Thursday, April 24, 2014

From "Because Exploitation" to "Because Inequality"

As I've studied Marxism over the last few years, I have found myself cudgeling my brains to figure out what the point was.

Eventually, I beat the answer out of my brain.  Marx admits that the bourgeoisie had conjured miracles of economic growth out of the ground.  But it was all going to end in tears.  Because exploitation.  The capitalists would secure a larger and larger share of the economic pie, and the proletariat would be driven to penury.  Because the capitalists would secure all the value added by labor, leaving merely a subsistence existence for the rest, including the middle class.

The point is that without the exploitation, the Marxians don't have an argument for revolution, for the seizure of political and economic power by the educated youth in the name of the working class.  So there must be exploitation, "naked, shameless, direct, brutal".

Today liberals are insisting we have a big argument about inequality.  And they are all over the moon over the new version of Capital.  It is called Capital in the Twenty-first Century by Thomas Piketty.  He argues that the income from capital is about 4-5 percent per year while the growth in the economy is only about 1.5 percent per year.  Thus wealth will concentrate in the wealthiest families without end.  As Scott Winship writes:
In other words, Piketty is suggesting that we may have entered a period in which concentrated wealth will produce a sort of inequality death spiral. With economic growth sluggish, and the returns to wealth high, owners of “capital”—land, housing, buildings, businesses, and other income-producing property—will receive a rising share of income as they re-invest their returns. 
So he is making exactly the same argument as Marx.  Marx argued for an exploitation death spiral and a progressive "immiseration" of the workers.  Therefore we should stop the rich cold with a revolution.

Piketty argues for an inequality death spiral and a progressive increase in the wealth of the 1%.  Therefore we should stop the rich cold with a global wealth tax.

There is a rather obvious conclusion to be drawn from both these theses.  Without exploitation and immiseration there was nothing for the Marxists to complain about.  Just shut up and let the railroaders make more railroads, the shipbuilders make more steamships, the Carnegies make more steel, the Rockefellers make more oil, and let the market take care of it.  Because, as it turned out, the workers eventually got to wield not spades and shovels, but powered backhoes and dragline excavators.

Without inequality and concentration of wealth there is nothing for liberals to complain about.  Just shut up and let the Googles and Facebooks and Apples get on with it.  Oh and don't forget Qualcomm.  They are the guys that developed spread-spectrum CDMA.  That's the technology that allows cellphones to work.  Back in the 1990s the settled scientists said CDMA violated the laws of physics.

Oh, and before we follow liberals into the inequality black hole maybe we should remember Nassim Nicholas Taleb and his Black Swan. On his idea, capitalists make their tidy 5 percent for years and years.  Until a Black Swan event completely wipes them out.

Or there is Stein's Law.  If something cannot go on forever, it will stop.

But one thing will go on forever.  Liberals will always need a "because" to justify their political power.

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