The question I pose to professed anti-capitalists is: What is the viable alternative? Let's say we have a risky business proposition requiring the up-front investment of a lot of capital. (Building a new factory, say.) Under a capitalist system the owner of that money makes the decision, and as you point out in this piece that gives them skin in the game and a strong incentive to take the decision seriously.
What other viable decision-maker is there in this instance? A government committee? That's bound to get mired in politics and virtue-signalling. A worker collective? This will probably focus on short-term thinking (worker wages, etc.). I have never gotten a real answer from an anti-capitalist on these practical decisions at the root of everything.
Distributism provides one. It proposes, based on historical precedent with conceptual updates, a system in which all working-age individuals own their own individual means of production, thus being personally responsible for the conversion of their own personal labour into their own rent, and then in turn cooperatively aggregate those individual means of production into larger systems.
In another comment I referred the Modragon Corporation. It's a federation of cooperatives composed of 257 companies, each of which is owned by its members. It was founded in 1956 following Distributist ideas, and nowadays is Spain's 7th largest international corporation, employing over 80,000 people, see https://en.wikipedia.org/wiki/Mondragon_Corporation
Generally speaking then, I'd say the problem you point about worker collectives arise not from them being by workers, or being collective, but lacking the key characteristic of each member owning their own means of production, which is what provides the "skin in the game" that collective endeavors need to become successful.
In a modern economy the notion is fuzzier than in pre-modern ones, but the, let's say, "moral principle" behind it helps.
The idea is that for a contract between two or more parties to be mutually beneficial, all parties need to be sufficiently autonomous so that refusing to sign it doesn't deprive any of being able to keep sustaining themselves. This ability to sustain oneself, in turn, cannot be alienated from them. Hence a "means of production", for practical purposes, is that which one would require to be able to keep sustaining themselves in the absence of more advantageous contractual relations with others -- and ideally, not as a handout from government, but as something a individual can employ to produce their own rent.
The simplest examples would be owning a car with which to provide ride sharing / cab services, or a computer to develop software with as a freelance developer, with the caveat if there's an intermediate service linking service providers and those hiring such services, the intermediate service itself should be cooperatively owned by those providing the service. Hence, Uber-like services would be owned by the ride sharers themselves, via stakes on that ride-sharing cooperative. If one such service provider decided to leave that cooperative to join another, they'd receive their stake back from it and invest it into their new ride-sharing cooperative.
Other professional categories would have distinct specificities, but the basic structure would be be similar.
I'll play devil's advocate to why decisions being made by owner's can lead to people questioning that system. There are examples all over the U.S. of derelict and sometimes toxic leftovers of factories that were built by owner's with skin in the game. But, when those factories became unprofitable, the owners simply abandoned them by declaring bankruptcy, then walking away leaving local communities holding the bag. Obviously this isn't the norm and probably represents a pretty small portion of investments, but it is a highly visible reminder to people that owner's skin in the game doesn't always yield the best results for the affected community.
What you're highlighting is the need for regulation in a capitalist society, to better align the aims of the capitalist (wealth) with the aims of the community at large. This is the domain of pollution control laws, labor laws, zoning laws, and so on. A lot of gray areas here and room for vigorous debate.
What I would argue is not really up for debate is the engine that powers it all: Capitalism. Capitalism puts the person with the most to lose in charge of making investment decisions, which yields the best possible decisions. (There are some scifi futures, like The Culture, where benevolent AIs take over these decisions in lieu of capitalists. Maybe someday?)
I agree completely. I might say it differently that the capitalism is the fuel that powers the engine, but that's semantic quibbling. What I'm trying to highlight is why there is distrust of the capitalist system.
Having said that, one could point out that you actually see far more derelict and toxic factories in the former communist countries of Eastern Europe and the USSR than you do here so it's hard to rationally argue that socialism has gotten it any better.
"The question I pose to professed anti-capitalists is: What is the viable alternative? "
How about a capitaliest system with a level playing field? Some people enter the game with billions, laws tailored to expanding and sequestering wealth, and setting policy to their particular needs. Others are left to suffer. When I see a behemoth like Apple computer threatening apple growers because of an image of an apple on a logo, I see more than the fraying of edges of reason, I see one more example that Capitalism needs regulating.
I find myself aligning with your priorities, Robin, particularly your focus on a world that 'works.' However, I'd argue that the scope of what makes a world 'work' extends beyond commerce and economic efficiency. In 1973 when I worked in New Jersey across from Staten Island, the Arthur Kill was dead. DuPont operated a chemical plant that became a superfund site. DuPont was an industry leader in safety and environment; how long would the cleanup have taken without regulations?
The current climate crisis appears to be the result of regulatory failure. In today's complex information landscape, the need for thoughtful regulation is urgent, albeit in different forms.
A world that 'works' should also consider ethical, social, and environmental factors, creating a balanced ecosystem where commerce is just one aspect of a thriving community.
And that's all lovely, but starting in the 70s we regulated the best possible carbon free power source practically to death. France, which ignored the antinuclear movement with their usual Galic indifference has a minuscule carbon footprint for electricity generation.
That could have been us, if it weren't for the very environmental movement and regulators you are now calling on to save us. What critical infrastructure for the next crisis are they busy strangling and its cradle?
Garrett, your point about the potential downsides of regulation, especially in the context of France's nuclear energy program, is well-taken. However, it's worth noting that regulation has also had global successes, such as the international phase-out of CFCs (chlorofluorocarbons) to protect the ozone layer. This serves as an example of how well-crafted, adaptive regulation can address critical environmental issues effectively. The challenge is to develop regulations that are both flexible and targeted, allowing for technological and ethical advancements without stifling innovation. The aim should be a multi-faceted, thriving community that goes beyond mere economic efficiency.
Counterpoint: Regulation in practice is almost never flexible or well targeted. CFCs just happened to be a case where a simple blanket ban was the most effective regulation. It was successful because it didn't need to be adaptive.
For every CFC, there are dozens or hundreds of low flow dishwashers, gas stove bans, construction delays, pipeline cancellations, and endless red tape.
Economic efficiency isn't everything, but it is 80% of everything, and environmentalists tend to treat it as though were nonessential to modern standards of living.
I agree that capitalist competition is a powerful force for good most of the time, for the reasons you stated. It provides accountability for decision-makers: if their choices lead to less profit (which as you say is *usually* correlated with less good for society), the decision-makers often make less money themselves. But I don't think you are accurately describing the problems that can arise with it.
Monopolies are a problem that you casually dismiss because you say that repairing the problem of private monopolies must lead to an equal or greater problem of government monopolies. But there is a difference between a private monopoly and a government monopoly: the government monopoly is accountable to the voters. We see this in healthcare, where the countries with the best healthcare outcomes and lowest costs have single-payer systems. The USA has per-capita healthcare costs two to three times that of other Western countries, with worse health outcomes.
What we want is a system that maximizes the *useful* part of capitalism - which is ideal competition - and minimizes the harmful parts of capitalism: causing suffering for the workers to get more output from them, polluting the environment, selling products with dangerous defects the consumer is unaware of, creating monopolies, capturing the regulators.
Remember that in the limit of no regulation, corporations hire their own armies and effectively become small (or large!) governments themselves, setting whatever laws they please, without democratic accountability to the voters except the wealthy shareholders. They become the government regulators that were removed.
We can also take a lesson from the tale of the "paperclip optimizer." The paperclip optimizer is an AGI supervising a paperclip factory that was told to maximize production. As a result, it converts Earth into paperclips. The point is that even *slight* misalignment between the goals of a very powerful entity, and the general public, can lead to very bad outcomes. Now, in the short term, producing more paperclips is correlated with public good, just as producing more profit is correlated with greater public good. But if you take either to the extreme, the correlation no longer holds. Slaves are profitable, child workers are profitable, pollution is profitable, barely giving workers enough to live on is profitable, replacing all workers with robots is profitable, buying out the regulators and competitors is profitable.
A firm is accountable to customers when competition holds up. A monopoly is less accountable to customers than a firm with many competitors. As monopolistic status of a private firm increases, accountability of the firm goes down, until at a certain level of monopoly it may go below the accountability of a government monopoly to the voters.
Which is what we apparently see in healthcare. (There are also other factors beyond monopoly that make private healthcare providers less accountable to the customer, chiefly that the customer isn't able to determine the quality of product he is buying, because he's not an M.D., and is not an actuary, and prices aren't posted ahead of time, and the services he will receive also may not be known ahead of time as they are at the discretion of the doctors, and he may be having a heart attack at the time he needs to decide who to get care from.)
But it is almost impossible to maintain a monopoly without force.
Usually that comes in the form of a government license (along with the right to sic the police on any potential competitors) or through the use of extralegal intimidation and violence.
Otherwise the rewards for a successful new entrant to the market are simply too large for the monopolist to keep them out.
The trend since the 80s is for US corporations to get bigger and bigger, and fewer in number, through buying up smaller companies and competitors. Have you seen that graphic of which brands belong to which US food companies? 10 food companies control the majority of brands in the supermarket. Economies of scale are a thing, network effects are a thing, startup costs are a thing. Comcast is notorious for poor treatment of their customers, enabled by the fact that most people have very few options for internet service for where they live.
And yet, somehow there are new brands of atrocious sweetened drinks, yogurt, breakfast bars, protein shakes, and every other food under the sun popping up every week. Economies of scale are a real thing, but that is very different from a monopoly and very, very different from behavior that harms consumers. All that consolidation has done nothing to prevent new entrants into the market, and nothing to raise prices. (We can thank Congress and the Fed for that last one.)
You have a point about ISPs, but even there the worst thing you see is a temporary local monopoly in areas that have too few households to support a second ISP's infrastructure. Besides, when people demand that the government do something about monopolies, they don't mean Comcast in rural Wisconsin, they mean Google.
I use Google quite a lot, but I have other options in operating systems, in web browsers, even in search engines. There is an idea out there that a corporation being big is a bad thing in itself. If we believe that, we should say so. We should not call things monopolies that aren't.
There are few absolute monopolies but there are plenty of monopolistic companies - companies that benefit from reduced competition with other companies, allowing them to set their prices above their marginal cost of production. This harms the public by making them pay more and reducing the quantity produced. Big companies are usually monopolistic in some way.
Comcast is a national company, not a local company. Just one other ISP in an area is not enough to make them be nice, because of collusion. You need enough competitors that they won't be able to tacitly agree to not compete. That's more than 2.
Re "in the limit of no regulation", do you mean under pure anarchy, without any law or legal system whatsoever?
I don't think that the ordinary legal system (property rights, contracts and enforcement of them by courts, laws against theft and police to enforce them, etc.) is what most people mean when they say they're in favor of "regulation".
And it's the ordinary legal system that prevents the dystopia you describe.
What most people mean by "regulation" isn't the legal system - "regulation", as understood by most people, is specific rules about how to/not to do things, which trades are/aren't permitted, which things must or must not be done, what permissions are necessary to get from government before doing specific things, etc.
And in your dystopian "no regulation", why should corporations be accountable to the wealthy shareholders? It's the legal system that prevents the strong (those with armies and weapons) from robbing and enslaving the weak (which would include wealthy shareholders without their own armies). Not, I think, "regulation".
Mining companies used to hire Pinkerton men to physically assault and in some cases kill striking workers. At some point the government stepped in and said you can't do things like that. Wouldn't you call that regulation?
"in your dystopian 'no regulation,' why should corporations be accountable to the wealthy shareholders" - because soldiers obey the people writing the checks. Otherwise they stop getting the checks.
There are regulations about how and when private security companies may use different levels of force, including lethal force. Regulations. This is how language is used.
Capitalism is the ONLY system but it requires vigorous regulatory attenuation and financial attribution to support the system itself. The sheer volume of ultra-wealthy voices (and their sycophants) criticizing various examples of bad (or good) regulation that might disproportionately affect their own happiness or competitive potential destroys the dialogue between normal, otherwise good people. It gets complicated when people don’t know what they are talking about, especially when influencers get involved as proxy messengers of policy.
Technically I agree with all the criticism of capitalism I just don’t immediately agree that it’s inherently bad. At the end market intervention is only as good as the innovation it contributes to. Like taxes to limit consumption is good if it leads to innovation of some sort. In the sense of funding schools and universities to some extent.
"...most of our most important decisions are made by a small elite strongly selected for success..." Wrong. Many and even most capitalist enterprises fail; those terribly clever elites turn out to be not so very clever. The enterprises that succeed do so as the result of millions of decisions made every day by non-elites aka consumers, average people, who vote with their wallets. And that, the power of free markets, is the strength of capitalism. Clever ideas that don't get votes go to the wall.
1) Yes, it largely is, but money is power under any system of governance.
2) Yes, it does, this is the main reason that anarchocapitalism with no redistribution at all is a miserable idea.
3) No, it doesn't. People are greedy, capitalism or not. Capitalism attempts to harness that greed by using it to encourage people to do things that other people want.
4) Certainly monopolies exist under capitalism, but they are guaranteed under its polar opposite. A government monopoly is still a monopoly and shares much of the same problems as a private monopoly. (In general competitive market >>> state monopoly > private monopoly.)
One of the drains on any systems' efficiency is narcissism and psychopathy. How can any system gain efficiencies by policing parasites and throwbacks who lack empathy and game off systems to suit themselves? Rent-seeking is one example. Reducing interactions to binary win-lose trades is another.
(1) I'm not so sure about this sentence: "Most probably realize that most any large social world we share will probably result in great inequality of status and influence (including over politics), with many high status folks selfishly pursuing even more status." I question whether most people actually *do* realize that. People tend to associate, over time, with others of similar status, ability, wealth, and interests, and lose track of the existence of people who are radically different in any of these dimensions. (This fact has been observed many times in the context of the poor or disabled et cetera being "invisible". They are -- but it is equally true that the rich and talented are also largely invisible to the average person, although less so than the poor and disabled of course.) It's also naturally difficult to understand the abilities of someone who is much more talented in some direction than you are: it's why occasional sports fans can observe a world champion and say "yeah he seems a bit better than average" while the avid well-informed fan (or gifted amateur) is shocked by the understatement.
For both reasons, I think there's actually a pretty good chance that most people, if asked to imagine the future of a world in which everyone is abruptly made exactly equal in power and wealth, would conclude that this world will persist in that state. They would *not* theorize that inequalities would rapidly arise anew, as those few people who were most talented and energetic along the axes rewarded in the New Order acquired greater influence than those who were less so. I mean, this is probably why historically people seem to imagine that one revolutionary act (land reform, an Affordable Care Act, whatever) will permanently remove some perceived inequality, and they don't imagine the effort must be repeated, over and over again, indefinitely.
(2) Arguably the use of "capitalism" as "a system of economic governance" is one of the brilliant sleights of hand of Marxism, because it portrays this set of ideas as some kind of choice -- an option we can select, one among many options. But I think there's a good argument that "capitalism" -- in the sense of a basic description of transactions, prices, the division between labor and capital, the accumulation of capital and its uses, et cetera -- is just a description of how the world naturally works. Any social system we impose on top of that by force just distorts the natural relationships. (One can certainly argue they are distorted in pro-social ways, of course.) Which means treating "capitalism" as a thing you can choose is akin to saying "Should we choose to live in a world where death happens to all? Maybe not! And while we're at it, maybe we should choose to live in a universe where entropy doesn't necessarily increase, there are all kinds of advantages to that, you know..."
Why is Poland pro-capitalist? The answer of 'capitalism makes you rich' seems insufficient, since that is true everywhere, but anti-capitalist attitudes do not dominate everywhere
"Capitalism" is an evolutionary newer ranking mechanism based on prestige status and in conflict with traditional dominance status hierarchies (such as monarchy, democracy or socialism).
The last point is very inaccurate. The US has a history of periods of strong anti-monopoly activity followed by periods of strongly allowing monopolistic techniques to run rampantly, and there are scholars such as Matt Stoller (https://www.thebignewsletter.com/) who show in richness of details how much the second attitude derail things by progressively causing more inefficiencies, not less, not the least of which are reduced markets, not broader ones.
Also, there's a conceptual confusion between free trade / free markets and Capitalism proper. Capitalism, as a specific mode of production, arose in the late 18th, early 19th century. There have been different economic systems before that allowed for free trade and free markets, at times even freer than in Capitalist proper, that however weren't Capitalist themselves.
The specific traits Capitalism brought to the broader set of free market systems were, first, a strong emphasis on progressively increasing the per capita productivity of work; second, a strong emphasis on the accumulation of Capital, in the technical sense of means of production. These two traits can be decoupled. Cooperativism, for example, can pursue the first trait with as much emphasis, while not pursuing the second. When done well the result are efficient businesses that interact via free market exchanges but that aren't Capitalist, a well-known example being the Mondragon Corporation in Spain.
When people criticize Capitalism then, they aren't criticizing the pursuit of efficiency or free markets, they're criticizing the distortions brought about by the accumulation of means of production and the incentives that accumulation in turn generate. Free markets themselves are, for most, with the exception of radical socialists, fine.
Capitalism will always be the only system that works. That’s because it mirrors the natural world. One has to exchange resources for other resources. The proportional value of that exchange is what makes it viable. Putting the opinions of others into play will just mess it up.
I looked into the study you linked. Interesting that Argentina ranks relatively high in their support for economic freedom (higher than Switzerland) but that doesn't seem to have influenced their actual policies that much in the last decades
The question I pose to professed anti-capitalists is: What is the viable alternative? Let's say we have a risky business proposition requiring the up-front investment of a lot of capital. (Building a new factory, say.) Under a capitalist system the owner of that money makes the decision, and as you point out in this piece that gives them skin in the game and a strong incentive to take the decision seriously.
What other viable decision-maker is there in this instance? A government committee? That's bound to get mired in politics and virtue-signalling. A worker collective? This will probably focus on short-term thinking (worker wages, etc.). I have never gotten a real answer from an anti-capitalist on these practical decisions at the root of everything.
Distributism provides one. It proposes, based on historical precedent with conceptual updates, a system in which all working-age individuals own their own individual means of production, thus being personally responsible for the conversion of their own personal labour into their own rent, and then in turn cooperatively aggregate those individual means of production into larger systems.
In another comment I referred the Modragon Corporation. It's a federation of cooperatives composed of 257 companies, each of which is owned by its members. It was founded in 1956 following Distributist ideas, and nowadays is Spain's 7th largest international corporation, employing over 80,000 people, see https://en.wikipedia.org/wiki/Mondragon_Corporation
Generally speaking then, I'd say the problem you point about worker collectives arise not from them being by workers, or being collective, but lacking the key characteristic of each member owning their own means of production, which is what provides the "skin in the game" that collective endeavors need to become successful.
"each member owning their own means of production" - what could that even mean in a modern economy?
In a modern economy the notion is fuzzier than in pre-modern ones, but the, let's say, "moral principle" behind it helps.
The idea is that for a contract between two or more parties to be mutually beneficial, all parties need to be sufficiently autonomous so that refusing to sign it doesn't deprive any of being able to keep sustaining themselves. This ability to sustain oneself, in turn, cannot be alienated from them. Hence a "means of production", for practical purposes, is that which one would require to be able to keep sustaining themselves in the absence of more advantageous contractual relations with others -- and ideally, not as a handout from government, but as something a individual can employ to produce their own rent.
The simplest examples would be owning a car with which to provide ride sharing / cab services, or a computer to develop software with as a freelance developer, with the caveat if there's an intermediate service linking service providers and those hiring such services, the intermediate service itself should be cooperatively owned by those providing the service. Hence, Uber-like services would be owned by the ride sharers themselves, via stakes on that ride-sharing cooperative. If one such service provider decided to leave that cooperative to join another, they'd receive their stake back from it and invest it into their new ride-sharing cooperative.
Other professional categories would have distinct specificities, but the basic structure would be be similar.
I'll play devil's advocate to why decisions being made by owner's can lead to people questioning that system. There are examples all over the U.S. of derelict and sometimes toxic leftovers of factories that were built by owner's with skin in the game. But, when those factories became unprofitable, the owners simply abandoned them by declaring bankruptcy, then walking away leaving local communities holding the bag. Obviously this isn't the norm and probably represents a pretty small portion of investments, but it is a highly visible reminder to people that owner's skin in the game doesn't always yield the best results for the affected community.
What you're highlighting is the need for regulation in a capitalist society, to better align the aims of the capitalist (wealth) with the aims of the community at large. This is the domain of pollution control laws, labor laws, zoning laws, and so on. A lot of gray areas here and room for vigorous debate.
What I would argue is not really up for debate is the engine that powers it all: Capitalism. Capitalism puts the person with the most to lose in charge of making investment decisions, which yields the best possible decisions. (There are some scifi futures, like The Culture, where benevolent AIs take over these decisions in lieu of capitalists. Maybe someday?)
I agree completely. I might say it differently that the capitalism is the fuel that powers the engine, but that's semantic quibbling. What I'm trying to highlight is why there is distrust of the capitalist system.
Having said that, one could point out that you actually see far more derelict and toxic factories in the former communist countries of Eastern Europe and the USSR than you do here so it's hard to rationally argue that socialism has gotten it any better.
"The question I pose to professed anti-capitalists is: What is the viable alternative? "
How about a capitaliest system with a level playing field? Some people enter the game with billions, laws tailored to expanding and sequestering wealth, and setting policy to their particular needs. Others are left to suffer. When I see a behemoth like Apple computer threatening apple growers because of an image of an apple on a logo, I see more than the fraying of edges of reason, I see one more example that Capitalism needs regulating.
I find myself aligning with your priorities, Robin, particularly your focus on a world that 'works.' However, I'd argue that the scope of what makes a world 'work' extends beyond commerce and economic efficiency. In 1973 when I worked in New Jersey across from Staten Island, the Arthur Kill was dead. DuPont operated a chemical plant that became a superfund site. DuPont was an industry leader in safety and environment; how long would the cleanup have taken without regulations?
The current climate crisis appears to be the result of regulatory failure. In today's complex information landscape, the need for thoughtful regulation is urgent, albeit in different forms.
A world that 'works' should also consider ethical, social, and environmental factors, creating a balanced ecosystem where commerce is just one aspect of a thriving community.
And that's all lovely, but starting in the 70s we regulated the best possible carbon free power source practically to death. France, which ignored the antinuclear movement with their usual Galic indifference has a minuscule carbon footprint for electricity generation.
That could have been us, if it weren't for the very environmental movement and regulators you are now calling on to save us. What critical infrastructure for the next crisis are they busy strangling and its cradle?
Garrett, your point about the potential downsides of regulation, especially in the context of France's nuclear energy program, is well-taken. However, it's worth noting that regulation has also had global successes, such as the international phase-out of CFCs (chlorofluorocarbons) to protect the ozone layer. This serves as an example of how well-crafted, adaptive regulation can address critical environmental issues effectively. The challenge is to develop regulations that are both flexible and targeted, allowing for technological and ethical advancements without stifling innovation. The aim should be a multi-faceted, thriving community that goes beyond mere economic efficiency.
Point.
Counterpoint: Regulation in practice is almost never flexible or well targeted. CFCs just happened to be a case where a simple blanket ban was the most effective regulation. It was successful because it didn't need to be adaptive.
For every CFC, there are dozens or hundreds of low flow dishwashers, gas stove bans, construction delays, pipeline cancellations, and endless red tape.
Economic efficiency isn't everything, but it is 80% of everything, and environmentalists tend to treat it as though were nonessential to modern standards of living.
I agree that capitalist competition is a powerful force for good most of the time, for the reasons you stated. It provides accountability for decision-makers: if their choices lead to less profit (which as you say is *usually* correlated with less good for society), the decision-makers often make less money themselves. But I don't think you are accurately describing the problems that can arise with it.
Monopolies are a problem that you casually dismiss because you say that repairing the problem of private monopolies must lead to an equal or greater problem of government monopolies. But there is a difference between a private monopoly and a government monopoly: the government monopoly is accountable to the voters. We see this in healthcare, where the countries with the best healthcare outcomes and lowest costs have single-payer systems. The USA has per-capita healthcare costs two to three times that of other Western countries, with worse health outcomes.
What we want is a system that maximizes the *useful* part of capitalism - which is ideal competition - and minimizes the harmful parts of capitalism: causing suffering for the workers to get more output from them, polluting the environment, selling products with dangerous defects the consumer is unaware of, creating monopolies, capturing the regulators.
Remember that in the limit of no regulation, corporations hire their own armies and effectively become small (or large!) governments themselves, setting whatever laws they please, without democratic accountability to the voters except the wealthy shareholders. They become the government regulators that were removed.
We can also take a lesson from the tale of the "paperclip optimizer." The paperclip optimizer is an AGI supervising a paperclip factory that was told to maximize production. As a result, it converts Earth into paperclips. The point is that even *slight* misalignment between the goals of a very powerful entity, and the general public, can lead to very bad outcomes. Now, in the short term, producing more paperclips is correlated with public good, just as producing more profit is correlated with greater public good. But if you take either to the extreme, the correlation no longer holds. Slaves are profitable, child workers are profitable, pollution is profitable, barely giving workers enough to live on is profitable, replacing all workers with robots is profitable, buying out the regulators and competitors is profitable.
Govt monopoly is accountable to voters, while the private one is accountable to customers, suppliers, and investors.
Law can exist w/o govt, so not fair to posit no law when you posit no regulation.
I wasn't trying to accurately summarize possible market failures.
A firm is accountable to customers when competition holds up. A monopoly is less accountable to customers than a firm with many competitors. As monopolistic status of a private firm increases, accountability of the firm goes down, until at a certain level of monopoly it may go below the accountability of a government monopoly to the voters.
Which is what we apparently see in healthcare. (There are also other factors beyond monopoly that make private healthcare providers less accountable to the customer, chiefly that the customer isn't able to determine the quality of product he is buying, because he's not an M.D., and is not an actuary, and prices aren't posted ahead of time, and the services he will receive also may not be known ahead of time as they are at the discretion of the doctors, and he may be having a heart attack at the time he needs to decide who to get care from.)
But it is almost impossible to maintain a monopoly without force.
Usually that comes in the form of a government license (along with the right to sic the police on any potential competitors) or through the use of extralegal intimidation and violence.
Otherwise the rewards for a successful new entrant to the market are simply too large for the monopolist to keep them out.
The trend since the 80s is for US corporations to get bigger and bigger, and fewer in number, through buying up smaller companies and competitors. Have you seen that graphic of which brands belong to which US food companies? 10 food companies control the majority of brands in the supermarket. Economies of scale are a thing, network effects are a thing, startup costs are a thing. Comcast is notorious for poor treatment of their customers, enabled by the fact that most people have very few options for internet service for where they live.
https://www.oxfamamerica.org/explore/stories/these-10-companies-make-a-lot-of-the-food-we-buy-heres-how-we-made-them-better/
And yet, somehow there are new brands of atrocious sweetened drinks, yogurt, breakfast bars, protein shakes, and every other food under the sun popping up every week. Economies of scale are a real thing, but that is very different from a monopoly and very, very different from behavior that harms consumers. All that consolidation has done nothing to prevent new entrants into the market, and nothing to raise prices. (We can thank Congress and the Fed for that last one.)
You have a point about ISPs, but even there the worst thing you see is a temporary local monopoly in areas that have too few households to support a second ISP's infrastructure. Besides, when people demand that the government do something about monopolies, they don't mean Comcast in rural Wisconsin, they mean Google.
I use Google quite a lot, but I have other options in operating systems, in web browsers, even in search engines. There is an idea out there that a corporation being big is a bad thing in itself. If we believe that, we should say so. We should not call things monopolies that aren't.
There are few absolute monopolies but there are plenty of monopolistic companies - companies that benefit from reduced competition with other companies, allowing them to set their prices above their marginal cost of production. This harms the public by making them pay more and reducing the quantity produced. Big companies are usually monopolistic in some way.
Comcast is a national company, not a local company. Just one other ISP in an area is not enough to make them be nice, because of collusion. You need enough competitors that they won't be able to tacitly agree to not compete. That's more than 2.
Re "in the limit of no regulation", do you mean under pure anarchy, without any law or legal system whatsoever?
I don't think that the ordinary legal system (property rights, contracts and enforcement of them by courts, laws against theft and police to enforce them, etc.) is what most people mean when they say they're in favor of "regulation".
And it's the ordinary legal system that prevents the dystopia you describe.
What most people mean by "regulation" isn't the legal system - "regulation", as understood by most people, is specific rules about how to/not to do things, which trades are/aren't permitted, which things must or must not be done, what permissions are necessary to get from government before doing specific things, etc.
And in your dystopian "no regulation", why should corporations be accountable to the wealthy shareholders? It's the legal system that prevents the strong (those with armies and weapons) from robbing and enslaving the weak (which would include wealthy shareholders without their own armies). Not, I think, "regulation".
Mining companies used to hire Pinkerton men to physically assault and in some cases kill striking workers. At some point the government stepped in and said you can't do things like that. Wouldn't you call that regulation?
"in your dystopian 'no regulation,' why should corporations be accountable to the wealthy shareholders" - because soldiers obey the people writing the checks. Otherwise they stop getting the checks.
No I wouldn't call that "regulation". Murder and assault are crimes handled by the ordinary legal system. Not "regulation".
If you don't use words the same way other people do, communication becomes difficult.
There are regulations about how and when private security companies may use different levels of force, including lethal force. Regulations. This is how language is used.
Capitalism is the ONLY system but it requires vigorous regulatory attenuation and financial attribution to support the system itself. The sheer volume of ultra-wealthy voices (and their sycophants) criticizing various examples of bad (or good) regulation that might disproportionately affect their own happiness or competitive potential destroys the dialogue between normal, otherwise good people. It gets complicated when people don’t know what they are talking about, especially when influencers get involved as proxy messengers of policy.
Technically I agree with all the criticism of capitalism I just don’t immediately agree that it’s inherently bad. At the end market intervention is only as good as the innovation it contributes to. Like taxes to limit consumption is good if it leads to innovation of some sort. In the sense of funding schools and universities to some extent.
"...most of our most important decisions are made by a small elite strongly selected for success..." Wrong. Many and even most capitalist enterprises fail; those terribly clever elites turn out to be not so very clever. The enterprises that succeed do so as the result of millions of decisions made every day by non-elites aka consumers, average people, who vote with their wallets. And that, the power of free markets, is the strength of capitalism. Clever ideas that don't get votes go to the wall.
My take on the four reasons capitalism is hated:
1) Yes, it largely is, but money is power under any system of governance.
2) Yes, it does, this is the main reason that anarchocapitalism with no redistribution at all is a miserable idea.
3) No, it doesn't. People are greedy, capitalism or not. Capitalism attempts to harness that greed by using it to encourage people to do things that other people want.
4) Certainly monopolies exist under capitalism, but they are guaranteed under its polar opposite. A government monopoly is still a monopoly and shares much of the same problems as a private monopoly. (In general competitive market >>> state monopoly > private monopoly.)
The market is more important than capitalism. The market will do away with capitalism when is it necessarily effective to do so.
One of the drains on any systems' efficiency is narcissism and psychopathy. How can any system gain efficiencies by policing parasites and throwbacks who lack empathy and game off systems to suit themselves? Rent-seeking is one example. Reducing interactions to binary win-lose trades is another.
An interesting essay. Two comments:
(1) I'm not so sure about this sentence: "Most probably realize that most any large social world we share will probably result in great inequality of status and influence (including over politics), with many high status folks selfishly pursuing even more status." I question whether most people actually *do* realize that. People tend to associate, over time, with others of similar status, ability, wealth, and interests, and lose track of the existence of people who are radically different in any of these dimensions. (This fact has been observed many times in the context of the poor or disabled et cetera being "invisible". They are -- but it is equally true that the rich and talented are also largely invisible to the average person, although less so than the poor and disabled of course.) It's also naturally difficult to understand the abilities of someone who is much more talented in some direction than you are: it's why occasional sports fans can observe a world champion and say "yeah he seems a bit better than average" while the avid well-informed fan (or gifted amateur) is shocked by the understatement.
For both reasons, I think there's actually a pretty good chance that most people, if asked to imagine the future of a world in which everyone is abruptly made exactly equal in power and wealth, would conclude that this world will persist in that state. They would *not* theorize that inequalities would rapidly arise anew, as those few people who were most talented and energetic along the axes rewarded in the New Order acquired greater influence than those who were less so. I mean, this is probably why historically people seem to imagine that one revolutionary act (land reform, an Affordable Care Act, whatever) will permanently remove some perceived inequality, and they don't imagine the effort must be repeated, over and over again, indefinitely.
(2) Arguably the use of "capitalism" as "a system of economic governance" is one of the brilliant sleights of hand of Marxism, because it portrays this set of ideas as some kind of choice -- an option we can select, one among many options. But I think there's a good argument that "capitalism" -- in the sense of a basic description of transactions, prices, the division between labor and capital, the accumulation of capital and its uses, et cetera -- is just a description of how the world naturally works. Any social system we impose on top of that by force just distorts the natural relationships. (One can certainly argue they are distorted in pro-social ways, of course.) Which means treating "capitalism" as a thing you can choose is akin to saying "Should we choose to live in a world where death happens to all? Maybe not! And while we're at it, maybe we should choose to live in a universe where entropy doesn't necessarily increase, there are all kinds of advantages to that, you know..."
Why is Poland pro-capitalist? The answer of 'capitalism makes you rich' seems insufficient, since that is true everywhere, but anti-capitalist attitudes do not dominate everywhere
"Capitalism" is an evolutionary newer ranking mechanism based on prestige status and in conflict with traditional dominance status hierarchies (such as monarchy, democracy or socialism).
Thank you for this post.
The last point is very inaccurate. The US has a history of periods of strong anti-monopoly activity followed by periods of strongly allowing monopolistic techniques to run rampantly, and there are scholars such as Matt Stoller (https://www.thebignewsletter.com/) who show in richness of details how much the second attitude derail things by progressively causing more inefficiencies, not less, not the least of which are reduced markets, not broader ones.
Also, there's a conceptual confusion between free trade / free markets and Capitalism proper. Capitalism, as a specific mode of production, arose in the late 18th, early 19th century. There have been different economic systems before that allowed for free trade and free markets, at times even freer than in Capitalist proper, that however weren't Capitalist themselves.
The specific traits Capitalism brought to the broader set of free market systems were, first, a strong emphasis on progressively increasing the per capita productivity of work; second, a strong emphasis on the accumulation of Capital, in the technical sense of means of production. These two traits can be decoupled. Cooperativism, for example, can pursue the first trait with as much emphasis, while not pursuing the second. When done well the result are efficient businesses that interact via free market exchanges but that aren't Capitalist, a well-known example being the Mondragon Corporation in Spain.
When people criticize Capitalism then, they aren't criticizing the pursuit of efficiency or free markets, they're criticizing the distortions brought about by the accumulation of means of production and the incentives that accumulation in turn generate. Free markets themselves are, for most, with the exception of radical socialists, fine.
Capitalism will always be the only system that works. That’s because it mirrors the natural world. One has to exchange resources for other resources. The proportional value of that exchange is what makes it viable. Putting the opinions of others into play will just mess it up.
I looked into the study you linked. Interesting that Argentina ranks relatively high in their support for economic freedom (higher than Switzerland) but that doesn't seem to have influenced their actual policies that much in the last decades