Hacker News Reader

Comment by geofft | Hacker News Reader

Why does the author refer to this as "fake capitalism"? Isn't this what capitalism is?

It reminds me of the arguments that communism must be a good idea because we haven't seen true communism yet. We've seen true capitalism for much longer and much more clearly than we've ever seen any form of communism, and it's exactly what the US has. You can't just hope that maybe with a little more regulation, or a little less regulation, or something, capitalism will magically work. Capitalism sets up incentives for people to figure out regulatory capture and lobbying in whatever regime you come up with. Capitalism sets up incentives for companies to influence the public to believe that certain forms of government intervention are perfectly natural (take copyright, for instance - if you convince everyone to get rid of copyright, you'll just set up incentives for companies to convince everyone to bring it back). If you think this isn't working right, please work with the folks who want to figure out an alternative.

View on HN

> Why does the author refer to this as "fake capitalism"? Isn't this what capitalism is?

The author appears to be conflating the terms "capitalism" and "highly competitive markets", which are not at all the same thing. "Capitalism" is, as you say, perfectly compatible with regulatory capture and co-opting the government to help stymie potential competitors; in fact that is exactly how the "capitalists" of the late 19th century in the US operated.

Do you know how to cook well? Go to the front of your yard, set out a table, and start selling your food. It's now a count down until you're ticketed and/or arrested, and the police also decide to take any money in your wallet along with anything valuable at your stand as 'evidence'. This is really a very important example since selling food is probably the single easiest industry that can provide substantial revenue to anybody with a bit of skill.

Rules and regulations are not inherently bad, but as they grow out of control they rapidly transition from being a net positive to a net negative on society. Go try to navigate the thousands of relevant pages of legalese full of esoteric and counter-intuitive laws in e.g. California just to open a food stall. Your utility cleaning sink is only 9" deep? Time to shut you down, it needs to be 10"! In the current state of the US it's generally unlawful for a kid to go setup a lemonade stand in their front yard. The US has rapidly transitioned towards becoming quite anti-capitalist.

But of course this was not always the case. It's hard to pinpoint when exactly we started transitioning to the current era, probably around the 60s. And this is really the point. 'Not true communism' can not really pinpoint any era in communism as 'true communism' because the ideal and reality simply don't exist in the same plane. And while e.g. the 50s were not necessarily the penultimate example of what capitalism can yield, they were at least a really great example - as it was a time period that struck a balance between rules and regulations while not hampering individual entrepreneurship and innovation.

"The US has rapidly transitioned towards becoming quite anti-capitalist."

What you're describing is distinctly capitalist.

"Pure capitalism is defined as a system wherein all of the means of production (physical capital) are privately owned and run by the capitalist class for a profit, while most other people are workers who work for a salary or wage (and who do not own the capital or the product)."

This has nothing to do with how easy it is for someone to acquire capital in the ways you're describing. In fact that it is difficult to enter the capitalist class only emphasises that there is a difference between them and the worker class (i.e. capitalism).

No, it's not. As you can prove by a simple reduction to absurdity. Let's take a feudal system. But in this feudal system our lord will pass a law that effectively means exactly the king's 'chosen' is able to be a blacksmith. And this blacksmith then hands a good chunk of his profits right back to the lord in exchange for this monopoly. And then he does the exact same thing to create a puppet tavern, a puppet brothel, and so on. This is not a capitalist system by any imagining of the word.

The most underlying and critical point of capitalism is an individual's right of access to the market, both as a buyer and a seller. All this class distinction stuff are part of Marx's inane ramblings. They don't even make any sense. Traditionally the shop owner, shop visitors, as well as the shop workers have lived practically right next door to one another in mostly similar condition doing mostly similar things. And more importantly people can generally do as they feel. Want to open a shop? Then knock out the front wall of your home, put up a sign, and boom - you're now part of this magical "class" of business owners. Some people even just set up tables outside their house and sell whatever they happen to like making or growing. And this isn't some vague ideal. In many nations throughout the world today this is still very much the reality, and it's awesome.

This is really the unfortunate part. So many people try to come to conclusions about economic systems and what is right or wrong without having any experience outside of America or similar nations. It's like trying to judge the civility of society at large when you've only ever lived in e.g. Detroit, St. Louis, or Baltimore. Your opinions would be misinformed, at best.

You are correct that your feudal system is not a capitalist one, as the blacksmith does not own (he is not able to sell) his means of production.

The most underlying and critical point of capitalism is an individual's right of access to the market All this class distinction stuff are part of Marx's inane ramblings

This is not the case. The Wikipedia definition for capitalism is well cited.

Then knock out the front wall of your home, put up a sign, and boom - you're now part of this magical "class" of business owners.

Yes, there is absolutely the ability to move between classes. The use of classes in the context of this definition of capitalism is to give a broad overview of how a capitalist society is structured. In your example, owning the house and stock they sell would be considered "capital". If they were to employ an assistant, to tidy up or help sell stock (which the assistant doesn't own) then the assistant would not own their means of production. Making the assistant a "worker".

Some people even just set up tables outside their house and sell whatever they happen to like making or growing. And this isn't some vague ideal. In many nations throughout the world today this is still very much the reality, and it's awesome.

But it's not capitalism. Hence the definition I provided.

Returning to this bit:

All this class distinction stuff are part of Marx's inane ramblings.

I think shows your true colours. Economists might respectfully disagree with Marx or his ideas, but to call them inane is just ignorance.

The blacksmith would indeed own his 'means of production'. The one and only reason he would have difficulty selling it is because of rules and regulations. This was rather the whole point of the example. As rules and regulations make it more and more difficult to access the market as a seller you move further and further away from what capitalism is.

As for Marx, something doe eyed students of today often forget is that academia can and does often go extremely far astray, particularly on social issues where a dangerous hive mind frequently emerges. For instance in the early 20th century we in the US, and the academic establishment in particular, were the biggest drivers behind eugenics. We were literally the inspiration for Hitler who saw his own work as building off our 'progress.' His work ultimately being the one and only reason that eugenics in the US was scaled back and gradually became taboo.

The rise of Marxist ideology corresponded with an extremely sharp increase in the number of individuals pursuing the social sciences and liberal arts at the postgraduate level. Unfortunately these studies, in this quantity, do not really correspond to being able to contribute to society in any meaningful way. That's not to say the arts and humanities inherently do not contribute as they most certainly do. But society cannot support a billion philosophers anymore than it can support a billion neurosurgeons or plumbers. Thus enter Marxism which is little more than a fancification of striving to live as Marx did: drink and drug yourself to stupidity while writing whatever you want. Time to put food on the table? Just mooch off Engels and your brother-in-law.

I think when people say "fake capitalism" or "true capitalism" they're talking about unrestricted and unregulated free markets. It's also important to realize that the thought tied to Communism and Capitalism is one in the same; I'm sure most would be surprised that Karl Marx and Friedrich Engels were the ones that coined the phrase and idea of Capitalism.

> Capitalism sets up incentives for people to figure out regulatory capture and lobbying in whatever regime you come up with. Capitalism sets up incentives for companies to influence the public to believe that certain forms of government intervention are perfectly natural (take copyright, for instance - if you convince everyone to get rid of copyright, you'll just set up incentives for companies to convince everyone to bring it back). If you think this isn't working right, please work with the folks who want to figure out an alternative.

I like your line of thought but I'm unsure if I agree with the fact that copyright could be incentivized to come back but that's just an opinionated view of mine. It started with the structure of the government from the beginning making it was a day 0 idea. There are also different types of capitalism; China's capitalism is different from US capitalism. So, that also is something to consider with the "fake capitalism" issue you brought up.

Overall, I think one baseline to be able to tell if capitalism is working is if one can actually go from rags to riches in today's time. I also think what people are picking at is the imbalance that happens at an economy of scale when a company becomes so large that it is the market.

> I think when people say "fake capitalism" or "true capitalism" they're talking about unrestricted and unregulated free markets.

As far as I can tell, by "fake capitalism" the author means the opposite of "competitive free markets" (emphasis mine), not unregulated ones. In fact, the author says, "The federal government has done little to prevent this concentration, and in fact has done much to encourage it." - i.e., the author supports increased regulation and government intervention as long as it's in the appropriate direction.

Yeah, I agree with your assessment of the author. I should have detailed that I was getting at more of my personal experience talking with some hardline libertarians and free market anarchists.

I think the key distinction is capitalism vs corporatism. Corporatism is feudalism wearing a capitalist mask. The elite companies in the top do operate in a free market, but the story for the rest of society is radically different. I think in the US today we have a corporatist society. Your kid wants to setup a lemonade stand on the lawn? Get ready for a visit from the police. A multinational corporation wants to produce and sell a product that involves a real possibility of poisoning the groundwater? Sure, we're all about capitalism!

It's a really ridiculous system and it's the consequence of the fact that regulatory organizations have started to become a tool for multinationals to exploit at their whims, rather than a tool to effect positive change in society as a whole. So it ends up in a system where individual to small business capitalism is hyper over-regulated whereas big business and multinational capitalism is regulated on paper yet laissez faire in practice.

Capitalism is simply the private ownership (including ability to transfer) the means of production. This is still true of the corporatist variety - unlike feudal fiefs, corporations can be bought and sold, and that makes all the difference. The only way for a feudal to aggregate more power is to go to war with other feudals for more lands, because a fief is land tenure, not property. In capitalism, because capital is property, it can be aggregated by buying it, and the more you aggregate, the more powerful you become, letting you acquire more capital etc - a positive feedback loop which means that monopolies are inevitable in pure unregulated capitalism.

Regulation is orthogonal to all that, so long as it does not interfere with the ability to aggregate capital. You can tax the corporations heavily, you can impose various safety standards on them, you can have consumer rights commissions etc - it makes it harder for them to make money from the capital that they own, but it doesn't change the fundamental equation of capital -> money -> more capital, and therefore the result is still capitalism. The only way you can stop this cycle is by imposing a limit on how much capital can be held in one hands.

Artificially limiting the 'means of production' (which is such an increasingly inappropriate and dated concept to use for these sort of discussions) is precisely the issue. Imagine a kingdom where a king created rules that, in effect, named exactly one black smith owning [puppet], one tavern owning [puppet], one brothel owning [puppet], etc. And these individuals were free to buy, sell, and trade these businesses so long as the transactions remained within the regulations of the king. That's not capitalism, not even a little.

And that is really the issue. The further you limit the ability of people to engage the market (as buyer and seller) the further away you move from capitalism. And that is precisely what our current system is doing. Repeating the same example just because it's so stupefying. In most places in America today you cannot legally setup a lemonade stand and start selling lemonade on your own property. We're creating a culture of passive consumers driven by extreme regulations against everything except such!

We don't have a problem with monopolization of lemonade stands, though. But we do have a problems with large corporations monopolizing their respective markets, and they are doing that not because they are granted said monopoly from up above, but because they are able to consolidate it.

Limiting the amount of capital one can own is not equivalent to your scheme, by the way. The rule isn't that only one guy can own a tavern, or that there can only be one tavern - the rule is that one guy cannot own more than one tavern (just as an example - I don't think that's the level at which we should actually cap capital).

The issues are intrinsically connected. People don't just start out e.g. going from nothing to building let's say a telecoms company. Entrepreneurship and creating businesses is a cycle of growth. For instance Bezos' first 'gig' followed a summer of work at McDonalds, which he hated. The next summer he setup a week long education camp for younger kids. He only got a dozen or so signups, but he probably made more from those signups than he did in last year's work at McDonalds. When you start making entrepreneurship difficult from the bottom up, you're going to end up with a really distorted picture of capitalism at the top since you're going to have some sort of strange bias in the companies represented.

And this is where I think corporatism excels. There are now just an immense number of rules and laws that are all increasingly esoteric even to operate quite simple businesses. And that's before you get into the countless fees and costs the government demands before you've even sold your first product. In other words when you kill off entrepreneurship and start moving away from capitalism, you invariably head towards corporatism which is itself headed much closer to feudalism than capitalism.

As for the king example, this was relating to the feudalism -> capitalism -> corporatism -> feudalism loop, not your specific suggestion. As for your suggestion, there are two big issues. The first is the same as discussed here. Capitalism and competition is a growth system. The reason e.g. Elon Musk was able to create a competitive rocket and vehicle company was because he earned hundreds of millions of dollars in another venture. No individual has any personal need for hundreds of millions of dollars, but it is strictly required if this individual wishes to engage in large scale ventures - the sort of which stand to massively improve society.

The second issue is probably the bigger point. We already have countless laws, on the order of thousands of pages, of laws relating to competition, anticompetitive behavior, restrictions on mergers and acquisitions, etc. These were all geared minimizing anti-competitive ownership. But the general rule in a corporatist society holds true. We have the FTC approve mergers between e.g. AT&T/Time Warner/Charter while rejecting mergers between far smaller companies that could eventually become the competitors for these sort of behemoths that increasingly stand above the law, and perhaps even above government.

In other words, write the laws and expect to see you and I only be able to own e.g. one tavern. But expect to see the king's friends somehow manage to own thousands. Corporatism in a nutshell.

Our anti-monopoly enforcement is actually much scaled back compared to what it used to be for most of 20th century. More importantly, the focus was changed. The original monopoly busting approach, at its peak under FDR, was all about ensuring that the markets stay competitive - it was hindrance to competition that had the feds cracking down on you, not e.g. jacking up prices on consumers.

That was changed under Reagan, and the new approach was that monopolies were only to be regulated if they start to affect consumers. And that's very much by design - according to the people who devised this regime, monopolies are not in and of themselves bad, because they're more efficient due to economy of scale. So, for example, if a merger happens, the reason why they can block it is if they can demonstrate that it would raise prices or reduce quality of service. If they can't prove that, that's too bad - even if the sheer size of the resulting behemoth is obviously a problem for market competitiveness, it's just out of scope.

I don't think it's a coincidence that monopolies dominate the market under these new rules, in a way that they haven't done before.

Mostly agreed - we're saying the exact same thing here.

You'll also find that going back in time there were also far fewer rules against individual entrepreneurship. And where there were rules they were enforced in a more sane fashion. E.g. - even if a kid's lemonade stand isn't obeying regulation 3753 section 3, or city ordinance 4725-4 or whatever, you don't go and shut down the stand as the stand is doing nothing but good for everybody.

But as we transition towards corporatism rules against large companies start to disappear or fail to be enforced, while those rules against small companies and individuals start to grow and become unreasonably burdensome as well as extremely actively enforced.

The one part we don't agree on is why corporations are allowed to merge. For instance it's quite evident that Time Warner alone has already exploited their monopoly to increase prices unreasonable. Internet service in America is far more expensive than in many parts of the world, yet the quality is not particularly remarkable. And there's no justifiable reason. It's just companies agreeing not to compete and then jacking up their prices. Because of this it's not reasonable to suggest they're being technically allowed to merge/acquire further competitors because there's no evidence that they won't do what they're already doing. This is just another aspect of corporatism where rules disappear as companies grow large enough.

Capitalism lacked a single intellectual backing in the way that communism did (speaking in general terms). Wikipedia also says differently on the etymology of capitalism - Louis Blanc was apparently the first person to use it in the modern sense [0].

[0]: https://en.wikipedia.org/wiki/Capitalism#Etymology

While I sympathize with your view, I don't find it reasonable to say that Capitalism won't work if you add sufficient regulation.

There's a continuum of Capitalism->...->Socialism->...->Communism where it's been shown that both a completely free market (extreme capitalism) fails due to being unstable (for the reasons you state), but also that pure Communism fails (because people are people and systems corrupt - essentially same reasons as with Capitalism).

Somewhere in the center where you allow both the good of the many and self-interest to balance - you can have stability... but it comes at a cost of constant vigilance.

I'm not really convinced that the answer to "Neither A or B work" is "Try something in the middle," especially because in this case I'm not convinced capitalism and communism are our endpoints and it's a one-dimensional space.

If you're having trouble with Automake and having trouble with CMake, the answer is almost certainly not to use parts of Automake and parts of CMake. A much better strategy is to read go read Automake docs carefully and make sure you're doing it right (inspired, perhaps, by people who say "You're doing Automake wrong" but not taking them at face value) and see if you can get it to work; go do the same with CMake; and if neither works, go look for something completely different. Maybe Bazel. Or start figuring out where Automake and CMake are falling short and how to improve them - not how to use them better, but how to build new versions of them that actually work.

"capitalism will magically work."

Capitalism essentially DOES work. Any argument otherwise bears to burden of proof in presenting a more desirable alternative.

There are 0 starving people in the United States, there is an actual obesity epidemic among the poor. The absolute quality of life over the last century across capitalist nations has continued to explode across all societal strata.

> There are 0 starving people in the United States,

That is somewhere between misleading and flat-out untrue. While starving to death in the US is exceedingly rare, the number is still non-zero and there are literally millions who are "food insecure" (the term used for statistics etc.) to some degree or other. That's starving, as anyone who has actually had trouble affording decent meals (as I did when I was young) would know. The fact that there are also poor people who are obese doesn't change that one bit.

And you know the funny thing? The reason there are so few people starving to the point of death is distinctly non-capitalist food programs. Capitalism failed them; social democracy saved them. That you would claim the near opposite is frankly disgusting.

> The absolute quality of life over the last century across capitalist nations has continued to explode across all societal strata.

1. I think that's true on average and probably true on the median, but it's unclear that's true for everyone. There are a lot of anecdotal stories of people working at a gas station to pay for college or even postgraduate school ~50 years ago, no loans or anything. That's just not possible today. I would bet that in terms of net worth, ~50 years ago the lowest class in the US was at least positive and is definitely not positive today.

2. In any case that's not what the author means by capitalism not working. The claim is not that quality of life has gone up, it's that the market is not operating in the way that advocates of capitalism say that it should. Perhaps you want to argue that oligopolies and regulatory capture and barriers to entry in new markets are morally good because they have had the empirical result of reducing Great Depression-style starvation. I think that's a coherent argument to make. (I'd ask some questions about how the leadup to the Great Depression involved oligopolies and regulatory capture and barriers to entry, but I imagine you could come up with convincing rebuttals.) But then you / the people who believe like you need to start selling capitalism as not free markets because that produces moral good, but as highly regulated and government-intervened markets that are centrally planned in a way that reduces suffering and quality of life and is therefore morally good. If you want to argue that the author's depiction of "capitalism" is a straw man and in fact capitalism is winning by killing needless competition, that's fine - just start saying it.

Reply on news.ycombinator.com