This post is part of a series about a discussion (framed as a debate) between Gillian Tett and Yanis Yaroufakis on the subject of saving capitalism. If you found this post via an Internet search, it probably makes sense to start with the first post in the series, the link to which can be found above, and here.
Saving capitalism: Q&A session
This post is about the questions asked during the post-debate Q&A.
Does capitalism require governments? and Do we need less asymmetry of information to make capitalism work?
Yanis starts. As regards the first question he states there is a “great illusion” that capitalism is a system where wealth is produced individually, then socialized by the state, when in reality the state has always been an integral part of the wealth creation within a capitalist system.
As regards the second question, he states with “Yes, information is power”, and inequalities of power are often associated with asymmetries of information. However, power is derived from other sources, such as the threat of violence and the holding of resources. Asymmetry of information is layered on top of these other factors and provides greater power and privilege.
Gillian addresses the asymmetry of information question and comments that we have more information available to use today than ever before. She uses the release of the Panama Papers and the use of social media to spread information as examples.
As regards the question of governments, Gillian somewhat translates that question into “Has capitalism been tried perfectly?” and her answer is “absolutely not”. She goes back to the Winston Churchill quote she likes which is that capitalism is the worst way to organize an economy, except for all the others.
Isn’t it inevitable in a capitalist system that the winners will coopt the political system and as such unequal access is inevitable?
The question is directed at Gillian who answers yes and states that is why checks and balances are needed.
How can the short-term focus of capitalism be compatible with some long-term problems requiring global coordination?
Yanis went first. He stated that Adam Smith’s idea is that through market mechanisms, conflict and competition become collaboration and coordination. But he himself knew the limits of this.
For example, he thought it doesn’t work when it comes to education.
Adam Smith recognized that when the butcher, the baker, and the brewer provide for the common good by simply trying to make a living, that this requires a set of shared morals and shared values on which this all operates.
The problem is that with the second industrial revolution and now with the digital revolution, we have economies of scale and economies of scope that destroy both the moral bed on which the butcher, the baker, and the brewer can operate, as well as their businesses. They’ve been taken over by Starbucks, or whatever.
Then suddenly, the ideas in both of Smith’s books, The Theory of Moral Sentiments and The Wealth of Nations go out the window, and we have what can be described quite feasibly as techno-feudalism.
Gillian chimes in to say that’s why we need anti-monopoly laws, regulation, and government. It’s not an either-or. To play a game of soccer, you need an agreed-upon set of rules and an umpire, but you still need to have the players compete.
Yanis then adds that is why he calls Gillian utopian. He claims it is impossible to have those rules set by the government when you have two dominant political parties both of which represent the techno-feudal lords.
Gillians adds that without the competition, without the profit motive, without the pricing (which she stated is how we crystalize probability and competition), that his setup is even more utopic than her idea.
Yanis stated that he agrees, which is WHY we need to do away with capitalism. That will enable proper competition and proper markets.
Gillians clarifies that Yanis’s vision of socialism, done properly, would include better markets and better competition. Which Yanis agrees with while clarifying that he is not your run-of-the-mill socialist.
