Is shareholder capitalism a suicide pact?
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I think people are uncomfortable with the consideration that things are transactional. We'd rather pretend they aren't, even though we all know that they are.
If two people do not treat their relationship as transactional, then it is not transactional. I don't know how to make this any simpler: at least one counterparty has to, at least, agree to the notion of "transaction" entering into the interaction in the first place, for a transaction to be taking place (and, I think, it could be argued that both counterparties must approach it this way). If they don't, then there is no transaction.
You seem to regard the idea of transactions as something fundamental to all human behavior, like a law of physics. This is not the case.
We all do some calculating, often subconsciously, about whether to continue to interact with someone else. And we have various thresholds or red lines which could lead to ending or at least significantly reducing future contact.
And indeed, this is usually how such discussions about this topic proceed, with someone opening with the narrow definition of "transaction" - not necessarily monetary, of course, but at least two well-defined sets of things that two people intend to trade (and where a withholding from one party would result in a cancellation of the deal) - and then as you point out more and more human behaviors that don't work like this, they retreat to the point where, for example, a parent taking their child out for ice cream is a "transaction" because the child wanted ice cream and the parent wanted to do something nice for their child.
If that's your working definition of "transaction" then fine for you, but you can't then make some argument that it's neoliberal economics that best reflect human nature and fulfill human needs because of its insistence that all economic activity be mediated by a free market (i.e. a forum supposedly for the free and open proposal and settlement of transactions). The "transaction" of one, is not the "transaction" of the other: neoliberalism and indeed capitalism itself would not work even by their own internal logic if they assumed the same notion of "transaction" as that required of the statement "all human relationships are transactional."
What positive return is guaranteed that makes these relationships beneficial? There are plenty of living beings who yeet their young out to live on their own from the start. Or is every parent either throwing away their time/money/effort on a losing transaction?
Is it a gamble for those who are poor, that their children will take care of them? What does that mean for rich people and their children? For extremely wealthy people, who can buy everything they ever need/want, is it solely a gamble that your child will want to spend time with you?
Why do you believe that guarantees are required? Or even that the return must be positive?
'Transactional' doesn't have to mean a perfectly balanced exchange or in kind. For some just a bit of acknowledgement is worth millions of dollars and/or years of sacrifice. For others they're never satisfied and forever feel cheated or unhappy with how they see things "balancing out" or failing to.
Transactions are the signals for building trust, but they aren't the only components in the relationship. Shared history, shared vocabulary, commitments built on that that trust... These are not just transactions.
It's like saying that "we hate to admit it, but all the company really is is the emails and Slack messages the employees send to each other."
It's not that simple.
And don't reply with a link to that japanese guy who sells his time to hang out.
that's just, like, your opinion, man
The (grand)parent comment is arguing that the things left out are the ones they find important. A friendship can be analyzed through value, but that's not necessarily a good way to build and sustain friendships.
You can model relationships in economic terms, but it's a very different type of economy. Given how bad we are at modeling money economies, relationship dynamics are probably a lost cause.
Similarly what would you do if a friend was dying? Sorry I just don't see the ROI here, don't think I can get much out of your last few months?
The reason we can't do that anymore is that it requires something like an equitable distribution of political power. Our current system is so top-heavy in terms of who determines policy and political direction, that even simple problems with easily-mitigated failure modes are beyond us.
It's unclear what specific policy changes are being advocated by the author. Even if we decide we want to go back to the 1980s (do we? was life that good back then?) how specifically do we do it? Is it just by banning the marketing of securities to retail investors?
Incidentally retail participation in public equity markets has traditionally been much lower in Europe and this is something that lawmakers are actively trying to remedy there: https://finance.ec.europa.eu/capital-markets-union-and-finan...
- The huge sums of wealth which tens of millions of ordinary people feel they need to accumulate, to pay for their (grand)?children's college education, unexpected medical bills, many decades of retirement and elder care, etc. Compare that to (say) the 1950's.
- The huge structural and social barriers to creating small businesses in most economic sectors, compared to (say) 60 years ago. Back then, how many of the businesses in an average town were (at most) small-ish, family-owned companies?
- How d*mn much "money" is sloshing around the financial system these days, with the "at any sign of crisis, pour in more $trillions" monetary policies of the Fed.
I hear you, but uncle Karl names and shames the growth-obsession in Das Kapital which predated Reagan by over 100 years. It's a part of the system that many people have incentive to deny, hide, or minimize, but endless growth seems to be a requirement of "the system of organizing our resources that prioritizes turning capital into more capital" aka capital-ism.
This has nothing whatsoever to do with capitalism.
Capitalism is an economic system in which those who invest capital rather than labor or ideas are considered to be entitled to the bulk of the profit from the endeavor. This is defended by the claim that the capital-ists are also exposed to more of the risk, and hence deserve more of the reward. There are strong counter-arguments to this position.
The counter arguments to this position are entirely theoretical and have never been proven to work in the real world. Perhaps there is some non-capitalist economic system out there waiting to be invented which could deliver superior results without eventually devolving into an authoritarian dystopia, but I doubt it.
However, just as there's no ironclad rule that an enterprise in a capitalist system must seek to maximise profits, there's also no ironclad rule that the best or only way to see profits is to do things that other people want to pay for.
Increasingly, the financialization of the US (and other) economies means that substantial profits can be obtained by extracting value from transactions, rather than creating value to society.
Mariana Mazzucato has discussed this at length in her excellent book "The Value of Everything: Making & Taking in the Global Economy Economics"
The point is that capitalism only works well for allocating resources when it happens to follow the goal of producing value for others, and in that sense any economic system that somehow prioritized this would have the same benefits as capitalism. Note that it also needs to take externalities into account, otherwise the short term benefits of value production-driven economic activity become a long term net negative. Capitalism has not proven itself in this regard so far.
The thing that is different about capitalism is that beyond (generally) favoring value production, it also favors the owners of capital as the beneficiaries of generated profit. This in turn makes the owners of capital have deeply vested interests in ensuring that this asymmetrical distribution of profit does not change (they will almost certainly lose if it does). That is what defines capitalism, not free markets, not value creation, not entrepeneurial activity.
If you held a gun to my head, I'd severely limit the ability to extract value via financial transaction fees (either by directly limiting them or taxing the shit out of them), and I'd require corporate boards to have worker representation, and I'd require some level (25-100%, not sure) of worker ownership of for-profit corporations.
The goal of all these is to nudge for-profit corporations towards (a) actual value creation, instead of extracting value (b) increasing the distribution of profits to the labor class.
Plenty of capitalisms do, have done, and are currently doing, exactly this. I should know: I live in one.
In early days, capitalism did contribute to increased production- for example, the role it played in removing the crown's ability to grant monopolies in different fields to favorable subjects, and allowing private ownership at all.
Early monopolies and their place-men held back economic development, and allowing anyone who sees a new need to start a business definitely increased production, but Capitalism is governance by the owners of capital.
At this point, that is again holding back production, as capital owners (like the place men before them) incentives' are to increase their personal wealth even at the expense of production. We see capitalism inhibiting production most clearly in the way private equity consumes and destroys productive enterprises by loading them with debt, using the money to issue enormous dividends payable to the special class of shares held by the firm, and then selling the scraps of the company that remain after bankruptcy. This is also visible in the way that banks no longer offer loans to new businesses unless they have collateral to borrow against, and the flaws in how venture/angel investment works.
When optimizing for production, governments turn to policies that are considered socialist in order to remove these obstacles.
One category of this is stuff like social housing and free education/healthcare which reduce the cost of living for workers, increasing the size of a country's workforce and allowing cheap production of goods & services. Unemployment benefits and support for non-workers (like children and the disabled) also fall into this category, as that allows workers to change employers with less friction. Other ways are limiting what owners of capital are allowed to do with their property- a prohibition on the Private Equity model of destroying companies would fall into this category, or subsidizing immature industry.
There is a balance between capitalist policies and state-controlled policies, where either side can inhibit production once it has power without responsibility to the citizens it operates on.
> Since the turn of the millennium, most American families have been invested in the stock market.
The actual percentage appears to be 61%.
Now, that's definitely a majority and so the line is defensible. However, I would say that "most" has connotations that are in conflict with "more than 1/3rd of all Americans are not invested in the stock market".