It’s finally summer again here in Boulder and I am at Whole Foods drinking an overpriced coffee ($3.29/$2.ish), enjoying the view of the mountains as the daylight gradually fades. I count the improbably fit male and female bodies as they pass by one at a time. But that isn’t what I came here for. I’m supposed to be answering a question… what was it again? Oh yes, this one comes from derek7mc.
It’s a timely and critical question. Capitalism isn’t completely dysfunctional. In many ways it is still working. It is creating prosperity. It is making us rich. But isn’t making all of us rich. And it isn’t making us rich together. That’s the part that needs fixing. But the ability of capitalism to produce enormous of amounts of wealth is not really being questioned by anyone. Not even me.
But I get a lot of side-eye for insisting that we can all get rich together. Some don’t think it is possible, others simply don’t want it to be possible. What does a whole world of rich people even look like? We talk about ending poverty all the time, but I hardly ever hear anyone talk about the realities of accommodating more than 8 billion wealthy individuals. But if that was not my vision then I would not be serious about #fixingcapitalism. It would be nothing more than a cheesy tagline. So I cannot back down from the task of visualizing a world of billions of wealthy people.
What does that even look like?
I often find it helpful to visualize the capitalist system as a layered structure. This is a technique that I learned while working on a trading-desk. We spent a lot of time looking at the movements of various sectors within the S&P 500 index, which is a list of the largest publicly-traded corporate equities. An important technique was to order the sectors in the index based on their relationships in the real economy. According to this method you have Energy, Materials and Industrials forming the foundation layer. Then the layer above that one consists of Utilities, Healthcare and Telecom, which provide the foundation for an economy geared towards human life. Then you have Consumer Staples and Consumer Discretionary which produce most of what we know as “real stuff.” On the top layer, you have the Finance and Information Technology sectors battling for supremacy, but with Finance remaining on top. At least, that’s how we on Wall Street saw it.
Of course, this model only includes the largest publicly-traded corporations. It does not acknowledge the even lower levels of the capital structure; the public capital structure that the Energy and Materials and Industrial sectors depend on. Namely, Infrastructure to create demand for industry in the first place, and Defense to protect the Infrastructure. It also doesn’t tell us anything about the market for labor.
My point however, is that this “food chain” visualization is a powerful technique to understand how capitalism works. For example, it helps me to analyze what is happening in the media. The old media outlets are part of the Consumer Discretionary sector of the economy. The new media outlets are an offshoot of the Finance and Information Technology sectors. New media amounts to a bet, by finance and tech players, that media really belongs in the command and control center of the capitalist system, not as a “discretionary” consumer product. In my opinion, the elevation of media is a positive development and the new media outlets will ultimately replace the old ones. They will produce more of what people want and will reduce the friction that has historically prevented good ideas, and their creators, from acquiring currency in public consciousness until long after they are able to receive appropriate compensation for their work.
But it doesn’t feel as triumphant as it should does it? That’s because we don’t know where the money is going to come from to fund this new sector of the economy. We are like pioneers, facing the ravages of untamed nature, far from the supply-lines enjoyed by the rest of capitalism. Someday this will be a posh subdivision with spacious green lawns and heated pools, but today we are standing in an austere, impoverished wasteland on the frontier of new media.
In my other posts I talk about how we can create sustainable growth by reengaging in fiscal deficits, keeping interest-rates near zero, and guaranteeing incomes and the opportunity to work in the public sector. And also, as an intellectual matter, understanding our currency as a form of equity rather than a credit instrument so that we no longer need to fear the rising “national debt.” In this paradigm it is understood that everyone who works for the government is contributing to a capital increase on the government balance-sheet. Therefore, the work performed by government employees literally is the value source of the money that those employees receive as compensation. The value of their work goes into and persists within capital assets on the government balance sheet. Therefore there is no need for an external source of funds. No need for a “taxpayer.” We will no longer be confused by the belief, as Stephanie Kelton put it first and best, “that money grows on rich people.” From a policy standpoint, this amounts to a new vision of capitalism and I dare you to say otherwise.
But let’s pretend you believe all of that. You accept the idea that it’s just the neoliberals and their stupid fear of government participation in the market that stands between us and a future of freedom, fairness, and prosperity. Then of course you want to know how we will spend our days after we unlock the secret to a capitalist system that really works. I’ve been wondering when this conversation was going to begin since I went to Epcot Center at the age of twelve and saw an exhibit claiming that in the future production would be entirely automated by robots and that humans would dedicate their time to “aesthetic and intellectual goals.”
That was the answer then and it remains the answer today. Once we have secured the basic means of existence through technology, we devote ourselves to aesthetic and intellectual endeavors of all kinds. We may focus on fitness and health and diet in a way that we could not under old capitalism. We may create art in forms that are already well-understood, like writings and drawings and music. But I believe that whole new classes of great works of art, culture and philosophy lie before us, waiting be discovered as soon as we manage to liberate ourselves from the strictures of neoliberalism.
We are just beginning the debate over whether we need money in this new, “post-scarcity” environment, or if we merely require a steady diet of essentials along with an abundance of free time to create all of these great works. But I already know where I stand. I believe that in a post-scarcity economy we need money and capitalism more than ever. I believe that if an artist can sell their work for money, that they will produce more and better work than one who cannot sell their work. Clearly, an artist cannot sell their work if their followers have no suitable means of payment to offer in exchange. And artists cannot sell their work if there is an insufficient quantity of payers that can appreciate it. This is part of why arts education is essential to the future of capitalism. The process of earning money and receiving feedback from well-informed fans helps creators to hone their creations in a way that maximizes the value of those creations. There is still competition. There is still struggle. But the competition and the struggle is to create greater value, not to obtain a finite share of life’s necessities.
I do not accept the trope that says artists produce better art under conditions of poverty. This is a fundamentally anti-capitalistic sentiment. There has never been a society that properly compensated artists for the value they produced, therefore we don’t know exactly what well-capitalized artistic creation will look like. In the first half of the 20th century we built capitalism for energy, infrastructure and defense. In the late 20th century we built capitalism for the consumer. In the 21th century we will build capitalism for the higher forms of value. New media is just the tip of that iceberg.
So I do not want to see any starving artists in New Capitalism. I want to see artists, entrepreneurs and creators of all stripes buying the choicest real-estate, occupying the highest decision-making offices, and launching the biggest, baddest new companies. We will not be wheeled around and fed through straws by robots in the New Capitalism. We will be fitter, healthier, better educated and more skilled than ever before. We will be wealthier than ever before and we will use that wealth to create even more wealth. Therefore, New Capitalism is a never-ending quest for ever higher forms of greatness. There is always something to improve and there is always something new on the horizon.
My dream is not for a future where we have ever-increasing amounts of free-time (even though free-time decreased under neoliberalism and needs to increase again). My dream is for a future of better work. One where we are doing the work that we love to do and where others love the results of our work, and everyone feels incentivized to create as much value as they can for others, and to make a positive contribution to the betterment of the species and the planet. It is a future where it doesn’t matter whether you did it for the money or to make the world a better place, because those two goals are one and the same.
Welcome to the frontier.
