Capitalism concentrates wealth. Ridicule Marx and his latter-day disciples all you like (I’ll help); he definitely got that right.
But capitalism is a big word with lots of meanings, and enough ideological baggage to fill a Lear Jet. Let’s talk about something more precise: perfect markets, with ownership, in which individuals compete with others to produce stuff, and store up savings. You can see this kind of perfect world in agent-based simulations like Sugarscape. Start with a bunch of sugar farmers trying to accumulate sugar in an artificial world, hit Go, and watch what happens.…Evonomics
How Perfect Markets Concentrate Wealth and Strangle Growth and Prosperity
Steve Roth
5 comments:
"Perfect markets" are a red herring, they don't exist hence they don't matter and we shouldn't spend time discussing them.
What is important is that corporations are not interested in competition, but in market domination and control.
Capitalism is not pro-market, capitalism is just pro-private ownership of means of production, it says nothing about the distribution of that ownership. Often the capitalists is interested in owning as much of the share as possible, avoiding competition.
This is with or without perfect markets.
Right. Economic liberals never claimed that market-based outcome are not unequal. The claims is that they are optimal in the sense of both economically efficient and fair. Thus, TINA.
The perfect market simulation is nevertheless important because neoclassical economics assumes perfect competition and symmetrical agents.
The conclusion in that distribution is therefore meritocratic, and therefore, even though unequal, fair.
But the simulation shows that the consequence is a smaller pie. That's not optimal wrt effectiveness.
This is the foundation of neoliberalism as a political theory based on economic liberalism. Distribution is "optimal," in the sense of both efficient wrt to employment of available resources, and fair, based on just deserts.
That involves empirical matters that can be tested. Heterodox analyses, not only Marxist or Marxian, reveal the flaws in the argument.
The counterargument is that departure from the ideal is owing to government intrusion. Therefore, government must be further limited in order to more closely approximate the requisite conditions under economic liberaralism.
The objections to this are based on matters other than government intrusion that bias outcomes toward the top.
In the article you have linked it explains how sclerotic markets due to oligopolies are self-defeating, meaning that an optimal efficient and fair outcome is impossible under such circumstances on the long term.
Joseph Schumpter held that capitalism is based on innovation and innovation on entrepreneurship.
Oligopoly is the enemy of innovation as disruptive.
This works against the creative destruction required to open the way for innovation.
As the rate of profit falls for production, then financial capital turns to finance for return rather than investment and financialization begins to replace production, leading to a decline in entrepreneurship and innovation.
This is why us liberals think that people who vote Conservative are stupid. Taxes might be a bit higher under liberal and socialist governments but we would all still be much more better off.
Conservative voters are so caught up with taxes and benefits going to the so called ' undeserving poor ' that they the miss what it is that really makes them poor, which is voting for Conservatives.
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