Pluralistic: America and "national capitalism" (18 Feb 2025)

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Originally published at: Pluralistic: America and “national capitalism” (18 Feb 2025) – Pluralistic: Daily links from Cory Doctorow



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A Gilded Age editorial cartoon of a frowning Uncle Sam giving a blood transfusion to a gargantuan business-man whose waistcoat is labeled 'protected monopolies.' The businessman's head has been replaced with the hostile red eye of HAL 9000 from Kubrick's '2001: A Space Odyssey.' The background has been replaced with a halftoned EU flag whose blue field is covered in circuit-board traceries. The floor beneath the figures is an abstract, pinkish pattern.

America and "national capitalism" (permalink)

Thomas Piketty's 2013 unexpected bestseller (a 750 page economics book translated from French!) Capital in the 21st Century, offers a very convincing explanation of our political decay, and it continues to serve this purpose as the decay undergoes alarming acceleration:

https://memex.craphound.com/2014/06/24/thomas-pikettys-capital-in-the-21st-century/

Let me sketch out that argument really briefly for you here. Absent any kind of government intervention, markets make investors richer than workers (AKA "the rate of return on capital exceeds the rate of return from growth" or "r > g"). This is true even for extremely powerful workers who get very, very rich indeed. Piketty illustrates this in many ways, but my favorite is the Parable of Bill Gates, Liliane Bettencourt and Bill Gates (again).

Bill Gates founded Microsoft in 1975 and he stepped down as CEO in 2000. In the intervening 25 years, he built the company into the most profitable firm in human history and grew very, very rich. This is Market Lore Canon: found a successful company, grow rich.

Now, Bill Gates started with a bunch of money – he comes from a wealthy family – but he grew his personal fortune over those years in extraordinary ways, and not by investing it, but rather, by founding a company and working at it.

Now consider Liliane Bettencourt, who, during Bill Gates period as Microsoft CEO, was the richest woman in Europe. Bettencourt was born very, very rich, heiress to the L'Oreal fortune. Unlike Gates, Bettencourt didn't have a job. She just sat around, while financial planners invested her family money. Over the 25 years when Bill Gates was growing Microsoft from zero to the most successful company in planetary history, Bettencourt made more money than Gates. Gates made his money by doing something. Bettencourt made her money by emerging from a very lucky orifice and just hanging around.

But here's the kicker: after Bill Gates quit Microsoft, he became a professional investor. He stopped doing a job and started investing in companies where other people were working. Over the next 13 years, Bill Gates (investor) made more money than Bill Gates (Microsoft CEO) made in his 25 years of doing a job. He also made more than Liliane Bettencourt.

That's what r > g means: that even the most successful worker in human history can't make as much as person who merely has a lot of money, and the more money you have, the more money you make.

If you think about this for a second, you can see how it'll play out: in economies both good and bad, the people who emerge from lucky orifices will get wealthier than anyone else, wealthier than the people who do things that grow the economy. And because they're getting wealthier faster than the economy grows, they come to command ever-larger shares of the economy, so that even when the pie gets bigger, their slices gets bigger still, and the remainder that we all share isn't just proportionally smaller – it's actually smaller. We don't just have less relative to the rich – we have less relative to our parents.

For Piketty, this is an iron law of markets, born out by analysis of hundreds of years' worth of capital flows. He devotes many of those 750 pages showing how even the most profitable sectors of the economy at any given time are disproportionately benefiting investors, even relative to the most successful managers and workers at any given time. This is where oligarchy comes from: it is the natural end-state of a market economy.

But (Picketty continues), oligarchy is intrinsically destabilizing. For one thing, once the fortunes of Bill Gates' or Liliane Bettencourt's are large enough, growing them by even, say 1% requires that some capital come from other rich people, because 1% of Bill Gates's holdings will eventually exceed 100% of the holdings of everyone who isn't insanely right. So, over time, rich people eventually have to fight with each other in order to keep getting richer – see, for example, World War I.

That's not the only way extreme wealth inequality creates political instability. Once the 1% are sufficiently wealthy, they capture government, and the only policies that can be enacted are those that don't gore some aristocrat's ox, and once the rich become super rich, they own all the oxen. So sensible policies that are needed to ensure an orderly, stable society (for example, limiting war bond repayments to a sustainable level that won't bankrupt the economy to make wealthy bondholders even richer) become impossible, and then you get societal collapse (see, for example, Worl War II).

The backbone of C21 is a time-series of 300 years' worth of global capital flows, painstakingly assembled by Piketty and his grad students. This time series shows the same pattern emerging over and over: as the rich get richer, they capture more and more of the state's policy-making apparatus, triggering more wealth-friendly policies, which make them even richer, and makes their grip on policy stronger. This continues until inequality reaches a tipping point, and then you a rupture, like the French Revolution, or the World Wars. These are orgies of capital destruction, and because nearly all the capital is in the hands of the rich, when the dust settles, they emerge with much less capital and much less power. Society is shattered, but it is more equal, and this means that we can once again make good policies that help us rebuild a society that benefits everyone, not just the rich (the French call the 30 years following WWII "the 30 glorious years").

But, if this society doesn't include some kind of mechanism to address the fact that capital is still growing faster than the economy – even a post-war boom economy – then eventually the share of wealth held by the rich will reach a tipping point, and we'll see policies that benefit the wealthy crowding out policies that support human thriving, and the rich will get richer, and they will feud with each other, and society will destabilize, and we will face collapse.

So, let's talk about Ronald Reagan! By the late 1970s, the share of wealth held by the top 10% had grown significantly from its post-war low point. With all that excess capital, the rich started spending money to promote candidates and policies that would make them richer. At a certain point, they have enough money to buy Reagan's presidency, and we get a deregulalatory bonfire: lower taxes for the rich, looser rules for finance, fewer protections for workers, less spending on social programs.

This makes the rich richer, even as wages stagnate. The next 40 years are a procession of ever-more-wealth-friendly policies and politicians – not just the Bush years, but also Bill Clinton's welfare bill and Obama's foreclosure crisis – and the rich get richer and everyone else gets poorer. Monopolies consume the American economy. GDP goes up, because the corporate sector is super consolidated and it's jacking up prices and slashing wages, leaving more for profits and dividends.

Society grows progressively less stable. Policies that benefit the wealthy at the expense of everyone else – ignoring the climate emergency, slashing the safety net, starving infrastructure, etc – dominate. Inequality worsens. No one can afford a house, health care, or university. Your life's savings are stolen by a subprime mortgage, or a pension-fund raid, or bitcoin grift. Instability worsens. Policies that benefit the wealthy at the expense of everyone else – endless imperialist wars, noncompete agreements, private equity rollups – multiply. Wages stagnate. Inequality increases. The rich get richer. One political party is captured by finance ghouls. The other one is also captured by finance ghouls, but welds them into a coalition that includes virulent, apocalyptic racists.

Which brings us to today, and Trump, and imminent collapse, and Elon Musk and his child soldiers, and JD Vance, and the whole fucking thing.

Today, Piketty posted some pointed thoughts on the situation in Europe in the face of rising American fascism and belligerence:

https://www.lemonde.fr/blog/piketty/2025/02/18/trump-national-capitalism-at-bay/

It's common for Americans to write off Europe because its "economy isn't growing" the way the US economy is. Piketty points out that this is a mirage: American economic growth is due to rising prices and plummeting wages, which is great for the share price of giant American companies whose cartels and monopolies make everyone except the tiny number of Americans with substantial stock market portfolios much poorer: "When measured in terms of purchasing power parity, the reality is very different: the productivity gap with Europe disappears entirely."

Once you adjust US economic figures to account for this, it's clear that America truly is in decline – the real US GDP has lagged China's since 2016. China now has an adjusted GDP that 30% higher than America's, and it's on track to double US GDP by 2035.

The US is losing control of the rest of the world, and Trump is accelerating this phenomenon. Take de-dollarization: the US (and only the US) can make as many US dollars as it wants, so for so long as things around the world (oil, say) are available for sale in USD, the US can buy them on better terms than any other country in the world:

https://stephaniekelton.substack.com/p/trade-isnt-money-for-nothing

What's more, the fact that dollar-clearing takes place at the Federal Reserve gives the US the ability to spy on and control other countries around the world (think of US SWIFT sanctions on Russia after the Ukraine invasion, or the vulture capitalists who forced Argentina to pay up even after it defaulted on its debts). Trump's pro-bitcoin policies are intrinsically anti-dollar policies. The rest of the world was already increasingly nervous about the way that the US dollar is a vehicle for soft power around the world, we're already seeing a lot of oil denominated in rubles, and now Trump is encouraging the growth of a shadow currency that will make it even easier for transactions to take place without dollars (notably, cryptocurrency will help America's ultra-rich evade even more taxes, and commit even more bribery):

https://www.programmablemutter.com/p/what-happens-when-economic-coercion

Trump is also waging war on the CIA and NSA. Good riddance, sure – but these are also major sources for projecting US power around the world – think of the NSA's mass surveillance program, in alliance with the "5 Eyes" countries whom Trump is setting out to alienate.

Then there's trade. The US has pushed pro-oligarchic policies on the world through its trade deals. To access US markets, foreign governments must enact punitive laws that make it easier for US giants to loot their economy, like IP laws:

https://pluralistic.net/2025/01/15/beauty-eh/#its-the-only-war-the-yankees-lost-except-for-vietnam-and-also-the-alamo-and-the-bay-of-ham

and investor-state dispute settlements:

https://pluralistic.net/2024/03/27/korporate-kangaroo-kourts/#corporate-sovereignty

Not all the profits of giant US companies arise from ripping off 99% of Americans. Some of those profits come from ripping off foreigners, but that's only possible because foreign governments have passed looter-friendly policies in exchange for tariff-free access to US markets. Now that the US is shutting that down, there's no reason to allow America to continue stealing from your citizens.

As Piketty says, Trump dreams of a "national capitalism." National capitalism is a disaster, even compared to global capitalism:

the strength of national capitalism lies in glorifying power and national identity while denouncing the illusions of carefree rhetoric about universal harmony and class equality. Its weakness is that it clashes with power struggles and forgets that sustainable prosperity requires an educational, social and environmental investment that benefits all.

National capitalism walls its oligarchs off from the possibility of draining the riches of other countries, limiting them to domestic looting. Eventually, all the wealth in the country is held by its looter class, and the only way they can grow is by attacking each other. No one has more direct, recent experience with this phenomenon than Europe, a wealthy trading bloc of 500m. Trump has demanded that the EU commit 5% of its GDP to building up arms and its standing armies.

Piketty says this is a dead end. As the US is abandoning its role as global rule-of-law haven and transaction clearing house, the EU has an opportunity to become a very different kind of world power:

Europe must heed the calls from the Global South for economic, fiscal and climate justice. It must renew its commitment to social investment and definitively overtake the US in terms of training and productivity, just as it has already done in terms of health and life expectancy. After 1945, Europe rebuilt itself through the welfare state and the social-democratic revolution. This project remains unfinished: on the contrary, it must be seen as the beginning of a model of democratic and ecological socialism that must now be thought through on a global scale.

(Image: Cryteria, CC BY 3.0; EFF, CC BY 4.0, modified)

Hey look at this (permalink)


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Object permanence (permalink)

#20yrsago Broadcast Flag court date: Feb 22 https://web.archive.org/web/20050219110625/https://www.tvtechnology.com/dailynews/one.php?id=2755

#20yrsago Municipal WiFi: What if the question was, “Should governments be in the electricity business?” https://wifinetnews.com/archives/2005/02/imagine_electricity.html

#15yrsago Anonymous Iranian dissidents launch online comic about Iranian current events https://web.archive.org/web/20100221080816/http://www.zahrasparadise.com/

#15yrsago VIP prison treatment for rich Indonesians convicted of bribery https://www.csmonitor.com/World/Asia-Pacific/2010/0218/Prison-for-wealthy-Indonesians-puts-Club-Fed-to-shame

#15yrsago Kim Stanley Robinson chapbook: how history works explained in fiction and essay https://memex.craphound.com/2010/02/18/kim-stanley-robinson-chapbook-how-history-works-explained-in-fiction-and-essay/

#10yrsago Hong Kong’s Umbrella Revolution leaders haunted by dirty-trick harassment campaigns https://www.csmonitor.com/World/Asia-Pacific/2015/0218/Hong-Kong-s-Occupy-leaders-now-face-quiet-but-persistent-harassment

#10yrsago Telegraph’s lead political writer resigns because of censorship of criticism of advertisers, especially HSBC https://www.opendemocracy.net/en/opendemocracyuk/why-i-have-resigned-from-telegraph/

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Colophon (permalink)

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Do not recall which documentary movie that featured Noam Chomsky at this moment but I recall a part of the documentary that showed how much over the decades that finance and banks increased their share of (either or both) the stock market and or “GDP” verses the rest of the economy.

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Isn’t there only distribution in an economy? “Redistribution” caves to the assumption of gaining only through merit.

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Is it? I think I’m getting confused between the rate of return, and absolute values.

If someone uses g to get from $1M to $1B in 10 years, and then r to get from $1B to $10B in the next 10 years, they’ve made more money in the second 10 years ($0.9B vs $9B), but their rate of return is lower (1000x vs 10x).

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«That’s what r > g means: that even the most successful worker in human history can’t make as much as person who merely has a lot of money, and the more money you have, the more money you make.»

That is not what it means, it means something much worse: that since ‘g’ is the total rate of income growth and ‘r’ is the rate of growth of income just from capital and the latter type of income grows faster then in the long term all income will go to investors except the income that ensures that enough workers barely survive to serve investors.

«This is where oligarchy comes from: it is the natural end-state of a market economy.»

That does not follow: that ‘r’ is higher than ‘g’ is not a law valid in all possible market economies or even a general property of actually-existing market economies, it is an empiral well documented outcome in actually-existing economies.

There are some arguments that it happens only in economies rigged by investors to ensure that ‘r’ is higher than ‘g’.

«But, if this society doesn’t include some kind of mechanism to address the fact that capital is still growing faster than the economy»

That is a very gross misunderstanding: if ‘r’ is higher than ‘g’ the income from capital (not capital necessarily) grows faster than the total income from “the economy”.

«even as wages stagnate.»

That is a bit of right-wing propaganda, the situation is worse: what has stagnated is the “average wage”, but most wages have fallen, while higher-end wages (for professionals and executives) have increased, so the average has merely stagnated.

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«and we get a deregulalatory bonfire: lower taxes for the rich, looser rules for finance, fewer protections for workers, less spending on social programs. […] This makes the rich richer […] The next 40 years are a procession of ever-more-wealth-friendly policies and politicians – not just the Bush years, but also Bill Clinton’s welfare bill and Obama’s foreclosure crisis – and the rich get richer and everyone else gets poorer. Monopolies consume the American economy. GDP goes up, because the corporate sector is super consolidated and it’s jacking up prices and slashing wages, leaving more for profits and dividends.»

My usual story here: this is a simpleton-liberal thesis that only a tiny percent of business billionaires only become richer while everybody else gets poorer:

«Policies that benefit the wealthy at the expense of everyone else – ignoring the climate emergency, slashing the safety net, starving infrastructure, etc – dominate. Inequality worsens. No one can afford a house, health care, or university.»

But this obviously has not happened, a large minority can afford houses, health care, university educations, luxury holidays, affluent retirements, etc. so:

  • Why would so many of the 99% of the population keep electing for 40 years reaganist politicians if this guarantees that they become poorer? That so many have had “false class consciousness” for so long as some suggest seems implausible.

  • Actually the business billionaires who employ a lot of workers have sometimes done well but often not so well: many have had to offshore their businesses, the others had their businesses destroyed by globalization or exploited by finance and property speculators. Those who have done really well have been the property and finance billionaires and middle class.

  • Actually between 20% and 40% of the population have had booming incomes, wealth and living standards for those 40 years and they are the mass support base of those property and finance billionaires because they made lots of money with finance and property too. It just the bottom 60-80% who have been losers.

The political problem is that pretending that only a tiny number of billionaires have been winners and that the ever more affluent middle class 20-40% of the population have been losers is a big mistake: without the political support or acquiescence of the affluent middle class the billionaires would not have achieved so much.

Even worse those 20-40% were once the solid base of social-democracy, those who fought monopolies, those who supported labor unions. Without persuading them that their best interests are in an alliance with the lower classes organizing the working class is going to be very difficult, but to do that it is essential to understand that so far they have done very well out of reaganism.

Sometimes I wonder why Cory Doctorow pretends that only the mass-employing business billionaires have been winners from the rollback of the New Deal. Perhaps because that was the case many decades ago, or perhaps because affluent property owning middle class people are the solid core of the Democratic Party and the “woke” (identity politics) mass of those infected with TDS :-).

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PS: So that ‘r’ > ‘g’ and that the billionaires make lots of money by taking advantage of their power is not something new, what is new is that such a large minority of the working class have become their “petty rentier” allies and supporters who are very keen to take advantage of other workers even if many of them are at the same time also workers. How to deal with mass rentierism and the support of middle class rentiers for monopolists and other features of reaganism is an intellectual challenge that strangely many “leftists” seem unable or unwilling to consider.

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You have invalidated everything else you’ve said with this comment alone.

A million people died in the U.S. because of this man, his policies, and his failure to act during the COVID 19 outbreak and you want to accuse liberals of losing a sense of proportion?

A MILLION people DIED. That is a per-capita horrifying figure which we haven’t even remotely begun to grapple with. We just… moved on. A couple thousand died on 9/11 and it reshaped the world.

A MILLION PEOPLE DIED.

Some of you may die, but that is a sacrifice he is willing to make. These things happen? Oopsie?

A. MILLION. FUCKING. PEOPLE. DIED.

You know where a million people didn’t die? Literally any other country on Earth.

There is definitely some serious derangement going on, but I think you’ll have to look in the mirror to find it.

I already know the excuses you’ll try and make “but what about all cause mortality”, “but what about China and accurate reporting”, and I suppose it was all a Chinese hoax and we should drink some bleach, etc. etc. etc. Please save us both the time and don’t even bother.

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«A million people died in the U.S. because of this man, his policies, and his failure to act during the COVID 19 outbreak»

Actually only 415k people died of COVID-19 in the USA before 20 January 2021; instead Biden achieved 795k deaths from COVID-19 between 21 January 2021 and 20 January 2025:

That is because by looking at cumulative USA and Canada and Ireland (anti-Trump “woke” champions Trudeau and Varadkar) death rates:

The achievement of Biden was the result of large surges in the death rate in august 2021 and in May 2022 racing further ahead of Ireland and Canada.

Was Biden an uniquely evil president much worse than Trump in the death rates he achieved? Not really, the death rates achieved by Biden were not that different from those of Italy or Brazil, or the average of South America, even if still somewhat higher then Europe:

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