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[flagged] Is There a Crisis in Capitalism? (gatesnotes.com)
51 points by tmlee 31 days ago | hide | past | web | favorite | 74 comments



There is. It's incompatible with the continuing existence of a living planet.

Naturally enough, a billionaire megaconsumer, having bought a moat intended to separate himself comprehensively from physical reality, isn't fussed. But he's a mammal. All mammals live in ecologies, not economies, whatever they tell themselves.


Soviet system destroyed the Aral Sea:

>The Aral Sea was once the fourth-largest lake in the world. But in the 1960s, the Soviet Union diverted two major rivers to irrigate farmland, cutting off the inland sea from its source. The Aral Sea has been slowly disappearing ever since [0]

We need a new solution. Not capitalism, not communism. Something better. And I have zero idea on what it would look like. But the Earth need one nonetheless.

[0] https://earthobservatory.nasa.gov/features/videos/shrinking-...


Quite. I'm not remotely claiming that capitalism is the only system which collapses ecosystems. Plenty of civilisations did that locally millennia before global capitalism was conceived.

As for what needs to come next, that's well beyond my abilities to come up with.


True economic activity is trashing the planet but the biggest CO2 emitter, China, is nominally communist. What we need is a tax on environmental damage applied globally, probably enforced by trade sanctions on countries that don't go along, or something along those lines. Get the financial incentives right and loads of startups and billions of investment dollars will pile into fixing environmental issues. Capitalism can do good stuff too.


Yes, this is the discredited Blair-Clinton Third Way, applied to environmental issues. It was a catastrophe applied to the so-called 'economy' as a whole, and would be worse applied to more serious real (ie. physical-ecological) issues:

The physical problems of so-called 'growth' are many. They number in the thousands, and more are discovered with unremitting and accelerating frequency. Climate collapse is just one (albeit the most currently newsworthy). Trying to nail each one with the vast range of accounting and pricing mechanisms required would cripple capitalism. New rules and regulations would have to be enacted, and harmonised worldwide, constantly. Nostalgic capitalists call this 'green tape', and their solution is to pretend the real (physical, ecological, complex) world doesn't exist. Third Wayers instead pretend that the green tape problem doesn't exist. They both get this wrong because they have sworn religious fealty to fake 'growth' ('religious' is meant quite literally here - it has its historical origins in European variants of Christianity, and questioning it in public is taboo).

Capitalism, whether nostalgic or third way, collapses ecologies because of its inherent allegiance to a fictional concept of growth. Ecologies are where we live, and we have nowhere else to go, whatever the protestations of capitalist death cult evangelists (Bezos et al).


On the contrary I don't agree that capitalism is responsible for environmental decline.

If anything environmental decline can be attributed to the form of democracy in which companies control government policy via donations and lobbyists.

The government policy thus serves the interests not of the people but of the companies.

Companies have no interest in anything but furthering their own goals, typically to make money without any attribution of the collateral costs such as environmental vandalism.

This is not about capitalism - it's about broken democracy, subverted to become some weird system of government that serves companies and vested interest above those of the citizens.

Nor are billionaires the cause of poverty. There's plenty of money to go around and plenty of resources to go around with room to spare for billionaires. Poverty exists because governments expend the resources to the betterment of companies rather than the citizens. If we suddenly took all the money from all the billionaires this would make zero difference to poverty because the reasons for poverty have little or no relationship to the existence of billionaires.


>> If we suddenly took all the money from all the billionaires this would make zero difference to poverty

It would make a massive difference. Without billionaires, there would be more millionaires[1], and their collective ability (and collective incentive) to invest their money efficiently would be far greater. More minds making more sophisticated investment decisions under more pressure using smaller amounts of money.

A billionaire investor is a lazy investor. They can afford to make blanket decisions which ignore all the intricate negative ramifications of those decisions.

When you factor in the inefficiencies created by corporate monopolies and index funds which reward lazy investors without any risk[2], the people who end up paying for those inefficiencies are members of the working class.

[1] When we consider that supply tends to adjust to meet demand, we can deduce that if we were to artificially limit the amount of supply that any single person could reap the rewards from (which is equivalent to artificially limiting wealth accumulation of a single person), then we would need a larger number of people to supply the same quantity of goods/services.

[2] The risk is essentially 0 because index funds such as S&P500 spread risk across many stocks such that only the complete and sudden collapse of human society could result in any significant loss of investment. As a human investor, if society were to collapse completely, you probably wouldn't survive anyway, so within the scope of human experience, your risk of living to see your investment fail is 0.


> I don't agree that capitalism is responsible for environmental decline

> environmental decline can be attributed to the form of democracy in which companies control government policy

These are the same thing everywhere except in theory.


Yeah. Capitalism apologists now sound very much like the credulous lefties who made excuses for the Soviet Union's many catastrophes, long after it was manifestly a disaster. A benign idealist version might exist in some Platonic realm, but for now the capitalism we have is a dire threat to all.


> Nor are billionaires the cause of poverty

Whether that's true or not, many billionaires (Bezos, Thiel etc) are certainly propagandists of death cult capitalism.


>Companies have no interest in anything but furthering their own goals, typically to make money without any attribution of the collateral costs such as environmental vandalism.

These kinds of companies are precisely the form in which capitalism has shaped them. Cost externalization (collateral costs, as you call them) are a competitive advantage, and under an improperly regulated capitalism these entities are incentivized to find and exploit every single one of these advantages to dominate and eventually monopolize their market.

What we are debating now is if it even possible to create a system of properly regulated capitalism. Will capitalism necessarily exhaust the planet, capture and subsume every form of regulatory control and destroy itself.


I agree.

I think our current form of government is completely unsuited to saving civilisation.

There will be an environment driven revolution within 20 years.

The current generation of children will include deeply radicalised kids so disillusioned with government that it will lead to an overthrow.

Exactly what that will look like cannot be predicted. I think it will be violent because the government has so many protections in place to prevent fundamental change, but that is what future generations will want, due to the dying earth.


> The current generation of children will include deeply radicalised kids so disillusioned with government that it will lead to an overthrow.

We're seeing hints of that now, and it's one of the few chinks of light. I don't see how they can succeed, but I don't take my own predictions too seriously


> [Capitalism] is incompatible with the continuing existence of a living planet.

This seems like a pretty extreme viewpoint. Can you explain your reasoning?


Quick reply as I have to dash back into the physical world! Grounds:

- theoretical: economic 'growth' is (a) central to capitalism, and (b) identical to global entropy increase (decoupling is a faith-based myth). So-called 'growth' IS ecosystem destruction

- empirical: numberless studies showing nearly every ecosystem to be in catastrophic decline. In short - everything is dying (and astonishingly fast - on human-generational timeframes)!

As for 'extreme': in corporatist media circles, sure. But there are plenty to whom it's perfectly commonplace (ecologists, indigenous peoples, etc), and has been well-understood for decades.


China is communist. They're arguably worse. Not fully embracing nuclear power when we still had time to avoid global catastrophe will probably be the thing that's really done us in.


China is politically communist. Economically, they still want to make a lot of money, as cheaply as possible, without regard to regulations, be they intellectual property, ecological, or otherwise.

However, I've read that they are taking air pollution more seriously: https://phys.org/news/2019-03-china-air-pollution.html


IMO, and likely in many others' opinions there are simply too many oligopolies in the world. Too much concentration of wealth in too few hands.

People see that the benefit the large majority of the wealthiest people / organizations bring to society is far from optimal compared to their capacity to do so.

I think it's not necessarily that there is an enormous divide between the wealthiest and the poorest. I think the important point is it requires close to an act of God, as a poor person (or just not wealthy), to make the kind of dent most of us want to make in the universe.


Replying to my own post :)

I think capitalism at its core: the human traits necessary to wildly succeed in it, are not the most desirable traits to most people. Yet we're optimizing civilization such that we should be striving to achieve them in order to live successful lives.


True - it is (very roughly) a Darwinian machine designed to select for traits inimical to the flourishing of ecosystems.


> Collier says we’re experiencing three big rifts: 1) a spatial divide between booming cities and struggling small towns ...

Strange then that in the US the "booming cities" are voting for more restrictions on capitalism than the "struggling small towns". Yet this is his primary explanation for a crisis in capitalism?

Does he mean that the crisis in capitalism is caused by its success? There may be something to that. The most vocal protesters against capitalism tend to come from more economically privileged classes, judging by, say, college students versus blue collar workers. The Australian elections and Brexit referendum echoed that pattern. It's as if protesting capitalism is a luxury good.


This isn't so strange in a complex world.

When you're struggling to put food on the table you don't have time to philosophise about how a better future would look.

You do have time to do the less coal = fewer jobs for your immediate community math.


Capitalism as it was originally imagined - transactions between people- is the best system. Unfortunately money is now transacting itself. With ai and financial instruments as they exist, there is an order of magnitude more wealth tied up in speculation than actually being used by humans. Money from financial gains should be restricted to being used on products, services, and human endeavor.


>Ultimately, I agree with him that “capitalism needs to be managed, not defeated.”

Says the man that used his monopoly to crush his competition, created embrace/extend/extinguish and become the richest man in the world.

Exciting now that there are no stakes for him he's thinking about others (in both this and his other philanthropic adventures).


Have you ever met Bill, and chatted with him for a few hours? I have. I think you'll find he's a geek's geek, with conscience. Thank Ballmer for most of MS's excesses. Ask yourself: is the world a better place due to what he's been able to do, so far? And, one would hope, continues to do through the Gates Foundation? Mostly, please, don't be so quick to throw the first stone.


I'm sure your few hours conversation with him overturns the evidence the DoJ managed to collect about their plans for Netscape laid out in emails and memos. Stuff signed by Gates saying “take away their oxygen supply”, “crush them” and “knife the baby” in regard to killing Netscape while they were up and coming.

Bill Gates is a bully, and no matter how much money he throws at malaria research to redeem it, the sad bit is that he set the bar for Bezos, Zuck, Kalanick et al to reach and they've largely reached similar heights because over the years the US government has successfully been defanged.

And regarding the Gates Foundation:

> ...there’s clearly a conflict of interest that Gates does have that’s at stake here. And that’s this, you know, look, if you look at one of the main problems that the Global South faces right now is that they have a lot of difficulty paying the patent licensing fees that they need on sort of basic medicines and technology including for renewable energy access. And one of the reasons for that is because of the TRIPS agreements, the Trade-Related Aspects of Intellectual Property Rights, which is an agreement that came into force under the World Trade Organization in 1994, which basically massively extends corporate patents law around the world. And Gates has benefited singularly from that because that’s where the vast majority of his profits come from and what funds the Gates Foundation is rent effectively on intellectual property.

https://medium.com/@CitationsPodcst/episode-58-the-neolibera...


He was a bully. He really was.

Was.

People change in 20 or 30 years. I sure don't want to be judged by some of the things I did 30 years ago, when I was a hypercompetitive jerk (also socially clueless, and a few other things).

And I don't think that the "vast majority" of Gates' profits came from patents in the Global South. It came from copyrights, and primarily in the First World.


Not everybody worships wealth. Not everybody buys into the myth of the tech genius/entrepreneurial wizard. Some folks, myself included, don't feel that it's even remotely possible to amass billions in personal capital without doing some truly dirty, nasty, awful things to many other people along the way.

So, frankly, I don't really care that Bill Gates is now a soft sweater-wearing sexagenerian who likes to talk about solving global problems with his ill-gotten gains, instead of a cutthroat corporate executive crushing his competitors and perverting the market in the process. The fact is that one led to the other.

I want to hear less from delusional, egotistical billionaires who think that they themselves can solve the problems we face as a society, and more from our actual, you know, political leaders. I didn't vote for Bill Gates, thank you.


I'd always be more impressed by a poacher-turned-gamekeeper who returned his gains and then lived like the rest of us. Continuing to live a megaconsuming existence while consolidating power over fellow humans via 'philanthropy' is just more of the same.


> "don't feel that it's even remotely possible to amass billions in personal capital"

Instead of feeling, you can instead learn and think about how wealth and value works. Capitalism allows ownership of production. Produce something valuable enough and you'll make your billions.

There are plenty of people on this forum with a 7 or 8 figure net worth from starting a business, and even a few billionaires like the founders of Dropbox and Stripe. Maybe ask them how they did it instead of assuming the worst.


How can we know since he forced his vision on the world for so many years in technology?

At the very least, the fact BeOS isn't giving Windows and Apple a run for their money is a travesty.

The idea that super-rich people need to be super rich to do great things and society can't just come together to do them (Do you have the same reverence for the NIH? An entity that actually pays for indirect costs, unlike the Gates' Foundation.) is such a farce.


Very impressive that you have chatted with Bill Gates, and you seem very proud of that (congrats, by the way), but he's still a capital hoarder sitting atop a mountain of ill-gotten gains, and no I don't feel that I should thank him for that


Agreed, also in the article he advocates for higher taxes on the wealthiest people. I don't see how a billionaire who holds this position can be anything but genuine.

blacksqr 31 days ago [flagged]

Everybody knows the fight was fixed.

The poor stay poor, the rich get rich.

That's how it goes.


Maybe so, but please don't post unsubstantive comments here. It leads to further unsubstantive comments, and eventually worse.

https://news.ycombinator.com/newsguidelines.html


we have another leonard cohen fan here on hn. hello friend o/

nkkollaw 31 days ago [flagged]

Nice try Karl Marx, but that simply isn't true, especially in the States.

If you provide value, you will get out of poverty and even get rich. You don't always need money personally to provide value.


How do you get the mental resources and education to "provide value"? How do you become resourceful? Simplest way is: Do not be born in a poor family.

On a more narrow level -- if people have to worry about food on the table, the stress itself causes IQ to drop, also in experiments.

Of course there are exceptions, but on a statistical level, poverty is inherited -- because of what you mention, not in spite of it!


In Europe, universities are free. Poor people get housing, money for food, etc. if you go to school.

I studied in the States and some people at my college were being paid $700/mo. on top of dorms if they took at least a handful of classes.

If poverty is inherited it's because of a negative culture and worldview is passed down, not because of money.


Two kinds of people in this system. One of them thinks if you work hard you can climb your way out of poverty through your own self determination and hard work.


> Two kinds of people in this system.

Three or more if you count more realistic viewpoints.

> Two kinds of people in this system. One of them thinks if you work hard you can climb your way out of poverty through your own self determination and hard work.

Self determination and hard work is necessary for success but it doesn't mean much without opportunity. Opportunity is unevenly distributed.

What one person see as value, which creates someone else's opportunity, is often determined by subjective social and cultural factors and isn't always objective or rational.


Everything is unevenly distributed. Race, height, money, attractiveness, IQ, etc.

If you are unlucky, you have to work more.

If opportunity doesn't present itself, you go look for it.


If you provide value someone will get rich. I would say rarely the person providing the value and the one getting rich are the same.


Can you give me an example? The guy who has the idea and takes the risk is 1000 times more important than the guy who assembles the idea.

That's why they get paid more.


https://www.epi.org/publication/charting-wage-stagnation/

It's about something new versus what we have tried to this point.


Your company captures the value you provide, and attempts to pay you as little as possible in the process. This is the process by which profit itself is created.


So? There's more than one party negotiating that rate of pay.

Think it's unfair for one person to negotiate against a company? Maybe, but that's where unions become useful.

There's ill will against them, and they're not widely used (at least in tech), but maybe that's the problem. If so it's not a problem worth tearing down the whole system.


In this day and age, you often don't need a corporation behind you to provide value.

Actually, it seems like not even in the past you did, since many many companies were started in a garage.


The garage mythos borders on capitalist propaganda.

Here's Steve Wozniak debunking the Apple garage myth:

https://www.theguardian.com/technology/2014/dec/05/steve-woz...

And an entire thread debunking the "started in a garage" for the market dominators of today:

https://twitter.com/historic_ly/status/1119980086420299777

These founders have always had some access to resources above and beyond what is considered "standard issue." It's about time we get realistic about the necessary conditions that were required to start these radically successful companies, because we shouldn't design economies or social policies around myths.


Capitalism is explicitly designed to ensure that those who provide value don't get to keep it. Value is funneled to those who have capital. Hence "capitalism."


Im a car factory, workers who make cars provide value, but management who keep the company afloat, owners who take all the risk, etc. provide an even greater value.

I'm amazed people don't see that and simplify the whole thing into "owners exploit workers". It's just absurd.


[flagged]


Gates would agree


[flagged]


The unspoken assumption in capitalism is that it cannot exist without humans. The complex corrections to the capitalist goal of maximizing profits comes when its agents realize profits decline when the agents are excluded from the gains. I do not think that Adam Smith or j Keynes envisioned a world when money became intelligent and could transact itself. We need a financial Einstein to present an equation of relativity to restore the human observer into the reference frame of the current economics


Is there a country with an economic system other than capitalism that is even remotely competitive with the US?

Saying there's a crisis in capitalism because some people are poor is like saying the Warriors are in crisis because their bench players aren't getting much playing time.


We've tended to go to war (hot or cold) with them before they have the chance to compete.


And here, I thought war (hot or cold) was competition.

I get that momentum is hard to overcome, but I think a sufficiently competitive system will overcome that barrier and eventually outcompete capitalism as we know it; we haven't found that system yet, though it's theoretically possible we've tossed out some better systems that weren't better enough to overcome the first-mover-after-WWII advantage.

I think the major innovation of the next paradigm shift will relate to how groups of people handle intergenerational wealth (and perhaps some related structural questions), as I think this is the most glaring inefficiency of the American system. This is a minefield of a problem with a lot of naive, popular answers.


But if the number of players on the bench keep increasing while those on the field keep decreasing, you might start to wonder if there's a problem, or if the Warriors will be back to play next season.


Plenty of social democracies about that have a good standard of living for more people.


Well, all of Scandinavia have better societies than the US by a range of measures, and they’re certainly much less capitalist.


Having grown up in Sweden, I'd say that's mostly history by now.

It used to work a lot better, but they've been privatizing and monetizing non-stop during my life so far and it's mostly same ice cream/different flavor these days from what I can see.


Yep, Sweden is unfortunately a long way from "the middle way" these days.


This is relevant, why did it get flagged??


>But no other system comes close to delivering the innovations and economic growth that capitalism has sparked around the world. This is worth remembering as we consider its future.

I ask great authors post this at the start and end of bash of capitalism. It is good we all acknowledge how great markets are, what kind of damage can we do fighting it?


Just in terms of definitions, a crisis of capitalism would be the possibility of some sort of collapse, say financial, from too much QE, stock buy-backs and so-forth, or environmental, from climate change, say.

What he's talking about broadly merits being called "problems of capitalism", "injustices of capitalism" or similar labels. These pressing problems but only for those who experience them or those who take the time to discover them.

That said, I think one could say a ruling class that is fairly secure is often ruling class willing to toss some benefits to those below whereas a ruling class that's worried can be a ruling class that grabs everything it can. My feeling is the global ruling class is acting worried.


>Just in terms of definitions, a crisis of capitalism would be the possibility of some sort of collapse, say financial, from too much QE, stock buy-backs and so-forth, or environmental, from climate change, say.

I think you can make a reasonable case that all these crises exist. Schumpeter argued that at the heart of capitalism is its ability to diverge from equilibrium and to innovate through the process of creative destruction.

And I don't think much of this is in sight, hell it even has people like Thiel worried who aren't exactly known for being anti-capitalist. You have financial crises that are only barely kept in check, you have the rise of the 'cognitive class' that Bill Gates points to in this article and that will create new widespread divide, you have ecological destruction and you have political inability to cope.

And as can also be seen in this thread, the first response is always to argue that there is no alternative. But that doesn't mean that the system isn't screwed up, it just means as the late Mark Fisher put it, that we have completely abolished our capacity to imagine alternative futures.


If enough people feel left out of the economic gains of capitalism, and they vote for Venezuela-style socialism, or just go for violent revolution, that could easily be a crisis of capitalism.

Your last paragraph is interesting. It has an element of truth, especially for other countries. In the history of the US, though, it seems to me that more benefits were given to those below when we worried about competition from Communism, and that the rise in inequality at least somewhat coincides with the fall of the Berlin Wall.


Of course, the problem isn't capitalism, so much, as the glorification of monetary accumulation uber alles.

We used to encourage far stronger social capital (think single-income marriages); that's become a luxury good. And what Gates seems to be calling a "crisis" looks like a crisis in social capital.


I've always considered myself a capitalist, and 20 years ago I used to be very annoyed by what I considered insufficient appreciation for marketplace competition on the left.

But runaway inequality and the intransigent insistence of people like Gates that said inequality is not a problem has me questioning whether I need to reassess. (In my view the problem with inequality is that political power corresponds roughly to economic power, so unlimited amounts warp our political system.)

If you're losing people like me, maybe a crisis really is on the way.


But your belief can't be true because I'm both trump and Brexit the side that spent the most money (by far) was beaten. Clearly that's a syringe against the idea that political power covers directly from money.

See also: tech firms in Europe


I didn't read this article as Gates saying that inequality is not a problem. In fact, he's saying that it is a problem.


> I've always considered myself a capitalist

Curious as to why? Do you derive your livelihood from your ownership in capital? Or do you have to work, but value private property, markets and liberal economics?

I ask, because when I think of a capitalist, I think of someone whose wealth and power are derived from significant ownership in companies and assets, real or financial.

There are plenty of ideologies that value market economics from the very left to the very right. Examples include market socialism on the left and American libertarianism on the right.


Capital is a synonym for wealth and a synonym for property.

Being against capital is a fairly extreme position that has been tried and has a much worse track record.

What people think of when they say capitalism these days is more like kleptocracy or corporationism.


My technical background instructs me that when faced with a seemingly intractable problem or unexplainable outcomes - we’re asking the wrong questions.

Capitalism is essentially our new religion. Suddenly responsible for curing all ills, but it’s simply an economic model.

It necessitates people be productive, but it also inherently directs income from the poorer to the richer. We in the western world redistribute trillions in taxes for social welfare to attempt to offset its natural effects.

As far as creating our utopia, it doesn’t help that political solutions designed to help the middle and lower income classes actually can have the opposite effect.

Does making 401k contributions tax deductible, when big banks take a fee on all such deposits, help the middle class save, or does it just more direct tax dollars into corporate profits.


401k by itself is a great idea.

Making it optional, not requiring employer match and allowing fees to run rampant - not such great ideas.

Vanguard is a great example of a low fee fund manager. Many good companies provide strong match and help secure the future of their workforce. But the problem is that these are all optional in the spirit of personal choice and empowerment.

Problem is, to most people these are disempowering because the compulsion to spend is too high. If all make a little less take home, but their retirement accounts are filled like the IRS coffers, overall prices decline because of less disposable income, but in the end, people get to retire.

For those that unfortunately doesn’t make it to retirement, it would be good if the accumulated wealth could be inherited and/or donated.




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