalism) explain a change? Regulations. Short-term-itis mostly got rolling with people like Icahn in the 1980s and asset stripping. All that got rolling due to changes in regulations around finance. And then tech and VCs poured accelerant on the flames.

p_l 3y ago

A lot of it is slow realisation that this was always the "end game" of capitalism. Beware Marxist terms, but then he kinda coined the "capitalism" term too! Big simplifications ahead. Capitalist is an entity who makes money because they own capital. Any actually productive activity (like investments into products/factories/people/etc) are secondary to extracting rent from owning the capital. Now, for various reasons, few different things dominated over economy in the past: 1) Rate of return on investment for actual production, investment, etc was bigger than for rent extraction. Some of this was due to wars shaking things up, some of it was due to non-availability of (2) 2) Ability to grow capital purely by speculation was limited by physical & legal issues. This is where financial industry/engineering comes in - you can spend all your efforts on pure speculation, do corporate raiding etc. and be shielded from consequences. Same with earning money just by moving money around exploiting sub-second price differences. 3) (2) was less acceptable in the past - but became very much so in the present, even if there's constant grumbling about Wall Street - hell, the amount of people who claim that "maximizing shareholder value" is an actual law you're obligated to follow should be good point about it. 4) Corporate entities are a lot like paperclip optimizers - individuals in them can be individually moral and the corporate entity can still be an amoral profit chaser, especially in face of external stockholders. However, in the past, they faced different limits (legal & physical), different stockholders (less volatility and short-term juggling), and different social pressures. All of the above combines with increased disconnect in many countries between different social groups and people starting to think that maybe, maybe, there's something weird. Then they look into how some people have been pointing that this is the "pure capitalism", maybe started calling it "late stage capitalism" to compare with more encumbered earlier forms, etc.

FrustratedMonky 3y ago
Exactly -> " Corporate entities are a lot like paperclip optimizers " We are so scared of AI paperclip optimizers, but don't see that humans are machine s that optimize to have as much sex and food as possible. Our society is optimizing for producing Doritos and Taco Bells and McDonalds and Porn. Wasn't there a George Carlin bit about men only went to the moon so they could brag and get laid? All our better 'accomplishment' can be reduced to sex. Art, Music, Writing, is sex. And, Capitalism just smooths the way to the lowest common denominator. Unless people wake up and put limits on it, like a regulator on an engine so it doesn't blow up.

thelastparadise 3y ago

> How does a constant factor (capitalism) explain a change? You show me the incentives and I'll show you the outcome.

FrustratedMonky 3y ago

Yes. Capitalism has created a lot. As the pure simple form of transactions of value. I build x, you build y, barter is inefficient, so we use money to smooth it out. Adam Smith, yada, yada, yada. The problem is that Capitalism is not static. It is an evolving system. Many people that are Capitalism cheer leaders are proponents of a very simplified version, that they want to 'get back to' even thought it generated Robber Barons. As it evolves, it warps society. It forces people into constraints of decision making, across all layers. Management wants a bonus, so they push for 'cheaper at all costs', short term quarterly goals, and it warps government by buying off politicians, lobbying, and middle managers or line workers, they have kids to feed, bills to pay, they aren't fighting back/rocking the boat. So this whole situation continues to evolve, until it reaches a breaking point. Marx was not the only one that called this out. He is just the one everyone hates on. Even thought his work defined the word 'capitalism', and most of the more 'academic' side of his work is just doing what economist do today. What he pointed to was the end-state of the system as it grows, it's inevitable crash. Many others besides Marx have pointed out the trend. Nietzsche was expressly not-Marx, and also identified the same trends and end state of Capitalism. You can find examples going back to Plato. When wealth generation is the only drive, the society eventually collapses.

p_l 3y ago
In many ways Marx works are continuation of Adam Smith's, who is explicitly calling against "rent extraction" and that landlords are curse on society and economy - which in mostly agrarian economies meant landlords held the means of value of production. It's very ironic to later see fervent defense of rent seeking under the banner of "Adam Smith Institute" (at least an org named so locally) :/
- FrustratedMonky 3y ago
  Have to agree. The Right, worship Adam Smith, and Hate Marx. But when I read Adam Smith, it sounds kind of what would be called socialist from the right. Marx was doing economic theory. He was paid to write the 'C Manifesto'. Not that he didn't also believe, but he did do actual economic work, it wasn't just all propaganda calling for a revolution. There was theory behind it.

camgunz 3y ago

Compared to other economic systems, capitalism hasn't been around for very long. How fast do you want things to happen before evaluating the economic incentives? My point here is that incentives can work over time and interact with environmental factors. You're making essentially the same argument Larry Summers made against greedflation, "I don't think corporations suddenly became more greedy, so this can't be a phenomenon". Sure, greediness didn't change, but the economic and political environment did, giving the actors cover to collectively raise prices. It's the same as an algal bloom, the initial amount of algae was constant, but at some point the amount of fertilizer in the water increased and it multiplied at greater rates. Or, empirically, you're making an argument against evaluating any economic system. The fall of the USSR couldn't have been due to communism, because communism was in effect the whole time. The fall of Empire X couldn't have been due to feudalism/mercantilism, because feudalism/mercantilism was there the whole time.

Buttons840 3y ago

What if we replaced capitalism with a focus on consumer choice, competition, and free markets? I'm being a bit flippant with that question, because supposedly capitalism is all about consumer choice, competition between companies, and free markets. But I often feel that people who defend "capitalism" vigorously will turn around and say "meh" when shown a market with little consumer choice and little competition. Their blood pressure will go up 20 points while defending capitalism, but they barely blink an eye at a market without competition. How often do consumers have only 2, or fewer, choices? So much for customer choice, so much for competition. I want to see a political cartoon that shows 2 panels, the first is "the free market ideal" with a bustling market filled carts selling food and goods, the next panel is "the free market reality" showing a bunch of tired people waiting in line for one of two computer terminals, and both computer terminals are operated by the same guy and one of the is broken. We need to stop talking about capitalism vs Marxism and instead talk about consumer choice and competition between companies. Are we happy with the amount of consumer choice we have? Are companies competing by trying to offer the best goods and services they can, or are they exploiting consumers and making profits by moving money around and rent seeking? We need to talk about IP laws and what makes a free market "free". We need more talk about the underlying principles and less talk about politically charged buzzwords. I've tried to capture all this before in a question I ask: What does it mean when the things that (supposedly) happen in a healthy capitalist society aren't happening?

FrustratedMonky 3y ago
This might be because lawmakers equate 'capitalism' with 'big business', and thus are in favor of large mergers. If you try to discuss splitting a company, or denying a merger, you are called a communist for standing in the way of business. The concept of 'competition' in capitalism is somewhat lost now.
- orwin 3y ago
  It's because capitalism isn't about competition or free market? It's about extracting rent on capital, hence the name?

safety1st 3y ago

I started tuning out of this article when it referred to the market Boeing is in as a "free market." I assume the article's author is not a moron, so I don't know how he can lie and distort reality with such a straight face. I mean at this point the story is older than most of the people who read HN, 1) US government "deregulates" an industry, 2) this amounts to allowing the executives of the largest firms in the industry regulate themselves, 3) said individuals float between the top firms and various lobbying or regulator jobs and craft new policy which entrenches said firms. Witness the decline for example in the number of US defense contractors, there used to be hundreds a few decades ago, and now there are only really five that matter. Boeing is one of them of course. We know and have known for hundreds of years what happens when a firm becomes a monopoly, they cut costs even as their prices and profit margins go up, because they have no competition to keep them customer focused. Jesus Christ, Defector.com and David Roth, Boeing's markets are the polar opposite of a free market.

raziel2p 3y ago
Could this just be a naming issue? I would argue that a totally free market (as opposed to a regulated competitive market) will systematically lead to monopolies and corruption. Maybe your definition of "free" is different from mine (and potentially the author's).
- from-nibly 3y ago
  A totally free market will lead to a regulated one in an attempt to create monopolies. Monopolies are created by regulation, not broken up by it.
  - rickydroll 3y ago
    A truly free market has guardrails to prevent cheating such as monopolies, price fixing etc etc. The current fetishized free market is one of the avenues for monopoly creation. see Standard Oil, IBM, AT&T. In this kind of free market, if there is no outside influence such as government regulation or crowdsourced guillotines, the person with the most Capital will just buy up all the competitors and on the market. There are regulation-based monopolies are relatively rare. there are examples of natural monopolies such as cable companies using regulation to enhance the power of a natural monopoly. One important regulation-based Monopoly is the one created by patents and copyrights. one fix is to make patents automatically license-able under RAND https://mpeg-g.org/knowledge-base/what-is-a-rand-license-rand-terms/ https://mpeg-g.org/knowledge-base/what-is-a-rand-license-ran.... Inventor is rewarded, everyone gets to use it, pubic licensing terms.