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The World After Capital (worldaftercapital.org)
112 points by sethbannon on Apr 9, 2018 | hide | past | web | favorite | 118 comments



We do not live in a post-scarcity world, just the illusion of one. Ecological systems will collapse because humans' unchecked consumption patterns disrupt the homeostasis of those systems.

I feel sad that this person writes about "post-scarcity" and "post-capitalism" because it reinforces for me the fact that this person with the resources and station in life to help take responsibility for this accelerating, destabilizing train ride instead chooses to talk about a fanciful Utopia.


I think it's fair to argue that scarcity has been reduced significantly, and continues to be reduced. It's been replaced by hoarding. I agree that this book is a little naive in that way (from what i've skimmed) but it's also important not to dismiss the spirit of the claim just because we haven't totally solved all of our dependencies on limited resources.

edit: I also wanna point out that i get frustrated when people say "late stage capitalism" or "post-capitalism" because it's really presumptuous. For one thing, you have no evidence that you're anywhere near the "end" of capitalism, or even that it's in decline!


> we haven't totally solved all of our dependencies on limited resources

I think this seriously understates the case. Hoarding certainly matters in terms of shared wealth, but the resource use of the mega-rich is much closer to that of the middle class than their financial position. The common "fourth Earths to live like Americans!" statistics seem to abuse means, but even median first world consumption is basically debt-financed in terms of resource use.

Certainly we can expect more efficiency in the future, our current consumption isn't irreducible, but that's far from a guarantee we'll make it through the gate. The trend on issues like water consumption has been for efficiency gains to slowly lose out against the fundamentally unsustainable approaches taken everywhere from Oklahoma to Capetown.


Good comment: I don't really disagree with you. I probably shouldn't have thrown that thing in there about hoarding cause it's more of a gripe than anything. I guess what I was trying to say is that our current relation to power (that is, capital) results in serious inefficiencies like huge amounts of food going to waste because no one near them will pay, or people dying of preventable causes within walking distance of the services to prevent that outcome. This is kinda what i meant by hoarding: the resources that we can easily automate production of are just getting stockpiled instead of given to people.

Even worse, we "hoard" more abstract things like education. The means to pay for free education for all in America is well within the accumulated wealth of a few of those who have been most successful at accumulating it.

For sure I agree, though, that some sort of soviet-era attempt at forced redistribution wont magically solve all our issues. As you say, resources are limited and only further technology development will solve those issues.


Ah, thank you for the followup - you're right that we don't much disagree!

There's undoubtedly room to go back and forth on specifics, but it's hard to deny the extreme cases; access to things like clean water, mosquito netting, and essential medicines are exceedingly low cost for their amount of benefit.

The education point is even more poignant - faced with the sudden ability to offer educational resources at near-zero marginal cost, we've instead devoted huge effort to recreating scarcity (e.g. with login access codes in textbooks). Even outside gatekeeping spaces like college degrees, we end up with absurd situations like artificial limits on how many times a digital library book can be 'loaned' before it has to be 'destroyed'.

It's been a depressing road seeing that even in the least-scarce domains imaginable, we can't accept ways to create wealth other than artificial scarcity. (And conversely, it's been awesome to see things like Patreon sponsor free-for-everyone content creation.) I'm not sure what the answer will be - it's pretty clear that new technology will be necessary to make non-scarcity possible, but insufficient to make it happen.


Your comment made me wonder how deleterious it would be to a top university, say, Harvard, to add an extra student to each major track every semester that expressed a strong genuine desire to attend but could pass no admissions threshold. Lets say the costs were covered by me, personally. Would 50 majors * 8 semesters = 400 extra students† who didn't pass entrance muster really negatively effect the operation of the university or change existing student's access?

Your point about gatekeeping of resources that don't cost anything (perhaps for prestige?) is very striking.

† There are ~20k matriculating students at Harvard currently according to google so this increases the load by 2%. Also I totally made up the 50 major tracks figure. Just a guess.


Average life spans in the first world beginning to actually fall is a sign of some kind of decline.


A good example is when your parents did better at your current age..

Jobs were plentiful when your parents were your age. They were even more plentiful when your grandparents were your age.

Healthcare was reasonably priced then. Of course there was less that could be done, but people didn't go bankrupt because of a diagnosis.

Now we're seeing longevity declines and infant mortalities climb for the low and middle classes. Wealth disparity is also the greatest its ever been... But I'm sure they "worked hard" for being born into wealth.


Oh there are lots of ways to show that things are declining, but capitalism has been successful in concentrating wealth in the hands of those who have it. That system is working for those in power and as such I think it's extremely presumptuous to say we're living in the "late stage" or that we're anywhere knowably near the "post-" part of capitalism.


The question is whether that state of affairs can exist forever, or if the system can find a way to adapt and head off any cataclysm.


Genuinely curious, when was the last time humanity pro actively headed off a huge systemic problem instead of waiting for it to become a crisis?


I think the Great Depression could plausibly have ended with the total collapse of the US government if not for the combination of the New Deal and the WWII-driven stimulus.

I guess the problem with answering this question definitively is the counterfactual nature. Who's to really say what things would have been calamitous that ended up not turning out to be?


Maybe it is an indication of some kind of decline. Saying that decline is the decline of capitalism seems like a stretch, though.


People didn't wake up one morning and say "oh, Rome is gone and it's the Early Middle Ages now." I don't think it's that much of a stretch. At the very least, the postwar order is facing serious challenges.


It can also be argued that countries in which the majority of the housing and labor markets are "off the books" are still pre-capitalist.

So just because much of the world is not post-scarcity, it doesn't mean that he's wrong.

I just don't know if attention really will be the new currency or whatever. I think that part's ridiculous.

The real danger to post-capitalist possibilities is greed and the effect greed has on structures. Crypto could be the vehicle to take us past capitalism, but it looks like it's just gonna turn into capitalism 2.0. An even better way for the rich to use their wealth to put pressure on those without it.


No part of the world is post-scarcity.


There are different views of sustainability. My view is that the only path is continued progress. Here is what I write early on in the book https://worldaftercapital.gitbooks.io/worldaftercapital/cont...


I think you will find very few people who disagree with the abstract idea of "progress," but that isn't really a program.


Part 3 of the book is a program for that reason https://worldaftercapital.gitbooks.io/worldaftercapital/cont...


"Free ourselves from scarcity thinking." Brilliant. Do not worry about the decrease in arable land, shortages of drinking water, decline in biomass in fisheries, scarce minerals, or any of that stuff. It's all in your head! Mind over matter, man.


That's not the argument being made there.

Indeed, the argument is that "scarcity thinking" prevents people from addressing those problems, because people are afraid of losing what they have individually, and so are incapable of collaborating on collective issues.


What's the solution to declining fisheries that involves such "post-scarcity" thinking?


The point isn't that avoiding scarcity thinking magically provides a solution. It's that it's very difficult to implement a solution when you have e.g. a lot of fishers who stand to lose out from it.

The idea is that we should work towards a society where the people who currently fish are happy to stop fishing if necessary, because they don't fear for their survival or comfort if they do.

I'd agree it's not really a good short term solution to acute problems though.


I can't see how it would possibly work without such scarcity thinking as saying people can't take too much fish.


That's not what is meant by "scarcity thinking" in this context. I suggest you read the chapter about it.


Fish farming. Growing fish meat from stem cells. Finding substitutes for fish meat, e.g. via synthetic biology from fungi.


> Do not worry about the decrease in arable land...

Apply more technology: agroforestry combined with Boston Dynamics-type robots. Look into published material from/by Ernst Götsch, F. H. King, and Masanobu Fukuoka among others on principles. The techniques they worked out and published can be used to rebuild, reclaim, and build de novo arable land. Main criticism of these techniques is they are too labor-intensive. There isn't a law of physics that enforces wheeled farm machinery, so robotics-based farm machinery can assist with capturing scale. It's a new frontier, so no established player wants to pursue it at this time as long as our backs aren't against the wall when it comes to available arable land.

> shortages of drinking water...

Apply more technology: potable water supply is roughly a derivative function of available energy. Push comes to shove, we as a species are going to widespread nuclear power if necessary instead of the leadership dying by dysentery.

> decline in biomass in fisheries...

Apply more technology: mega-scale research and engineering to build fish sanctuaries/breeding grounds in the relative marine deserts of the open oceans. We're still in the relative hunter-gatherer phase of our aquaculture tech. When we have vast farms in the deep open water ocean that grow algae, then plankton, and upwards, raising an entire tower of consumption, instead of catching wild fish to feed domesticated fish, then I'd say we are relatively progressing into true aquaculture. Wouldn't hurt to develop at the same time genetically modified sponges and coral to capture and entomb mercury, and start millennia long filtration while we work out how to stop dumping it into our ecosystem.

> scarce minerals, or any of that stuff. It's all in your head!

Apply more technology: von Neumann mining while at the same time sending out starwisps to scout nearby star systems. Hundreds and even millennia-long timelines here, but not constrained by the known laws of physics, only by our species' own will to overcome our internal dissension.

The question I'm unsure of is will capital allocate to the "more technology" solution space before we as a species run out of time? I'm not entirely convinced capital markets actually understand the timelines, scales, and civilizational risks we are working with here, and even if individual people within the markets understand them, there is an argument to be made that the incentive structures of the markets combined with people's natural lifespans combine to create perverse incentives for funding Long Now-scale tech.

The dominant thesis the markets have embraced thus far is "the tech will become available when the threat becomes clear and present", which is outright faith and not based upon any settled science. Once the timeline to develop and deploy the tech to solve or even mitigate the challenges you outlined above exceed the timeline to catastrophic civilization-wide impacts, the capital markets have failed their anticipation function.


I find it hard to believe that individual actors acting in their own Rational Self-Interest will ever do what you are proposing. Governments, or private actors working hand-in-hand with the government, could do probably do so, even on the framework of a capitalist system, but you'd have to completely reverse the trend of privatizing and selling off everything.


Agreed, and I'm not even certain governments within capitalist systems can handle these challenges. At issue is the presence of scales that our species have not worked with before, both time and populations. We don't even have a good framework to judge relative difficulty between current and past technological eras, except perhaps coarse-grained energy per capita per annum metrics.

The time scale is a real killer IMHO. Many of the challenges involve timescales that are very vulnerable to abandonment by political processes, as progress is achingly slow for our current perceptions. We might be able to grow in bioreactors Memphis Meats-style protein, especially with CRISPR-powered advancements, but even that is a solid 4+ decades away before we see Neal Stephenson-envisioned sashimi for the masses. I don't see any kind of speculative investment trying to solve basic, low-margin deployments like that, on that kind of timescale.

And even then, I don't really see sustainability built into the design and research from the beginning; it is like we rarely see security built into general business software from the beginning. So for the protein availability challenge, I don't see an emphasis on creating the entire "stack" in a sustainable manner, starting from solar energy, building through to the feedstocks into the processes being researched. This perniciously binds us to legacy energy and materials production supply chains for those feedstocks, and creating more externalities into undesirable positive feedback loops.


I'm not sure if you read the entire book, but I don't think that this is a fair assessment of the main thesis the Author makes.

Of course we are not in a post-scarcity world. Capital itself will always be scarce by definition.

The question is: If time is not longer a viable means to obtain capital, how to adjust societal norms to compensate?


This is a non-serious piece. Not a single mention of mining/resource extraction or security. As long as people are fighting over rocks, we live in a capital-driven world. Key questions are who owns the minerals in the ground and the airwaves in the sky? "Humanism" has always been an ironic euphemism for imperialism, and I suppose it still is in "the world after capital."


Even if we had enough rocks, we'd still find something to fight about: ideas even.

Objectively, the number of wars deaths is going down, but tribalism overall seems to be going strong. Humanity has some growing to do, still.


We're no where close to eliminating scarcity or capital. We're so far from that there is almost no point in giving it serious merit. Probably centuries away. Humans being will be limited by scarcity until we're able to convert matter from one substance to another with ease, and able to freely genetically engineer ourselves to survive on other worlds.


I think that's the most important (and one of the least examined) aspect of "post-capitalism". It's easy for me and, I assume, anybody else to _envision_ a world where there's no more useful work for humans to do and therefore no further need for people to "earn a living". However, it seems pretty obvious that we're not there yet. We might be ten years away, we might be a thousand years away - but destroying civilization now because we figure we might get there in the near future strikes me as unwise. While I see lots of people debating about what to do when we get to the "end of capitalism", I see very few people trying to find any common ground as to how to figure out when we get to that point.


I think most people talking about the end of capitalism are imagining the system caving in on itself rather than its gentle evolution into a Utopian post-capitalist state.


The opposite of scarcity is not abundance. There is a state in-between which I call "sufficient." See https://worldaftercapital.gitbooks.io/worldaftercapital/cont...


Rather than throwing away the definitions and creating one that is very loosely supported, it may make more sense to divide scarcity into 'artificial' and 'innate' or something similar where artificial scarcity is created by 'attaching property rights' to something like in the air example; though you are correct, I do think that is a ridiculous example despite some people arguing for it.


> We need to figure out how to live in a World After Capital in which the only scarcity is our attention.

I’ve been thinking a lot lately about this issue. I believe that at the end of the day attention is the only finite resource. Sure, you can say time, but that’s more relative. For example - waiting in line at the supermarket seems like a waste of time, but if mind’s attention is uplifted / benevolent / doing something productive (whatever your values are) then it is a net gain.

Meanwhile I spend so much of my day watching YouTube and reading HN in a distracted and mindless manner.

Perhaps being Buddhist years ago shaped this perspective.


One could also be cynical about it and say that a human is reduced to a pure consumer, since productive mental work will be automated as well with a few exceptions. So there is nothing of value to contribute in the line at the supermarket, except for watching/listening to something and feeding the recommendation engine.


High quality land will always be a finite resource. They aren't making any more of it.


As a real estate investor, this is kind of true. Though for now there’s a lot of undeveloped land, if you venture beyond cities. And we could always build vertically. And some kind of Elysium-like thing. Some of it will have to be farmland, of course.


Most of that undeveloped land is undeveloped for a reason. The high quality locations (climate, natural resources, waterways) are already developed.

All else being equal, the majority of people prefer to have some space and privacy rather than being crammed into dense vertical developments.


Not until we start building orbital colonies at least.


Started skimming this and immediately started to wonder this guy's credentials, especially when I got to the parts on UBI and communism and how "governments distort markets". Like how can you write a book called "The World After Capital" with such a thin understanding of capitalism and the very very obvious prior art here, Marxism.

Then went back to the preface for the money shot:

> As a Venture Capitalist (“VC”)....


> One of my fundamental claims is that capital is no longer scarce. There is enough capital in the world to meet everyone's basic needs.

When was there not enough capital in the world to meet everyone's basic needs?

The 2015 estimated World GDP per capita is $16,800, or $46/day. The poverty threshold is $2 per day.

We crossed that threshold long before 1990.


Author is talking about different ages there, and reasoning that capital abundance will lead, amongst others (like technology development), to the transition from the industrial age to the next one, "the world after capital". Wikipedia says industrial age began around 1760. I don't understand why you talk about 1990.


Because the worldbank.org GDP per capita data start at 1990 :D. At it was still about $15 per day. I don't know if the poverty threshold was different back then.

[https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD]


Angus Maddison's data date back to the year 1 CE. They are frequently used in historic economic analysis.

https://www.rug.nl/ggdc/historicaldevelopment/maddison/


You demonstrated that average income exceeds the poverty threshold; that does not in and of itself demonstrate that there was adequate capital.

GDP is not a measure of capital; GDP is the value of goods and services produced.

That said, the burden is on the author of "The World After Capital" to demonstrate what is meant by "sufficient capital".


What exactly do you think it means to have "enough" capital, and how would you suggest measuring it?

Surely looking at the value of goods and services we are able to produce with existing capital is precisely that which we should be measuring to determine whether it's enough?


I'm not sure how to measure this, but as an observer, there are definitely things that to me are signs that we are drowning in capital.

It's easy to get money for really goofy projects with poor long term potential. Alot of motels and shopping centers are sustainable projects because of financial shenanigans where the developers are "harvesting" expenses to offset taxes for other projects and companies. Those schemes break down as the loans funding the properties shift from paying off interest to paying off principal. Airplanes are similar -- that's how you can fly to Europe on Norwegian Air for less than a bus ticket from NYC-Boston.


My suggestion in the book is to go back to a distinction between "needs" and "wants." A distinction that capitalism has unfortunately erased. For a great treatment of that I recommend "How Much is Enough" by Edward and Robert Skidelsky. Here is my take on Needs (caveat: this section of the book is heavily under development, so YMMV) https://worldaftercapital.gitbooks.io/worldaftercapital/cont...


Wikipedia defines capital as "a factor of production that is not wanted for itself but for its ability to help in producing other goods". That's the definition I learned in high school while studying Marx.

There is not an "after capital" world. To manufacture anything you need capital first. Even for software services you need software, that's also capital. So to reach a world of post-scarcity you need a lot of capital.


The argument being made here is not that we don't need the things we call capital, it's that we have enough capital now that allocating it is not the primary problem we need our economy to solve, and that the current system we use to do so (i.e. Capitalism) is limiting our ability to prioritise anything other than the creation of more capital.

Therefore I would read the title not as "after capital ceases to exist" but "after capital ceases to be as relevant".


Fair point. But, the concerns with attention are the other part of this thesis. How is attention related to capital?. I think this is a fair question.

Something worth considering in relating this to Marx is that while Karl Marx did not live at a time that would have favored a deep awareness of media, his work is very concerned with culture. His more economic terminology was "human relations" and how capital mediates human relations.

These days, what we call media ("mediation" of human communication) is at the root of our concerns with attention.

Having studied Marx, I assume my eagerness to relate his work to contemporary economics discussions might seem desperate but it seems desperate to me that others try so hard to do otherwise. I hope you'll forgive me.

Marx did live in a more simple time but the wonder of his work is that he identified so much of the forces that guide our society. Even living at a time when attention was at a surplus, his work is robust and thoughtful enough to translate in more modern times.


If you're interested in the role of attention under capitalism, I would recommend Peter Coffin's videos:

https://www.youtube.com/user/petercoffin

Most of his stuff is focused on how attention is used to manipulate people's worldview in the "Marketplace of Ideas", but his latest video is about considering attention as labour. (Although, I thought it was a little unclear tbh)


Yes, I also understand that what the author talks about is a change in focus. Similarly, when he talks about the transition from the agrarian age to the industrial, he doesn't imply "land" disappeared, that would be absurd.

I would also add that the author seems to be talking a lot about the transition, so maybe it's not so much "we have enough capital now", than "we're getting there in a few years/decades", and hence the question about what lies ahead. Well, he actually writes that:

> Capital is already no longer scarce in some parts of the world and rapidly less scarce everywhere.

Rapidly is a very relative term in this context.


If capitalism is limiting our ability to prioritize anything other than the creation of more capital, how do you explain ventures like SpaceX, which are highly capitalistic but demonstrably moving humanity forward?


I said "limits" not "prevents". During the Cold War both the USA and USSR developed their space programs extremely rapidly by deciding collectively to prioritise them.

Since that ended, the industry has developed much more slowly in the absence of an obvious profit incentive. Indeed, even now, SpaceX has relied on collectively allocated resources from NASA for many of their contracts, not to mention all the research done during that period.

And in any case, SpaceX is still an example of prioritising capital creation. SpaceX is a privately owned space launch system, which will likely primarily benefit other privately owned space industries in the near future. We may like that this particular capital is being created, but it's only a small part of the wider economy.


Funny thing the scenario you put forward in the last part is exactly how Marx envisioned the transition from capitalism to socialism (iirc, communism was seen as a possible stepping stone). Thus he expected it to happen in heavily industrialized nations like Germany or UK back when he was writing.

Supposedly Lenin was able to meet Marx once before the latter died, and asked Marx about his opinion on bootstrapping Russia straight to socialism. Marx thought it a folly as the nation lacked the industrialization that Marx figured was a prerequisite.


You have that backwards. In Marx's works, socialism was the stepping stone to communism.


And Marx was right. Russia was communist in the same way America is a democracy.


The definition you cite is not quite right (from a Marxian perspective).

According to Marx, capital is an accumulation of money used to purchase something so that it may be sold again AND whose consumption brings about an increase in the value of the commodity.

https://www.marxists.org/glossary/terms/c/a.htm


I think that Marx's definition of capital is significantly limited in comparison to what others refer to as capital. In a much more common usage, capital is not just money, but any goods and services saved for the later production of consumer goods, or to meet a specific end. For instance, factory machines, education, tools, etc. are also considered capital.


With respect to education, that limit is definitely intentional for Marx, and the same goes for other forms of so-called "human capital" like job experience and connections.

They definitely help you make money, but they don't have the special attributes that make capital so desireable--you can't sell it to turn it into another form of capital, and crucially you can't employ others to use it to make money on your behalf while capturing the surplus value of their labor.


There is (and always will be) no shortage of internet arguments over this exact concern. I will sidestep it and point to social theorist Pierre Bourdieu. Here's an explainer video:

https://www.youtube.com/watch?v=dQ5MdAjX4NU


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You seem to be confusing capital (the means of production) with money. Money can be used to buy capital (in a capitalist economy), and due to that is frequently used as a measure of the quantity of capital in such an economy, but is not the same thing as (or even a subset of) capital.


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That is not an accurate assessment of this scenario.

The idea that capital == money is merely the guiding basis of capitalism.


Richest 1% on target to own two-thirds of all wealth by 2030: World leaders urged to act as anger over inequality reaches a ‘tipping point’ By Michael Savage Apr 7 2018 <https://www.theguardian.com/business/2018/apr/07/global-ineq...

"The world’s richest 1% are on course to control as much as two-thirds of the world’s wealth by 2030, according to a shocking analysis that has lead to a cross-party call for action."

Hard to rationalize the inequalities in the distribution of wealth in a "World After Capital" where the commodity in short supply is attention.

From the webpage for the TL;DR folk: Technological progress has shifted scarcity for humanity. When we were foragers, food was scarce. During the agrarian age, it was land. Following the industrial revolution, capital became scarce. With digital technologies scarcity is shifting once more. We need to figure out how to live in a World After Capital in which the only scarcity is our attention.


> the only scarcity is our attention.

I'm surprised nobody brought up artificial scarcity. Debeer's diamond cartel is one of the most recognized early examples of artificial scarcity. Lots of places have artificial land shortages. There's plenty of capital to solve societies big problems but instead we have economic waste like 20 companies cloning the latest candy crush app.


Albert - Ignore the naysayers and keep writing your book and ideas. I have followed your writing for years, and share many of your hunches. As did Aaron Schwartz. It's a bold attempt at a future worth working on. Abundance is indeed here now, and attainable in a more equitable distribution. Not easily - indeed it's hard work - harder still allowing the negativity on Hacker News.


If you add a billion users to Youtube or to Facebook or to any other major platform, the marginal costs won't be 0 or close to 0. They'll be substantial. Existing servers won't account for the new demand. Electricity needs to be generated, new hardware needs to be procured, more employees need to be hired, etc. So I'm having trouble understanding how we're entering an age where the digital entities have marginal costs approaching 0. For a single additional customer, that's true - their costs are effectively zero. But if you start adding millions of users, the costs are not approaching zero.


As soon as I saw the author wasn't being precise I suspected that this wasn't a serious paper - you can't handwave numbers and say they are 0 when they are provably not 0, then build an entire argument on it.


If you want to read an economic examination of a world without scarcity, I can recommend Trekomics. The title may sound fanciful, but the subject is not. Some of the trends discussed and the social phenomena do seem to be happening.

https://www.amazon.com/dp/B01E6USVP0/ref=dp-kindle-redirect?...


From the FAQ:

    It is a work in progress. The current version is a rough draft with many problems and placeholders. I am using gitbook and github to keep track of versions of this website and the book itself.
You definitely do not get that impression just looking at the homepage. Beware!


Beware of what?

What impression do you get looking at the homepage?


The impression that this book is a finished product and not just a rough draft.


Capital can’t be eliminated because it’s an extension of what we are in the natural world.

You might look at Bill Gates billions of dollars and think it’s an excessive amount that could never been needed. Yet what does he do when he and Jeff Bezos both want to own the Mona Lisa? It can’t be shared and it can’t be copied. One man will take it back to his house and the other will go empty handed.

No amount of wealth in the world will change its property of relativity in problem solving.


> It can’t be shared and it can’t be copied. One man will take it back to his house and the other will go empty handed.

It can be shared, and is currently being shared -- it's in a museum.


In case anyone is unaware, OP (Seth Bannon) runs Fifty Years (fifty.vc) a VC firm supporting some really awesome and important businesses, like Memphis Meats


From the Author page: "a New York-based thesis-driven venture capital firm investing in in networks" attention is is scarce.


Lots of shaky assumptions and economic misconceptions in this book. Every decade there is always a utopian or a group of idealists who claim that we have the means to meet everyones needs and that capitalism and its economic laws are no longer capable of providing the goods and services that we demand. But these ideas are always incoherent and boil down to arbitrary assumptions about human nature.

Let us, for the sake of the argument ignore the fact that capitalism, voluntary exchange, and the free market is the _only_ system that is capable of rationally allocating resources in a society and instead assume that we have somehow surpassed the need for capital-based economics. What do the central planners like the author of the book have in mind to "replace" capitalism? The proposed solutions always boil down to some form of common ownership of the means of production. Private ownership is considered obsolete and common ownership of resources with a rational distribution system where everyone receives what they need. In the past people proposed that this rational distribution system would be controlled by a committee of experts, and today the same people say that a highly intelligent computer system would marshal the resources. Human needs can be objectively determined, and damn those who demand more than what they are entitled to from the rational distribution system.

Sounds familiar? That is because it is. Socialism _always_ fails because a central authority cannot, objectively, plan an economy better than the collective decisions by acting men in the free market. Hayek wrote about this in his essay _The Use of Knowledge in Society_ [1] This is the same fallacy that caused the collapse of every single planned economy in the past and will in the future. Without prices there is no economic calculation, and the best pricing system is one that is based on private property. Frankly, after skimming the book, I find that his entire argument boils down to the fact that he believes that certain things should be worth more and others should be worth less, and damn the market for telling me why they cost the way they do. There is a reason space travel costs as much as it does, but luckily for us we have a system that allows for entrepreneurship where innovative individuals and corporations who are able to arbitrage between the cost of factor inputs and the prices of their output get rewarded with a handsome profit. Since it is in their interest to maximise their spread they always tend to discover ways cut costs while still delivering the product that their customers demand (just look at Elon Musk and his space venture).

While I agree with the author that enabling people to widely access information will speed up the process of entrepreneurship, time is unfortunately an element in entrepreneurial discovery and there is no coming around that.

[1] http://www.econlib.org/library/Essays/hykKnw1.html


Asking what should replace Capitalism is a very reasonable question. The problem is that lots of people don't actually explore this question in a spirit of intellectual honesty.

>What do the central planners like the author of the book have in mind to "replace" capitalism?

Right off the bat, you insist that any alternative to capitalism is necessarily the whim of a "central planner", and go on to suggest that:

>Socialism _always_ fails because a central authority cannot, objectively, plan an economy better than the collective decisions by acting men in the free market.

But of course, Socialism does not prescribe a central authority (although many theories suggest one), and an exchange market is not the only way to collectively make decisions.

If you're interested in alternatives, I'd suggest you read some leftist theory, because this is pretty basic knowledge.

>he believes that certain things should be worth more and others should be worth less, and damn the market for telling me why they cost the way they do.

The market doesn't tell us why things cost what they do. Proponents of a free market argue that anything the market values is inherently valuable, even if that seems unintuitive. However, I think when many many people are unhappy with the priorities of the market, we should perhaps consider this claim with more scrutiny.


>Asking what should replace Capitalism is a very reasonable question. The problem is that lots of people don't actually explore this question in a spirit of intellectual honesty.

It is not a reasonable question because inquiries into this matter start from the assumption that capitalism is a conscious creation by man (and thus replaceable) and not something that, through the laws of human action, evolves spontaneously between free individuals.

>Right off the bat, you insist that any alternative to capitalism is necessarily the whim of a "central planner", and go on to suggest that:

Yes, because an alternative to capitalism (the interactions between free individuals in a market) necessitates the use of coercion to enforce, coercion that will inevitably be directed by someone.

>But of course, Socialism does not prescribe a central authority (although many theories suggest one), and an exchange market is not the only way to collectively make decisions.

Let us assume that a collective has made a decision to produce pineapples and not bananas, what happens to the guy who likes bananas and funds the production of bananas and refuses to participate in the production of pineapples?

>The market doesn't tell us why things cost what they do. Proponents of a free market argue that anything the market values is inherently valuable, even if that seems unintuitive. However, I think when many many people are unhappy with the priorities of the market, we should perhaps consider this claim with more scrutiny.

No, and we will never ever know why things cost the way they do, but we can draw some reasonable conclusions based on things like supply and demand. Ultimately however prices are the result of the choices of billions of people in an enormous decentralised system (the market), and it is literally impossible to objectively know the chain of choices that led to one specific good being priced one dollar or ten dollars. Doing so would require knowing every single choice that every man, woman, and child makes every single moment as well as taking into account the choices they didn't choose, the ordinal scale of which is quite literally infinite for every individual.

>Proponents of a free market argue that anything the market values is inherently valuable, even if that seems unintuitive.

No, the subjective theory of value does not say that, in fact it says the opposite: it is impossible to determine the objective value of goods since they come from the subjective choices of free individuals. Prices come pretty damn close though. Ironically, it is Marx that said that value can be determined objectively through the lens of the labour theory of value where the amount of labor put into a good is what determines its value. That, most certainly, is unintuitive.


>not something that, through the laws of human action, evolves spontaneously between free individuals.

Because it isn't. There is nothing "spontaneous" about private property. There have been a wide variety of conceptions of property throughout history, many involving notions of collective ownership. The system as it currently exists is enforced by state violence and was created historically by privatising collectively owned property.

e.g. https://en.wikipedia.org/wiki/Enclosure

>an alternative to capitalism ... necessitates the use of coercion to enforce

So does capitalism. The only way you can "own" capital is by using violence to prevent other people trying to use it.

>Let us assume that a collective has made a decision to produce pineapples and not bananas, what happens to the guy who likes bananas and funds the production of bananas and refuses to participate in the production of pineapples?

There are a lot of assumptions here. Why is this a mutually exclusive choice? Can we not grow both pineapples and bananas? Does the man believe the amount of bananas produced will not be enough to satisfy him? How many bananas does he expect to be able to eat?

In any case, the answer depends on the system. In some systems, the guy would be punished (as he would if he were employed by a pineapple farmer under capitalism) in others, the decision of what to grow would be his, and the collective just coordinates to inform him how many bananas are already being grown nearby, so he can make an informed decision about whether bananas are the right thing to grow.

>No, the subjective theory of value does not say that, in fact it says the opposite: it is impossible to determine the value of goods since they come from the subjective choices of free individuals. Prices come pretty damn close though.

The last part is what I'm criticising. An exchange system weights the demand input to market price determination based on the wealth of the individual. This means the market optimises for the subjective values of the rich over those of the poor.

And since the rich already have plenty, what they tend to demand is more capital. This leads to a system which is very effective at creating capital, but very bad at distributing its bounties. This is perhaps good when we have a scarcity of capital, but the argument made by the author here is that we have enough now, so we should redirect the economy to distribute wealth more effectively.


>An exchange system weights the demand input to market price determination based on the wealth of the individual.

What does this mean? Do you mean that rich people can buy more and so have more impact on overall demand? Or that they can afford to pay more and so cost stabilizes at a higher point than it would otherwise?


The former. The rich have more to spend, so in the pricing mechanism their demand counts more than that of the poor. This makes the idea that prices reflect subjective demand highly suspect.


Yes.

(Not OP.)


> the fact that capitalism, voluntary exchange, and the free market is the _only_ system that is capable of rationally allocating resources in a society

Wow. Before one is the _only_ <something> shouldn't one be first _one of_ <something>? Afaik it's quite clear by now that capitalism and free market are not rationally allocating resources, or is your definition of "rationally" equaling "give more to those who already have too much"?


Rationally can be understood to mean something like:

* Put goods to their highest use

* Allocate capital to those who can produce more rather than consume it

In general, nothing is given to anyone. Increasing capital (i.e. by a single individual or within a single firm) is quite difficult and getting moreso every day. If 1% of the population is a super-producer, 9% are regular producers, and 90% are largely consumers, then the consumers are best off when the 10% producers have most of the capital. Allocating capital to consumers starts fun and ends poorly.


It might be correct if that would be what happens. However people who create more are usually at the bottom end of the food chain in our current system. People who don't do much more than play political games usually end up at the top, sometimes earning 5 times of what the actual creators earn.


>* Put goods to their highest use

That's just dodging the question. What is the "highest use"?

>* Allocate capital to those who can produce more rather than consume it

And thus the optimally rational world as conceived based on this premise is one where no one ever consumes anything.


Everyone consumes. It's the basis of the economy. The producers produce that which is consumed. The best thing for consumers is for producers to produce more goods at lower cost.

If one of those goods is a bicycle, then the highest use might be for a nominal consumer to use it to kickstart a delivery service and join the ranks of net producers. The revenue generated by his service, or credit extended on the expectation of future revenue, can allow him to outbid a pure consumer from purchasing the bicycle as a leisure device, leisure being a lower use than that of delivery.


>Everyone consumes. It's the basis of the economy.

Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume.

The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods? Given that we seem to have vast productive capacity, and yet many people in the world seem to still live in poverty, perhaps we're not making the best trade-offs there?


> You can't just say production is a better use of resources than consumption

We're not talking about resources though -- capital is "the means of production". It's not the final good which is consumed. Capital, in the case of an Iowa corn farm, is neither the corn itself nor a choice about how to distribute the corn. Capital would be the land underlying the farm, the "seed corn", the farming implements, and the funding (liquid capital, e.g. money, credit, debt) for the operation. The farm employees and owners are ostensibly human capital but are usually considered separate from "capital" in general.

One way to allocate this capital is Zimbabwe or South Africa style, which says give it to the needy. Or Venezuela style which says give it to the public (i.e. government). Again, the question of capital allocation is distinct from the question of consumption good allocation, though the answers tend to be highly correlated.

> The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods?

In general, expanding productive capacity results in producing more consumer goods. Any "lag" concerns are trivial, which would be the only tradeoff here. The best thing for people lacking in consumer goods is to produce more goods by expanding productive capacity. What's the real alternative? How would you propose to allocate capital towards people in poverty?

When we get to free nanoreplicators, that will be great in terms of raising living standards for everyone, and this entirely consistent with capital theory, particularly in terms of maximizing consumer welfare. It will be hard to "make a living" as a producer in such an economy, but no one needs to "make a living" beyond pushing the button on their nanoreplicator.


> Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume.

Exactly. We'll put a cost on how much it is to live per day, and if you fail to exceed that, capitalism will slowly kill you.

And for a great many people, it does.

It kills by pollution in communities that don't have enough to fight the corporations.

It kills by depriving basic health care.

It kills by malnutrition.

It kills by subsidization of refined carbohydrates and sugars.

It slowly kills by locking people in jobs in which the upkeep for their bodies is higher than what they make.

It further injures the future generations by depriving education to those in impoverished areas.

"But hey, we made a killing on the markets. And stock prices went up for the next quarter. And those low wagers we employ, well, ehh, turnover's a thing. It's just another externalization we don't have to care about!"


And of course, people will ignore most of these deaths when comparing capitalism to the alternatives, because the responsibility is distributed, and can often be placed on individuals.


"giving more to those who already have too much" who are you to say what quantity or quality of goods people should have? That by itself isn't a "rational" allocation but a highly subjective one. When I say rational I mean that objectively, capitalism and markets reward agents who make the right market choices, and that in my book is allocating resources efficiently.


Well if I sit in a meeting with 2 programmers who work 80h+ to produce value for the company, 2 consultants, 2 managers, 2 architects, each of them earning 3x-10x of what the programmers earn, but all living off of what the programmers produce, then I think it's quite clear that this is not sustainable.

I think that's good enough as an explanation of why it's not rational. There doesn't need to be a known truth about what's rational to see that this is not rational.

And now don't come to me with "each of them does different tasks". I can distinguish between architects who design systems and architects who happen to come to 10 biweekly meetings in a row without having designed anything.

Also please note that I'm not blaming anybody. The programmers are just as responsible in my eyes, sometimes even supporting the other people in their parasitic positions.

Last but not least there's also literature out there showing that nearly all systems in their early stages contain huge amounts of people willing to sacrifice their own good for the community, thereby creating public goods, and later stages societies more and more focussing on stealing and centralizing the goods in a private manner. Capitalism is simply a system in its later stage and will be overcome by a just-as-flawed system at some point.


You'll find extensive discussion, and defence, of just this position from Adam Smith and John Stuart Mill, amongst many, many, many others.


I you are right, but I also think that there is an argument that our modern incarnation of capitalism has more in common with a planned economy than Adam Smith's capitalism.

In many key areas of the economy there are no free agents making economic decisions. This is the age of rent-seeking. The competitive markets for fuel, finance, retail and many other areas are increasingly being pushed to the fringe of the market.

If the answer to how to manage the economy is capitalism, than we need to embrace capitalism.


> free market is the _only_ system that is capable of rationally allocating resources in a society

That's a mighty strong claim there. Rationally...

Except for food. Except for gas. Except for land. Except for scarcity. Except for...

And the biggest part here that speaks against what you say, is that information asymmetry is the biggest reason why this doesn't work the way you portray it. And right now, you have giants who provide "Free" services, that only want your social graph, your realtime positioning data, content of your chats, who you are, and your metadata about everything. And on the upside, you get free email and chat!

> The proposed solutions always boil down to some form of common ownership of the means of production.

Counterpoint: GPL.

And yes, that does work.

> Without prices there is no economic calculation, and the best pricing system is one that is based on private property.

Again, completely wrong. Current prices distill every possible dimension down to one, that being price. Organic? price. Company was union? Price. Company treated people with respect and dignity? Price. Company treated the rivers like their own personal trash transfer? Price. Company uses prison slave labor? Price.

It doesn't matter what metrics are being compared against. We have the almighty dollar. It doesn't matter if the environment is being trashed to save a nickel - hey, I saved a buck.

> Socialism _always_ fails because a central authority cannot, objectively, plan an economy better

False premise. Central authority was only an idea regarding socialism/communism. It is not the ground truth.


Capital's not going anywhere. Not until the world implodes.


The world after centralised capital might be a thing.


You see whether scarcity is “attention” if you’re 59, “retired” due to “technological obsolescence,” and develop a medical problem in the U.S.


Is that a problem of scarcity though?

In most other developed countries, there is some form of universal healthcare, and this hasn't caused these countries to come grinding to a halt. Which suggests that the problem in the US is not "scarcity" but how the existing resources are allocated.


Unless we institute a worldwide, universal commune where all resources are equally available to everyone, people are going to experience localized scarcity. I think it's a fair example.


But the question is, is the lack of access to healthcare in the US result of an inherent shortage of capital, or is it due to the system used to allocate healthcare to individuals?

Given that the majority of the developed world seems to be mostly able to deliver universal health care with relatively little difficulty, it seems more likely that the problem is the system, not a need for more capital.


I guess it depends what "post-scarcity" is supposed to mean, but I don't consider a situation where people die because of lack of access to resources post-scarcity, even if someone is hoarding all the necessary resources somewhere.


The foremost claim of Karl Marx was that capitalism would eventually secede to socialism.

Most HN readers were indoctrinated to simplisticly demonize Marx despite ignorance of his nuanced academic legacy, and might overlook the glaring similarities here. They should be reminded that Marx laid these foundations ~150 years ago and offers a lifetime of critical research on this very discussion.


Psssh what’s an entire field of study worth when we have an VC techie who invested in MongoDB to teach us.


Marx had a good bullshit detector. But as a prophet... let's say that I've seen better.


Please do elaborate.


He's probably referring to Marx's Historical determinism. Marx claimed that there were stages of the development of labour and capital that would inevitably happen based on the forces that govern both. For most people, I would say, even those who study Marx, these ideas have been dismissed, or proven wrong by the failure of the 'working class' to seize the means of production in most countries where such attempts took place.

However, his predictions are only a part of a very rich body of work that still provides productive economic analysis.


One might also argue that the real thing didn't happen yet though. Just because a lot of people attach a label to themselves and then other people come and use that label to do PR against them doesn't mean it was correct in the first place.

That said, I also don't believe in it. From what I'm seeing around me, people usually grab small short term advantages over other people even if they suffer long term consequences together after the "success". Also people really love to give power over themselves to other people. Until these two misconceptions are overcome there can't be any real attempt at communism.


>From what I'm seeing around me, people usually grab small short term advantages over other people even if they suffer long term consequences together

I would argue this is a symptom of capitalism, not an inherent property of human nature. We live in a system that requires us to compete to sell our labour in order to survive. This leads us to think of everything in terms of competition.

This is why so many people in creative jobs (including software development) end up feeling like they can't do their work efficiently because their manager won't let them. Because the employer-employee relationship is based on exchange, it is fundamentally antagonistic.


Precisely. This whole recent STEM discussion comes back to the demonization of the Liberal Arts.

Science, technology, engineering, and mathematics all makes money as a multiplier for the capitalist class. So all of them are highly praised. However, those pesky things like philosophy and art are "worthless" - as in they don't make the owners money.

Marx's works also talk about turning universities into training centers too. Eventually, the cost of education would be the point that either the rich (capitalists) would attend, or regular people would attend to learn how to work in the above (STEM) categories.


Please do elaborate.

This one is well known and profusely commented, I'm sure you can google it: Marx considered industrial workers the ones with more class awareness and predicted that Socialism will ignite in the UK first.

On the contrary, it succeeded in big old agrarian countries like Russia and China.

Also predicted that worker class solidarity will make for an idilic proletary dictatorship, no need for democratic checks and balances that only decadent burgeois countries need.

Then came Lenin, Stalin, Mao...




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