I don't read any criticism of capitalism because there is basically none. 99% of it is just people claiming that some abstract bad thing in human society is due to "capitalism" without any sort of argument that would actually rise to the level of what I would call criticism.
In an unregulated market, capital very naturally tends to accumulate more capital - while, if you have nothing, it's very hard to build up capital in the first place.
Which means that, if this continues indefinitely, more and more things belong to fewer and fewer people - which is exactly what we've been seeing over the last couple of decades.
Why are you only looking at income inequality, only in the United States and only in the last 20 years? Look at where that graph was in 1980, for example.
But I didn't intend 2000 to be an arbitrary cutoff. 1980 is important because it's right before Reagan- and Thatcher-style economics. And if you look at measures of wealth inequality (e.g. the share of wealth owned by billionaires), that's actually become worse especially during the pandemic.
This was described in adam smith’s original writings about “capitalism” and he was clear for the need in government intervention to maintain a free market long term.
This is a very good thing, and the reason why capitalism works. The idea of pure meritocratic capitalism is that capital is allowed to accumulate to those who use capital most efficiently. There are fewer of those, naturally. Increasing capital efficiency benefits everyone; it means less work and more production, i.e. there's more of everything and everything is cheaper.
The actual issues of our current world happen because this pure version of capitalism doesn't happen. There's all sorts of things which lead to non-efficient people / organizations accumulating a lot of capital.
I feel like you're missing an important detail: in an unregulated market, it is often times far more efficient from an individual corporation's perspective to buy up or merge with competitors than to actually compete, whereas the societal-level efficiencies you're lauding come from competition itself. Without some form of regulation, capitalism trends towards monopoly, which is the antithesis of efficiency.
I don't think this is generally true. There are exceptions, such as a monopoly on some scarce natural resource. However, there's a quite limited market for such opportunities. It's extremely difficult if not impossible to completely corner some market, even without regulations.
In general, it's not true that companies would merge without regulation. Why would Apple merge with Samsung? It doesn't make any sense.
Usually, regulation causes monopolies to form. A prime example is the patent system, which literally grants a monopoly to an idea. There would be much more competition without IP protection laws, which in my opinion doesn't belong in capitalism. For example, if all Apple's patents and copyrights were openly licensed, there would be much more competition with higher quality, but cheaper products.
> It's extremely difficult if not impossible to completely corner some market
Are we forgetting how Microsoft absolutely dominated the PC market in the 90s and early 2000s? How today, there's basically two mobile operating systems that can determine much of today's mobile experience?
I agree that IP laws serve to entrench monopolies (although they also have the effect of encouraging development (e.g. of expensive drugs) in the first place - so it's a double edged sword). But so do a lot of other, much more "natural" mechanisms such as network effects, brand recognition, etc.
I feel like the libertarian, "pure capitalism" world view only makes sense if you think that consumers are omniscient and perfectly rational, but we know fully well how neither of these things are true.
I used to work for a company that would just buy up a bunch of smaller companies and then drive them into the ground. The smaller companies had the better tech, but the large company had a user base, a brand and money.
The point about operating systems is that these are new technologies. Free markets require time to resolve. It's natural that an inventor (especially with IP protections) has an market advantage for a period of time. It's important, that at longer time scales, the market evolves towards decentralization.
It's true that there are a lot of natural centralizing forces, such as network effects. Not sure how to resolve those.
However, getting back to the original point, no matter how you think about it, capital efficiency requires that 'a few' manage the capital, because naturally there are 'a few' who manage capital better than the rest. The problem is selecting those few. I think it's a misconception to argue that capital shouldn't centralize in principle, or that it's a morally bad thing.
Also, efficiency in a free market is really about fulfilling the needs of people according to their free will in the most efficient way possible. There's no forcing function to produce more if people don't want to consume more. In Soviet Union, they were very efficient at producing some stuff, but they made stuff that no one needed (they made lots of cheap shoes in big factories, which no one wanted). I.e. there's a difference in being efficient in isolation, and efficient at fulfilling needs of the market.
First, I don't think that "capital efficiency" is something that we absolutely need to optimise for regardless of any other concerns, and even if I would concede that, there's an argument to be made that concentrating capital in the hands of more people leads to more diverse markets that cater to more, and more different, people's needs. The thesis that a few number of people are just naturally more efficient at everything seems questionable to me.
It's true that there's a lot of specialization required and other reasons why capital doesn't always scale. That's basically what limits everything concentrating to just one guy.
> there's more of everything and everything is cheaper
And I don't believe that this is what we should optimise for. "More of everything, for cheaper" somehow doesn't seem to make people happier. I think that more shared ownership is more important, especially if you consider the effects of increased inequality on intangible goods such as democracy (e.g. how currently a few tech companies can influence global political discourse).
But even if I was willing to concede your point, somehow most people who argue for "pure meritocratic capitalism" never seem to suggest that we should have a 100% inheritance tax. Because people being born into wealth is exactly one of the reasons why "non-efficient people" (a problematic term in and of itself, btw) end up accumulating a lot of capital.
(I don't personally believe we should have a 100% inheritance tax, although I think it should be higher than it is right now in most places, but I think that this would be an almost inevitable conclusion of a "purely meritocratic" conception of economics.)
You have it backwards. Regulation has gone up a lot over the last two decades which is why you're seeing what you're seeing.
Historically in America or current day in developing countries, the rate of growth in living standards negatively correlates with the amount of regulation.
You haven't responded to my main point: do you believe that a completely unregulated market doesn't lead to wealth accumulation in the hands of few people?
It is of course true that some (bad) regulation, like protectionism of various sorts, can also lead to the same outcome in a different way.
After pondering this question from time to time over a few decades now, I will say I still really don't know. Sure, it makes intuitive sense that wealth can be used to create setups that capture more wealth. But most examples we see of this (especially the galling zero-sum ones) are regulatory capture and regulatory escape, where wealth is used to affect government action/policy to further concentrate wealth. The most glaring of these, that facilitates many others, is the fountain of newly-created USD that the politically connected get the first cut of. That value doesn't come from nowhere - it's the central collection of technological and economic progress that would otherwise show up as distributed price deflation.
On the other hand, we have the diminishing marginal utility of money - rich people overspend all the time, often on frivolous stuff. Musk bought an entire publicly traded company and crashed it on the way home, the way an upper middle class person might a shiny red Dodge Viper. One might say the VC ecosystem is chiefly 'dumb' money sloshing around trying to not be left out of the next big thing, while having no clue what that might be.
Talking about "completely unregulated" markets is also somewhat specious. In a completely ancap context, we'd likely get structures similar to governments, funded by wealthy people cooperating rather than continuing to compete in less-productive ways (say through physical force). In fact some might even say that this is the character of the current US government in a few different regards.
Yes, completely unregulated would lead to that. We need laws to protect against coercion and adjudicate in the case of disagreements between parties. Warring tribes where physical force wins is not a good place to be.
I don't think you're seeing the whole picture if you think only about physical force.
People who are well off have more opportunities to start other ventures that make them even more well-off, and if they're especially powerful, they can use that influence to further their benefit. I don't think that's particularly controversial.
To wit, I live in a mid sized town in the Midwest - about 80 years ago a family started a business that was pretty successful and is on its third or fourth generation of ownership now — that’s all well and good but it’s insane how much of the town is owned or directed by them now. Do you want to buy a car, foreign or domestic? Host a convention? Rent a hotel room in the urban core? Put on a concert? How about go to the hospital or buy health insurance? Go to college? Send your kid to preschool? Build a commercial building?
Playing into the articles points to gain higher status among "capitalists"?
Here is an easy one. Excess capital doesn't earn enough money to compensate for losses relating to depreciation, storage and maintenance costs i.e. the expectation is that capital income disappears in the long run. All further investment turns into consumption instead. That is kind of at odds with what people consider "capitalism" where the marginal productivity of capital is considered constant.
I think terms like "capitalism" inherently spread confusion rather than clarity.
Specifically, which of these systems do you mean by "capitalism"?
1) The status quo in the US where the economy is dominated by private corporations but the government has some regulations and some safety net. Also, corporations receive a significant amount of welfare from the government, generally control the regulatory agencies and some are primarily funded by the government either directly (NPR/PBS, Amtrak, etc.) or as its primary customer (defense contractors).
2) The system that existed in Gilded Age America where there was very little regulation but lots of corporate welfare and a US Army that would "remove" any American Indians who were causing trouble for the railroads.
3) The libertarian utopia where absolutely everything is privatized.
4) A system where everything except the police and military is privatized, there are virtually no regulations and there is no corporate welfare. Basically the more moderate form of libertarianism.
5) Basically the system we have in the US but with a larger safety net, more regulations and less military spending. In other words the European system that is one of the things commonly called "socialism" in US politics but it is also called "capitalism" when convenient to contrast it against other types of economies.
6) An economy where most people have a reasonable chance of eventually becoming running their own business and where large businesses are generally rare. In this system, creating a corporation might even require an act of a state legislature or the national legislature and would be generally rare and mainly for utilities like long distance transportation. This is the system that generally prevailed in the free states of the US prior to the Gilded Age.
7) The system that existed in the mid-20th century US that is somewhere between 1) and 5). Strong unions, regulations (often captured by corporations), large corporations that make stuff domestically, restrictions on imports, defense contractors exist, etc. The main distinguishing characteristic of this system is a high degree of income equality. CEOs don't make dramatically more than typical workers and even entry level pays a living wage.
At one point, I would have defined "capitalism" as 3 or 4. Today, I'd define it as 6. Most people would probably define it as 1, 2 or 7 which is what I would call "corporatism". I'm also undoubtedly leaving out other definitions of capitalism. The term "socialism" is also unhelpful for the same reason.
People who like "capitalism" or "socialism" define it as an economic system they like then use the other word to define a system they don't like. Then they talk past people who have different definitions of those terms. An argument about Venezuela or the USSR is not a reasonable argument to use against somebody who wants the Nordic model in the US or to go back to the mid-20th century economic system. An argument about corporate welfare or defense contractors is not a reasonable argument to use against a libertarian.
