On: Capitalism, Alone

Episode: N/A

Date: May 11, 2020

Background: Author and economist.

Key Subjects:

• Capitalism.
  • Both US and China are capitalist societies (in differing degrees and ways).
    • Decentralized coordination (of economic decisions).
    • Hired labor (open market wage rates).
    • Privately owned capital, investment (profit principle).
• Inequality.
  • Widening gap between middle-class and self-sustaining upper-class.
    • Upper-class advantages:
      • Income from both capital and labor (historically unique).
      • Family structure (dual income, assortative mating, inheritance of financial assets).
      • Ability to afford rising costs of education.
      • Disproportionately influence on political process.
      • Informational advantage (plugged in, understanding how institutions work).
  • Potential solution:
    • More widespread ownership of capital (middle-class).
    • [See  also “Sharing the Wealth as we Recover“.]
• Political capitalism.
  • There are rules, but they are flexible (lack of rigorous rule of law).
    • Rules: help to form an efficient bureaucracy that can manage sufficient level of economic growth.
    • Discretion: go outside the rules to punish or reward specific behavior.
      • Corruption (reward) is endemic, cost of doing business.
  • People are willing to trade economic gain for social freedom.
    • China, Singapore, etc.
• Global integration.
  • Global value chain incentivizes companies to uplift technologies in poorer countries.
• Bright side of capitalism.
  • Eradication of classes: capitalism dissolves institution of feudal classes.
  • Empathy: you have to put yourself in the shoes of your customers (to sell anything).
  • Peace: otherwise you can’t trade.
• Dark side of capitalism.
  • Outsourcing, commoditization and commercialization of private matters (health, food, etc.).
    • Loss of stability (gig-jobs instead of normal jobs).
    • Societal changes.
      • Reduced role of family (incentives to form households have gone down).
      • Atomization of social life (individuals become private enterprises).