Every week, on this channel, I focus on critiquing a different aspect of capitalist society.
And every week I get comments telling me that I’m not doing my job.
Because it turns out that what I’m critiquing isn’t actually capitalism.
No no no.
None of this is capitalism, stupid YouTube man, it’s “corporatism” or, better yet,
it’s “crony capitalism” or actually it's the very trendy “techno-feudalism.”
Real Capitalism is basically perfect, so if anything is wrong, it’s probably because
of something else with a different name.
[[In this video I’m going to be debunking that idea as thoroughly as I possibly can
because I’m just tired of getting these misguided comments.
It’s not corporatism.
It’s not “crony” capitalism.
It’s just plain old capitalism.]]
Let’s start with the definition for crony capitalism, because although these comments
tend to use the word “corporatism,” unless the US recently began running its economy
on a model of tripartite negotiations or instituted a guild-based system of differentiated welfare
and privileges, “corporatism” is the wrong word.
So crony capitalism it is.
Wikipedia says: “Crony capitalism, sometimes called cronyism, is an economic system in
which businesses thrive not as a result of free enterprise, but rather as a return on
money amassed through collusion between a business class and the political class.
This is often achieved by the manipulation of relationships with state power by business
interests rather than unfettered competition” Then it lists out a couple ways that might
happen and sums it up: “Money is then made not merely by making a profit in the market,
but through profiteering by rent seeking using this monopoly or oligopoly.”
[[So now that we have a good idea of what these people are saying, let’s get three
things clear: One, I have an a priori objection to capitalism.
I don’t just focus on capitalism’s consequences on this channel, I think it’s a messed up
idea at its core.
Capitalism,]] crony or not, is an economic system where a tiny unelected minority of
people get the vast majority of people to work for them so they can get wealthier.
You might think that’s alright, I happen to think it’s wrong.
The place we spend most of our waking hours is run by a guy who has to prioritize profit
over everything else, including the well-being of the people that work.
Under capitalism you have the choice between working for the unelected guy, beating the
odds and becoming the unelected guy yourself, or starving.
None of that particularly appeals to me.
[[I also happen to think that business acumen shouldn’t be a justification for power.
Just because Elon Musk is a business supergenius, just look at how well he’s handling Twitter,
doesn’t mean his decisions should matter more,]] the same way that the divine right
of kings was a BS justification for feudalism.
I think democracy should apply to the economy.
Crony or not, capitalism isn’t something I support.
[[Two, the things that ancaps and libertarians complain about with “crony capitalism,”
like monopolies and oligopolies, companies that can basically get away with whatever
they want, are natural consequences of the “pure,” “free market” capitalism they
defend.]]
When companies “ruin competition,” it’s not necessarily because of something the state
does.
Free market competition always leads to this scenario where a few corporations dominate
and extract rent.
Monopolies inevitably happen with capitalism, and whether they got that status with the
help of the state or “on their own” doesn’t matter.
They are still a monopoly.
They still do whatever they want.
It still sucks.
[[Three, there’s no such thing as a free-market in the first place.]]
The distinction between crony capitalism and “pure” capitalism is based on the vague
idea that crony capitalism is when “gubment too big.”
At some point, one that is impossible to precisely define, there’s too much state intervention
and that’s why it all goes wrong, at least that’s the idea.
Ancaps incorrectly believe there is such a thing as capitalism without a state and libertarians
are vague about the amount of state intervention they deem to be ok, and as a result, anytime
something bad happens, it can just be chalked up to too much intervention, called crony
capitalism, and they clamor for “small government.”
[[But there is no such thing as markets without a state or without intervention because markets
don’t exist in their own little world.
All capitalism will involve state intervention,]] that intervention will necessarily benefit
some at the expense of others, companies will always find ways to influence that process
to their benefit by using strategies like capital flight or capital strikes, and that
means capitalism will always, inevitably be “crony,” therefore the distinction doesn’t
matter.
[[Let’s start with the point about monopolies.
Regardless of state intervention, collusion, or whatever, monopolies are an inevitable
feature of capitalism.
And that’s because all companies want to monopolize.
When it comes to making more profits than everyone else, which is the prime directive
of every single capitalist, becoming a monopoly is clearly *the* way to go.]]
When you’re a monopoly, or don’t have meaningful competition, prices are whatever
you say they are, work conditions are whatever you decide them to be, and profit margins
are pretty much up to you.
Every company is gunning for the number one spot and in a competitive market somebody
will eventually get it.
It’s a zero-sum game.
If you are less profitable than your competition, only a couple things can happen.
You will either gradually be phased out and fail, because your competition attracts more
investors who just follow the higher rate of returns, or your competition will buy you
out before that happens.
[[And if horizontal integration isn’t an option, companies will integrate vertically
and own every part of the manufacturing process to run a leaner business.
As they get larger, whether they acquire vertically or horizontally, companies benefit from economies
of scale.]]
They have better prices because they buy in bulk or control production from the start,
they have more money to invest into R&D to stay ahead of the pack, and a bigger market
share thanks to a more powerful advertising strategy.
The rich get richer and what starts out as a fair competition rapidly descends into monopoly
or oligopoly once someone gets an edge and the means to hold on to it.
Google and Facebook aren’t going anywhere anytime soon because they have hundreds of
mergers and acquisitions under their belts.
And just look at Wal-mart.
It starts out with a single local store, then it becomes a couple stores in a few towns,
then a couple hundred, and soon enough over 2 million people are working for the same
company, making so little that even full-time workers need to be on foodstamps.
Mom and pop shops can’t compete with their low prices.
At the end of the day, monopoly or oligopoly is inevitable when there are winners and losers
in a competitive market because the winners take over what they used to share or compete
over with the losers.
Antitrust regulation makes this a little better, but that is state intervention so, not a great
argument against “crony capitalism,” and even with antitrust laws in place oligopolies
form all over our economy.
Big Tech is dominated by just a few corporations, so is mass media, telecommunications, online
shopping happens almost exclusively on Amazon, and of course the food and beverage business
is dominated by just a handful of brands.
In theory, innovation is supposed to combat this effect a little bit, but now that tech
startups have realized it’s more profitable to be bought out by Meta than foolishly try
to outcompete it, innovation isn’t going to change all that much either.
Only massive breakthroughs can change the hierarchy, the way the internet did in the
late 90s and early 2000s, but whether IBM or Google is on top doesn’t matter if it’s
still an oligopolistic system.
It’s still gonna blow.
[[There is no version of capitalism that respects competition but not competition’s outcomes.
If your idea is to turn the clock back to when there was more competition, it’ll only
be a matter of time until we’re right back here.
It’s not a solution.
So now we should talk about state intervention and regulation.]]
There’s no capitalism without a state and no avoiding collusion between the state and
corporations.
The prime function of the state in a capitalist society is creating an environment where businesses
are profitable.
The state depends on the profit of the capitalist class, it delegates the responsibility of
organizing the economy to capitalists, and in turn capitalists depend on the state to
make sure that the conditions are right for them to profit.
At the most basic levels that means the state needs to be there to enforce contracts.
In the background of every business contract there is the state to make sure both parties
follow through.
Behind the ownership of a business, there’s the state too, making sure that someone with
a stockpile of guns doesn’t knock on the door and take it over.
The police and legal system are there to provide a baseline arrangement to make sure that violence
between capitalists doesn’t happen outside of the rules of business.
[[But now, what counts as the rules of business?
Those have to be defined.
Is it “state intervention” if the government fines a company for taking over another one
“the wrong way”?
That’s a tricky question.
It’s not clear what it means to “uphold private property rights” in practice.
And what about intellectual property?]]
In some places, the state protects patents and in others it doesn’t because for some
countries it's more profitable to not enforce them.
Isn’t the state intervening in the economy as soon as it makes that decision?
The reason you could argue it either way is because there are no natural conditions on
which to base an economy.
Economies have to be created, states in the past couple hundred years since capitalism
began have had to and still continue to make decisions.
They facilitate trade by creating a currency, taxing in that currency to give it value,
setting rules for proper engagement, and enforcing those rules.
In short, they need to intervene because without their intervention there’d be no economy
to speak of.
[[If you go one level deeper, the state's intervention is absolutely necessary to maintain
the exploitation of people under capitalism.]]
Capitalism is incredibly exploitative and incredibly unequal.
Most people work long hours and live right on the edge of poverty while a tiny minority
work no hours and fly their private jets to their 5th mansion.
In order to keep this machine turning and stop it from imploding in on itself French
revolution-style you need a state there to shape the cultural consensus that capitalism
is valid and necessary, and a police force and legal system to give muscle to the enforcement
of capitalist relations.
If I had to summarize that with just two quotes: “the industrial labourer works for and is
exploited by the factory owner – and when he organizes in opposition, in comes the policeman
who breaks his bones, the sheriff who evicts him and the judge who jails him” and “Accumulation,
because it is based on exploitation, cannot be sustained at the level of the individual
producer-employer alone.
It requires legal, ideological and cultural institutions; it needs state organs and other
power organizations; it has to be framed, shaped and contained from above.
In short, it requires the political power of a (nation) state.”
[[So now that the state exists, and it has to for capitalism to continue, how are capitalists
going to take advantage of it?]]
Are they going to finance the campaigns of the candidates they like?
Collude with politicians and make shadowy deals?
Become elected themselves, and go through the revolving door, so they can run the country
in whatever way helps their business?
Sure, they could do all that (and they do) but they don’t have to to get the same results.
[[If businesses are unhappy with something the government is doing they just stop investing
and the economy goes into a tailspin.
No need to influence the government in a crude way, capitalists just go on an investment
strike or they simply invest in another country.]]
The government tends to want to avoid that, so it usually doesn’t even get to that point.
And just like that, the state and businesses colluded without anyone accusing them of “cronyism.”
Some businesses will benefit from it, others won’t.
The outcome is the same as if there had been a bribe or an exclusive contract, except this
is “real capitalism” because all the state did was guarantee the conditions for profitability,
which any libertarian will tell you it should.
Ultimately, as long as you have private property, the profit motive, and wage labor you have
capitalism.
That those basic elements lead to objectionable things don’t make them any less capitalistic.
Capitalism isn’t a neutral economic system, it always ultimately favors those who sit
at its helm, so when that means screwing over the vast majority of people, that is always
the direction it will go.
[[As one final analogy, and this is how I usually explain it to commenters, you wouldn’t
call stage 4 cancer a different disease than cancer.
It’s simply the progression of the same disease.
No matter what perverse, mutated versions of capitalism appear, if the economic base
remains the same, if the profit motive is still the driving force, we live under capitalism.
You can call it what you want, but that won’t change reality, nor will it solve the problem.
The problem is capitalism.]]