And during the gilded era. The big-time capitalists of that period were not people who made money in free market competition. They were people with inherited wealth who got beaten in free market competition by others with less inherited wealth but better entrepreneurial skills--and so they went to the government and got their competition outlawed, for example by getting monopoly rights to transcontinental railroad routes.
In other words, "capitalism" and "free market" are not synonyms, though capitalists love it when everybody else thinks they are.
Agreed, and that is in my opinion when entrenched Wealth was established to oppose the very notion of the US narrative about free enterprise. I think free commerce was possible when the US was a frontier, and even that has caveats, because Abraham Lincoln's relative was able to hi-jack California into the Union after the Bear Flag Revolution in Sonoma [1], won without any bloodshed by 30 something Frontiersmen after they removed a Mexican Governor and later made Pio Pico a politician in the New Republic to surrender without violence.
And I think it was also found in the Gold Rush thereafter. This was critical for the emerging Economy in CA that would eventually make it the 8th Largest Economy in the World.
> In other words, "capitalism" and "free market" are not synonyms, though capitalists love it when everybody else thinks they are.
I'm open to this idea, but how can you achieve this without mal-investment, and destruction of resources found in all other antithetical forms of Economic systems: I've lived and worked with Anarcho-Communists/Marxists/Socialists and I (Anarcho-Capitalist) was always the defining variable in our collective projects succeeding because they often reverted to endeavors that lost our operating Capital.
I'd get us to a certain benchmark and then we'd be able to procure services and goods to get us to the next phase only to run out of money half way because they felt it best to spend on 'feel good' gestures to appease their concerns rather than have a merit-based system where compensation came from ROI on labour and judged on an empirical individual basis.
I took pay hits, as in not paid at all and had to pay my own way for most of the entire time and I worked for free because I was so driven to make it happen, because they felt the need to take the money (they erroneously felt entitled to as funds ere held in common ownership) that I often earned on risky business ventures to offset the expenses/losses we incurred from things like printing useless propaganda and paying people for 'raising awareness' in the most useless demos imaginable.
My real mistake was to be so stubborn to my openness to collaborations with anyone who wanted achieve the same goal(s), regardless of ideology; in retrospect I'm glad I did these projects but I'm sure I had shortened my Lifespan having done these things on several occasions.
I can go on, but you get my point.
But my question remains: outside of the Capitalism, as in non State-Sanctioned Central Bank based cronyism, how do you achieve this?
I’d say decoupling capital from production in this way leads inevitably to all the things you mentioned for the simple fact that it optimizes for exactly that outcome rather than producing value.
I guess the theory goes that capital invested in profitable endeavors should produce value as a side effect. But it seems the capitalists determined that speculation and protectionism produces far more rent than actual value creation.
Edit: Not that this is an argument for central planning. Just that we still need to find a mode of production that optimizes for producing value rather than rent.
That's one possible result of capitalism, but not the only possible one.
> I guess the theory goes that capital invested in profitable endeavors should produce value as a side effect.
No, you have it backwards. Capital invested in profitable endeavors to produce value is the primary effect. You need capital investment to increase productivity, and you need increased productivity to produce more value with the same inputs, which benefits everyone, but also benefits the owners of the capital. In other words, it's a positive sum process.
The fact that ownership of such capital can also be used to extract rents, which is not positive sum, is the side effect.
> it seems the capitalists determined that speculation and protectionism produces far more rent than actual value creation.
Speculation is not the same as rent seeking; it's a legitimate (though risky) form of investment.
Protectionism is not an inherent feature of capitalism; it's what you get when you allow the government to play favorites.
> we still need to find a mode of production that optimizes for producing value rather than rent.
We already have one: free markets, no government playing favorites. The problem is actually sticking to it.
Speculation, as in buying some capital just to exclude it from others to profit from the resulting opportunity cost. Is the kind of rent seeking I was thinking of.
I agree with your notion capital as such and it’s role in production. I just think there could more interesting approaches invented to allocate it. For example to endeavors that don’t produce much rent, or even profit, such as commons based production (open source software being one example).
Markets mainly optimizes for lowering costs, not producing value. They are important tools for managing resource allocation, but thinking of them as optimize for value puts you dangerously close to interpret market prices as a measure of value.
I'm not sure why that would be the key qualification to make. A corporation that invests capital to improve productivity is investing capital as private property. I don't see why you wouldn't simply focus on whether or not the capital is invested to improve productivity.
> Speculation, as in buying some capital just to exclude it from others to profit from the resulting opportunity cost
"Speculation" is not normally defined as buying capital, but as buying goods that are expected to become scarce in the future. That is not rent seeking, it's a natural part of a free market, and serves a valid function. In a free market, by buying goods that the speculator expects to be scarce in the future, the speculator drives up their price now (by increasing demand), giving others an incentive to economize (thus conserving the good against future scarcity), and drives down their price in the future when the speculator sells them (by increasing supply), thus increasing the good's availability when needed. The profit the speculator makes is a perfectly normal profit based on the value provided.
I'm not sure why buying capital to exclude it from others would be termed "speculation", since buying capital at all, by its very nature, gives ownership of it to the buyer and excludes others. The buyer can rent it out, or can use it himself, but either way any ownership of capital, if used for productivity, earns a profit for the owner. That's why people do it. To term that "speculation" and "rent seeking" would make all productive enterprise rent-seeking, which is wrong.
> Markets mainly optimizes for lowering costs, not producing value.
Nonsense. Markets optimize for providing the things people want, as shown by their actual choices in that market. If people want more value and are willing to pay more for it, that's what the market will provide. The market for computer hardware is an excellent example: hardware with a wide range of capabilities and prices is available, because there are customers whose value to cost ratio is optimal at every price point over that entire range.
In cases where markets end up providing the lowest cost product and that's it, either the additional value in more expensive products isn't worth it to people, so they choose not to pay for it, or information about the additional value in more expensive products is not getting to the potential customers who might be willing to pay for it. The latter case can be viewed as suboptimal, certainly (transactions that would be positive sum if they happened are not happening), but it's not due to any simple flaw in markets; it's due to unavoidable facts about the real world that can't be handwaved away, and certainly can't be "fixed" by government intervention.
Now as the owner you can exercise that choice with no regard as to what would produce the most economic value. So the first option might very well be the most interesting for you even if there are more productive options. And the choice ultimately comes down to rent seeking, not value creation.
If, instead, the land could only be leased. The speculation option would not be there. The only option would be to use it for something that could pay the rent.
Now land is a bit special so perhaps not the best example. But to provide the details of how capital could be allocated as non-private property.
In a similar line of reasoning there are coop models of organizations with joint ownership of the means of production such that there isn’t a need for external capitalist ownership. And as such having different priorities, with no intention to trade shares the company might not need constant growth to achieve its goals, instead focusing on value creation first.
So the qualification was just that for a capitalist, acting only as the owner of capital, value production is secondary to return on investment.
On the topic of markets. I’d say the truth is somewhere between our two descriptions. Some of the more spectacular failures might be more tied to capitalism than markets as such. But certainly you agree there there are lots of value created outside of the markets entirely just as there lots of value destroyed within markets. Competition has its place, but there also has to be room for cooperation. I will just leave the spectacular failure that is capitalistic intellectual property approach v. commons based peer production as an example of how we clearly have some policy work to do before we can call things a success.
"True capitalism has never been tried".
Not true, I think Bitcoin and specifically when used on DNM have proven to be a test-bed for Free Market Capitalism. Its no surprise the State (FBI) shuts these down and non-us affiliated exchanges, using a myriad of reasons; not least of which charging them for Anti money laundering or Know your customer infringements outside of it's Jurisdiction when the SEC and IRS cannot even come to an agreed conclusion and refuse to define Bitcoin as Money or property so it exists in a limbo state with all the drawbacks of both. They use drug prevention as a pretense but let Purdue Pharmaceutical create an opioid crisis and use the Established Medical Industry to do it and no one goes to prison.
Bitcoin is not perfect, and there are tons of scams abound, but True, Free Market Capitalism has a home: The Internet.
Bitcoin happens to be the currency of the Internet, despite not currently being anonymous or very private at its base layer. This must change, and it is as we speak, but despite those limitations it still allows for the experiments to continue.
The fact that front-running isn't an established Raison D'être embedded deeply into its culture and system that diminishes any value purported from its supposedly 'open markets' is another.
I can go on, but if you can't see that then you have a very superficial understanding of either systems and are require far more education than I can avail to you.
I'm not saying this to be snarky, but its clear you're simply not paying enough attention if you have to ask.
Granted.
> as a Californian you are still closer to any other American in any measurable parameter you can think about than to people outside your country.
I disagree, we have very European centric Laws (the clean air act was inline with EU standards), our policy on immigration and foreign labor is very much like the EU--going so far as to defy the Federal Government as seen with its stnace of Ag labor against the Trumps administration, much of the US took massive crop losses while the CA ignored it entirely. To my surprise I have seen various signs written in both English as well Spanish, and in both Standard as well as metric systems to denote distance.
I've lived in Hawaii and to be honest, I think some of us, especially those of us from SoCal surf towns, have a greater cultural alliance with Hawaii than with the rest of the 48. Both are deeply rooted in its own respective rich History and has its own identity entirely--this is why we're always told we live in a bubble in CA, which I regret to say is true as that is not 'normal,' either. Only when I left did I realize just how perverse and toxic it could be, too. There is nothing positive about Hollywood culture, and its incredibly sordid History with Epstein and the like is just the tip of the Iceberg in my opinion.
Also California is massive, NorCal is like a different culture entirely itself--my family is originally from San Jose and Santa Cruz but I grew up all over the South and went to Europe in the summer. And the brief time I spent in the Valley, it mostly very dis-pleasurable.
Its a nice place to visit, or for business but I'd never live there again; the amount of Homeless is something I never got used to that is just normalized, and accepted. I have only ever seen something comparable in skidrow having grown up in the SoCal and its every where in the Bay Area. Everything is crowded, and expensive for no real reason other than the diaspora of People that flooded the housing Market, which in part I enjoy, but cannot justify as we have may more diversity in the South at a fraction of the cost(s). I don't know how anyone can live like that.
I live in CO now, and I can say this place is the US and despite the appearance sort of looking like Switzerland at times (where I've also lived and worked) its very American centric and still feels strange after living here all these years. When I first came in 2007 it felt even more mono-cultural and 'mountain folk-like' stripped of any cultural diversity outside of major towns. Which is interesting, but again, very different from where I was raised where you can literately visit 4-5 different Asian cultures in an hour going from North OC to the South.
> America didn't have lack of cohesion and identity, at those times when America could build it was overwhelmingly a north west European country with a certain set of value deriving from this.
You do realize that Columbus was Italian, and the Spanish conquistadors and colonizers/missionaries that followed were all Southern European, right? France followed in greater numbers than Germans or Nordics, too, hence why why Government documents are written in English/Spanish/French.
And I speak German, not well anymore if at all, but the presence of Germanic or Nordic People or its culture outside of the Great Lakes area is no where to be found, its blown out of proportion in relation to the amount of Spanish and French presence, especially in the West Coast and into Central and South America. Not only has California existed longer than the US, but so had what was called 'New Spain.' Which is why so many things are locations are written in Spanish well into the Midwest, Colorado being apt example.
> Turns out diversity is not a strength, it is a disaster and ruins social cohesion, solidarity and the ability to build. It is not going to get any better.
Honestly, I welcome the balkanization of not just the West, but the whole World. COVID has proven that large Nation-States/Empires cannot compete with City-States to not just contain a pandemic, but to provide the necessary PPE and other critical goods and the infrastructure for such a large population. In the process it has made us less safe, and on the brink of another economic Depression with obscene amounts of unemployment and unrest with Militarized Police all while we edge closer to World War with China/Russia/Iran vs US/UK/AUS/NZ/India/Hong Kong/Taiwan.
I"d argue that if there ever was a time for the Nation-State model, we have long surpassed it and there no anything to be gained from this modelin such an interconnected World and we should seek alternative to these horrible governing systems. We're going to have to re-negotiate with China, ideally without the belligerence of Xi and the CCP as well as Trump's imbecilic nature' so why not just cut to the BS posturing and saber rattling and have representatives from their respective provinces decide how to broker a deal in which Hong Kong gains Independence, as does Xianjing/Macau/Tibet/Taiwan and we can all go back to more pertinent things like advancing the Human Species with Space Exploration and reap the economic fruits of that instead of needless Warfare?
How we transition to that model is a mystery, but I pray it is without the need for more Bloody Revolution.
If they really wanted a History lesson on the matter I'd tell them California existed before the US did and how much Law and culture differs between CA and the rest of the US. There is a reason its many laws are aggregated as 49, pertaining to the rest, and not California. That has many caveats and drawbacks, but it exists and its worth noting.
> Moreover, it's easy to be disappointed with Americanism. Generational memory exists. People built last century expecting a better future this century, but capitalism and irresponsibility failed to make it happen. This country built roads and bridges it cannot afford to maintain [3], a health care system that bankrupts people and sells them addictions, an economy that disproportionately favors the rich, and a government that has spurred some dystopian agencies [5], destabilized many other governments [6] and is constantly at war [7] while failing to address the needs of its population.
For once I'd really like someone define what Capitalism has to do with the cronyism we've seen in the US since the gilded era. Capitalism as the mode of functional means of production has been lost since then, in its place you have robber-barons who monopolize a sector/Industry through the use of lobbyist and donations to politicians campaigns that keeps them in office way longer then was intended (Pelosi) and then offer them cushy jobs as consultants, effectively undoing the critical aspect of Capitalism: Competition.
At no point or time can I look at Jeff Bezos or Amazon and say that's Capitalism's success story, instead what you have is State sanctioned protectionism that skewed the playing field for an Amazon to take over and benefit from the model that is often berated. Labor laws seem to be entirely negligible to an entity that knows it can have a system bend to its will. The same applies to banks who not only create continual booms-busts cycles to consolidate their power, and wealth over a system but they enter into a realm in which we HAVE to believe they are 'too big to fail.' And suffer the consequences as nepotism and plutocrats emerge as the real rulers of Society.
That is exactly the antithesis of Capitalism.
Just for claity's sake: as an Anarcho-Capitalist I think Capitalism is inherently flawed at its core, as it relies on perpetual growth that can only be maintained for periods of a time, and often at great consequence to the Environment when and entity like the State exists and is the supposed vanguard. As its entirely susceptible to corruption, but its the best we have to ensure commerce continues as the viable default rather than warfare to procure goods and services.
But it's still often erroneously portrayed in a light that negates that much of the progress that got us to have critical things to modern Life and longer, healthier life expectancy are somehow the mistakes of Capitalism and not the desired outcome. And that some how we should entrust this responsibility to the very entity responsible for the corruption of a system (Governments) to benefit its own largess.
Just look at all the insider trading done by politicians on both sides as COVID was starting to shutdown the economy. That's what a political class does, it insulates itself from crimes that others would have to pay with jail or their very Life. Look at SLS with ULA, look at the entire banking sector post 2008... I can go on.
But I'd really like to see a response to this question: Define Capitalism, and how IT has led to the captured Markets and Industries you see, and are responsible for the entrenched wealth and inequality you describe.