Raúl Ilargi Meijer — Is Capitalism Dead or Merely Dying?

Maldistribution. Symptom or cause?

A market ideology that causes widespread misery has no future.

The Automatic Earth
Is Capitalism Dead or Merely Dying?

Raúl Ilargi Meijer

The transition from the age of hunting-gathering to the agricultural age wrought a drastic social, political l and economic transformation, as did the transition from the agricultural age to the industrial age. So it can be safely assumed that the transition from the industrial age to the information age will also involve a profound social, political and economic transformation, as Varoufakis foresees.

The relations of production in late-stage capitalism, that is, the owners of capital and workers, are coming into conflict with the forces of production, that is, the workers and technological innovations, are coming into conflict with the relations of production, chiefly involving the ownership of capital, e.g., of technology and finance capital.

A symptom of this is that gains in productivity resulting from technological innovation are being hoarded by the owners of technology and high-skilled management and workers, which results in turn in maldistribution, social dysfunction, and political unrest. Financialization exacerbates this by increasing private debt, which involves debt service from income, drawing on existing asset, or more debt. When incomes are insufficient, this process is unsustainable without redistribution or reform.

The old order is breaking down and the new order has not yet revealed its outline clearly enough to be visible.

Independent
Capitalism is ending because it has made itself obsolete, former Greek finance minister Yannis Varoufakis says
Tom Embury-Dennis

Brad DeLong — Reviewing Lawrence H. Summers’s Review of Piketty V: Secular Stagnation and the High-Pressure Economy

First, there is the lost opportunity from maldistribution: a dollar of income creates more human well-being in the hands of the relatively poor than in those of the superrich. As we trade off dessert, incentive, and utility in our assessment of what the distribution of income should be, there is potentially a huge lost opportunity from maldistribution that blocks both egalitarian division and upward mobility.

Second, there is both the loss of opportunity directly to those whose ability to move up is blocked by the sociological, Cultural, and economic consequences of plutocracy; and the indirect loss of opportunity for others because blockages to upward mobility keep a great deal of the potential talent of the society from being appropriately utilized.

Third, there is the fact that in the PikettyWorld most institutions are run and most societal decisions of note are made by those whose principal qualification is to have chosen the right parents. They for the most part lacks the meritocratic chops to would have been able to potentially acquire even 1/100 of their fortunes on their own. In such a society institutions are unlikely to function well. This is a third, enormous loss of opportunity.

And, fourth, there is, in the SummersWorld, the lost opportunity to mobilize the potential savings power of the world for economic growth and development––unless, of course, the government provides the risk-bearing capacity that the private sector cannot mobilize on its own.

Both sets of opportunities are with seizing. Summers appears to have spent a considerable amount of time thinking about how to grasp opportunities in SummersWorld. It is a flaw in Piketty’s book, I think, that Piketty takes a relatively narrow focus on policies. Here is a place where I think a great deal of thought and work could productively be concentrated.

WCEG
Reviewing Lawrence H. Summers’s Review of Piketty V: Secular Stagnation and the High-Pressure Economy
Brad DeLong