Monday, November 6, 2017

What Capitalism is Most Worthy of Defense?

The capitalism most worthy of defense, broadly speaking, generates useful product which otherwise would not have materialized on its own - especially when output has the potential to scale exponentially. For instance, I find it difficult to be critical of a wide range of tradable sector product, which clearly requires more coordination and detail than could readily be provided by individuals or small groups.

Whereas, one reason I question much of today's organizational capacity - especially for education and healthcare - is that reasonably equal value could be generated via small groups and in many instances, between two individuals. Organizational capacity matters, and too many knowledge based activities occur in ways which end up selling access, instead of quantifiable attention on the part of a provider for a customer.

For me, Google is a clear example of capitalism that is worthwhile. Consequently, I was concerned about Barry Lynn's disappointment with Google, although he's hardly alone. For anyone such as myself who is tech challenged, Google has supported simple platforms for online activities which I otherwise might not have been able to master, on my own. And while Amazon provides a platform for shopping, and Facebook a platform for those who are socially inclined, it's Google's intellectual emphasis which means I no longer have to rely soley on the news or my own personal library - extensive though it may be - to connect with the world.

Perhaps Barry Lynn hasn't realized, how Google has improved the lives of so many individuals such as myself who have limited resources at their disposal. Just the same, I'm glad for the times he's singled out corporations whose territorial ambitions often resulted in diminished marketplace choice. As a former grocery store employee, I personally encountered one of Barry Lynn's examples, re small businesses who lost much (already scarce) shelf space for their product, when larger corporations convinced retailers to give it to them for further product expansion. And often, when I've sampled what large corporations have to offer on grocery shelves, it turns out they're more ambivalent and less committed to new product, than the small providers whose shelf space had been lost.

However, a post from Chris Dillow, "How to Defend Capitalism" is what actually prompted my own, today. He writes:
Capitalism hasn't come into doubt because people woke up stupid one morning. It's in question because it has stopped delivering the goods. Productivity has flatlined for ten years - something that hasn't happened since the early days of the industrial revolution. That's why real wages have fallen...
Is capitalism "indefensible"? Or is too much of what has not worked well (in terms of productivity and otherwise) actually something quite different from the organizational capacity which has brought us centuries of progress?

Again, real wages have fallen not because capitalism has somehow "lost its way", but because of a rising dominance of non tradable sector activity, much of which lacks both the incentive and scaling capacity to generate growing levels of output. How can we continue broadly rising wages, given such a shift in overall output trajectories?

Nevertheless, we could still have more output than is presently occurring in our non tradable sectors, even though it would not take place at the same earlier exponential levels. But there's a more important issue at stake: We don't necessarily have to have constantly rising wages to generate further progress. The problem, however, is too much energy expended either blaming capitalism, or confidently defending it while not considering how the present state of economic affairs is coming up short.

This post wouldn't be complete if I didn't also touch on a point made by Miles Kimball, who again cites John Locke in "John Locke on Diminishing Marginal Utility as a Limit to Legitimately Claiming Works of Nature as Property". I was particularly struck that Kimball made a connection between land ownership, and the ownership of ideas. Only consider that the "ownership" of all healthcare related medical ideas, is supposed to rest with physicians. Unfortunately, what this means, is that their ownership is so extensive, they have diminishing marginal utility for the healthcare resources and ideas they don't primarily favour, which results in less marketplace choice for consumers. Indeed, the same might be said for the diminishing marginal utility of grocery shelf space for big business, as well.

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