Tag: Galbraith

Comrade Bezos

On By phulsrojIn UncategorizedLeave a comment

Jeff Bezos is a capitalist. Jeff Bezos is a communist. Two seemingly irreconcilable statements, but nevertheless both true. Few doubt that the God of Amazon is an arch-capitalist, but many would refute the assertion that he is a communist – Bezos himself certainly included.

He is obviously not a communist because he is spreading wealth around as communism was supposed to do. Bezos likes to keep workers at a subsistence minimum as communism ended up doing as well. But still, that is not where the most striking similarity lies. Where Bezos and communism overlap is in the attachment to planned economy. To be fair to Bezos and Amazon, they are not the only sworn capitalists who are de facto communists. All the trillion-dollar companies and their leaders are.

It should be unnecessary to explain why we have this paradox, because John Kenneth Galbraith already did so fifty-five years ago in his splendid The Industrial State, but fact is that the wisdom of Galbraith is largely forgotten in the debates about Big Tech and the trillion-dollar companies. The giant companies shield themselves from competition by virtue of their economic might, and government, wittingly and unwittingly, aides and abets. The abundance of riches and the benevolence of policy makers and policy planners allow the trillion-dollar companies to plan long-term and accept risks that no company in an Adam Smith liberal economy could. Facebook’s venture into the metaverse is a casebook example. It is exactly the kind of thing that could have happened in a communist planned economy, had the leaders been cleverer managers. One thing that sets Bezos apart from red secretary-generals is that he and his ilk undoubtedly are much, much better at identifying potential needs and using their economic toolboxes for their satisfaction.

There is more afoot than competition being replaced by economic plan, however. The historically unparalleled wealth of the giant companies brings power that does not only work hand-in-hand with the state but is starting to eclipse it. The leaders of the giant firms may not yet see it in quite that way, but still, this is the reality.  The tools deployed include time-honoured ones, such as picking up stray politicians, see the acquisition of the disgraced former chancellor of Austria by an extreme right-wing tech tycoon and, before that, of the former deputy prime minister of Britain by Facebook. Although there is a depressingly large number of historical precedents, such relationships are now married to corporate wealth that rivals that of states and that is unprecedented at least since the East India Company became a virtual state itself.

If the litany would stop here, the leaders of the trillion-dollar companies would still be communist yet risks for society could be contained. But consider now the horizonal expansion of the companies and the associated activities of their principals. Elon Musk’s avowed attempt to save democracy by buying Twitter and release all its right-wing demagoguery potential is something to behold in this respect! But let us stay on Bezos, because he even better exemplifies how much the moguls can spread their wings. Apart from his stake in Amazon and its subsidiary Whole Foods, Bezos owns Washington Post (to his credit he has not yet turned it into his private Pravda), and the Blue Origin space company. Amazon itself is dabbling in telemedicine and is a leading cloud computing company through AWS and experiments with drone delivery systems. As we know from Facebook, there is only a short reach to an own cryptocurrency (I propose to name it the Bezo), and security, robotics, virtual education, general health care and health insurance beckon. The trillion-dollar company can easily become a ten-trillion-company (Apple reached the three-trillion mark a while ago, before falling back). Most worrisome, the ten-trillion company will then constitute a rival to the state itself but will not have its solidarity and common welfare mandate.

Fact is that the current trillion-dollar companies in the end may be able to offer all the services the state offers – and more. And in undermining state authority, the trillion-dollar companies will deploy the siren song of ‘small government’, the pre-eminence of private initiative, all the libertarian slogans that the companies themselves know are hogwash. What will not be said is that once in the hands of giant companies, citizens will have exchanged a state that, however, imperfectly, tried to foster commercial competition with planned economy mastodons that will feel no responsibility towards those human beings who hold no commercial attraction. Bezos will become the better communist because he can choose his citizens and leave all others behind, where the communist state made almost everybody equally miserable.

The replacement of the state by giant companies is not yet inevitable, but the end is nigh unfortunately. The state is still strong enough to reign in the horizontal power of the mastodons, but we need to force it to act now – not only in order to protect consumers but in order to save the state itself. It is urgent to torpedo commercial communism!

(Inspired by Marco Aliberti’s and my book, Essays on the Optional Society and a Letter Concerning Inclusion,  https://lnkd.in/eYDsHXSs)

Capital in any century

On By phulsrojIn UncategorizedLeave a comment

 

At a recent lunch I discussed with a friend the perennial issue of populism and how difficult it is for the liberal elite to colport truer statements without oversimplifying. I mentioned as an example of such oversimplification an incident in the seventies at my high school when an in-crowd hippie told a large meeting how unjust it was that a normal worker would earn less than hundred thousand kroners when Denmark’s richest man would earn hundreds of millions.

My friend immediately said: don’t give me the trickle-down story now. And he was right, of course. Trickle-down is another oversimplification, partly because it does not distinguish between unequal consumption and unequal capital ownership.

Inequality is a moral and economic outrage. The moral aspect requires no explanation, but it is important to understand the economics in this respect. And it is important not to oversimplify.

What disturbs us the most is not necessarily that capital ownership is so unequally distributed. Our concern is mostly about the inequality in living conditions, the inequality in consumption. This inequality in consumption makes little sense from an economics perspective, since a healthy economy requires prosperous consumers. The current expanding global economy is largely driven by exporting to underserved markets, which is fine since this helps inter-regional equality. However, in the long run export markets will start to saturate, and start to be more self-sufficient, and the lessons of the Industrial Revolution is that that is when the purchasing power of the domestic consumer will start to become critical. Marx and Engels explained very clearly that the bourgeoisie ultimately requires a better paid proletariat in order to hang on to its wealth. Social democracy was the handmaiden to a blinkered capitalist class.

Capital that does not go into consumption must be invested. When we question unequal capital ownership we are implicitly also questioning whether the capital owners that be are the best to allocate capital. And this is an exceedingly pertinent question, and one that should be explicit, not just implicit. With a very high percentage of capital ownership concentrated in very few hands we are approximating the planned economy paradigm. The difference to Marxism is only that those who in our society are allocating capital are not politically chosen, but, in the best case, chosen by entrepreneurship, in the worst case by inheritance, and in many cases by the ability to climb a corporate ladder not dissimilar to that of a government bureaucracy. John Kenneth Galbraith explained fifty years ago how large corporations in the Industrial State exercise a planned economy function. That fundamental truth has only been exacerbated nowadays by capital ownership residing in so few hands.

Capitalists are genetically aligned with Adam Smith. Yet, the vision of Adam Smith was not an economy planned by the few and the quasi-monopolists. Adam Smith imagined a vibrant society of mainly middle class entrepreneurs. Ironically, if we want to pursue the Adam Smith ideas we must thus break the stranglehold on capital by the few. Adam Smith would have voted for a much higher degree of capital equality! But also, in a democracy we must believe that capital allocation should harness the wisdom of the population at large. Yet for that to happen capital ownership must be far more broadly distributed!