[hypewatch]

~Capitalizm~ Capitalism is purely a theoretical idea. Free markets as capitalism defines them are impossible. Perfect information, competition, price taking, ect, which are baked into the economic theories of capitalism are simply not feasible.

Often our critiques of capitalism are not critiques of capitalism at all. In fact they’re criticisms of monopolies and oligopolies in our modern society, which are antithetic to capitalism.

The American economy is an aristocracy. VCs, the big ones at least, are members of that aristocracy. Many of which are filled with smart good hearted people. But there are some incentives baked into their position of power that we need to be cognizant of.

Edit: “free-market capitalism” would probably have been a better term. Clearly that was not the point I was making.

[WalterBright]

Perfect information is not a requirement of free markets.

The term for imperfect information is "risk" and pricing risk is very much an integral part of free markets.

[gotostatement]

> Often our critiques of capitalism are not critiques of capitalism at all.

While this is superficially true, the structure of capitalism arguably makes such concentration of wealth and power inevitable, so the phenomena of monopoly and oligarchy are intrinsic features of capitalism. Not free markets, but capitalism, i.e. the system where individual, private citizens own the means of production.

I'm not sure yet whether I think that capitalism can ever be made work for the people (including the underclass that our society currently consumes as human fuel to keep the status quo). I think it's quite possible that it will foil all attempts to reform it. But we'll see.

[hypewatch]

I’d argue that free markets are a requirement of the definition of capitalism, but like the term “communism” the definition has become squishy.

I agree that your definition inevitably leads to income inequality.

Either way, I think we agree on the nature of these problems.

[notahacker]

'Capitalism' was a term conceived by Marx and despite Marx and many other anti and pro-capitalist economists having much more to say on the subject, has always had a pretty straightforward definition of being an economy characterised by capital owners hiring wage labourers to generate returns on their capital. A definition sufficiently succinct to describe both the excesses of Silicon Valley and the grim poverty of the Industrial Revolution.

The definition relies on the assumption the distribution of capital is sufficiently unequal for workers to need/want to work for capitalists to earn wages and the market sufficiently free for it to be possible for capitalists to hire workers to generate returns. But both the Marxist arguments that capital must inevitably become so concentrated that capitalists won't need to pay workers above subsistence levels [until it leads to revolutions] and the free market economist argument that competition will resolve this [and pesky social democrats will ruin it] are firmly in the 'squishy' parts of the definition.

('Communism', which had competing definitions before Marx started writing about it, has always been a bit squishy...)

[hypewatch]

Fair enough. I learned - in an American college - that “capitalism” was a term coined by Adam Smith in “Wealth if Nations”, which apparently was an incorrect conflation made by my Econ professor.

The term “free-market capitalism” is used often by politicians and economists, but apparently that term is conflating two distinct concepts by your definition.

That illustrates my point that the term’s meaning has morphed since it’s coining. Even the Wikipedia page’s disagrees with both of us!

> The initial use of the term "capitalism" in its modern sense is attributed to Louis Blanc in 1850

> Marx did not extensively use the form capitalism, but instead capitalist and capitalist mode of production, which appear more than 2,600 times in the trilogy Capital

https://en.m.wikipedia.org/wiki/Capitalism

What a rabbit hole! We’re officially lost in the minutia of term definitions. Time to log off of HN for the weekend haha

[WalterBright]

Monopolies come about because of government interference, not free markets.

The reason is pretty simple - the larger a company gets, the more bureaucratic and inefficient it becomes, until a smaller, nimbler company eats it for lunch.

[gotostatement]

A large company can benefit from massive economies of scale or upfront costs that create an impenetrable barrier to entry. e.g. Wal-mart, Barnes and Noble, mobile phone networks. In certain areas, once you amass enough power, you have the power to crush competition, no government interference necessary.

However, we're not just talking about market dynamics of monopoly, we're talking about concentration of power in a society. Billionaires control enough wealth to influence or even effectively buy politicians, who then make rules that benefit them. They use their money to control media narratives. They hamstring labor power and increase their own leverage without limit. You can't write this off as a consequence of government interference into an otherwise self-regulating system - government interference, and interference by other centers of power, on behalf of the super-rich is an essential feature of concentration of wealth and power in a society.

[WalterBright]

> A large company can benefit from massive economies of scale that create an impenetrable barrier to entry. e.g. Wal-mart, Barnes and Noble, mobile phone networks. In certain areas, once you amass enough power, you have the power to crush competition, no government interference necessary.

Isn't it interesting that the huge companies today are newish companies? How does that fit into your theory? What happened to IBM, Sears, RCA, the unstoppable juggernauts of yesteryear?

> You can't write this off as "government interference"

That's exactly what it is. And isn't it ironic that people who want to replace free markets want to replace it with a far more powerful government? Wouldn't that imply far more corruption?

[gotostatement]

If you're saying that monopolies only arise because of government interference, I'm gonna need a lot of citations.

I don't want to replace free markets or have a totally planned economy because I agree with you that excessive power centralization is a problem, including when it goes to the government. I am just saying that the system of capitalism (which, again, doesn't just mean free markets, it means that individual citizens can own essential means of production) has power concentration as an inevitable consequence. Government interference on behalf of the super rich, which leads to more concentration of power, is a consequence of capitalism, not a foil to it.

To be clear, I don't know what the best alternative is. But it looks something like more democratic control and accountability over the essential means of production. I'm not convinced government ownership would always accomplish this. But letting individual citizens own it and use it as leverage to increase their own personal wealth and power, virtually without limit, at the expense of those who depend on it and labor on it, is unacceptable.

[WalterBright]

> If you're saying that monopolies only arise because of government interference, I'm gonna need a lot of citations.

Name one that isn't. If your theory is correct, there should be free market monopolies everywhere.

> But letting individual citizens own it and use it as leverage to increase their own personal wealth and power, virtually without limit, at the expense of those who depend on it and labor on it, is unacceptable.

Who do you think sits in power in the government? Individual citizens.

> virtually without limit

Bill Gates, Jeff Bezos, etc., cannot order you arrested. But the rookiest cop can arrest you.

Amazon tried to influence the Seattle City Council election buy funding opposition candidates. This became a campaign issue, and Amazon failed badly at it.

Hilary Clinton outspent Trump 2:1 and still lost the election.

Bloomberg got trounced.

Wealth buying power in America is not nearly as effective as you suggest.