Working Class consciousness (in other words envy and covetousness) runs into economics: “The Chamley-Judd Redistribution Impossibility Theorem†which tells us that redistribution from capitalists to workers is impossible, and trying to do so merely buggers the economy making everyone worse off.
This conflict between reality and ideology brings you nazism and communism.
The Chamley-Judd Redistribution Impossibility theorem is economists admitting Ayn Rand was right while trying to sound as if they are not admitting it. The economy needs savings, investment, and entrepreneurship. Entrepreneurs will arrange to get a good chunk of the wealth produced, and if you try to stop them, you will discourage, or altogether stop, savings, investment and entrepreneurship.
You try to distribute from the capitalists to the workers, and somehow it does not happen. Obviously an evil conspiracy. So you round up the usual suspects. Somehow, this fails to work. Obviously the conspiracy must be bigger than you thought. So you round up everyone vaguely connected to the usual suspects. And you wind up killing them.
Yes, there are perfectly real conspiracies, as the previous post reveals, and some of them, such as the one revealed in the previous post, contain a curiously large proportion of Jews, but this is not what causes economic differences between capitalists and workers. The usual object of conspiracy is political power. This causes economic inequality between people in political power and people out of political power, but other forms of inequality are more resistant to politics, and attempts to politicize other forms of inequality will have disastrous effects.
The inequality between Jewish tax farmers and the peasants had political origins and was reasonably answered by political measures against tax farming. The inequality between Jewish Estate managers and the people who worked on those estates, the inequality between Jewish money lenders and European borrowers, and the inequality between Jewish vodka merchants and Russian drunks did not have political origins, hence trying to remedy it results in you killing the Jews, not to mention capitalists, kulaks, foreign educated intellectuals, and whatnot. And after they are killed, your peasants are still screwed. Indeed they are even more screwed.
Hence successful official belief systems prohibit this fallacy. Believing it gets punished by social disapproval and exclusion from the levers of political power.
🙂
Jim, how do you write? Do you imagine the conclusion and fill in the blanks? Do you ask a question and then in real-time imagine a conclusion? Or do you do both in varying degrees? Or more?
I’ve always figured that conclusion came before explanation. Otherwise your deduction skills would be OFF DA FUCKING CHARTS. Or not? 😉
Just curious?
Okay that was a trick question (duh). Be that as it may… I’m quite sure you know your logic and fill in the blanks. It’s great stuff.
One observes that working class solidarity and mass murder goes together like ham and eggs.
There are several explanations of why this should be so, which describe the same phenomenon from different angles, seemingly different explanations which are in fact the same explanation.
Since Jews seem to be the object of extraordinary, intense, and excessive interest, I restated the standard explanation in a way skewed towards the pre-occupations of those that think far too much about Jews.
Indeed.
Actually, I have a question which a friend asked me earlier in private email when I suggested he read the Nick Land TDA post. All are free to answer. I feel unfit to answer the question to my satisfaction, because it was just recently that I spent some serious time studying the movement.
“From what I can gather of the movement, there is a lot of vaguely racist thoughts being thrown about, and theres a sense that simply claiming “ITS SCIENCE!” makes it all immune to criticism. Maybe I have that wrong… thats just the impression I get. They need better PR if that is 100% untrue.
But all of that is just addressing the most sensational part of this movement… maybe a return to Kings and Queens is what we need. The system we have in place now is quite sorry and beyond flawed in its current state. You and your internet cronies should make that happen (but without all of the white power fantasies, preferably)…
What is it about this thing that draws you to it?”
What I was thinking at the time, but did not voice as I thought it was hopeless:
1. Do you believe in evolution?
1b. Do you believe in races?
2. Then… etc.
I didn’t answer him. I avoided the question entirely.
Jim, you have integrity, I’m quite sure, how would you answer this question?
(just curious, no bullshit)
Do not understand the question. Do not see that there even is a question.
Of course it is science – very old science, back from the days when science relied on empirical data rather than social consensus.
The Dark Enlightenment is simply truth, which is why we can have a canon on which both Heartiste, Minion of Satan, and Sunshine Mary can agree. It is just that simple. To ask “what draws you to it”, implies that we have a free hand to choose make up whatever reality we please. The Dark Enlightenment is bad news. No one is “drawn to it”. It is just that some of us think that actual reality is preferable to made up reality.
haha, love it. By now, everyone knows the Good News of Christ and redemption; so we are here to spread the Bad News of God the Father and sin.
“The ‘Chamley-Judd Redistribution Impossibility Theorem’ which tells us that redistribution from capitalists to workers is impossible, and trying to do so merely buggers the economy making everyone worse off.”
Pfff. Jewish… or b-like.
I see a problem recently when saying one thing about X and someone having a second account of X without knowing where X came from.
In other words “they” have some account of X without the account being from X, but from A, or X, or Z. Whatever… it’s a different account from the original.
Thus, I don’t see this movement going anywhere logically, but I hope it does go somewhere.
Point being… never have the point come from an interpretation, but from the source.
Can I get a “hellz jeah!”?
Ha! X is knowable or unknowable! Brahs will pick this up.
Jeah!
I think I did a fair job of paraphrasing umpteen pages of arcane and obscure economist speak into a couple of lines of plain English.
For sure man. Just having a little fun tonight. The little one is out and about. 🙂
I think that the difference between capitalists and workers is a relatively recent one. Until a few centuries ago, there were aristocrats/warriors (with a king up top,) merchants and artisans (including merchants whose stock in trade was money,) priests and peasants. A typical Indoeuropean/Eurasian breakdown.
Of course, all these classes were in constant dynamic tension. The peasants largely had the function of taking it in the shorts from all parties, which is why their rebellions tended to be jacqueries, full of atrocity and with no endgame. The rest played a constant game of alliances and betrayals-the king with the aristos against the priests and the merchants in the Guelphs/Ghibellines, the king with the merchants against the aristos in Spain, then with the aristos and some of the merchants against the others, and so on. Envy in this case is a very useful coordination tool. Sure, it’s a negative-sum game overall, but if you win, you and yours are better off than when you started, so it’s worth it.
The king is gone (via Sham-kings,) the priests are wiped out and replaced by a remarkably ineffectual analog class (scientists and pundits,) the aristos put paid to each other with WW1 and then 20th century degeneracy, so all that is left are the merchants and the peasants. Now, with the industrial revolution, modern logistics and so on, industrial armies mean that you need the peasants and their urban equivalent. And human nature being what it is, there is nobody people hate more than 1) their relatives, 2) people who did them a favor, and whom they now owe. So, the merchants, split in various ways, fight each other, enlisting the envy of the peasants, many of whom are ripe for a jacquerie anyway and thus dangerous allies to have-but as the saying went in the GULAG, “you can die today, and I will die tomorrow.”
The problem between workers and the elites/CEOs are less an issue of wealth than of status. The Nazi’s understood this. They were able to work their workers much harder for less reward than any other group thanks to the high status they gave their position in life. Contrast that with America where high status is given to the parasitical classes and the military power and contributions of the working class is ignored and denigrated.
The greatest evil of trade based societies wealth and influence being the primary markers of status. Such system are perfect for middleman minorities to exploit them to gain power and influence without the military power component. This in turns allows the treatment the working class as nothing more than cattle to be used and exploited with no chance for self improvement. The working class needs a fatherly class to guide them. Instead our elites throw them to wolves and flood them gifts that only cause them pain.
The study of social status distribution instead of wealth distribution would be well worth looking for the DE.
^^^^^ THIS.
Yeah THIS.
The roots of the greatness of European civilization, for example the Dutch Golden Age and the British empire, are the joint-stock corporations. Western Civilization is, or was, a trade based civilization. The British empire was not conquered by the British Government.
@The British empire was not conquered by the British Government.
the british empire was conquered by the american empire.
No, it was not.
It rotted from within, and continues to do so to this day – from the parasitic welfare class and a growingly inefficient and indifferent working class.
No other system has produced the level of luxury than the capitalism of today. No other system has been able to duplicate the risk/investment/return of the free market today. Individuals and societies do best when trade is strong, and gov’t interference is limited to keeping the trade practices honest and clean. Those that thrive are those that give everyone – from the powerful noble class right down to the serf – a stake in their future.
Empires are seldom conquered at their heights – they rot from within first. For us, the writing is on the wall: we need to eliminate the welfare class and put them to work. They aren’t paying their share and they are breeding like flies.
My intended meaning was that India and suchlike were conquered by private businesses. Clive of India was an accountant for East India Company, who conducted battles as if they were takeover bids between joint stock corporations with armed and dangerous shareholders.
A joint stock corporation is just some guys in London or Rotterdam with their thumbs up their asses- unless they have ships. Which means you need people who can build and sail ships, and keep others from interfering with your ships, which means building and sailing ships that can sink other ships, which are trying to sink yours. None of these people are traders. Traders think people who build and sail ships and sink other people’s ships are a little weird, but they humor them if they are smart because they need their ships to go back and forth with stuff without getting sunk.
The roots of the greatness of European civilization then are building ships, sailing ships, sinking other people’s ships, then when you get to the other side of the ocean getting off your ship and setting the natives straight. Trade, wealth, and power come only after all this is accomplished.
Who provided the resources, designs, and decisions to build those ships? The workers are not going to build those ships by themselves. Joint stock companies provided the resources to do great things, and the decisions to do great things with those resources.
It’s a symbiotic relationship, but the ships, soldiers and sailors, and the wars of conquest, predate capitalism. Harald Hardradr, Rollo and William the Conqueror were not funded by joint stock companies. Even the Royal Navy in its modern form predates capitalism- taxes on landowners built it.
You are right that the East India Company was a joint stock corporation, but all the heavy lifting for international trade had been done by others previously. And they were only able to raise a private army and succeed in conquering and controlling India with it because they had a population to draw from that could do it.
So I’m going to quote Obama and say, “You didn’t build that.” You are giving capitalism credit for the qualities and abilities of a certain group of people that long predates it.
Those qualities existed in aristocratic Britain and monarchic Holland, but world conquest followed the rise of the joint stock company, and was done by it. More generally, high living standards and technological advance were a creation of entrepreneurs generally organized as joint stock companies.
This.
Commerce by definition is always susceptible of being captured by a coherent ethnicity, leaving the majority permanently fucked. You see that in every human society. Broad-based commercialism was only possible in Europe after nation-states without serfdom appeared, so that no single ethnic group could capture all the commercial nodes. Alas given enough time it always happens again.
No, commerce is not susceptible to being “captured” by a coherent minority, because if they charge too much for too little, you can always go into commerce yourself.
And I’ll have the same access to capital and suppliers as the old players? They won’t team up to take me down before I can even start charging less than them?
Where’s this paradise of yours?
All you have to do is start a financial institution that has the implicit or explicit guarantee of the creator of the worlds only fiat money, thus giving you the ability to create debt instruments equivalent to said fiat money. Come on, anybody can do that. Of course, the old players will hook you or me or anyone up to the money spigot, they love free markets!
Obviously the banks are a branch of government, and government can be, and routinely is, captured by conspiratorial collective action. Spandrell’s claim referred to the actual market.
Well, I will just make the blanket statement that capitalism as a historical phenomenon *just is* state-sponsored usury.
Capitalism developed the west, developed China, is developing India. Was the East India Company state sponsored usury? More like state tolerated piracy.
You will have the flexibility to take advantage of the established players’ blind spots, technological and political developments, better models of reality, more granular perception of the landscape, and so on. See: AirBnB vs. the hotel industry.
>The greatest evil of trade based societies wealth and influence being the primary markers of status.
Status and power are fungible. Military power, economic power and political power are always transformable one into another, given enough power and time.
>Such system are perfect for middleman minorities to exploit them to gain power and influence without the military power component.
You can always buy military power, sooner or later.
>This in turns allows the treatment the working class as nothing more than cattle to be used and exploited with no chance for self improvement.
I don’t see the American working class being treated like cattle-I see them being used as a vote bank. In general, they have been getting steadily less productive and better off economically as time goes on and technology advances. The only really skinny people I’ve seen in the ghettoes and redneck towns were drug addicts and those spending a lot of their time on athletic leisure.
>The working class needs a fatherly class to guide them.
“We are all Progressives now.” How does this make you different from the New Deal?
They’re the Reactionary Progressives. Right down to the Social Engineering.
All this talk of what the optimal system is, as if any cop or for that matter these gangbangers ye tremble before doesn’t have more power than the aggregate.
We have a problem of Bad, insane, Evil Elites. They’ll still be bad, insane, evil, destructive, nihilist and predatory if they’re around after King Emperor Patchwork Ibn Fnargl the 1st. This is a people problem, not finding the optimum system. Not waiting for King ET to phone home, et al. It’s a matter of gritting your teeth and working.
Back to lurking, Out.
[…] Working class consciousness « Jim’s Blog […]
The Nazis were overwhelmingly supported by the middle class.. As Whittaker Chambers wrote, the working class votes Democrat, the middle class votes Republican, and the upper classes are Communist.
You have to redefine the middle class downwards, way downwards, to torture that result out of the data.
It is a popular conclusion, but to get it, they have to do extraordinary things with statistics, such as not defining domestic help as working class, and not defining agricultural laborers as working class, and then comparing a percentage of a percentage with yet another percentage. What they claim to be proving is that the middle class voted for Hitler, but what they are actually proving is that members of unions affiliated with the SPD tended to vote SPD.
The Weimar Republic would have been fine if they had not let poor people vote.
Often you will find a source saying that Nazi vote correlates only weakly with working class population in an electorate, which if true would mean that Nazi voters were all classes, not “overwhelmingly middle class”, but they get that conclusion by excluding rural electorates, indeed by excluding all electorates where working class people were not largely unionized in SPD affilliated unions.
[…] to Jim for the pointer. “The Chamley-Judd Redistribution Impossibility theorem is economists admitting Ayn Rand was […]
>>One observes that working class solidarity and mass murder goes together like ham and eggs. <<
That's a fine way of dismissing a huge group of people. Communism isn't working class solidarity, and Nazism wasn't either. Not a lot of good examples of it, but maybe the Teamsters.
What I'm advocating in any case is nationalism, which recognizes that there are different classes and they should all work together for the good of the nation.
When all you have is a hammer, everything looks like a nail. It's the universal problem of economic determinists, whether Michael Moore or Bryan Caplan. The solution to the problems of capitalism for a capitalist is always more capitalism, and the solution for the problems of socialism for a socialist is always more socialism. Pragmatism is always an intellectual failure to a theorist.
But capitalism will be ruined if Paul Ryan can't get an unlimited supply of Oaxacan labor for Wisconsin dairy farmers. Who need government subsidies and price supports too…… I guess my state university degree doesn't qualify me to comment.
Every time a businessman hires someone, he and that employee are working together for the good of the nation. If you have class consciousness, if they act collectively, it is not working together, but class war.
>>Working Class consciousness (in other words envy and covetousness) <<
Working class consciousness isn't envy and covetousness, it's recognizing that my interests are not completely matched with my employer's. It's peculiarly moral language to be used by people who claim to be thinking primarily in terms of logic. The idea that what will benefit my employer will benefit me is true to an extent, but not an unlimited extent, because part of what benefits him is to have me do more work for less pay.
I assert that my interests are reasonable, and to assert them is reasonable, and not immoral, quite the opposite.
What Chamley Judd should tell you is that asserting such interests through collective political action is going to be counterproductive.
You’re taking the Randian position that capitalistic activity is inherently virtuous, and that the capitalist is a sort of Promethean hero, daring to create order from chaos and wealth from privation. That’s pretty romantic. It doesn’t match very well with reality, in my experience. I would trust the average crack dealer more than most of the businessmen I’ve worked for.
Chamley Judd are welcome to their theory. I’m going to believe my lying eyes. I prefer to have a legal and political framework that protects my interests, not just the interests of businessmen.
Take a lesson from India and China. Until it was “glorious to get rich”, they festered in dire poverty. Look at China and India: Capitalists did create order from chaos and wealth from privation.
Both these places are disgusting. A few people have gotten rich from low-wage based business, but they are still filthy and China has grotesque pollution from industrial activity.
Wages in China have risen a lot and continue to rise rapidly. In Dubai, wages don’t rise, but poor people rise to better paid jobs.
I wonder how Chamley and Judd explain Japan? Where inheritance tax is 50% (will rise next year), and the president of the biggest, most profitable company in the country earns 200k per year.
Would enterpreneurs be discouraged if they aren’t allowed to amass billions of dollars? Give me a break. If you depend on mainstream economics for a good analysis on people’s motivations you aren’t going very far.
And where the economy has been stagnant for over twenty years.
But in any case, Chamley and Judd say it is pointless to tax profits, and so forth, not that it is pointless to tax inheritance, so the more relevant point is that Japan has forty percent tax on profits, and progressive taxes that add up to about fifty percent for the wealthy, so they are attempting to take seventy percent of profits, which is not going to work.
It hasn’t been stagnant. Come and take a look. People eat meat, they didn’t, people have proper appliances in their houses; tumble driers were unheard of.
The 80s were a sham. Tokyo’s land prices were worth all the US. Once you discount the ridiculous asset bubble prices, and count from the 70s, Japan has been seeing constant growth, and that’s with a declining working-age population.
Japan’s tax bureaus takes it works seriously so Japanese companies don’t have access to tax havens, and they pay their taxes in full. They also pay their CEOs and other high officers less than 300k each.
Japanese rich people never complained about the level of taxation. They have a better life than everyone else, and that’s all they care about. They have their own restaurants were commoners aren’t allowed to go, their own schools were you can’t go if nobody introduces you.
Recently with all the new Randian hero worship that is coming out of the US, Average-is-Over, without-billionaires-no-innovation-is-possible, every American funded media in the country is telling the same story: we have to drop taxes on the rich or they’ll move to Singapore!!
They won’t. What people want in life is status, superiority. Not just money. The president of Toyota doesn’t need billions, he’s quite happy with his 200k. Because he is the fucking president of Toyota and people kneel down in front of him wherever he goes. Moving to Singapore doesn’t compare to that.
Hello? “We are the 99%” “You did not build that”
Of course they did build it. Modern living standards are a gift of the capitalists to the masses. This is obviously from the history of the west, and has been confirmed yet again by the rise of China and India.
Let the strawman be. There’s plenty of libertarian rhetoric in the US too, something that used to be unique to America but has been exported during the last 10 years all over the world. Globalism! Davos man! We need to privilege rich people or they’ll move to Singapore!
Allowing rich people to keep more of what they produce is scarcely privileging them.
You don’t think capitalists produce much? Observe what happens in countries that suppress capitalists.
while US capitalists are apt to get spat on wherever they go. Unless, of course, like Jon Corzine, they are on the revolving door between politics, regulation, and business.
If the choice is between rewarding businessmen by kneeling before them, and rewarding them by letting them get very rich, most Americans would choose the latter.
And, if you neither kneel before them, nor let them get rich, they are going to move to Singapore.
spandrell you’re exactly right. The Japanese also skew their statistics lower to keep countries from putting up trade barriers.
>You can always buy military power, sooner or later.<
How did that theory work in Lebanon in 2006?
I was speaking about how things work inside a society.
Incidentally, things have been quiet on the Northern border since 2006.
The most recent rocket attack from Lebanon was four rockets six months ago, which is not all that quiet.
Small stuff compared to 2006 when you got four thousand rockets, but hardly grounds for complacency.
After 2006, Hezbollah claimed victory on the entirely reasonable grounds that they got the terrorists they had been demanding released, and that they are still around and still armed and still making trouble.
Israel penalized Lebanon for harboring Hezbollah, but not enough to inspire them to get rid of Hezbollah.
What happened with the vending machine comment? That was a good point.
And by the way people don’t actually kneel down on meeting Mr. Toyoda; but they bow pretty low. And you think he hasn’t access to the regulatory system? Revolving door? Toyota makes the law as it pleases. They own the 3rd province in the country.
In the end this is a debate over what sort of inequality is optimal in order to produce better technology and living standards. The US has seen increased inequality and declining living standards since 1972. But hey we would starve without the billionaires, who gifted us high living standards. Right.
Increased living standards in East Asia were all due to state capitalism making stuff happen. Japan didn’t allow individuals to get filthy rich; China does; the result isnt’ that different, and if it is, Japan’s model is superior, in that it produced better living standards for everyone.
Did Europe raise its living standards too thanks to the mass producing of billionaires?
Perhaps you misunderstood his comment. No-one in the US is worried that they might be oppressed by Italian Americans.
I still think that if the alternative to letting businessmen get stinking rich is bowing low, most Americans would prefer to let businessmen get stinking rich.
In order to make that conclusion, you need to compare with an East Asian country without state capitalism: And that country is Hong Kong.
The implication of Hong Kong is that things in East Asia happened in spite of state capitalism. The record of what happened with state socialism also supports that conclusion.
China is growing very rapidly. Japan has been stagnating for twenty years.
Industrial revolution and all that. Things started moving with the restoration, which required everyone, or everyone who wanted a high status, quasi state job, to regularly attend the official church, and in the official church, had them sing:
No income tax, no tax on profits.
Think closely about it. You’re telling me China is better than Japan? Japan had its own era of rapid growth too; they didn’t have billionaires sending their children to Harvard.
Japan hasn’t been stagnating. I repeat. Japan hasn’t been stagnating for 20 years. The last 5 years perhaps. But come take a look. Living standards have increased tremendously since 1989. And that’s with a declining working population.
China still needs 30 years at least to get close to Japanese living standards. My bet is they never will.
There are many ways to develop a country: having billionaires around is not a requisite. Japan produces lots of riches, they don’t let the rich keep them all; Japan’s inequality has been increasing, along with declining living standards for the last 5 years. The same as the US during the last 40 years.
Living standards for the common people in Europe increased most after WW2. How much of that was thanks to robber barons?
Japanese GDP per capita currently four times China. Gap closing at 8% a year. At that rate, China will pass Japan in sixteen years, in 2030.
Did they? The case I know best is Britain, where socialist policies following World War II led to economic disaster.
Living standards in the US did indeed rise rapidly after World War II – as the US dismantled the socialist legacy of Roosevelt.
Recall that rhetoric about robber barons is inversely proportional to the actual number of robber barons.
Essentially your argument is that we have moved left and living standards have risen. We are still moving left, and living standards are not rising.
Essentially your argument is that inequality is good, and the richer the rich get, the more it trickles down for everyone. We have seen increasing inequality and our living standards are not rising.
Given the changing quality of leftist movement, going to the left can’t possibly have always the same effect.
So either inequality is bad per se, or inequality doesn’t really matter, and other things do.
But you can’t go on selling the Ayn Rand model of motivation; as technological progress does not always follow the robber baron model. Sometimes it does; Japan had a big lot of robber barons pre-war, Japan’s economy got better but not that better. When Japan really stopped being a peasant country was when the Manchurian officials came back to Japan and applied state-driven industrialization to the country.
Chinese GDP/capita is 6 times lower than Japan. Please don’t use PPP as it’s bogus. It counts meal prices as if people were eating the same food.
And China won’t be growing a 8% much longer, read Pettis and take a look. China is using the same state-driven industrial model as Japan; if Japan stopped growing China will stop too. And given that the Chinese state is much bigger than Japan’s ever was, the crash will be worse.
I’m not saying like Thrasymachus that capitalists depend on their workers. Of course it’s capitalists who create the framework for workers to be able to acquire their skills and apply them, earning a living on the process.
But the level of income that capitalists must receive in order to be motivated to create new enterprises is not a given. I can very well believe that American culture per se requires the possibility of getting billions in order to get people to work. But that’s not universal. Asian countries capital markets are state controlled, and they produce quite a lot of wealth too. European markets are a mixed bag; they also don’t do that badly.
The problem with great inequality is that the rich are going to undergo ethnogenesis so they can keep their wealth forever, and block any upstarts. The Mafia controls vending machines so they can monopoliz that wealth. Absent efficient state-coercion to keep the market open, that’s what you get.
Why’d you delete that comment anyway?
No, my argument, or rather “The Chamley-Judd Redistribution Impossibility Theorem†is that inequality caused by market forces (as distinct from inequality caused by state favors) cannot be remedied without making everyone, including the supposed beneficiaries, worse off.
Indeed inequality is rising – at the same time as government measures to reduce inequality are rising.
Seems to me that prewar Japan had parity with the European powers, post war Japan not so much. So it is not apparent to me that absent “robber Barons”, you got impressive growth
The Chinese government is building cities by state decree, nuclear power plants by state decree. It is not building USB hubs by state decree. It is following the standard model of capitalist development in moving up the value chain, start with sweatshirts, then nike shoes, and then in due course, own brand smartphones. The smartphones are not state driven industrial development. Rather, they are overseas Chinese driven – and when I say overseas Chinese, I mean someone with an overseas passport and a server in Bermuda who spends a whole lot of time in China. Chinese smartphones are produced by a huge number of very small no name companies, hence, not state capitalism.
Don’t think I deleted any comments. Some comments were lost in a crash.
Spandrell, so your argument is essentially that the riches without government regulation would destroy the free market, as in US?
My 1 minute reading of the Chamley-Judd model is that, since capitalistic wealth (eg company valuation) is proportional to the productivity the capital produces. Hence the more capital there is, the more productivity, with the implication that government redistribution doesn’t result in worthwhile capital investment. And, provided the market is reasonably free, worker wage increases with productivity. Hence it is better for everyone in the long run.
So they are really 2 different problems, the former concerns the validity of free market, the later the efficiency of investment. Note that “in the long run” means more than 1 generation, like 30 – 100 yrs, so argument like “Living standard at period X is good ==> Policy at period X is good” isn’t valid.
> inequality caused by market forces (as distinct from inequality caused by state favors) cannot be remedied without making everyone, including the supposed beneficiaries, worse off.
But what if the populace would rather have worse material standard and worse genetic/technology progress in exchange for more perceived equality? Human being primary status animal, perceived status is more attractive than actual wealth when basic living need is satisfied, and it makes sense for optimizing evolutionary fitness. Most people don’t care much for progress as long as things are immediately hurting.
Inequality is a loaded word. It depends on how you measure it and what qualities are you weighting. Human being status animal will always use all their energy to arrange into hierarchies according to their competing ability. As Spandrell said, it is about what sort of inequality, what sort of competition activities are optimal in order to produce better technology and living standards.
Japanese CEO may not have high salary but they have other status privileges, and since status is what really matters, it can be argued that inequality in Japanese is no better than US. Japanese males have one of the highest suicide rate in the world.
Typo: Most people don’t care much for progress as long as things aren’t immediately hurting.
“Japanese GDP per capita currently four times China. Gap closing at 8% a year. At that rate, China will pass Japan in sixteen years, in 2030.”
This is absolutely absurd. China has the mother of all real estate bubbles. The ones that popped in the US and UK are nothing in comparison. There are lower class Chinese buying up tiny lots in ghost cities with personal savings. This is way worse than when American minorities were buying houses they couldnt afford with money they borrowed. At laest then it was the banks that too the brunt of the losses alongside upper class who were trading houses.
Things are going to get extremely bad in China when the dust settles. The people will be out for blood. This more than clear to the Chinese elites, who over the last 6 years have gone all out to move as much of their wealth to foreign nations. They are also engaging in maternity tourism en masse in the US and Canada, using their children’s citizenship as an escape plan of sorts for when things go to hell.
China may have a monoethnic nation like Japan, but their elites arent remotely as loyal to their fellow coethnic, and will flee the moment the market correction occurs. In that regards, they are much like their Western counterparts.
The US had a bubble because NAMs can buy a house no money down.
In China, thirty percent down, therefore not a bubble.
People who see a bubble in China, failed to see a bubble in the US.
That is what a nation turning middle class looks like.
“…Living standards for the common people in Europe increased most after WW2. How much of that was thanks to robber barons?…”
The only reason this happened was the capitalist were afraid of the communist. Now that the communist are gone they’re going to rape everyone.
>>I’m not saying like Thrasymachus that capitalists depend on their workers. Of course it’s capitalists who create the framework for workers to be able to acquire their skills and apply them, earning a living on the process.<<
I'm saying that capitalists depend on their workers, and themselves, for what ability they have to create things. It's a national characteristic, predating capitalism if it exists at all. Europeans made great stuff before capitalism. The Japanese made great stuff before capitalism. Capitalism allows more people to enjoy more great stuff, but it does not have the ability to create it. The Chinese can't, or at least won't, make decent stuff. If one more Chinese laptop dies on me….. I had a couple of expensive Lenovos do this…. I swear I will go over there and…..
Jim's, or Ayn Rand's, argument may have held water twenty years ago, but now we have capitalism everywhere and see that it produces cheap, possibly poisonous junk in China. So capitalism is not magic.
Capitalism is magic. China was terribly poor. Now it is not. That is capitalism.
To the extent that actual free markets exist, yes, I don’t think concentration of wealth necessarily results in better median living standards and long term support for free market regulation.
You can amass capital in corporate forms which are ultimately controlled by government (Japan), or you can amass it in personal fortunes, which then start foundations to fund the Cathedral, like the US.
Or you can amass capital it in dynastic fortunes like HK. How have the median HK living standards evolved in the last 20 years? Last time I checked the latest housing projects have even smaller apartments than those of the 1980s. And how is the “10 million population city” project been working for the median HK citizen?
Declining living standards for the median HK is creating the socialist ferment that is pushing for universal suffrage, and once that happens, HK is pretty much over.
Hong Kong situation different from your nation models since it isn’t really a self sustaining nation country and face different challenges. I don’t have time to explain it.
> How have the median HK living standards evolved in the last 20 years?
In terms of absolute measure it is actually not too bad. The SARS disease took a heavy hit but overall there were improvement. The public housing is of much better quality for a negligible monthly rent so the poor are better off too. But in relative term it “feels” worse off because it is facing severe competition from mainland and SE asia, reducing HKers’s status and competitive leverage, and the in-pour of capitalistic money from mainland makes properties expensive. The feeling of the young generation is that while they enjoy a good material life, there is little hope of improving their status.
> Declining living standards for the median HK is creating the socialist ferment that is pushing for universal suffrage, and once that happens, HK is pretty much over.
Hong Kong was brought up by the British and fed by western culture. Following the western system was and is the dominant ideology and seen as the natural progress. Unless the west collapse and a superior alternative take over, little will change.
Lol that’s a turn off. When you do have time drop me an email, I’ll be glad to publish it.
I’ve nothing against HK, is a nice place I always enjoy visiting. But if it was the capitalist heaven that some think it is, it would’ve been improving at a much higher pace that it is. HK living standards aren’t better, and arguably worse than those in Taiwan or Seoul, let alone Singapore or Japan.
I’m curious what you consider “negligible monthly rent” tho. My friends forced to live in Yuen Long don’t seem to agree.
Jim>
Prewar Japan was a peasant society where commoners couldn’t afford to eat rice, and ate millet instead. The big Manchu push was a colonization project because Japan couldn’t feed itself. Yes it had a pretty motivated military but economically speaking it was not even close to the European powers. And its army couldn’t really fight a European one in equal terms; the small incursion into Soviet territory in Khalkin-Gol was utterly destroyed by the vastly superior Soviet equipment.
A vast majority of suicides in Japan are from debt. In Japan there’s no personal bankrupcy; legally it exists but the Yakuza will get you, your wife and your children; and the societal shame that not paying your debts means you’ll be a pariah the rest of your life. So people understandably can’t take the pressure and kill themselves. Doesn’t make their families better off but at least they don’t have to see it.
The fact that the CEOs aren’t paid more is important, because the workers get a bigger bunch of the profits as wages, money they spend. Having a middle class is important. Techno-commercialists seem not to agree.
Japanese workers produce good products and from time to time make technological breakthroughs; their college researchers are also top-notch. They seem to be motivated for something else than the chance to get billions; or even to be kneel upon, as that sort of status is mostly hereditary.
To the extent that any, or at least most human endeavor requires groups of people; something must drive the people to strive as a group, not just individual status-seeking.
If your concern is “does free market works in HK?”, my answer is “largely yes, provided free market would be kept intact”. Despite your plutocracy accusation, HK remains the freest market in the world. Competition is fierce in HK. Products except real estates are cheap. But there are only so many niches to fill and innovations to discover (and native HKers are not known for being innovative or entrepreneurial), so if there is already established big players with the economics of scale, they will remain big until something dramatic happen.
Now real estate price is what everyone is complaining about. But the real estate in HK is actually fairly priced. There is little profiteering on the part of private enterprises. It has more to do with the taxing structure of HK government and the free flow of foreign capital. Singapore house has the same intrinsic fair price as HK, but their government arrange citizen saving and subsidies in a way such that it is much easier for a family to buy the first property.
> HK living standards aren’t better, and arguably worse than those in Taiwan or Seoul, let alone Singapore or Japan.
Depends on what you are looking for. I lived in Japan for a year. It is a different lifestyle, environment is beautiful, products are good, though there are inconveniences. Tokyo is too expensive though, if you compare it to HK. It feels like Japanese are actors meticulously each playing a defined life script. Exemplary outwards but could be stressed and stifling inwards. Not a good match for an entrepreneurial and free spirited person like me.
> what you consider “negligible monthly rentâ€
If you don’t consider the status signaling value, recently built public house of similar environmental, utilitarian quality is only of 1/5 – 1/10 rent to private house. In 80s poor people were living in ?? (bed as a flat) and family-in-a-room at rodent ridden streets.
> The fact that the CEOs aren’t paid more is important, because the workers get a bigger bunch of the profits as wages, money they spend. Having a middle class is important. Techno-commercialists seem not to agree.
There are 2 types of spending: investment (for future productivity) and consumption. The idea of some economists is that, capitalists invest more, while workers tend to spend their money as consumption, and governments spend as ineffective investment, welfare consumption and wasteful bureaucratics. Spending on consumption with not enough investment doesn’t result in more productivity on the long run, it just create inflation. So we can tax and redistribution consumption power (as in progressive income tax), but better not tax investment power (as in capital tax).
As an example, Lee Kar Shin is 100K times more wealthy than average HKers. But he doesn’t actually consume 100K more, or enjoy his life 100K more. If you confiscate his house and redistribute it to HKers, each may get an extra inch, at the cost of totally collapsing the economy of HK.
> Japanese workers produce good products and from time to time make technological breakthroughs; their college researchers are also top-notch. They seem to be motivated for something else than the chance to get billions; or even to be kneel upon, as that sort of status is mostly hereditary.
Your are talking about scientists, engineers and artists who are common motivated enough without the billions. But they still need billions to fund their works and support a respectable living; the money can come from either the government or capitalists. That’s where the argument is.
I get what you mean about Japanese culture and the fake veneer there’s to most people. That’s how they are. Has little to do with economic policy anyway. Explaining it would take several books but in short it’s a legacy of feudal culture.
I also lived in HK for a year, and as I can recall food in Tokyo is more expensive than HK (though arguably better quality), rent is comparable if not cheaper, transportation is more expensive but mile per mile probably the same. Wages are higher in Tokyo though. Median wage for menial jobs is around 1000 yen/hour, median salary is around double HK. That counts.
Japan had excessive investment since the 1980s, the asset bubble crash produced a change of focus into consumption, which resulted in the golden age of popular culture and product quality. All that beautiful environment and good quality wasn’t there in 1989. People who say Japan has stagnated during 20 years just need to get out more.
Japan’s income tax rates aren’t any higher than any Western country. But corporations fix wages in a more egalitarian way, of course with heavy government input. Bosses have undisputed higher status and many perks so they don’t feel the need to take the bigger part of the cake for themselves. That results in a better balance of investment (which is done by corporations with state guidance, not individual plutocrats) and consumption, as the median Japanese has enough money to spend around in the economy.
Say what you will about Japanese culture and its corporate governance, Japan is a place where when people make money they don’t feel the need to move abroad, where the median worker can afford to buy a good house by age 30, and living standards have been rising steadily even with a declining population. Of course it may have peaked already, but their model worked very well.
It may not be applicable elsewhere, but neither can the Ayn Rand model be. Jim seems to think that the 18th century British model would have saved China and any nation from decline and produce an instant industrial revolution wherever it went.
> Has little to do with economic policy anyway.
Of course they are related. Certain people correlates with certain governance.
> Of course it may have peaked already, but their model worked very well.
Long term views look in generations. We are in an interesting time to see how the varies politic-economic models unfold. My take is that each of them has some truth in it but none of them are sustainable on their own.
That’s fair enough.
> Japan had excessive investment since the 1980s, the asset bubble crash produced a change of focus into consumption, which resulted in the golden age of popular culture and product quality. All that beautiful environment and good quality wasn’t there in 1989. People who say Japan has stagnated during 20 years just need to get out more.
In free market economic theory, over investment is accounted for. Over investment means the capitalists spend money on works that cannot create enough productivity to make back a profit. The decrease from the expected return to the real return manifest as a collapse of capital wealth. Since the capitalists lose their invested money, the money is returned to the workers. So it is a self-healing process; you don’t end up with a situation where the capitalists invest all the money and workers have no money to spend on consumption; the fact that the capitalists have money to invest means that there is enough consumption to support it. Now if you throw governmental influence into the mix things will go differently; some economists argue it always go worse in the long term.
So to recap: West developed technology and industry by what Spandrel would probably call “robber baron capitalism”. Japan developed before world war II with what spandrel calls “robber baron capitalism”. China’s leading edge of industrialization, the part that is producing modern technology, is “robber baron capitalism”.
So who industrialized without “robber baron capitalism”? Taiwan and Korea had extensive government intervention, but it would seem that the objective was more to enrich some capitalists rather than a socially just industrialization.
All of which confirms the Ayn Rand account: That the modern economy, technologically advanced civilization, is a gift of the capitalists to the masses. The root of western civilization and empire is the joint stock corporation. Hence any attempt to redistribute wealth from capitalists is bound to be counterproductive, leading to mass murder if carried to extremes.
Is that not what happened?
Everyone who industrialized, had what Spandrel would call robber barons. Maybe they do not have them any more, but they had them when the heavy lifting happened.
the fact that CEOs aren’t paid more is important, because the workers get a bigger bunch of the profits as wages
bullshit. Walmart has 1.4 million employeees, and gave 13 billion in profits to its shareholders in 2012. Could they afford to give their workers a raise? Sure, a little, if they wanted to stop paying their shareholders.
No, Jim, Japan only developed a strong industrial base when it pretty much nationalized the industrial conglomerates after WW2.
Korean’s chaebols are quite robber baron-ish in that they’re privately owned, but you could say they’re state controlled to a point. Taiwan industry was also state lead.
Also was German industrialization during the late 19th century also plutocratic? Where are the great German fortunes? German workers have it pretty good.
Do call me when China produces state of the art technology besides cheap smartphones with Android clones. And is anyone making billions out of that? Don’t forget Huawei is a state operation as is the BGI.
I’m very willing to admit that modern technology is a gift of the capitalists to the masses. Entrepreneurs, robber barons or not, make stuff happen and we should be grateful for that.
What I don’t understand is why they must be rewarded with more wealth and power than is proper. Mr. Toyoda made a huge contribution to Japan by founding the Toyota company. But he wasn’t allowed to make billions for himself, to evade taxes and buy half the country’s assets. He was forced to pay good wages and never fire his employees, to follow the country’s industrial policy to access capital. All that didn’t stop him or his descendants from continuing producing great technology.
If people bow low to him, I am pretty sure he is rewarded with as much power as is proper, and probably more power than is proper, making it difficult for new entrants to compete. If he had been rewarded with more wealth and less power, Japan would have a more dynamic market.
I suspect your history is wrong, in that it was the fascists that pretty much nationalized the big corporations, and that Japan had to have had a modern western industrial base to accomplish what it did accomplish in World War II.
Nationalization never creates an industrial base. It commandeers existing assets to state purposes, such as war, but the assets always decay in the long run, see for example Britain and the communist states.
Your history goes against my economic preconceptions, and it also goes against Japan’s World War II performance.
Japan had a second rate industrial base, until the war started, and Japan went all fascist. All existing private conglomerates were left as they were but they were integrated in the war economy, Nazi style. The state paid them to do what the state wanted them to do. Massive production increases and technological breakthroughs ensued.
After the war, the war economy was left as standing, the mission having changed from producing weapons to producing products for export. Private ownership of industry by plutocrats was abolished by Mr. McArthur, who the bureaucrats worshipped. Today Japanese industry conglomerates (Mitsui, Mitsubishi etc.) mostly own themselves in a circular fashion, with no plutocracy behind them. They weren’t nationalized de jure, simply the Nazi-style controlled economy continued after the war. Read the Locke paper.
http://www.paecon.net/PAEReview/issue23/Locke23.htm
The fact remains that Prewar Japan was a peasant country where common people ate millet and were 1.50cm tall, postwar Japan was an economic superpower whose people eat the best quality rice and meat in the world. Life is good. Very good.
I do thank the plutocrats for jumpstarting the industry in the 1880s, but I sure wouldn’t have liked to be a millet eating peasant. I rather enjoy the country today, where the plutocrats were robbed of their billions, and common people eat high quality grain and meat.
You mean to say that if the plutocrats hadn’t been first overruled by the army, then overthrown by the American backed bureaucracy; that if Mr. Mitsubishi et al. still had their billions, Japan would be even better off? The middle class would have more than 2 reliable cars per family, and would eat even better rice and meat? I find that hard to believe. You can have your dynamic market and keep it.
I heard the same thing about Australia. When I investigated, it turned out to be untrue. Rather, existing production was captured by the state, disrupted, and destroyed. As a result, when the war ended, and Australia continued the command economy but attempted to apply it to civilian purposes, people found themselves dramatically poorer, and were outraged and indignant. An election ensued in which a new party appeared, promising a return to normality, which is to say capitalism: They reverted to old fashioned capitalism, which result in an immediate return to near normal living standards and reasonably rapid economic growth. This spectacular failure of socialism and command was so utterly devastating as to exclude the Labor party from power for a generation.
Similar tales for Britain and Germany. In Britain, the labor party establishment recoiled from the disaster of the command economy when hunger loomed and the lifts in the treasury building stopped working, so was not sent to the wilderness for a generation the way the Australian labor party was.
In Germany, the new government dismantled the command economy at about the same time as Australia and Britain (1949). As in Australia and Britain, the command economy supplied poverty and despair. As in Australia and Britain, immediate postwar living standards were substantially lower than prewar living standards, and took a while to recover.
1949 provides a clear and decisive experiment in Germany, Britain, and Australia: The command economy deindustrialized these countries and made everyone poorer. Capitalism built their wealth before the war, capitalism rebuilt their wealth after 1949.
I don’t have the details to argue about how much of the war command economy was kept and how much was dismantled, but fact that the Japanese keiretsu aren’t privately owned, and that Japanese industry was very much controlled by the MITI is very well known.
Also foreign trade was tightly regulated (mostly monopolized by the big trading companies), as was agriculture (farmers sold all rice to a government body which resold it to keep prices high), etc.
The fact is post-war Japan has no plutocrats, no landed aristocracy, and pre-war they had both.
Prewar Japan made the industrialization transition.
Postwar Japan does have plutocrats, in that captains of industry have a great deal of power, probably more power than anywhere else in the developed world.
Honda was created in defiance of MITI, therefore MITI did not “very much control private industry”. More like private industry very much controlled MITI.
In short, as in every industrialized country, Japan was industrialized by rich entrepreneurs. The wealth of industrial civilization is, as Ayn Rand argues, the gift of the capitalists to the masses.
Japan has a different industrial role model than the US. They went all around the world and looked at the economies and made a combination heavily based on Germany. A good book to read on this is “Blindside: Why Japan Is Still on Track to Overtake the U.S. By the Year 2000”. It didn’t turn out to be completely correct but it’s not completely wrong either. China took some of their steam out. One disadvantage, as you noted, is that new entrants to markets get screwed. Japan doesn’t see that as a problem they just buy new tech from the US.
Not that different. Every nation that industrialized had what Spandrel calls “robber barons” – which is to say, people who were allowed to create wealth from simple materials and order from chaos.
> What I don’t understand is why they must be rewarded with more wealth and power than is proper.
What is proper? If a king runs his country to prosperity, but he theoretically owns the country, is he proper?
As long as the money is put to good use socially, it doesn’t matter private shareholders owns the money or the government use it. If Japan can work out a system of good governmental economics, all the power to them. Problem is how to maintain a good system. In practice, societies tend to slip into crony capitalism or socialist hellhole, both working by pork distribution rather than good investment.
China is more state capitalism / crony capitalism than free market. At cities where market is more free, the living quality is gradually approaching Hong Kong. Despite westerners sneering at the poisonous food and breaking copycat products, its improving year-over-year. (Trust me on this, I have more intimate experience than most of you.) By the time it really present a challenge at the innovation and quality fronts, it would be too late for the west to turn the table. I am not saying it must happen though, it depends on how the government is run and the cultural gene of the Chinese.
Agreed. My point is whether plutocracies are more or less likely to produce crony capitalism than other systems. Jim seems to think plutocracies are a sine qua non for technological improvement. I’m afraid they produce crony capitalism, feminism and Brazilization.
I’m no socialist I’d be very willing to kiss Lee Ka Shing’s feet if he sent HK women back to the kitchen, took the plastic surgery ad banners out of the streets and told the government to slow down the cheap labor imports. Alas he has other priorities.
Westerners don’t know crap about the poisonous food, if they knew they wouldn’t make friends with the Uyghurs street peddlers and their strange tasting meat. It’s domestic public opinion who’s been making noise about it, and for good reason. I’ve plenty of local mainlanders who are extremely picky of the food they buy as they know how the local farmland is. I do guess it’s not getting worse but the improvement is taking quite a while.
If you have any first hand info on how agriculture quality control is improving by leaps and bounds do tell, I gotta visit soon and I’ll like some peace of mind.
Well yeah picky is the point. You can’t expect to pay cheap price for decent food. HK imports plenty of food from Mainland but we aren’t getting poisoned as bad.
For now I’d just avoid processed food, avoid over consumption. Traditional chinese processed food has plenty of poison too, but old timers didn’t get the chance to consume to sickness.
Did you know? Daniel Radcliffe identifies as Jewish, and his mother is Jewish too.
I have never heard of Daniel Radcliffe and why should anyone care what he identifies as?
He’s the (former) child actor who played Harry Potter. LOL
[…] Working class consciousness « Jim’s Blog […]
[…] Working class consciousness « Jim’s Blog […]
Most men who become spectacularly wealthy end up benefiting their society as well.
Case in point: Bill Gates and Microsoft. But what happened after Gates and Microsoft became spectacularly wealthy? They became drains on American society. Microsoft attempts to protect its monopoly by hindering further technology development and Gates wastes his billions on unproductive and even counter-productive charity projects.
[…] Working class consciousness « Jim’s Blog […]
[…] https://blog.reaction.la/economics/working-class-consciousness.html/comment-page-1#comment-515557 […]
If you have to work, you’re working class.
If you don’t have to work, and your grandkids could still go to expensive private schools, you’re upper class.
There’s really no middle anymore.
High income workers are still workers, if they stopped working they would be out on their ass living in NAM hell pretty quick.
This definition of working class is overly broad.
>Working Class consciousness (in other words envy and covetousness
I must object to this. Socialism would not have been so popular if Marx would not get at least SOME things right. He got it right that wage labor is not a good thing. The natural way to work would be to own your own business, be self-employed. Having to work for a wage, selling your time instead of selling your product, is indeed wrong, unnatural, you feel like a rented machine. A self-employed enterpreneur can design products rationally, like a human being, while a wage laborer just does what is told. In Classical times there was no wage labor – no free man would have thought of being a part-time slave.
It is unnatural to work without owning your tools. It is unnatural to sell work, and not sell the product of work.
Be Distributist. Read Chesterton and Belloc. Such as http://www.cse.dmu.ac.uk/~mward/gkc/books/Sanity.txt That is how a right-wing person like myself understands why wage labor is not a good thing.
Socialism has never been popular among the workers. Always imposed furtively on them from above by a hostile elite. Marx despised workers individually, and actual socialists have always done the same.
[…] strongly to this, to the original comment and to the extent of making a post directly on the topic, Working class consciousness, dismissing the idea comprehensively as leading to Nazism or […]
[…] to the original comment and to the extent of making a post directly on the topic, <a href=”https://blog.reaction.la/economics/working-class-consciousness.html”>Working class consciousness</a>, dismissing the idea comprehensively as leading to Nazism or […]