Capitalism: the cause of and solution to all life's problems

[zompist]

A lot of capital in Western countries is locked up in real estate. A suburban house in the general Paris area is worth about one million euros now (and Londoners would think of that as an incredible bargain), and sure, some capital allocation would help...But how much?

This area is the particular hobbyhorse of Matt Yglesias. Briefly: Western countries don't like high housing costs, but refuse to do the obvious thing: build houses. Instead they are fixated on fighting "development" and zoning to prevent high-density housing. Progressives are as bad as conservatives in this area— they tend to think that (say) a rent freeze will somehow benefit everyone, rather than just locking in benefits for current renters.

The thing is, we have an example of an opposing strategy that works: Japan. I'm too lazy to look up the cite right now, but it builds housing at something like four times the rate as San Francisco or London. Result: housing is cheaper. Amazing! But in this one area, otherwise rational people contort themselves to believe that increasing supply will not lower prices and that we need to throttle the supply instead.

I'm quite taken with the sheer elegance of UBI... But I've had questions for years now, which still remain unanswered, chiefly: how do we fund it in the first place? I don't see how this won't end up subsidizing badly paid jobs either. I'm not too comfortable with having people entirely dependant on the state either.

Funding is not a reason to dismiss big ideas. For now, borrowing costs very little, so we should make use of that while we can. Deficits are not as bad as we were once led to believe. (They were routinely immense in the 19th century.) And if we want to, you know, pay for things, the answer is easy: tax the rich as we used to.

(I don't know if that applies to France so much as the US. But Piketty also advocates a wealth tax.)

I think some form of UBI is probably essential for a more equal and robust society. Things change too fast to hope that (say) everyone will get factory jobs, or computer jobs. Plus, it turns out that giving people money is actually very effective. The relatively small amounts people have gotten here as Covid assistance made a big difference for the poor. And money can be distributed very efficiently! Adding a whole bureaucracy to micromanage welfare is by contrast very costly.

I have two qualms, though.

One is that it'll be half-assed. Piketty mentions a UBI of half the minimum wage. This would not be useless— again, when you're poor, more money is good, far more than it'd be for a richer person. But it seems like our goal for society should be more than guaranteeing a miserable floor. What about, oh, enabling ordinary people to have a place to live, enough to eat, and health care?

The other is that though money benefits are good, not everything can be addressed that way— notably, housing costs and health care. You give people health care by guaranteeing health care, not (just) by giving them money. Basically: any specific money amount can be overwhelmed by a health crisis or a housing boom.

I've run the 'inheritance for all' idea by several people, and most of them reject it. Rather violently, I should add, even people who are usually more left-wing than I am.

I think it's a fine idea, but again, money helps but doesn't solve all problems. Here, the amount he proposes would not pay for a college education, or more than a tiny house or apartment. It could be easily swallowed by one medical crisis. If you used it for ordinary expenses... well, consider that it amounts to about six years of poverty-level income. Ot to put it another way, it's a year's income for (say) a developer.

My guess is that those left-wing folks recognize that all these ideas would be a band-aid on late capitalism. Capitalism with a safety net sure beats capitalism with no safety net. But you don't even have to be very far left to believe that unbridled and increasing plutocracy was a very bad idea.

[Moose-tache]

This area is the particular hobbyhorse of Matt Yglesias. Briefly: Western countries don't like high housing costs, but refuse to do the obvious thing: build houses. Instead they are fixated on fighting "development" and zoning to prevent high-density housing. Progressives are as bad as conservatives in this area— they tend to think that (say) a rent freeze will somehow benefit everyone, rather than just locking in benefits for current renters.

Very good points. But building houses is easier said than done, for two reasons.

First, for the government to build these houses and give them away to citizens, they have to buy the land with public funds (selling houses "at cost" is trivially different than selling them at market rate, so these houses would need to be given away for free or at a reduced price). Buying enough land to make an impact on prices would incur huge expense for tax payers. And of course once developers get wind of the fact that they can sell to the government, as a captive buyer, at market rate, that rate will sky-rocket. If you expect private developers to do this instead, then you need to make it profitable. But so far no private developer has figured out how to make residential development profitable without charging people the market rate that many of them very obviously can't afford. As you say, some progressives have failed here as well, pushing for mandatory low-income construction, only to scare away developers and get no low-income construction. A happy medium might be to subsidize housing, but that just combines both problems: developers have no reason to chase after unprofitable customers, and tax payers don't want to pay $2 in taxes to save $1 in rent. Capping land prices or forcing developers to sell at below market rate would bring up the... other problem.

The second problem is more fundamental. As I and many people in this thread have said, there are often obvious solutions to the problems caused by Capitalism, but they are solutions that are structurally impossible under Capitalism. Capitalism ceases to function if capital investments cease to yield returns above inflation. This means that the value of capital must increase in real terms over time. If it doesn't, and real growth stops over a long period and a large area, it's no exaggeration to say it will be Armageddon. Normally capital is not a daily necessity. The food and clothing made by that capital can actually get cheaper, while returns on investments grow. But land is a tricky thing, because it's both a capital investment and something that everyone needs. And unlike shares in a business, it's not easy to "split the stock" of housing, and doing so threatens to weaken existing investments (i.e. existing homeowners want prices to continue to rise as quickly as possible). So the cost of "buy-in" increases with each generation, not as a bug but a feature. Extending ever-increasing credit solved this problem for about thirty five years, but since 2008 nobody has figured out what to do next.

So under Capitalism the value of real estate cannot stagnate or decrease in real terms without wiping out investment and causing major economic catastrophe. And as long as that value increases, it will be expensive for the government to ensure affordable housing to the poor. For the time being, with a thin majority of Americans living in a house that they own, there are more people directly benefitting than suffering under this system (at least until their kids grow up and try to buy a house). If that balance ever goes the other way, it is possible more people will be willing to lay hands on the machinery of Capitalism.

[zompist]

This area is the particular hobbyhorse of Matt Yglesias. Briefly: Western countries don't like high housing costs, but refuse to do the obvious thing: build houses. Instead they are fixated on fighting "development" and zoning to prevent high-density housing. Progressives are as bad as conservatives in this area— they tend to think that (say) a rent freeze will somehow benefit everyone, rather than just locking in benefits for current renters.

Very good points. But building houses is easier said than done, for two reasons.

First, for the government to build these houses and give them away to citizens,

No need to get that radical. Removing the barriers to private entities building things would be a big help.

Also, re the "capitalism wouldn't put up with this" line... do you think government could realistically build enough houses to make housing lose 1/3 of its value? That's what capitalism did to itself in 2008.

[Ares Land]

(Oh, I borked that post and can't delete it now. Would it possible to remove it?)

[Ares Land]

This area is the particular hobbyhorse of Matt Yglesias.

Oh, I should definitely go take a look at what he does... He sounds right up my alley.

I'm quite taken with the sheer elegance of UBI... But I've had questions for years now, which still remain unanswered, chiefly: how do we fund it in the first place? I don't see how this won't end up subsidizing badly paid jobs either. I'm not too comfortable with having people entirely dependant on the state either.

Funding is not a reason to dismiss big ideas. For now, borrowing costs very little, so we should make use of that while we can. Deficits are not as bad as we were once led to believe. (They were routinely immense in the 19th century.) And if we want to, you know, pay for things, the answer is easy: tax the rich as we used to.
(I don't know if that applies to France so much as the US. But Piketty also advocates a wealth tax.)

I generally agree with that! But we're looking at a huge pile of money.
Let's assume a UBI of 600 euros for all adults in the lowest 30%. That's very conservative: it's hardly universal, and very, very basic. You can about survive on that -- provided you get other benefits, like social housing.
Doing a quick and dirty estimate, we're looking at an annual budget of 100 billion to fund that. That's one third our national budget, the entire income tax revenue, half the revenue of VAT, and two thirds the annual budget of the EU.
I'm generally in favor of taxing the rich, but in this case it's not going to help: that's close to Elon Musk's entire net worth. (Which is hardly taxable anyway: how much are Musk's assets really worth, once you take away the Elon Musk hype?)

On taxing the rich in France: we'll, that'd be worth a long, rambling post, but long story short, we don't really tax the rich any more than you guys.
I'm in favor of the Piketty wealth tax, but in the short run its chief use will be as a source of data, not income. Besides, our current institutions won't allow it, in France at least. (Long story short: it'll be shut down as unconstitutional.)

That being said, I'm all in favor of spending whatever it takes to end poverty once and for all. But I want some kind of assurance that standards of living for the lowest percentile will actually improve in the long run, and how we can improve things so that not so many people need UBI in the long run. My main worry is that it'll essentially subsidize the gig economy.

Another way to look at is, what would you do with an annual budget of a 100 billion euros? That's enough to finance a Rooseveltian WPA, for instance -- which I believe would be a hell of a lot more useful in the long run. You could provide one or even two million jobs with that money. And a lot, lot more, if these are subsidized public or private sector jobs.
Wait, didn't I say something nasty about subsidized jobs just before? In fact I think subsidized jobs work great, as long as they come with oversight. If employers get cheaper labor financed by taxpayer money, fine, but the taxpayer gets to take a look at what the money is spent on.

The relatively small amounts people have gotten here as Covid assistance made a big difference for the poor.

Oh, as an aside, is it me or has the pandemic greatly improved the understanding of economics worldwide? I mean, Macron went from 'there's no magic money tree' to 'whatever it costs', the US President went on record saying trickle-down economics don't work, and, oh god yes, the European Commission has finally stopped whining about budget deficits.
Can a virus get the Nobel Prize in Economics? Because it sure deserves it.

[Ares Land]

First, for the government to build these houses and give them away to citizens, they have to buy the land with public funds

I don't know how things are in London, or in San Francisco. Here, though, municipalities do buy real estate and build properties and it does alleviate the problem; we also get subsidized housing, which helps too. It really works quite well.
The specific issue is real estate. You can't drive here, which means you want to live close to public transportation. Public transportation is great here, for the 19th century. Everyone wants to live close to the subway/train station, and in the latter case, to the lines that don't suck.
Things will eventually improve as new lines are getting built, but it's awfully slow.
Another issue is interest rates. They're ridiculously low. Banks will lend you an absurd amount of money, but as 10 million people are fighting over the tiny scraps of real estate where you can get public transport, well, property prices are absurdly inflated.
Which in turn means that Parisian real estate is an excellent investment. If you have 20 million to invest, well, just buy an apartment building next to the subway. Congratulations: now you own 30 millions. You can even rent it out if you want, but frankly it's not even worse the hassle.

The second problem is more fundamental. As I and many people in this thread have said, there are often obvious solutions to the problems caused by Capitalism, but they are solutions that are structurally impossible under Capitalism. Capitalism ceases to function if capital investments cease to yield returns above inflation. This means that the value of capital must increase in real terms over time. If it doesn't, and real growth stops over a long period and a large area, it's no exaggeration to say it will be Armageddon.

Except that actually happened in France from WWII until about the 90s. We didn't have as much capitalism as, say, the US during that time, but we still had a fair share of it, and I assure you it worked just fine.
Of course it was easier when real growth was high, but there were periods of stagnation or recession during that time, which were difficult but no Armageddon.
The problem here is: what if growth stops? These days, I'm inclined to think that it really shouldn't. In the short run, we're nowhere near the technological or social stage where no further growth is needed. (And in the long run, as Keynes put it, we're all dead.)

Your objection is straight out of Marx, which is no sin, and frankly looks quite reasonable on the face of it. The problem is that Marx fails to account for Europe in the later half of the 20th century. Or you know, Northern / Western Europe now. As far as I can see, the US are in a full-fledged plutocratic cyberpunk dystopia right now and the UK are somewhere close to it. But in a good-sized chunk of the EU, capitalism still works. After a fashion, and granted all the evil it has to answer for, of course, but it works.

So under Capitalism the value of real estate cannot stagnate or decrease in real terms without wiping out investment and causing major economic catastrophe.

Real estate prices do crash and it's much less of a problem than you'd think. The last one here was after the Gulf War, and there was no major economic catastrophe. In fact people mostly didn't notice or don't remember.
IIRC we still had fairly high inflation at the time, which may have eased the pain somewhat and it's possible (though still unlikely) central banks could be cajoled into accepting it again.
Of course, the most likely outcome is that we just don't fix the problem -- but doing nothing about it will cause major economic catastrophe somewhere down the line.

[sangi39]

This might come across as an "I'm a terrible person" question*, but where do things like LGBTQIA+ rights, feminism, racism, etc. fall within the sphere of various Marxist related movements and ideologies.

For me, Marxism is one of those "we don't want to be included within the processes of the dominant group" lines of thinking, e.g. members of the working class shouldn't aspire to be capitalists, but more along the lines of "we want to overturn the current system in a way that everyone feels like a part of society in roughly similar ways", e.g. we should all recognise our roles as produces, and stand up to exploitation.

Would it be sensible to say that other equity-based movements could fit within the same framework? For example, feminism isn't about women achieving the same "heights" as men, but about creating a system in which women (or, more widely, not men) don't raise themselves up to some level that has been historically dominated by men, but instead remove that system and create something more universal.


*I'm bi, I'm sooort of questioning where I fit on the whole gender thing (I'm definitely masculine presenting, but since masculinity is cultural, what does that even mean?), but coming from a rural English background, basically everything I've ever considered about race comes from external sources (the area I was raised in is 99.5% white British, if I remember correctly, and I think at least one year within the last 5 we had, as a constituency, a sum total of 12 people come into the area from outside the UK)

[Travis B.]

I don't specifically identify as a Marxist, but socialism as I see it (as should be obvious from my posts here) is about democratizing ownership and control of capital. It is about replacing ownership and control of capital by a capitalist class or the state with that by the workers themselves, collectively. So in a way it is for elevating workers as a class rather than simply eliminating the capitalists (e.g. by replacing them with a state) so they have control of their destinies, so they are not alienated from their labor or its products.

[Ares Land]

Marxist strive (or should strive) for a classless society. I think you're right in seeing a parallel with anti-racism, feminist, LGBTQ+ rights -- in all cases, it's all about destroying privilege and generally not having a dominant group.

Conservatives and some moderates like to claim that feminists and activists or various kind are 'Marxists.' I mean, sure, but whose fault is that? Conservatism and the classical liberal traditional are entirely unwilling to consider that there might be, you know, problems... Any sexism you might experience is in your head, or just the way God intended, or the product of evolutionary psychology -- well in any case, nothing you can do anything about.
I'm not a Marxist because I think it's generally, you know, completely wrong about things but at least it starts from the correct position that society should be improved somewhat -- as opposed to the idea that it's all natural(*).

Eastern Bloc unions were horriby homophobic ('bourgeois degeneracy' echoing the accusation of 'Marxist degeneracy' on the other side) but one of their redeeming features was that they were generally less racist and sexist than the West at the time. (Don't go idealizing these too much though: there were no women on the Politburo.)
On the other hand, many Marxist will reduce almost everything to class struggle. This is pretty useless when dealing with sexism. Conveniently, also, dealing with racism and sexism can be postponed indefinitely, as both will magically disappear after the revolution.

(*) The fad for neurosciences and evolutionary psychology is infuriating. OK, sure, apes are sexist. They're also known to throw feces at people -- when do I get started?

[Travis B.]

One problem with Marxism is when it is treated as the end-all and be-all of solutions to all our social problems, when in fact Marxism itself says very little about anything other social class and one's relationship with capital. While there have been feminist Marxists, Marxism itself really does not address women's issues, much the less LGBTQ issues and like. This results in Marxists often dismissing anything outside of the "class struggle", such as LGBTQ issues, as "bourgeois".

[Starbeam]

One problem with Marxism is when it is treated as the end-all and be-all of solutions to all our social problems, when in fact Marxism itself says very little about anything other social class and one's relationship with capital. While there have been feminist Marxists, Marxism itself really does not address women's issues, much the less LGBTQ issues and like. This results in Marxists often dismissing anything outside of the "class struggle", such as LGBTQ issues, as "bourgeois".

Class reduxionism is a problem with cishet people, not with Marxism. If it weren't Marxism, they'd weasel in other faux-enlightened language about how queerness is somehow a luxury. Likewise with white people/ race, men/ gender, etc. etc.. I can't say i know the crux of Marxism, but class reduxionism can't possibly be its point or an implication of whatever its point is.

[Travis B.]

One problem with Marxism is when it is treated as the end-all and be-all of solutions to all our social problems, when in fact Marxism itself says very little about anything other social class and one's relationship with capital. While there have been feminist Marxists, Marxism itself really does not address women's issues, much the less LGBTQ issues and like. This results in Marxists often dismissing anything outside of the "class struggle", such as LGBTQ issues, as "bourgeois".

Class reduxionism is a problem with cishet people, not with Marxism. If it weren't Marxism, they'd weasel in other faux-enlightened language about how queerness is somehow a luxury. Likewise with white people/ race, men/ gender, etc. etc.. I can't say i know the crux of Marxism, but class reduxionism can't possibly be its point or an implication of whatever its point is.

Reductionism is a problem with anyone who considers their chosen cause as the only thing that matters.

[Emily]

One problem with Marxism is when it is treated as the end-all and be-all of solutions to all our social problems, when in fact Marxism itself says very little about anything other social class and one's relationship with capital. While there have been feminist Marxists, Marxism itself really does not address women's issues, much the less LGBTQ issues and like.

I'm sorry but this is almost completely incorrect. Marxism begins from a starting point of one's relationship with capital (or more accurately, with each class's relationship to production), but rather than ignoring other questions it examines how they relate to this one. This may be through more abstract concepts like base and superstructure (roughly, analyzing how class oppression creates ideologies and social institutions to justify and propogate itself, which in turn affect the course of class oppression and struggle), or through directly showing how they are direct products of capitalism/class society (Lenin's Imperialism explains war and modern international relations as an inherent outgrowth of the development of capitalism). Rather than ignoring social problems or institutions, Marxism examines how they're all related.

It's especially surprising to me to read the claim that Marxism doesn't address women's issues. Engels himself, working off of Marx's notes, wrote The Origin of the Family, Private Property and the State, whose central thesis is that class society (and thus modern capitalism) is inherently rooted in the oppression of women, and neither capitalism nor patriarchy can be eradicated without eradicating the other. As far as LGBTQ issues, it's true that there hasn't been as long of a history of Marxist writing on the topic, but it's still false to say that Marxists haven't addressed the issue at all.

[Travis B.]

One problem with Marxism is when it is treated as the end-all and be-all of solutions to all our social problems, when in fact Marxism itself says very little about anything other social class and one's relationship with capital. While there have been feminist Marxists, Marxism itself really does not address women's issues, much the less LGBTQ issues and like.

I'm sorry but this is almost completely incorrect. Marxism begins from a starting point of one's relationship with capital (or more accurately, with each class's relationship to production), but rather than ignoring other questions it examines how they relate to this one. This may be through more abstract concepts like base and superstructure (roughly, analyzing how class oppression creates ideologies and social institutions to justify and propogate itself, which in turn affect the course of class oppression and struggle), or through directly showing how they are direct products of capitalism/class society (Lenin's Imperialism explains war and modern international relations as an inherent outgrowth of the development of capitalism). Rather than ignoring social problems or institutions, Marxism examines how they're all related.

It's especially surprising to me to read the claim that Marxism doesn't address women's issues. Engels himself, working off of Marx's notes, wrote The Origin of the Family, Private Property and the State, whose central thesis is that class society (and thus modern capitalism) is inherently rooted in the oppression of women, and neither capitalism nor patriarchy can be eradicated without eradicating the other. As far as LGBTQ issues, it's true that there hasn't been as long of a history of Marxist writing on the topic, but it's still false to say that Marxists haven't addressed the issue at all.

I should have stated that a bit differently. Marxism reduces everything to class relationships, and while some have derived things such as feminist and anti-imperialist positions from this, these are derivative of Marxism's views of social class. This makes it easy to have variations upon Marxism which do not derive feminist or anti-imperialist positions, much the less LGBTQ positions, from it, which has often been the case with many forms of Marxism-Leninism.

[rotting bones]

I'd say Marxism usually refers to studying class relations in a systematic way. Whether all phenomena are reduced to these relations usually depends on the individual Marxist.

I have a question about the book Classical Econophysics. IIRC it models price as a normal distribution. In the model, the left tail goes to zero. But aren't distributions where a tail goes to zero modeled as gamma distributions?

[rotting bones]

As for Marx himself, he thought that injustice was natural, but that events were naturally trending towards the creation of a just society. This was clearly wishful thinking.

---

I'm skeptical of a democratization of the military for the following reasons:

1. Arranging unselected people into military units makes civil war more likely.

2. If the officers responsible for units elect generals, then they will sideline minorities standing in the way of the leadership's agenda.

3. If generals can't be changed while operations are ongoing, that will incentivize them to strategically extend operations to save their own seats.

...

However, I would describe my policy proposal as a militarization of food production in a vague sense.

PS. Regarding the normal distribution, I was thinking of arguments in Farjoun and Machover more than anything in Classical Econophysics per se.

[sangi39]

What about pre-Capitalist societies? Or pre-industrial ones? Where do the various schools of communism sit in regards to them?

[Travis B.]

What about pre-Capitalist societies? Or pre-industrial ones? Where do the various schools of communism sit in regards to them?

The traditional Marxist line is that they will develop into capitalist societies, and then into communist ones. Of course, IMHO the traditional Marxist line here is full of crap.

[sangi39]

What about pre-Capitalist societies? Or pre-industrial ones? Where do the various schools of communism sit in regards to them?

The traditional Marxist line is that they will develop into capitalist societies, and then into communist ones. Of course, IMHO the traditional Marxist line here is full of crap.

I believe that you are correct in general

What mainly got me thinking was a conversation regarding differences in culture between already capitalist countries, but watching videos about, for example, the Sami, and the Khoe, who are to varying extents even pre-agricultural (the the extent that "agricultural" can be considered a stage and not a state), got me thinking. Modern borders hugely impact their traditional way of life, but to what extend could, say, a bordered Khoeland, impact how they interact with modern countries as well? Will it always revolve around capitalism? If South Africa and Nambia all of a sudden went "yep, we're full on communist, as Marx intended", would how they interact with their own "traditional territories" change, and international relations too?

I don't think the "traditional Marxist line" takes this into account, and I can't seem to find many resources now that do (or I'm looking in the wrong places)

[Travis B.]

I believe that you are correct in general

What mainly got me thinking was a conversation regarding differences in culture between already capitalist countries, but watching videos about, for example, the Sami, and the Khoe, who are to varying extents even pre-agricultural (the the extent that "agricultural" can be considered a stage and not a state), got me thinking. Modern borders hugely impact their traditional way of life, but to what extend could, say, a bordered Khoeland, impact how they interact with modern countries as well? Will it always revolve around capitalism? If South Africa and Nambia all of a sudden went "yep, we're full on communist, as Marx intended", would how they interact with their own "traditional territories" change, and international relations too?

I don't think the "traditional Marxist line" takes this into account, and I can't seem to find many resources now that do (or I'm looking in the wrong places)

I don't think Marxism takes the dynamics of traditional societies (e.g. tribes in New Guinea) into account adequately, considering that these societies often don't necessarily have a "means of production" in the capitalist and communist sense in the first place (what production they do have is often in terms of small-scale agriculture and/or herding). How do you bring about collective ownership of the means of production, and how would that be of any benefit to those involved, when the only means of production is small-scale agriculture or herding, and those involved in such have no interest in any kind of collectivization of such?