Evonomics – Capitalism

Evonomic – How Capitalism Actually Generates More Inequality

Why extending markets or increasing competition won’t reduce inequality

The first line of argument simply couldn’t be any more false.
“At least nominally, capitalism embodies and sustains an Enlightenment agenda of freedom and equality”

Freedom, if it is to have any real meaning, involves the presence of actual, real choices.
In a market based system, anyone committed to universality, either as an ethical or a religious principle, or as the most powerful survival strategy available, rapidly finds that market based systems value universal anything at zero.
Anything based in markets is antithetical to anything being universal.
So anyone actually committed to freedom, applied universally, is forced to conclude that universal freedom, is not compatible with a market based system.

As for equality.
Anything equally distributed has no market value either.
Again, markets require difference to function.
In one sense markets can be thought of as flows of goods and services from areas of high concentration to areas of low concentration (capital can accumulate due to asymmetries at every step in such flows).
There is an aspect of markets that do the same in the realms of information and strategy, but that is far more complex, many levels more complex, and already has well developed technologies and strategies to deliver universal abundance.

The article goes on to suggest in respect of Wilkinson and Picket “They suggested that inequality creates adverse outcomes through psycho-social stresses generated through interactions in an unequal society.” Which is a part of the picture.
Another part of the picture is that at the bottom of the distribution curve, you are getting the lowest quality of everything available – information, food, housing, environment, education, …..
Individual people are not stupid. They may be ignorant at some levels, and everyone has a highly intuitive aspect.
Crowds can be stupid. Crowds can be wise about things that are within the common domain (like weight, or time), but truly foolish about more complex domains like abstract strategy.
Wisdom of the crowd depend very much upon the knowledge base of that specific crowd. The more abstract the conceptual system, the less likely the crowd is to display competence.

Inequality isn’t simply “endemic” to capitalism, it is the foundation upon which capitalism is built.
Without unequal distribution, markets cannot function.
Historically, that wasn’t a significant issue, because the inequalities of distribution were structural to reality, and markets were tending to smooth those out. In that context, it could clearly be argued that markets worked towards equality – and they did.
What has changed is that we now have the power to automate a large and expanding set of such systems such that, at the functional level of human experience, it can no longer be argued that such inequality is necessarily structural to reality.
We now have the technology to remove such inequality, universally.

What is now at issue, is that many of the dominant strategic sets that underlie that major systems in our society are based in the notion of structural inequality – markets being the most obvious one.

No one, who is truly committed to freedom, or who is really interested in their own long term survival probabilities, can any longer support the notion of markets as being a reasonable dominant tool in our tool-set, in an age of automation, except through willful ignorance (the defense of a notion that is logically indefensible in our current context).

The article asks:
“What are the mechanisms within capitalism that exacerbate inequalities of income or wealth?”

Then he misses the “core driver” completely.
Sure the tendencies he identifies exist, and are a part of the picture.

And the “core driver” is simply a statistical one. In any system subject to variations, in parameters that determine survival, then the ultimate driver of survival will, periodically, force those without sufficient reserves to devalue all their other values simply to survive. Recessions invoke something of a “feeding frenzy” amongst the top end of the capitalist strategic set of predatory strategies. Same can be said at all levels of the system, right down to the personal, where banks foreclose on individuals who lose their jobs (even if those very same banks funded the corporate raid that led to the job losses).
In one sense, all such strategies mean the bigger players tend to win, just as a house limit on a Crown and Anchor table ensures that the house will win, as it limits the strategic sets available to other players.

Agree completely that the removal of liberty in the name of communism is to be resisted, every bit as much as the removal of liberty in the name of capitalism is to be resisted.

What does liberty mean?
Capitalism seems to say that everyone is free to play the game of capitalism, but no one is supposed to mention that for some to win, the vast majority must lose.
Under capitalism, no one can survive unless they play the capitalism game.

I say, we now have sufficient technological capacity to automate processes that we can now, at no real cost to any individual, ensure that every individual on the planet has all the resources and real freedom of information and travel and technology, to do whatever they responsibly choose.
And responsibility in this context is a deeply recursive set of complex domains that seem to be potentially infinite – so no clear certainty, only balances of probabilities – sets of individual judgements.

Respect for individual life, and individual liberty, universally applied, must be at the core of any strategic set that has longevity as a desired outcome – if Wolfram has shown us anything, he has demonstrated that.

[followed by]

I am very aware that I am using a different definition of freedom.
As I am aware that I am using different conceptions of “evolution” and “complexity” and “strategy”, and a fundamentally different conception of “knowledge” (one based purely in probability).

So yes – your criticism is valid in that limited context, and that is not the context of my argument as a whole.

And yes – I acknowledge that this is a very complex realm, and it is very easy for misunderstandings to occur (far more probable than not).

I am definitely not restricted to the enlightenment conceptions of freedom.
Those concepts are over 200 years old.
Since then we have had general relativity, Heisenberg uncertainty, quantum probability, Turing computation, Wolfram and general algorithm and logic spaces, and the recursive nature of evolution in the deepest of strategic senses.

So I am a very long way from the conceptual spaces of the “Enlightenment”, and the very many errors of fundamental assumptions they implicitly adopted.

I am concerned with freedom in the context of the spaces we are dealing with here and now – in the context of emerging Artificial General Intelligence, chaos, maximal computational complexity and the possibility of indefinite life.

If this paper were concerning itself only as a historical document relating to the enlightenment, then your criticism would be completely valid.

But that is not what this paper claims to be.
This paper claims to be relevant to our present.
As such, it _must_ be relevant to all the contexts I have outlined above.

All of my pointing to trains of abstraction and realms of logic are in that context of contexts.

[followed by]

I promise, that within my own conceptual understanding of the relevance of Hodgson’s assertions to our modern context I stayed very much on topic – and I fully understand that not many people may have understood that.

Freedom is a complex topic. We could spend a long time on it. I don’t want to right now.

Hodgson claims that capitalism embodies a concept of freedom.

In the context of the 200 years ago, when most things were genuinely scarce, one could make a reasonable case to support such a proposition.

In the intellectual and technological context of today, when we can fully automate the production of a large and exponentially expanding set of goods and services (potentially making them universally available), then a claim that capitalism embodies freedom cannot be substantiated (in today’s context).

Trying to give some weight to such a claim, by using conceptual sets that are 200 years old is kind of like trying to teach thermodynamics using the caloric model of heat.
There is a place for talking of the caloric model of heat – in works like John Gribbin’s History of Science, but not in a modern understanding of physical processes involving heat.

The idea that capitalism embodies freedom in today’s context of exponentially expanding automation has about as much intellectual validity as the caloric model of heat in modern science.

It is, beyond any shadow of reasonable doubt, falsified.

Similarly, most of the enlightenment concepts of freedom (and there was no one concept, but a whole ecosystem of concepts) owed much to a set of assumptions which have now been clearly falsified, and worked (in as far as they did) in contexts that are no longer relevant.

So it is a very complex picture, and taking a broad brush to that very complex picture – I stand by the original assertion I painted.

About Ted Howard NZ

Seems like I might be a cancer survivor. Thinking about the systemic incentives within the world we find ourselves in, and how we might adjust them to provide an environment that supports everyone (no exceptions) - see www.tedhowardnz.com/money
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