Is capitalism dead? Yanis Varoufakis thinks it is – and he knows who killed it
theconversation.com
theconversation.com
Shopify, Instagram, TikTok, Magento and the dozens of other ways to sell goods online offer an alternate path, and while Amazon may dominate today, tomorrow is never certain.
(Edit: spelling error)
Still, I think Amazon is doing some pretty anticompetitive things, and the FTC lawsuit against them seems like it has merit in my layperson’s eyes.
Nobody else besides Amazon can get a random product to my door in under 12 hours for any reasonable cost. If I buy the product direct from the manufacturer I often get charged shipping. That situation could be easily argued to be a monopoly.
Apple vs. Google isn’t that much of a choice, either. There used to be so many smartphone options: BlackBerry, Windows Mobile, Palm, and Symbian all existed at the same time as the iPhone and Android.
Now it’s just two, and most governments don’t seem all that interested in curtailing some of their most anticompetitive practices.
You don’t have to be a pure monopoly be in a small group of “lords” with a position of power that cannot possibly be overturned.
Why do Amazon have a monopoly on this? Is it because they are engaging in anti-competitive practices preventing competitors from offering the same thing or do they just have the best logistics expertise and setup in the industry?
That's a genuine question btw because it matters a lot for whether or not regulation/the state should attempt to resolve it.
You have to have Amazon’s sales volume before owning a delivery and logistics empire makes any financial sense, and you can’t provide Amazon’s level of service and low costs without owning your own global logistics company.
Then you’ve got the fact that Amazon’s technology infrastructure is a profit center. In contrast, any e-commerce competitor has to pay retail rates for cloud computing or run a data center as a cost center. Amazon e-commerce lost money for decades while AWS propped it up.
The anticompetitive practices come from the ways in which they exploit this enviable position, like the issue the FTC is suing them over where they are charging their merchants money to fight over search ranking, and knowingly promoting inferior and/or less relevant products with the result of raising prices for consumers and merchants artificially. Merchants can’t refuse to play the game because if you don’t sell on Amazon you lose most of the addressable customer base.
> competition is what's supposed to protect us from rentier nobility
Google and Apple won smartphones, and now they get to tax everyone forever. Innovation in that space is dead, as both companies leech off of their earlier success.
That's so fucked.
An enormous amount of innovation capital is going straight into Apple and Google's pockets for what amounts to a distribution racket.
For so many things, you have to do mobile. Web apps are truly second class citizens, and most people do computing on smartphones instead of laptops and desktops.
So you adopt the app distribution model: then you're faced with the App Store and and all its toxic warts. Paid ad placement against your trademark. Draconian rules. Forced tech upgrade cycles. Inability to deploy on your own company's cadence. Break the rules, and you're out. No runtimes, fat taxes, no customer relationship.
Tech didn't used to be this authoritarian. We had a twenty year period of nearly unfettered freedom.
Apple and Google can't be both the hardware and the software of phones. That's wholly unfair to every other class of business.
We need four or more options for phones. Not two. And they shouldn't be able to unilaterally act as gods to block your access to millions of Americans. These aren't gaming consoles.
If GIMP could ship with the Photoshop key map and have nigh 1:1 behaviors these things become commodities and thus must compete for distinguishment. As it stands Photoshop is there almost exclusively as a product of inertia and so Adobe can leave it to stagnate.
If you ask a business about their moats, they'll talk your ear off about network effects, two sided markets, last mile infrastructure, brand power, property portfolios, scale... and if you listen from the inside, you'll hear about dumping, bribery, buying out competitors, and leveraging existing monopolies into adjacent domains. Sure, once in a blue moon regulatory capture will slip onto that list as a minor player, but it's the clumsy scrawny kid on Team Anticompetition. It might deserve 10%, maaaaybe 20% of your trust-busting efforts -- but 100%? There are only two reasons to give it 100% of your attention: either you don't know the bigger, stronger, nastier members of the anti-competition team (implausible, if you've been in business for any period of time) or you have an ulterior motive. Since there's an obvious and massively profitable ulterior motive, I tend to believe in incentives over words on this one.
While regulatory capture is real and it's a problem and the solution is deregulation, I am mighty suspicious whenever I see this proposal alone rather than in a lineup of more traditional trust-busting strategies like Sherman Act litigation or tax policy, which tend to fall on the other side of the big/small govt debate.
As I reckon it, standing is derived from the system. The system gives license to Apple to patent certain aspects of design, trademarks, etc. They don't have a truly market-derived end, what they have is derived from a much greater system in competition with others who've been borne similarly by systemic effects rather than market pressure. Restoring market pressures by breaking down such walls - certainly a progressive talking point - seems more likely to induce competition and thus affecting prices and priorities across the board.
I'd also make the aside here that I expect a large proportion of the businesses extant today existed in a "pre-capture" environment and made up the "post-capture" environment up for themselves, that is to say they wrote the book on what defines dumping by bribery which also bought them the lax oversight on antitrust - giving them license to subsume competition and permeate the market and expand.
That is to say take away an avenue like IP from companies like Adobe for example, and commodify their products. Conversely, giving competitors license to make bold faces copies of competitor's products results. In either case, I would expect the end to be very similar: more real competition as in driven by market pressure and selection.
With that said, such a policy wouldn't remedy conglomeration, which I would definitely submit is a problem, but ostensibly in many domains this would be a self-correcting as the barrier of entry doesn't require reinventing the wheel as a non-wheel-geometric-rolling-variation-on-a-circle-that's-never-quite right.
This is a good point because feudalism is when there is just one big fief. If another fief appears both cease to have the quality of feudalism, that’s what capitalism is.
It’s a false dichotomy that you either have one monopolistic company or perfect competition. Like almost everything, it’s a spectrum.
Apple and Google aren’t monopolies, they’re oligopolies. That’s better but a far cry from efficient competition. Compare their 30% App Store cut to online stock brokers which charge single-digit percentage fees and also require significant infrastructure and compliance overhead. They’d love to charge more but they’re in a sea of competitors who would eagerly steal away their customers.
I am not naive to the many valid critiques of all three, but the customer benefit is an important part of the discussion that seems consistently forgotten. It is so critical because customer preference and changing market dynamics are what ended the reign of both Sears and Walmart and they are what will do the same to Amazon. But until then, Amazon has figured out how to deliver stuff to my door quickly and inexpensively.
One small example. When I was young I loved music and in my medium sized town there was one record store with two locations. It was fine, and they would order in anything you asked for, but limited inventory available browsing. In the 90s Best Buy, Barnes and Noble and a few other now-forgotten big box retailers came to town. The impact was immense. Inventory went up ~100x over this period and price went down. And the breadth was amazing. Huge classical and Jazz sections, neither of which had much presence at the independent shop. The independent shop survived too. They had Ticket sales, hippie merch and a more specialized catalog. Wonderful differentiation in offerings. Now markets have shifted many times over since those days. Some retailers (including the record shop) have adapted others have not. So it goes.
This doesn't sound right to me, but if it is Varoufakis has a point.
Our contract, such as it is, with traditional capitalists is they employ many, produce some sort of value and keep as much profit as they can manage after labor and expenses.
If the Amazons and Googles of the world can generate their enormous revenues (and profits) without dispensing much of it to labor, essentially just collecting large rents in perpetuity, both traditional capitalists and workers are in serious trouble. That is a big shift.
Techno Feudalism, indeed.
On the other hand, if Google did pay out 80% of revenues, the average Google paycheck would be a cool $1,178,947.
capitalism is not just "free market economy," where the natural opposite as you supoose being "centrally planned economies"
this is essential to understand what varoufakis presents as a new relation to production: technofeudalism.
Not only is that not my personal definition of the term, but that isn't how it's defined in the linked article; nor is Yannis Varoufakis even remotely advocating eliminating the notion of private property ownership.
> capitalism is not just "free market economy," where the natural opposite as you supoose being "centrally planned economies"
That depends entirely on who you ask. You'll get very different, but equally sincere and well-justified, definitions from your local college's student socialist societ compared to the parents of the members of the lacrosse team.
Once anyone conversation starts using either C-word it inevitably turns into "Capitalism is anything I don't like" vs. "Communism is anything I don't like" and it's all downhill from there.
uh, yes, he does.
> I try to create a vision of a liberal, socialist society that is not based on private property but does use money as a vehicle for exchange and markets as coordinating devices. I preserve money and markets because the alternative would be to fall to some fearsome hierarchical control, which, for me, is a nightmare scenario.
https://greattransition.org/publication/another-europe-is-po...
whether you agree with Marx or not, his description of capitalism is at the very least, complete. and it's his definition I used.
I clarify, I meant in the linked article; not an interview from years ago.
>Towards the end of Technofeudalism, Varoufakis canvasses some proposals, drawn from his earlier book Another Now (2020), for how to address these issues. These include ending the cloudalists faux “free service” model and replacing it with a universal micro-payment model, instituting a Bill of Digital Rights, and using digital technology to “democratise companies” (with decisions being taken collectively by “employee-shareholders”)
employee owned coops are a major socialist idea, and are a definitive step away from privately owned capital, toward collectively owned production by the employees (proletariat, if you will).
so, yes. he does. in this article.
Probably happening in many industries and we don't know about it at all. Would generally agree that antithetical to free market capitalism and an example of how capitalism is not really capitalism.
So when someone claims that capitalism is dead - what the hell do they actually mean? I can still own property and trade it. The vast majority of people in Western countries can.
No - they think capitalism is something more, some ideal that we had and lost presumably. What that ideal is I have no clue.
Something similar happening now is where only big tech companies are able to afford compliance with censorship, money laundering, and other state regulations. This allows big tech to abuse their relationships with their customers, who are a wide group of industrialists, consumers, and labor.
Criticism of capitalism is fundamentally criticism of the state.
Trade requires coercion. Without coercion to stop you taking a particular object, there would be no need to trade for it, you would simply take it.
Without coercion to stop you living in your house if you stop paying rent or mortgage, why would you keep paying?
Trade requires ownership.
I don't think that's a good definition of capitalism. But to your point, that's why having these conversations are difficult - people don't have similar definitions for the same words.
I think such conversations can be valuable and meaningful, but when talking to someone who holds very different opinions, I think it's crucial to start with agreeing on clear definitions of words you'll be using. Sometimes that can take a while.
Unfortunately it doesn't seem like there will be any open e-book PDF versions available - perhaps as a testament about how the means of electronic distribution of information are too tightly held by the capitalists.
Sorry couldn't resist!
Do you similarly right off Nelson Mandela because he was ranting about the same injustice for multiple decades?
Passion is not enough, logical/ethical correctness is needed too. Mandela had that. Mao didn't have that in his passionate battle against sparrows.
In my opinion, it is a mistake to try and understand what's the purpose of money, by focusing on the consumption, rather than the production. Varoufakis falls into this trap. I have written in the past a relevant comment [1].
A recent example to illustrate what's the importance of money, is the production of CPUs, GPUs, TPUs, QubitPUs and so on. What's the more important processing unit, in the year of 2023? GPUs of course! How do we know? The price of Nvidia is going up and up. The consumers send a signal to the company which produces the most important processing unit, to increase production.
So, money is an automation. It automates the answer to the question: "Which one of the processing units do we need to increase the production of?"
Edit: Nvidia by receiving higher evaluations of money lately, tries to expand production and increase the volume of GPUs produced. So now they are tackling the problem of lithography [1], which is a long standing problem many chip companies tried to solve in the past and failed. It is an expensive problem, but as soon as an abundance of our money is given to Nvidia, they try to solve the hardest problem imaginable.
i.e (Money given -> Production increased) , in an automated way using money. Money is an automation.
Step 1. Let's define "commerce." You know, people buying and selling things, making favorable trades and such. Let's agree that we recognize that this is a thing that has happened for a long time and is likely to happen for a long time. You might say it's "good," or you might just sort of accept it -- and perhaps if you're not willing to accept it, you at least understand that you have a ton of work ahead of you if you're going to get rid of it.
Now, how is "capitalism" different from the above? And again, note that even if you have an elegant and clear answer, others don't. I'm literally asking this question because I don't think we've come remotely close to STARTING a good definition here, collectively.
Capitalism is a power system where capital and not creation dictates ownership. If you define it like this, people are often more inclined to see it as unethical. Which is exactly what the ruling class (aka the owners of capital) doesn’t want.
One of the most pressing problems is private equity with too much money and too much power buying up everything and anything in order to rent it back to us for more money because they can and because of said too much money and too much power and nowhere else to park it.
For example, many of the paths you've rightfully pointed out are, have been, and will be tarred with the socialism brush which, in (too) many corners of the US, is a synonym for communism.
and maybe I just don't have a good enough imagination, but I can't see anything other than extreme violence being able to solve the concentration of power. I'm not promoting it at all, but my knowledge of humanity and history is such that that's where I think the percentages point towards. Those with power seem to be increasingly doubling-down on positions that my logic would deem untenable, and their calling to account by those aspects of society responsible for calling power to account seem to be increasingly failing.
It seems the geist is about the monopolistic abusesses of large tech companies, which reminds us back to the Gilded Age's trusts. Both then and now are products and manifestation of the same Capitalism.
We may not have free markets anymore, but we have capitalism in spades.
The million was media money, book returns, and he declared nearly half a million paid back in taxes. Near as I can tell the ire was generated due becoming rich from books describing the Greek plumment into very not rich, leading to calls of Yanis being a champagne socialist profiting from the misfortune of many.
https://www.thetimes.co.uk/article/greeks-sneer-as-yanis-var...
The full wiki on this Greek - Australian (became a citizen of Oz in 1991) is:
Anyone would be lucky to become a billionaire, people already reporting ~1M euro annual income require much less luck.
It has been distilled into a more pure form and thus is another step removed from its base ideology and has become its own justification.
ie. Question: Why? Answer: Because capitalism
Where it used to be:
Question: Why capitalism? Answer: Because incentive structure to maintain a society
eg. The prevalence of overt user hostile function and design choices. These are in servitude of capital, not in servitude of customers or function. Capital as the ends justfying any means.
Nothing new: this has been a thing since socialism was invented.
Perhaps they should try to work within the system that has been shown to work better than any pther system, instead of advocating its mindless destruction.