[ExI] the formerly rich and their larvae...

[Rafal Smigrodzki]

On Feb 8, 2008 11:24 PM, The Avantguardian <avantguardian2020 at yahoo.com> wrote:
>
> --- Rafal Smigrodzki <rafal.smigrodzki at gmail.com> wrote:
> > > > That's a good point, but still, just how long can a continuously
> > > > decreasing fraction of the population continue to hold on to a
> > > > continuously increasing fraction of the wealth?  Something breaks
> > > > sooner or later.
> > >
> > > Well, there's capitalism in a nutshell. I wonder what will happen?
> > But
> > > on topic, there's no reason to think that the fraction of people
> > > holding these wealth-attracting ideas would decrease over time.
> >
> > ### As I discussed above, it all depends.
> >
> > And, BTW, capitalism actually leads under most human conditions to a
> > continuously increasing fraction of workers controlling continuously
> > increasing wealth.... but this is a whole different story.
>
> I would prefer that this important discussion to not devolve along
> party lines. Therefore I will not forward any argument. I simply invite
> Rafal and anyone else who is interested examine some data and attempt
> to assess it as objectively as possible.

### Ah, gotcha! :)

If you re-read my statement, it doesn't say that the outcome of
capitalist activity is egalitarian, as measured by the Gini
coefficient. What I said was something along the lines "The rising
tide lifts all boats"....right? I didn't say that the fraction of
wealth controlled by workers is higher, I only said that the total
wealth grows, and is enjoyed by an ever larger fraction of the
population. That this is true, even in the bastardized,
over-regulated, stunted kind of capitalism we have in America, is
self-evident.

As an aside, of course I would also say that the segmented network
prevents extreme concentrations of power and wealth. Let me elaborate:

A network is a set of interrelated nodes, such as servers in the
internet, or humans bound by economic and political ties. All networks
have modes of failure that are dependent on the structure of the
network and the properties of the nodes. It is probably impossible to
design a non-trivial network (i.e. with nodes and interactions that
cannot be feasibly enumerated, and fully controlled) which would be
failure-proof. Failure is here in the sense of not doing what the
network is intended for, not transmitting data or nor making people
better off. There is however a way of protecting yourself from the
failure of a network: having access to multiple fully independent
networks with sufficiently dissimilar interaction protocols so as to
make the spread of a failure mode (e.g. virus, whether computer,
biological, or memetic) unlikely. Using Linux or Mac does protect you
from most Windows garbage, and if everybody recognized the importance
of network segmentation in their OS purchase decisions, we'd have
enough operating systems around to make virus production that much
more difficult. It is extremely important to take the road less
traveled, and quite frequently, too. The same principle applies to
politics - political networks encompassing every individual over a
large area (i.e. empires and megastates ) have failure modes that are
extremely costly in terms of lives lost, and duration of impaired
function. The exit option and external pressures make small states
less likely (on a per capita basis) to fail spectacularly.

The capitalist economy is more of a segmented network than a
state-controlled economy. Failures of companies do not destroy whole
areas of activity - where Enron collapses, competitors pounce. In a
centrally-controlled economy the failure of a single decision-maker
may persist for a very long time - EPA regulations and programs stay
with us for decades after being shown to be ineffective or harmful. As
long as there is a market, with multiple, distinct, independent
players, there is a balance that prevents total failure. Single
segments may fail but other networks and subnetworks take the slack
and generate more segments to fill the void. In stable segmented
networks the growth of a segment does not give an absolute advantage
over competing segments. In other situations, e.g. in the OS business
or (to a lesser extent) in the business of extorting people, growth
does translate into an advantage, that's why we have Microsoft, and
states. Overall, capitalism does maintain segmentation of economic
networks to a much greater extent than other forms of economic
organization. The tsar of Russia or the First Secretary of the
Politburo directly controlled a greater fraction of his country's
wealth than Mr Rockefeller, or Mr Gates.

This is why I do think that "a continuously decreasing fraction of the
population continu[ing] to hold on to a continuously increasing
fraction of the wealth" is not "capitalism in a nutshell".

Rafal