The Revolution in Motion

[ReeferMadness]

I stumbled upon this insightful analytic book review discussing the changing foundations of economics. Although the conclusion (The end of Capitalism) is premature and optimistic, many of the ideas are thought provoking and intriguing.

Over the centuries, the primary foundations of wealth have gradually morphed from land to factories to information. Land is immutable (at least within a human lifetime), traditional factories are hugely capital intensive but information, once produced, has a marginal cost approaching zero.

Yesterday's promise of technology was that everyone would be better off, would work less and machines would take over the drudgery of unrewarding tasks. What has happened instead is that technology has been used to lower real wages and create even less rewarding work. The new, transnational elite have no national allegiance while nationalism is used as a distraction so that the new poor won't notice they are worse off than their parents. There is a gradual convergence of the middle class in wealthy countries and the emerging middle class in poor countries.

The traditional left is still caught up in old fight over the spoils of the capitalist system based on factories; a fight that it lost long ago. Witness the NDP in Canada steadily abandoning old positions as it becomes more "business friendly" and more electable. Like the pigs in Animal Farm, where the NDP has gained control, its policies have been scarcely distinguishable from the other two parties.

In fact, political parties suffer from exactly the same failing as corporations. The long term visions may exist and idealistic ideas might flourish beneath the surface but they come a poor second to the here and now. Like Corporations focus on the next quarter, political parties focus on the next election.

We need institutions that will help guide us through the coming revolution. Universities have been defunded, corporatized and ignored to the point where they are largely irrelevant. Think tanks are extensions of yesterday's political movements and today's political parties. And the parties themselves are caricatures of themselves.

[TimG]

Yesterday's promise of technology was that everyone would be better off, would work less and machines would take over the drudgery of unrewarding tasks. What has happened instead is that technology has been used to lower real wages and create even less rewarding work.

By almost every measure people are better off today than they ever have been. The trouble is the goal posts keep moving so people feel they are worse off relative to others today even as their own well being continues to increase.

Business friendly capitalist societies have proven time and time again that they can create the most wealth for their citizens at all income levels which is why so many societies move to emulate that model. Societies that remain mired in statist thinking continue to fall behind because governments can never emulate the dynamism that comes from an economy driven by individuals building wealth by building businesses.

Edited July 22, 2015 by TimG

[kimmy]

By almost every measure people are better off today than they ever have been. The trouble is the goal posts keep moving so people feel they are worse off relative to others today even as their own well being continues to increase.

Are you sure that's true? It seems like by some measures-- the cost of a home vs income, the cost of an education vs income, debt load, amount of free time... we're actually moving backwards. The economy is growing, the amount of wealth is increasing, sure... but who's actually any richer? Why should people care about growth when only a select few are benefiting from growth?

-k

[Freddy]

By almost every measure people are better off today than they ever have been. The trouble is the goal posts keep moving so people feel they are worse off relative to others today even as their own well being continues to increase.Business friendly capitalist societies have proven time and time again that they can create the most wealth for their citizens at all income levels which is why so many societies move to emulate that model. Societies that remain mired in statist thinking continue to fall behind because governments can never emulate the dynamism that comes from an economy driven by individuals building wealth by building businesses.

The entry level to start a business keeps rising, as technology advances. Corporations refine their competitiveness, with a global market, And as they do, less and less opportunity exist. A small company owner would need to order materials in such bulk quantity, to have a chance at competing, but doesn't have the liquid or room to store such large amounts.

To compete in today's global market, You need a super organization. We need people to understand how a corporation works, teach it and spawn as many as possible.

[Freddy]

Are you sure that's true? It seems like by some measures-- the cost of a home vs income, the cost of an education vs income, debt load, amount of free time... we're actually moving backwards. The economy is growing, the amount of wealth is increasing, sure... but who's actually any richer? Why should people care about growth when only a select few are benefiting from growth?

-k

i would say that many people today have lost their way and are simply surviving till they can smoke their next joint.

And they will do that till the day they die.

Edited July 22, 2015 by Freddy

[TimG]

Are you sure that's true? It seems like by some measures-- the cost of a home vs income

Housing is complicated because what matters is the payment on the mortgage which has never been lower. i.e. one can afford greater house price with interest rates at 3% than one could afford with interest rates at 8%. So the ratio of income to house price is not the right measure. The same rule is true for the general question of debt.

the cost of an education vs income

Yes, now the cost of a 4 year degree has increased but the infrastructure is in place to greatly reduce this cost via online courses.

The economy is growing, the amount of wealth is increasing, sure... but who's actually any richer? Why should people care about growth when only a select few are benefiting from growth?

Because the alternatives would be much worse since social services require tax revenue and without a growing economy this revenue base would decline.

[TimG]

The entry level to start a business keeps rising, as technology advances.

Not true at all. The price of starting many types of businesses have dropped. For example, an entrepreneur no longer needs to maintain internal servers because of cloud services. This reduces administrative overhead. It is also a lot easier for small businesses to source parts from around the world - even engage custom manufacturing services. The biggest source of increased costs are ever increasing government regulatory burdens. Edited July 22, 2015 by TimG

[Freddy]

Not true at all. The price of starting many types of businesses have dropped. For example, an entrepreneur no longer needs to maintain internal servers because of cloud services. This reduces administrative overhead. It is also a lot easier for small businesses to source parts from around the world - even engage custom manufacturing services. The biggest source of increased costs are ever increasing government regulatory burdens.

Just take a second and think. If anyone can source parts from around the world, why do they bother buying it from you? You obviously have no idea of what you're talking about.

Edited July 22, 2015 by Freddy

[TimG]

Just take a second and think. If anyone can source parts from around the world, why do they bother buying it from you? You obviously have no idea of what you're talking about.

I have been running a business for the last 12 years so I would say I do know what I am talking about. My overhead costs are extremely low thanks to technology. I sell to people around the world as easily as I can sell to people who live in the city where I live. I realize that not all businesses will benefit as much from the cost reductions but the costs reductions are there. Edited July 22, 2015 by TimG

[Bonam]

Over the centuries, the primary foundations of wealth have gradually morphed from land to factories to information. Land is immutable (at least within a human lifetime), traditional factories are hugely capital intensive but information, once produced, has a marginal cost approaching zero.

Copying existing information isn't the "foundation of wealth", though. Rather, it's the ability to create new information that has value. The foundation of wealth in the 21st century is people of ability... more or less as it should be, if you ask me.

Edited July 22, 2015 by Bonam

[eyeball]

Without us noticing, we are entering the postcapitalist era. At the heart of further change to come is information technology, new ways of working and the sharing economy. The old ways will take a long while to disappear, but it’s time to be utopian...

I'm afraid that ship sailed a long time ago myself. We're entering the pre-Malthusian epoch and we've pretty much squandered our social capital as well.

The water-hole is getting smaller and the animals are getting meaner.

[ReeferMadness]

By almost every measure people are better off today than they ever have been. The trouble is the goal posts keep moving so people feel they are worse off relative to others today even as their own well being continues to increase.

Nice press typical press clipping from neoliberal apologists. If only it were true. Large segments of society are worse off today than they were in the 70's, when it only took a single middle class income to afford a house.

Business friendly capitalist societies have proven time and time again that they can create the most wealth for their citizens at all income levels which is why so many societies move to emulate that model. Societies that remain mired in statist thinking continue to fall behind because governments can never emulate the dynamism that comes from an economy driven by individuals building wealth by building businesses.

Again with the familiar neoliberal claptrap. You didn't even look at the link did you? Admit it.

[ReeferMadness]

Copying existing information isn't the "foundation of wealth", though. Rather, it's the ability to create new information that has value. The foundation of wealth in the 21st century is people of ability... more or less as it should be, if you ask me.

I'm sure it's so much easier to construct an argument when you make up a straw dog rather than debating what I actually said.

[ReeferMadness]

Are you sure that's true? It seems like by some measures-- the cost of a home vs income, the cost of an education vs income, debt load, amount of free time... we're actually moving backwards. The economy is growing, the amount of wealth is increasing, sure... but who's actually any richer? Why should people care about growth when only a select few are benefiting from growth?

-k

Obviously, the answer is that the policies are decided by the few that are benefiting from the growth.

[Freddy]

I have been running a business for the last 12 years so I would say I do know what I am talking about. My overhead costs are extremely low thanks to technology. I sell to people around the world as easily as I can sell to people who live in the city where I live. I realize that not all businesses will benefit as much from the cost reductions but the costs reductions are there.

Sounds like you're a middle man. What is it that your business actually produces? Online marketing, & Shipping and handling.

Personally I'm already bypassing the middle man and buying things directly from Hong Kong. It won't take that long for more to do the same.

[TimG]

Nice press typical press clipping from neoliberal apologists. If only it were true. Large segments of society are worse off today than they were in the 70's, when it only took a single middle class income to afford a house.

A myth. This report by RBC measures affordability over time: http://www.rbc.com/newsroom/_assets-custom/pdf/20150622-HA.pdf

With the exception of Vancouver, the index has been relatively stable for the last 30 years.

Again with the familiar neoliberal claptrap. You didn't even look at the link did you? Admit it.

I did read the article and it was filled with complete nonsense. For example this little gem:

econd, information is corroding the market’s ability to form prices correctly. That is because markets are based on scarcity while information is abundant.

WTF? This guy clearly has no clue what a market is because markets are more efficient when there is more information. The rest of the article is filled with similarly nonsensical statements. It seems like the author believes that capitalism equals large established mega corporations when it is really the economic framework that has allowed many of the changes noted to emerge. The move to an information economy is capitalism at its essence - not an end of it. Edited July 22, 2015 by TimG

[TimG]

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Edited July 22, 2015 by TimG

[WIP]

I stumbled upon this insightful analytic book review discussing the changing foundations of economics. Although the conclusion (The end of Capitalism) is premature and optimistic, many of the ideas are thought provoking and intriguing.

Over the centuries, the primary foundations of wealth have gradually morphed from land to factories to information. Land is immutable (at least within a human lifetime), traditional factories are hugely capital intensive but information, once produced, has a marginal cost approaching zero.

Yesterday's promise of technology was that everyone would be better off, would work less and machines would take over the drudgery of unrewarding tasks. What has happened instead is that technology has been used to lower real wages and create even less rewarding work. The new, transnational elite have no national allegiance while nationalism is used as a distraction so that the new poor won't notice they are worse off than their parents. There is a gradual convergence of the middle class in wealthy countries and the emerging middle class in poor countries.

The traditional left is still caught up in old fight over the spoils of the capitalist system based on factories; a fight that it lost long ago. Witness the NDP in Canada steadily abandoning old positions as it becomes more "business friendly" and more electable. Like the pigs in Animal Farm, where the NDP has gained control, its policies have been scarcely distinguishable from the other two parties.

In fact, political parties suffer from exactly the same failing as corporations. The long term visions may exist and idealistic ideas might flourish beneath the surface but they come a poor second to the here and now. Like Corporations focus on the next quarter, political parties focus on the next election.

We need institutions that will help guide us through the coming revolution. Universities have been defunded, corporatized and ignored to the point where they are largely irrelevant. Think tanks are extensions of yesterday's political movements and today's political parties. And the parties themselves are caricatures of themselves.

Sounds interesting, I'll have to take a look at. It seems to me that there used to be a lot more topics based on new books and studies a few years back. Now, most have stopped reading and prefer poo-flinging.

Off-hand, the 'traditional left' (unions) have no choice about basing their struggle around factories, because the only venue for socialism allowed in 20th century capitalist societies was negotiating better working conditions in manufacturing. Laws made union organizing of service sectors like retail and food services near impossible. Worth noting that factories themselves were an invention created to replace skilled tradesmen and women with drones making simple, repetitive movements over and over again for as little wages as possible. So, even at it's best....like auto production up till the 70's, the production line was still a soul-killing monster that at least provided the plant workers with good wages...but that era ended with globalization...back to the 19th century again.

My favorite book close to this subject is "Techno-Fix" by Michael Huesemann, an engineer to unmasks the false hopes and dishonest claims of techno-optimists from liberal to libertarian. Most new technologies have come to us with high costs that have never been properly assessed for long term damages, let alone answer the question of how modern tech-dependent populations are going to cope with the eventual exhaustion of non-renewable resources needed to build them and their products.

[ReeferMadness]

A myth. This report by RBC measures affordability over time: http://www.rbc.com/newsroom/_assets-custom/pdf/20150622-HA.pdf

With the exception of Vancouver, the index has been relatively stable for the last 30 years.

Your link would be very impressive if it in any way addressed the point I was making. Stop wasting my time with this nonsense.

And on a side note, RBC's contention that the housing market is OK is a combination of wishful thinking and self-serving propaganda. Like other institutions, RBC would like to avoid a housing collapse and one way to do that is to tell people there won't be one. Whether there will be or not nobody can predict. But Canada's housing prices (in most cities, not just TO and Vancouver) can be sustained only by protracted historically low interest rates. The housing market is precarious, like a house of cards. The best case (for current owners and anyone with a significant stake in today's economy) is a prolonged period of real price declines (the so-called soft landing). The worst case is a panic as or both of the two over-inflated cities suffers a collapse and the accompanying landslide takes out much of the rest of Canada. The combined populations of metropolitan Toronto and Vancouver is right around 8 million people - a pretty significant portion of Canada.

WTF? This guy clearly has no clue what a market is because markets are more efficient when there is more information. The rest of the article is filled with similarly nonsensical statements. It seems like the author believes that capitalism equals large established mega corporations when it is really the economic framework that has allowed many of the changes noted to emerge. The move to an information economy is capitalism at its essence - not an end of it.

I don't agree with everything he said but I think he raises some interesting ideas. However, I don't think you understand what he's saying. Like all religious fanatics, capitalist fundamentalists resist hearing anything that will challenge their deeply held rigid views.

First to address your ludicrous contention about market efficiency. I laugh out loud whenever the apostles of capitalism tell me how omniscient and wise markets are when I turn and watch actual prices weave and sway around like a drunk in a hurricane. The "democratization" of the markets has simply made things worse as millions of uninformed investors pour money into the biggest casinos in history - the stock markets. And the profits are largely scooped off the top by people possessing inside information. So it is. So it's always been.

But I don't think that's what he meant. As time goes on, more and more of the value of a company is determined by its information. But information as an asset is ridiculously hard to contain. You can patent products and processes but you can't patent data or ideas. Once they leak out, someone else can reverse engineer what you've done and build something better.

[Michael Hardner]

This is a very heady article. I'm going to take a few runs at it, as it sweeps across a lot of topics ... so far I'm impressed.

It's kind of comical, by the way, to frame an argument in today's politics with this article as the anchor point of the thread. Kind of like blacksmiths arguing who is going to make shoes for the newfangled iron horse.

[TimG]

Your link would be very impressive if it in any way addressed the point I was making. Stop wasting my time with this nonsense.

Stop ignoring data that completely refutes your point. Housing affordability is a function of the mortgage payments relative to income. It is not a question of absolute price. RBC numbers show that housing affordability has been relatively constant which refutes your argument that people are less able to afford a home than they were in the past. BTW - people are always exposed to the risk of rising rates. When interest rates shot up to 25% in the early 80s a lot of people were ruined by their debts. The fact that a rate rise would cause problems today is nothing new.

First to address your ludicrous contention about market efficiency. I laugh out loud whenever the apostles of capitalism tell me how omniscient and wise markets are when I turn and watch actual prices weave and sway around like a drunk in a hurricane.

A strawman. What I said is it is absurd to say that a market with less information is more efficient. Markets always operate better with more information and people who have access to information that other people do not have can often profit from it. BTW - market excesses are a result of lack of information. For example, many people invested in CDOs because they did not have access to the information that the underlying assets were junk. In this case, more information would have resulted in markets that put proper prices on CDOs.

But I don't think that's what he meant. As time goes on, more and more of the value of a company is determined by its information. But information as an asset is ridiculously hard to contain. You can patent products and processes but you can't patent data or ideas. Once they leak out, someone else can reverse engineer what you've done and build something better.

That is the way it has always been. It is nothing new. That is why companies that are most successful are those that create brands in addition to whatever products or services they offer. Brands are often the most valuable asset a company has. Branding is why Apple is still succeeding despite the numerous copycats that offer technically equivalent products.

I get the impression that the author started with a click-bait premise and simply assembled a bunch of factoids to make an argument without thinking deeply about whether the facts actually supported the premise.

Edited July 23, 2015 by TimG

[kimmy]

Stop ignoring data that completely refutes your point. Housing affordability is a function of the mortgage payments relative to income. It is not a question of absolute price. RBC numbers show that housing affordability has been relatively constant which refutes your argument that people are less able to afford a home than they were in the past. BTW - people are always exposed to the risk of rising rates. When interest rates shot up to 25% in the early 80s a lot of people were ruined by their debts. The fact that a rate rise would cause problems today is nothing new.

Yeah, instead of 5 or 10 year mortgages, we now have 25 year mortgages.

No doubt the Royal Bank is enthusiastic about promoting payment size, rather than total price, as the measure of what people can afford. They were no doubt very disappointed when the government put an end to 35 year mortgages. They'd probably love it if the government brought those things back.

A strawman. What I said is it is absurd to say that a market with less information is more efficient. Markets always operate better with more information and people who have access to information that other people do not have can often profit from it. BTW - market excesses are a result of lack of information. For example, many people invested in CDOs because they did not have access to the information that the underlying assets were junk. In this case, more information would have resulted in markets that put proper prices on CDOs.

Who was supposed to provide investors with information about what was actually inside CDOs and MBSs? Standard & Poors, Fitch, Moody's... the "independent" ratings agencies who were supposed to scrutinize them. Except S&P et al were in the pockets of the banks. They don't get paid by investors... they get paid by the banks, and have proven themselves to be afraid to bite the hand that feeds. Great system.

-k

[Shady]

Kimmy, 25 year mortgages are nothing new.

[bush_cheney2004]

Kimmy, 25 year mortgages are nothing new.

Certainly not....I bought my first home back in the early 80's and the mortgage interest rate was over 12%. Whining about some of the lowest rates in history now is quite interesting compared to the bad old days.

[Moonlight Graham]

I'm trying to get through the OP article. It's long, but I'll respond directly to it when done.