[Analemma_]

> This isn't a criticism of capitalism.

> This is an acknowledgment our current "capitalist" financial system isn't able to produce "capitalism" itself.

That's a No True Scotsman argument intended to shield capitalism from any criticism. "The system isn't working? Then it must not be real capitalism."

[financedfuture]

No.

That's about recognizing there would be no mean reversion, a great indicative of the existence of crony monopolies and, therefore, lack of capitalism.

[nitrogen]

How can capitalism result in anything other than crony monopolies?

[jazzyk]

The government _not_ hand-picking winners and losers (bailouts, lobbyists, etc.) would be a good start.

[Hermel]

In the end, it boils down to whether firms in a given industry have increasing or decreasing returns to scale. For example, there are no hairdresser empires as this tends to be a profession that can already be operated efficiently at a small scale. Other sectors, especially those with high fixed costs, tend to produce monopolies.

[jbooth]

Yes, but it's also a huge indictment of "free market proponents" who tend to oppose any regulation, as it implies the need for muscular regulation of the market.

In American political terms, calling it an indictment of 'capitalism' is a little imprecise but not really wrong.

[oldmanjay]

It's a bit hyperbolic to call it a huge indictment. Or in fact, an indictment at all. It's more like a mildly divergent opinion.

[jbooth]

I'd agree and call it a mildly divergent opinion. The banks being regulated or the Republican primary candidates would call it outright communism. Depends on the yardstick, I guess.

[oldmanjay]

The truth is always somewhere between the marketing and the haters

[AnimalMuppet]

It could be viewed as No True Scotsman, but in this case I don't think it is.

Goldman talks about "reversion to the mean", which is a generally-accepted thing in the financial world. If you've got above-average returns, people tend to take note, and try to get some of those returns, and so there's more competition for those returns, and that goes on until there aren't excessive returns any longer. This is a generally-accepted thing because it's been observed a bunch of times. It's the normal functioning of a market.

So if Goldman is questioning whether this is going to happen this time, it's a recognition that the markets aren't functioning the way they normally do - which I think is financedfuture's point. (He/she is going a step further, and [EDIT]implying that either the financial firms or the government broke the system that had been working, which, if the system historically worked and now doesn't, seems like a reasonable guess.)