I’m reading The Affluent Society, an economics book originally published in the late 1950s, by John Kenneth Galbraith. I’m still in the first third of the book, but so far as I can tell the idea behind it is that up until this time, economics had been built around some pretty unpleasant assumptions, like scarcity, inequality, insecurity. That those assumptions persisted well beyond their expiration date, into a new world of affluence, largely due to technological progress. In this new era, everyone’s needs can be met pretty easily, except that our thinking is still controlled by the ideas of the past.
I’m not entirely sure where he’s going with all this, but I picked up the book because I heard it offered an early criticism of the role of induced overconsumption through advertising. This is also the era in which Buckminster Fuller was writing about the techno-utopian future in which humanity is liberated from toil by our technology.
One idea that’s really stood out so far came from the chapter on inequality. He makes it out to be a fundamental aspect of the classical capitalist economic worldview. That inequality isn’t just unavoidable, but that it is also necessary. One of the explanations for why it’s necessary is the need to facilitate “capital formation” — the accumulation of surplus wealth which can then be productively re-invested to generate yet more wealth and innovation, ultimately making everything better for everybody. Lamentably, more better for some people than others, but hey it’s the only way to keep this engine running…
Continue reading Cooperative Capital Formation
I’ve gotten some good natured pushback on the idea of buying oneself out of corporate servitude. The objection seems to come in two general forms.
- Contingency of Financial Autonomy: Deriving financial autonomy from investments in corporations whose operations are fundamentally destructive creates a morally corrosive dependency — your interests end up being aligned with theirs, because your autonomy depends on them remaining profitable.
- Opportunity Costs: Even if investing in corporations doesn’t actually give them financial support, there’s an opportunity cost: the same money could be used to invest in small local businesses or social enterprises. Wouldn’t that be more powerful and potentially transformational?
Continue reading Less Than Revolutionary Finance
You can only consume so much, but you can hedge against risk to an unlimited degree, and the ultra-wealthy do, suggests Interfluidity, and this makes a mess of a consumption-based economy when you get too much wealth concentrated in a few actors. It’s an interesting argument, but it does kind of hinge on a zero-sum game setting — insurance against risk going only to the highest of bidders (lifeboats on a libertarian Titanic). WWII as a giant re-set button, leading to a temporary age of prosperity. What’s the next re-set? Climate change seems like a good candidate…
A nice long-form piece from The Atlantic on the phenomenon and dangers of the New Plutocrats… not just Lloyd Blankfein and his parasitic bankster ilk, but nearly everyone who stands at the so-called Commanding Heights of industry, including productive innovators. The developed world was all to hot to globalize the economy when we thought we’d always stay on top. But that was ridiculous of course. Now “on top” is just a few people scattered all over, and most of us will slide toward the very large bottom if we’re not careful.
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Continue reading Links for the week of October 12th, 2010