Yeah that’s called economies of scale, these are not big in all industries and barriers of entry are also not big in all industries. So your argument is a good argument for why we have antitrust laws and why we need some companies and industries to be publicly owned, but this is not the case for every industry.
So what does your analysis of wealth concentration say? Has every capitalist country had increased wealth concentration? What type of wealth has increased in concentration?
Based on what evidence? Where I’m from, which is a capitalist country, inequality hasn’t risen and union membership has stayed strong.
Right but you don’t chug a pint of cocaine
Yes a balance found with the trade-off between the minimization of rent-seeking/market power and the idea that market companies tend to perform better by having stronger incentives to innovate and understanding consumer needs better. This of course relies on competition. So where there are only one or few market actors, the trade-off will be in favor of public ownership.
Sometimes it’s the lack of laws or institutions that prevent competition. For example, social media companies have huge market power because every user that wants to switch has to convince their friends to switch too. This is because these companies have made it difficult to switch out of their ecosystem. Europe is trying to build laws that means that friends can be automatically transferred or that you can chat to WhatsApp users from another app. We need to think better about how we can promote competition. Look at YouTube. If the government had a website where you could upload your videos and check off every YouTube alternative you wanted to upload it to, then it would be much more likely that the same videos could be found on for example PeerTube, making it a more competitive alternative.
With other companies like rail, ports, power, water, and other utilities, you cannot promote competition without losing economies of scale. And these are also not areas with a lot of benefits of privatization (innovation, consumer understanding), so these have a big benefit of being public.
Capital is not going to get unchecked increasing power as long as there is enough competition.
The georgist definition capital is the same as the classical economic one. The only school that doesn’t see it that way is the neoclassical one. And the only reason they don’t is because they made simplified assumptions in the marginalist revolution. Marx made similar simplifications in other ways.
It is true. What I’m saying does assume that we can democratically win against this ruling class. But lets say we do rise against them. Violently or not. And we then Implement a change in the system. I don’t think it’s necessary to seize all means of production in order to achieve that. I think it’s all about balance.
Well according Stiglitz, Zucman, and Josh Ryan-Collins, housing is the dominant aspect. Land is the main explanation for both inequality, housing unaffordability, recurring recessions, stagnating growth and urban sprawl - all of which Henry George (the first big advocate of land value taxes) predicted. The rest is what plays a smaller role according to the data they present on wealth. Housing makes up more than half of all wealth (it used to be more like 20%). Land is worth more than 25% of GDP. Housing makes 30-40% of people’s budgets and this is increasing rapidly. Every cohort is less about to buy a house.
Kuznets argued that inequality wouldn’t rise based on some very fundamental economic laws. These include Kaldor’s stylized facts. One of them says that the share of growth accruing to capital is expected to remain constant.
Piketty said that this is no longer true. Capital share of gdp is rising. His argument was initially that this is happening because the return to capital is rising above the general growth rate.
However the discussion has shifted in light of new data. Rognlie found that if you exclude housing from the equation, capital share is no longer rising. Meaning capitalists in general terms are not getting richer, property owners are. Or to be more exact, landowners are. Knoll found that 80% of changes in house prices are due to land scarcity. Keep in mind how much of company assets are tied to land wealth.
Stiglitz concludes from this discussion and his own analysis that wealth-to-income ratios rising is not because capital is increasing, but because we are including types of wealth in the term “capital” that are not actually capital. Land is not capital. He says that the main cause of the rise in inequality and stagnating growth is the rise in the capitalized value of rents, and that the majority of these rents come from land. But he says they also come from market power rents, political rents, patent rents and information asymmetry rents and other researchers focus on these rents.
This is what is meant by rentier capitalism. Without rents, capital wouldn’t accumulate. What you’re essentially arguing is that capitalism is bound to be rentier capitalism - there’s nothing we can do to stop it so, we should go a different route. Im happy to go on that route, I just don’t think it means the same as you. I’m a bit more optimistic if we manage to get society to target this rent-seeking behavior and create strong institutions against rent seeking.
I’m on board that the complicated nature of our legal system is exploited by companies to increase barriers of entry. I don’t think this means that institutions can’t do the opposite too. I think laws should be made simpler, but it’s possible to do so in way that also realigns them with societal goals of minimizing market power.
I’m also on board with the idea that there are certain industries that should be state owned such as management of natural resources, roads, rails, heating, health care etc.
You say that economics and history proves that capital concentrates in fewer and fewer hands. If you dissect what kind of capital that is, it’s actually housing that explains 87% of the rise in wealth to income ratios. And land explains 80% of changes in house prices. So Georgism may not be as small of a part of the problem as you think. Land is not capital.
If you move towards socialism when you vote left and move towards capitalism when you vote right, isn’t it possible to be halfway and be happy with being there?
Even the analysis of who has the political power. Democracy implies one person one vote, but the US has one dollar one vote. This is not democracy. It is capitalist yes, but it’s also possible to have capitalism with institutions that prevent money from getting too much political power both in terms of influencing politicians and media.
Btw, capitalists are not bound to get richer than workers. Over time, economic theory suggest that this remains in balance due to competition. You will find that the wealth to income ratio has risen over time. But wealth is not capital. Stiglitz argues quite convincingly that the only difference between wealth and capital is the capitalized value of economic rents. This is what I mean by rentier capitalism. Economic rents are the root of inequalities, stagnating growth, recurring recessions, unaffordable housing and urban sprawl. I recommend reading up on Georgism. You probably agree with it a lot more than you think ;)
Public vs private ownership of companies is a case by case basis. Many “capitalist” countries have many publicly owned companies. We used to have even more before Thatcher and Reagan. Now we have moved into a more public private partnership idea, which is a compromise.
Monopolies are able to extract monopoly rents through market power. This is one of the problems of rentier capitalism. That is why we have antitrust laws. We also need a system that prevents political rents from lobbyism for example by making it illegal for politicians to have stocks or to take campaign money from donors. We also have land rents from private land ownership. Singapore has a public land lease model, but a land value tax would achieve the exact same outcome.
In economics you talk about natural monopolies which is when initial investment costs are too high for competitors to exist or when physics or other constraints prevent competition (think of a railway line between two cities). There are many ways to argue that these types of companies should be publicly owned within a capitalist framework.
So yes, there is an in-between. And it depends exactly how much business is left to the government and how much is left to companies. This balance is defined by politics.
I’m getting a bit tired of seeing the communism/capitalism dichotomy. Guys let’s be pluralistic or at least see these two as a scale. There are a lot of solutions in between. Government failures exist just as much as market failures. Let’s focus on the actual root causes of our problems: externalities, rent seeking, private land ownership, too long patents, public good provision, overly complex legal system, information asymmetries in labor markets. We need unions, free health care, cheaper education, carbon taxes, land value taxes, simplified legal system that can’t be taken advantage of. Stop this capitalism vs communism bullshit. That’s not the cause of all this. Your real enemy is “rentier capitalism”.
Boycut companies with too much market power. They just happen to be quite concentrated in the US.
Yeah why do people have such strong views against it?
Also Linux is a great anti tech giant alternative.