Thread by @Noahpinion

1/So, the other day, @Annaleen asked if capitalism would be around forever, so here is a thread about that.

Short answer: Depends on how you define "capitalism".

2/If you defined "capitalism" as "markets with property rights" - i.e., people claiming ownership over stuff and then exchanging it - then capitalism will probably be around forever.

I highly doubt that a fully planned economy is in the offing, even with very smart AI.

3/There is an argument that a sufficiently smart AI could anticipate our desires, weigh them, and arrange the economy to optimize our utility, but A) this is way too science-fictiony at this point, and B) I doubt we'd want that even if it were possible.

4/People like having property rights, and unless we modify our personalities not to like property, that's not going to change. In addition, exchanging stuff creates gains from trade and sends signals to producers about who wants what, yadda yadda.

5/A second definition of "capitalism", which someone at lunch came up with, is basically "libertarian ideology", which says that wealthy people deserve their wealth, the government's only function is to protect property rights, etc. etc.

I expect this too will be around forever.

6/Why? Because market systems, like any system of distribution, will create a lot of inequality, and the rich people will want to defend their riches, and the cheapest way to defend your riches is to use moral suasion, i.e. convince people not to try to take your stuff.

7/And since humans have a strong instinct for reciprocity, which translates into ideas of just deserts, rich people will always be able to do an OK job of keeping their wealth by spreading the idea that wealth comes from hard work, fair play, etc. etc.

8/Of course this will only work up to a point, since when inequality gets big enough, people realize that the difference can't just be from hard work (or even natural ability), and that it must have a lot to do with luck. Then the rakes & pitchforks come out.

9/But don't expect the winners of market economies - or communist parties, or co-op consensus decision-making systems, or cyborg aristocracies, or whatever - to stop preaching doctrines of "just deserts".

10/So, what if "capitalism" means "tradable joint stock ownership of the means of production"?

Well, now things get interesting. I think there's some chance this *won't* be around forever.

11/First of all, public markets are already in decline. bloomberg.com/view/articles/…

12/Second of all, interest rates are really low everywhere - we're awash in a sea of abundant capital. Capital is cheap as heck.

Keynes envisioned this kind of situation driving down the return on capital, preventing the capitalists from taking all the wealth...

13/...But a funny thing happened. Profits didn't go down.

By some reckonings, the return on capital is already really low, and companies are making big profits on what economists call "rents" - i.e. sucking money out of the economy.

home.uchicago.edu/~barkai/doc/Ba…

14/So we could be looking at a future where financial capital - i.e., investable funds, accumulated savings - is basically too cheap to meter, like air, and companies make their money by leveraging various forms of power instead.

15/In this sort of world, where the rentier refuses to be euthanized (to use Keynes' term), governments will probably find ways of balancing corporate power on behalf of their citizens.

Some possibilities: Unions, co-determination, sovereign wealth funds, high corporate taxes...

16/This future, though it would still have markets and preachy libertarians and profits, would not be "capitalist" in the sense that we got used to during the industrial revolution.

17/Anyway, this is just my offhand prediction. With new technology, lots of other cool sci-fi things are possible. We could reengineer our personalities to be highly cooperative, and make the old dreams of voluntary socialism actually work (Star Trek!).

18/Or we could have various dystopias - enslavement to AIs that treat us like animals, upload to the cloud, rampant personality-cloning, infinite unimaginable digital holocausts, rabbits inherit the Earth...you name it.

19/But my best bet is that we should all be prepared for "late capitalism" to segue into "later capitalism", and "even later capitalism", and "OMG how the hell did it get this late and we still have capitalism"...

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