If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
The theory of markets goes like this: even the best of us can fall prey to selfishness and rationalization, so let's arrange society so that people acting on their most selfish impulses end up producing benefit for all of us. That'll be easier and more reliable than convincing everyone to be more generous.
How do you arrange society so that selfishness produces public benefit? With markets. Faced with relentless competition, the most effective way to accumulate and retain wealth is by striving to make your wares cheaper and better. In a competitive labor market, we can secure fair treatment for workers without labor law or unions – bosses who treat their workers badly will lose them to better bosses. Just "align the incentives" and let markets do the rest.
This is an area where there's broad overlap between the left and the right. Chapter one of The Communist Manifesto is Marx and Engels' love letter to the incredible power of markets to improve everyone's material conditions by increasing production while lowering costs:
Meanwhile, over in Wealth of Nations, Adam Smith comes to the same conclusion:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
In other words: if you get the incentives right, then even the greediest baker will resist the temptation to fill his loaves with sawdust and gravel. The greedier he is, the more he'll strive to make his bread cheap and delicious, because that will let him sell as many loaves as possible, thus maximizing his own wealth.
It's not exactly horseshoe theory vindicated, but if you squint just right, you'll see both communists and capitalists agreeing on this one thing: if you want the bourgeoisie to bend its efforts to producing something that the rest of us can benefit from, you'll get further by appealing to their fear and greed than by trusting in their munificence.
This is how you can have both leftists and market true believers coming onto the same side on antitrust: they may not both exactly agree that the best way to run things is by appealing to capitalists' fear of being dethroned by a competitor, but they absolutely agree that the worst way to run things is to simply trust in capitalists' generosity.
They're right, of course. As Lina Khan likes to say, companies that are too big to fail become too big to jail, and thus too big to care. If you doubt it, consider this internal email sent by an Apple executive insisting that the company is wasting money by making iPhones that are too good, and counseling a corporate strategy of deliberate shittiness:
In looking at it with hindsight, I think going forward we need to set a stake in the ground for what features we think are 'good enough' for the consumer. I would argue we're already doing more than what would have been good enough. But we find it very hard to regress our product features YOY [year over year]." Existing features "would have been good enough today if we hadn't introduced [them] already," and "anything new and especially expensive needs to be rigorously challenged before it's allowed into the consumer phone.
https://www.justice.gov/d9/2024-06/423137.pdf
Policymakers can assume the profit motive, but they have to craft the conditions under which that motive is shaped by competitive anxiety to produce quality goods and services at a fair price.
Anyone who believes in markets must also tacitly believe that successful market participants don't believe in markets. They should understand that capitalists hate capitalism, that every pirate yearns to be an admiral. They should understand that capitalism's winners only defend disruption when they're the ones doing the disrupting. They should understand that profits are only good when you're a scrappy challenger, but once you've conquered the market, every capitalist seeks to become a feudal lord, converting profits to rents and insulating themselves from an exhausting life of constant competition:
The (smart) defenders of markets do understand this, but they face a dilemma. By definition, the benefactors with the most money and power to contribute to their think-tanks, university economics departments, conferences and publications are the rentiers – the billionaires who've shored up their fortunes with Warren Buffet's beloved "moats and walls." They're the blitzscaling billionaires who thrive on predatory acquisitions and high capital costs that prevent new market entrants from challenging their incumbency and its easy profits. They're the pirates who've become admirals.
As Upton Sinclair famously quipped, "It is difficult to get a man to understand something, when his salary depends on his not understanding it." When your right-wing, "pro-market" think-tank depends on the largesse of someone who made their money by capturing a market, capturing its regulators, and capturing its labor force, you need to tie yourself into some very weird knots to explain why your market advocacy shouldn't start with stripping your funders of their power, wealth and position.
This is pretty much the entire edifice of neoclassical economics. There's the "consumer welfare" theory of antitrust, that says that monopolies are efficient and insists that an inefficient monopoly would immediately tempt new competitors into the market who would compete away the monopolist's advantage:
"Consumer welfare" is a perfect apologetic because it contains a lurking syllogism: it holds that "inefficient monopolies" will always bring forth competitors who trash their margins, which means that any actual monopoly we see in the wild must be efficient. If it wasn't, it would have been competed out of existence by now. QED. This means that you can be a "pro-market" think-tank and take infinite money from monopolists without any contradiction: by definition, any monopolist with extra cash on hand to fund your PR blitz on its behalf must be efficient, otherwise it would have gone broke.
This is the structure of so many of economics' "empirical, scientific" theories that boil down to new ways of saying, "Actually, your boss is right."
Take "revealed preferences," the idea that people's actions are a better indicator of their preferences than the things they say they prefer. While this theory has a certain superficial plausibility, it can really only be embraced by people who have suffered the highly specific neurological injury you get by taking an economics degree: an injury that makes you incapable of perceiving or reasoning about power.
To fully embrace "revealed preferences" is to observe someone who has just sold their kidney to make rent and exclaim, "Look at this person with a revealed preference for only having one kidney":
Then there's the right's conception of regulatory capture. When you think of "regulatory capture," you might picture a company or sector that has grown so powerful that it can boss the government around, so that it can abuse you with impunity. But for a neoclassical, "regulatory capture" isn't the result of too much corporate power – it's the result of too much state power. If states have the ability to do real things (the theory goes), then capitalists will do everything they can to take over the state and use it to punish their competitors, so the only answer is to eliminate state capacity altogether:
And finally, there's "meritocracy," which is a way of dressing up the Puritans' concept of divine providence as a scientific theory about how society must work. Puritans insisted that their god reached down into the human realm to elevate the truly virtuous among us, and that this divine favor could be discerned in the way that wealth and power were distributed among us. The rich and powerful were god's "elect." You could tell this was true, because they were rich and powerful. The corollary is that the poor and downtrodden are disfavored by god, and must therefore lack some virtue that the rich and powerful possess.
This same syllogistic thinking underpins the economic doctrine of "meritocracy," which holds that markets are giant computers that process uncountable trillions of decisions we all make about what to buy and sell and at what price, seeking out the "correct" price for every commodity and also elevating the people who are best at allocating capital in ways that arrive at the best prices for the best goods. Just as a Puritan believes that wealth is evidence of virtue, a hewer to economic orthodoxy believes the meritocratic system graces the best among us, giving them control over our lives by allowing them to "allocate capital" to create or destroy jobs, or entire firms, or whole sectors of the economy. You can tell they're the right people to do be doing this because the market chose them – if they were bad capital allocators, they'd have gone broke by now. QED.
When capital allocators' kids end up allocating capital too, well, that just shows that "merit" is a heritable trait and the people who have it are born to rule over us. Meritocracy cashes out to a eugenic belief in royal blood and royal dynasties. We know King Arthur was suited to rule us because he pulled a sword out of a stone, and we know Bill Gates is suited to rule over us because he pulled a fortune out of an operating system:
Consumer welfare, revealed preferences, regulatory capture and meritocracy are just some of the ways that capitalism's alleged defenders cooked up to insist that they love the competitive discipline imposed by markets while being totally dependent on self-described capitalists who have utterly escaped from that discipline and have committed to doing everything in their power to prevent themselves from ever coming under any form of constraint.
These champions of "free markets" have spent decades defending policies like noncompetes, which makes it a crime for a fast-food worker to quit their job at Wendy's and take a job at the McDonald's across the street in order to get a $0.25/hour raise:
They defend anticircumvention laws that make it a literal felony for you to install someone else's app store on your phone or put someone else's ink in your printer:
They somehow believe that value arises when the best among us are forced to contend with the stark terror of losing everything to a competitor, but also that there is a group of people who are so perfect, so virtuous and brilliant that they do not need this kind of goad to prod them into action. Indeed, these genetic sports and generational talents are so amazing that to force them to sully themselves with grubby competition is to deny us all the fruits of their genius.
Who are these people? Why, they're billionaires of course. All billionaires: after all, if providence and the market's invisible hand has seen fit to bestow nine or more zeroes upon someone, that is an indicator of 10^9 times more virtue than someone with only a dollar to their name. But especially: intellectual billionaires, the kinds of "curious" billionaires who write books, give lectures, and (especially), make gigantic cash donations to think-tanks, university economics departments, conferences and journals.
Billionaires like Peter Thiel and Elon Musk, in other words.
These are the billionaires that capitalism's (alleged) defenders are caping for when they deplore "billionaire derangement syndrome," and fret that candidates for office now routinely cite enmity for billionaires in their campaign materials:
But as Tim O'Reilly writes, these billionaire-defending intellectuals always told us that markets would protect us from the madness of kings, by constraining the folly of the wealthy and powerful through the discipline of competition. Meanwhile, those billionaires were busily transforming themselves into kings, unshackled from rules, morals or consequences:
Reflecting on this, the political scientist Henry Farrell notes that the most vocal defenders of billionaireism – the Musks and Thiels of the world – never made a secret of their desire to become kings and insulate themselves from markets and discipline of every kind, and they've grown brazen. Musk makes social media posts deploring the very idea of elections, agreeing with the idea that only "makers" should be allowed to vote and that "takers" should not, because "universal suffrage leads to universal suffering":
As for Thiel, he has long openly advocated the idea that there exists among us a latent aristocracy who do not need the discipline of markets to keep them from lapsing into folly or self-dealing. These people – born to found tech startups and to rule – are nonconformists who, in Thiel's writing, are "the most important" and "should be let off the hook":
Thiel makes no bones about his idea that people who have the right stuff should be exempted from any constraint. He writes "capitalism and competition are opposites." Rather than compete, Thiel says the true entrepreneur should seek to establish a monopoly, because "Monopolists can afford to think about things other than making money; non-monopolists can’t…Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits."
It's not that Thiel opposes constraints per se – he clearly thinks that most of us should operate under constraints – constraints that are dreamed up and enforced by people like him. Those people are born to rule: they emerged from a lucky orifice, in possession of lucky genes. How can we tell they were born to rule? Because they're ruling. If they weren't born to rule, they wouldn't be in a position to rule. As ever, a syllogism solves all our ideological and existential problems.
Thiel lives in what Naomi Klein would call "the mirror world." While counterculturists have long celebrated misfits and communities of nonconformists, they were invested in the idea of a space protected from power, where weirdos could let their freak flags fly:
But Thiel's version of this is to celebrate the "nonconformists" whose heterodox belief is that labor, privacy, finance and consumer protection laws shouldn't apply to them. He wants to protect those people so they can wield power. They should form "mafias" (like the "Paypal mafia") not solidaristic affinity groups. As Farrell writes:
Entrepreneurial risk taking can be awesome; weird people are often more likely to be original; densely linked communities have many advantages. Furthermore, I would guess that none of these factors was sufficient on its own to precipitate the madness of princes that we see today. It is perfectly possible that they would have worked together in much more benign ways under different external circumstances. But we are in the world we’re in: one where the boundless appetites and irrationalities of a small number of billionaires seem increasingly incompatible with the need to maintain a stable civil society.
A new would-be aristocracy was always the visible trajectory of these guys. The only people who couldn't see it were the think-tankies they funded to write papers explaining that their paymasters didn't need market discipline to keep them from sinking into folly or attempting to overthrow democracy.
Today, these Renfields clutch their pearls at the "demonization" of the ultra-rich, calling it "billionaire derangement syndrome." But the only "billionaire derangement syndrome" that matters is the syndrome that affects billionaires and convinces them that they are above any discipline or rules.
A lot of economic theory of the past few hundred years has been based on the premise that people act rationally with their finances - if not as individuals than at least en mass.
At the same time, we've seen industries based around exploiting the gamblers fallacy and sunk cost dominate the entertainment industry, with gambling becoming more and more widespread with less and less pretense despite how irrational gambling is.
We've also seen a massive IPO for SpaceX that was so high it created the world's first trillionaire - but at the same time investors were going wild for SpaceX stock, SpaceX bonds are treated as junk because it's viewed as unlikely the company will ever be able to repay the debt it owes before going bankrupt.
SpaceX just pulled off one of the biggest IPOs in history, but credit investors are quietly pricing its debt as if the investment-grade labe
The AI bubble is quite possibly the biggest in history, made all the more absurd because the AI industry has yet to turn a profit or provide a convincing argument for how they will do so.
Stock buys that are based on irrational exuberance rather than rational financial analysis are not only common, they have the new term "meme stock" used in positive ways to describe them.
There are so many obviously irrational choices being made economically, and not just by billionaires.
Finally, this week, we have Magical World of Monsters (1992), a collaboration between artist Erni Cabat and writer Daniel Cohen.
I hadn’t heard of Cabat before I went on my spree of buying up all the Daniel Cohen books I could lay my hands on. Seems he spent most of his career in advertising and only began illustrating toward the end of his life (he was also a ceramics artist, collaborating with his wife, Rose, who had a pretty significant career of her own). In addition to Monsters, he produces Magical World books for prehistoric animals, carousel animals and dinosaurs, all in the same basic format. His style is rather hard to describe. I suppose I would start with “garish.” They’re a swirling combination of texture, pattern and unusual color choices that are difficult to visually parse. There is so much detail in the Medusa head, for instance, and the tonal range so compressed, that my eye can’t stop in any one place for long, to the point that it seems like her hair of snakes is perhaps really squirming. The sense of motion in all of these pieces almost verges on vertigo. They’re pretty amazing!
The selection of monsters seems mostly governed by what Erni wanted to paint. Cohen is there to provide the slightest bit of context. It all hangs together fine, Cohen knows who the star is here.
I have to say, the only thing Cabat’s art reminds me of is the amazing box art from the D&D Computer Labyrinth Game. To my knowledge, the artist is still unknown. I wonder if it could have been Cabat?
Frustrated by being referred to as a mere “caricature” artist, William Hogarth produced this 1743 print to explain the difference between characters and caricatures — which he saw as radically different — and aligning his style firmly with the former: https://publicdomainreview.org/collection/characters-and-caricaturas-by-william-hogarth-1743
My message to my friends at CNN is that Weiss has probably already decided which anchors, reporters, and executives she will dismiss for being insufficiently conservative. You won’t save yourself by not calling out Trump’s lies in this speech. So do your journalistic and patriotic duty, and cover it honestly. If you don’t have your job (after being fired by Weiss), you’ll at least have your dignity.
The Two Chances for the Media to Show It Really Cares About Democracy (via wilwheaton)
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
The theory of markets goes like this: even the best of us can fall prey to selfishness and rationalization, so let's arrange society so that people acting on their most selfish impulses end up producing benefit for all of us. That'll be easier and more reliable than convincing everyone to be more generous.
How do you arrange society so that selfishness produces public benefit? With markets. Faced with relentless competition, the most effective way to accumulate and retain wealth is by striving to make your wares cheaper and better. In a competitive labor market, we can secure fair treatment for workers without labor law or unions – bosses who treat their workers badly will lose them to better bosses. Just "align the incentives" and let markets do the rest.
This is an area where there's broad overlap between the left and the right. Chapter one of The Communist Manifesto is Marx and Engels' love letter to the incredible power of markets to improve everyone's material conditions by increasing production while lowering costs:
Meanwhile, over in Wealth of Nations, Adam Smith comes to the same conclusion:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
In other words: if you get the incentives right, then even the greediest baker will resist the temptation to fill his loaves with sawdust and gravel. The greedier he is, the more he'll strive to make his bread cheap and delicious, because that will let him sell as many loaves as possible, thus maximizing his own wealth.
It's not exactly horseshoe theory vindicated, but if you squint just right, you'll see both communists and capitalists agreeing on this one thing: if you want the bourgeoisie to bend its efforts to producing something that the rest of us can benefit from, you'll get further by appealing to their fear and greed than by trusting in their munificence.
This is how you can have both leftists and market true believers coming onto the same side on antitrust: they may not both exactly agree that the best way to run things is by appealing to capitalists' fear of being dethroned by a competitor, but they absolutely agree that the worst way to run things is to simply trust in capitalists' generosity.
They're right, of course. As Lina Khan likes to say, companies that are too big to fail become too big to jail, and thus too big to care. If you doubt it, consider this internal email sent by an Apple executive insisting that the company is wasting money by making iPhones that are too good, and counseling a corporate strategy of deliberate shittiness:
In looking at it with hindsight, I think going forward we need to set a stake in the ground for what features we think are 'good enough' for the consumer. I would argue we're already doing more than what would have been good enough. But we find it very hard to regress our product features YOY [year over year]." Existing features "would have been good enough today if we hadn't introduced [them] already," and "anything new and especially expensive needs to be rigorously challenged before it's allowed into the consumer phone.
https://www.justice.gov/d9/2024-06/423137.pdf
Policymakers can assume the profit motive, but they have to craft the conditions under which that motive is shaped by competitive anxiety to produce quality goods and services at a fair price.
Anyone who believes in markets must also tacitly believe that successful market participants don't believe in markets. They should understand that capitalists hate capitalism, that every pirate yearns to be an admiral. They should understand that capitalism's winners only defend disruption when they're the ones doing the disrupting. They should understand that profits are only good when you're a scrappy challenger, but once you've conquered the market, every capitalist seeks to become a feudal lord, converting profits to rents and insulating themselves from an exhausting life of constant competition:
The (smart) defenders of markets do understand this, but they face a dilemma. By definition, the benefactors with the most money and power to contribute to their think-tanks, university economics departments, conferences and publications are the rentiers – the billionaires who've shored up their fortunes with Warren Buffet's beloved "moats and walls." They're the blitzscaling billionaires who thrive on predatory acquisitions and high capital costs that prevent new market entrants from challenging their incumbency and its easy profits. They're the pirates who've become admirals.
As Upton Sinclair famously quipped, "It is difficult to get a man to understand something, when his salary depends on his not understanding it." When your right-wing, "pro-market" think-tank depends on the largesse of someone who made their money by capturing a market, capturing its regulators, and capturing its labor force, you need to tie yourself into some very weird knots to explain why your market advocacy shouldn't start with stripping your funders of their power, wealth and position.
This is pretty much the entire edifice of neoclassical economics. There's the "consumer welfare" theory of antitrust, that says that monopolies are efficient and insists that an inefficient monopoly would immediately tempt new competitors into the market who would compete away the monopolist's advantage:
"Consumer welfare" is a perfect apologetic because it contains a lurking syllogism: it holds that "inefficient monopolies" will always bring forth competitors who trash their margins, which means that any actual monopoly we see in the wild must be efficient. If it wasn't, it would have been competed out of existence by now. QED. This means that you can be a "pro-market" think-tank and take infinite money from monopolists without any contradiction: by definition, any monopolist with extra cash on hand to fund your PR blitz on its behalf must be efficient, otherwise it would have gone broke.
This is the structure of so many of economics' "empirical, scientific" theories that boil down to new ways of saying, "Actually, your boss is right."
Take "revealed preferences," the idea that people's actions are a better indicator of their preferences than the things they say they prefer. While this theory has a certain superficial plausibility, it can really only be embraced by people who have suffered the highly specific neurological injury you get by taking an economics degree: an injury that makes you incapable of perceiving or reasoning about power.
To fully embrace "revealed preferences" is to observe someone who has just sold their kidney to make rent and exclaim, "Look at this person with a revealed preference for only having one kidney":
Then there's the right's conception of regulatory capture. When you think of "regulatory capture," you might picture a company or sector that has grown so powerful that it can boss the government around, so that it can abuse you with impunity. But for a neoclassical, "regulatory capture" isn't the result of too much corporate power – it's the result of too much state power. If states have the ability to do real things (the theory goes), then capitalists will do everything they can to take over the state and use it to punish their competitors, so the only answer is to eliminate state capacity altogether:
And finally, there's "meritocracy," which is a way of dressing up the Puritans' concept of divine providence as a scientific theory about how society must work. Puritans insisted that their god reached down into the human realm to elevate the truly virtuous among us, and that this divine favor could be discerned in the way that wealth and power were distributed among us. The rich and powerful were god's "elect." You could tell this was true, because they were rich and powerful. The corollary is that the poor and downtrodden are disfavored by god, and must therefore lack some virtue that the rich and powerful possess.
This same syllogistic thinking underpins the economic doctrine of "meritocracy," which holds that markets are giant computers that process uncountable trillions of decisions we all make about what to buy and sell and at what price, seeking out the "correct" price for every commodity and also elevating the people who are best at allocating capital in ways that arrive at the best prices for the best goods. Just as a Puritan believes that wealth is evidence of virtue, a hewer to economic orthodoxy believes the meritocratic system graces the best among us, giving them control over our lives by allowing them to "allocate capital" to create or destroy jobs, or entire firms, or whole sectors of the economy. You can tell they're the right people to do be doing this because the market chose them – if they were bad capital allocators, they'd have gone broke by now. QED.
When capital allocators' kids end up allocating capital too, well, that just shows that "merit" is a heritable trait and the people who have it are born to rule over us. Meritocracy cashes out to a eugenic belief in royal blood and royal dynasties. We know King Arthur was suited to rule us because he pulled a sword out of a stone, and we know Bill Gates is suited to rule over us because he pulled a fortune out of an operating system:
Consumer welfare, revealed preferences, regulatory capture and meritocracy are just some of the ways that capitalism's alleged defenders cooked up to insist that they love the competitive discipline imposed by markets while being totally dependent on self-described capitalists who have utterly escaped from that discipline and have committed to doing everything in their power to prevent themselves from ever coming under any form of constraint.
These champions of "free markets" have spent decades defending policies like noncompetes, which makes it a crime for a fast-food worker to quit their job at Wendy's and take a job at the McDonald's across the street in order to get a $0.25/hour raise:
They defend anticircumvention laws that make it a literal felony for you to install someone else's app store on your phone or put someone else's ink in your printer:
They somehow believe that value arises when the best among us are forced to contend with the stark terror of losing everything to a competitor, but also that there is a group of people who are so perfect, so virtuous and brilliant that they do not need this kind of goad to prod them into action. Indeed, these genetic sports and generational talents are so amazing that to force them to sully themselves with grubby competition is to deny us all the fruits of their genius.
Who are these people? Why, they're billionaires of course. All billionaires: after all, if providence and the market's invisible hand has seen fit to bestow nine or more zeroes upon someone, that is an indicator of 10^9 times more virtue than someone with only a dollar to their name. But especially: intellectual billionaires, the kinds of "curious" billionaires who write books, give lectures, and (especially), make gigantic cash donations to think-tanks, university economics departments, conferences and journals.
Billionaires like Peter Thiel and Elon Musk, in other words.
These are the billionaires that capitalism's (alleged) defenders are caping for when they deplore "billionaire derangement syndrome," and fret that candidates for office now routinely cite enmity for billionaires in their campaign materials:
But as Tim O'Reilly writes, these billionaire-defending intellectuals always told us that markets would protect us from the madness of kings, by constraining the folly of the wealthy and powerful through the discipline of competition. Meanwhile, those billionaires were busily transforming themselves into kings, unshackled from rules, morals or consequences:
Reflecting on this, the political scientist Henry Farrell notes that the most vocal defenders of billionaireism – the Musks and Thiels of the world – never made a secret of their desire to become kings and insulate themselves from markets and discipline of every kind, and they've grown brazen. Musk makes social media posts deploring the very idea of elections, agreeing with the idea that only "makers" should be allowed to vote and that "takers" should not, because "universal suffrage leads to universal suffering":
As for Thiel, he has long openly advocated the idea that there exists among us a latent aristocracy who do not need the discipline of markets to keep them from lapsing into folly or self-dealing. These people – born to found tech startups and to rule – are nonconformists who, in Thiel's writing, are "the most important" and "should be let off the hook":
Thiel makes no bones about his idea that people who have the right stuff should be exempted from any constraint. He writes "capitalism and competition are opposites." Rather than compete, Thiel says the true entrepreneur should seek to establish a monopoly, because "Monopolists can afford to think about things other than making money; non-monopolists can’t…Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits."
It's not that Thiel opposes constraints per se – he clearly thinks that most of us should operate under constraints – constraints that are dreamed up and enforced by people like him. Those people are born to rule: they emerged from a lucky orifice, in possession of lucky genes. How can we tell they were born to rule? Because they're ruling. If they weren't born to rule, they wouldn't be in a position to rule. As ever, a syllogism solves all our ideological and existential problems.
Thiel lives in what Naomi Klein would call "the mirror world." While counterculturists have long celebrated misfits and communities of nonconformists, they were invested in the idea of a space protected from power, where weirdos could let their freak flags fly:
But Thiel's version of this is to celebrate the "nonconformists" whose heterodox belief is that labor, privacy, finance and consumer protection laws shouldn't apply to them. He wants to protect those people so they can wield power. They should form "mafias" (like the "Paypal mafia") not solidaristic affinity groups. As Farrell writes:
Entrepreneurial risk taking can be awesome; weird people are often more likely to be original; densely linked communities have many advantages. Furthermore, I would guess that none of these factors was sufficient on its own to precipitate the madness of princes that we see today. It is perfectly possible that they would have worked together in much more benign ways under different external circumstances. But we are in the world we’re in: one where the boundless appetites and irrationalities of a small number of billionaires seem increasingly incompatible with the need to maintain a stable civil society.
A new would-be aristocracy was always the visible trajectory of these guys. The only people who couldn't see it were the think-tankies they funded to write papers explaining that their paymasters didn't need market discipline to keep them from sinking into folly or attempting to overthrow democracy.
Today, these Renfields clutch their pearls at the "demonization" of the ultra-rich, calling it "billionaire derangement syndrome." But the only "billionaire derangement syndrome" that matters is the syndrome that affects billionaires and convinces them that they are above any discipline or rules.
#15yrsago Privacy risks in collaborative filters https://blog.citp.princeton.edu/2011/05/24/you-might-also-privacy-risks-collaborative-filtering/
#15yrsago Tenn. state rep: “I carved my initials in my desk in the House, but I don’t understand why it’s news” https://web.archive.org/web/20110715202451/http://www.knoxnews.com/news/2011/jul/11/state-rep-hurley-admits-carving-initials-house-flo/
#15yrsago Who holds the copyright to a picture taken by a monkey? https://www.techdirt.com/2011/07/13/can-we-subpoena-monkey-why-monkey-self-portraits-are-likely-public-domain/
#15yrsago Organization for Security and Co-operation in Europe slams Internet censorship, copyright disconnection https://web.archive.org/web/20121108080007/https://arstechnica.com/tech-policy/2011/07/yet-another-report-internet-disconnections-a-disproportionate-penalty/
#10yrsago Mississippi’s prison town are in danger of collapse, thanks to tiny reforms in the War on Drugs https://www.huffingtonpost.co.uk/entry/mississippi-jails-revenue_n_57100da1e4b06f35cb6f14e8
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
The theory of markets goes like this: even the best of us can fall prey to selfishness and rationalization, so let's arrange society so that people acting on their most selfish impulses end up producing benefit for all of us. That'll be easier and more reliable than convincing everyone to be more generous.
How do you arrange society so that selfishness produces public benefit? With markets. Faced with relentless competition, the most effective way to accumulate and retain wealth is by striving to make your wares cheaper and better. In a competitive labor market, we can secure fair treatment for workers without labor law or unions – bosses who treat their workers badly will lose them to better bosses. Just "align the incentives" and let markets do the rest.
This is an area where there's broad overlap between the left and the right. Chapter one of The Communist Manifesto is Marx and Engels' love letter to the incredible power of markets to improve everyone's material conditions by increasing production while lowering costs:
Meanwhile, over in Wealth of Nations, Adam Smith comes to the same conclusion:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
In other words: if you get the incentives right, then even the greediest baker will resist the temptation to fill his loaves with sawdust and gravel. The greedier he is, the more he'll strive to make his bread cheap and delicious, because that will let him sell as many loaves as possible, thus maximizing his own wealth.
It's not exactly horseshoe theory vindicated, but if you squint just right, you'll see both communists and capitalists agreeing on this one thing: if you want the bourgeoisie to bend its efforts to producing something that the rest of us can benefit from, you'll get further by appealing to their fear and greed than by trusting in their munificence.
This is how you can have both leftists and market true believers coming onto the same side on antitrust: they may not both exactly agree that the best way to run things is by appealing to capitalists' fear of being dethroned by a competitor, but they absolutely agree that the worst way to run things is to simply trust in capitalists' generosity.
They're right, of course. As Lina Khan likes to say, companies that are too big to fail become too big to jail, and thus too big to care. If you doubt it, consider this internal email sent by an Apple executive insisting that the company is wasting money by making iPhones that are too good, and counseling a corporate strategy of deliberate shittiness:
In looking at it with hindsight, I think going forward we need to set a stake in the ground for what features we think are 'good enough' for the consumer. I would argue we're already doing more than what would have been good enough. But we find it very hard to regress our product features YOY [year over year]." Existing features "would have been good enough today if we hadn't introduced [them] already," and "anything new and especially expensive needs to be rigorously challenged before it's allowed into the consumer phone.
https://www.justice.gov/d9/2024-06/423137.pdf
Policymakers can assume the profit motive, but they have to craft the conditions under which that motive is shaped by competitive anxiety to produce quality goods and services at a fair price.
Anyone who believes in markets must also tacitly believe that successful market participants don't believe in markets. They should understand that capitalists hate capitalism, that every pirate yearns to be an admiral. They should understand that capitalism's winners only defend disruption when they're the ones doing the disrupting. They should understand that profits are only good when you're a scrappy challenger, but once you've conquered the market, every capitalist seeks to become a feudal lord, converting profits to rents and insulating themselves from an exhausting life of constant competition:
The (smart) defenders of markets do understand this, but they face a dilemma. By definition, the benefactors with the most money and power to contribute to their think-tanks, university economics departments, conferences and publications are the rentiers – the billionaires who've shored up their fortunes with Warren Buffet's beloved "moats and walls." They're the blitzscaling billionaires who thrive on predatory acquisitions and high capital costs that prevent new market entrants from challenging their incumbency and its easy profits. They're the pirates who've become admirals.
As Upton Sinclair famously quipped, "It is difficult to get a man to understand something, when his salary depends on his not understanding it." When your right-wing, "pro-market" think-tank depends on the largesse of someone who made their money by capturing a market, capturing its regulators, and capturing its labor force, you need to tie yourself into some very weird knots to explain why your market advocacy shouldn't start with stripping your funders of their power, wealth and position.
This is pretty much the entire edifice of neoclassical economics. There's the "consumer welfare" theory of antitrust, that says that monopolies are efficient and insists that an inefficient monopoly would immediately tempt new competitors into the market who would compete away the monopolist's advantage:
"Consumer welfare" is a perfect apologetic because it contains a lurking syllogism: it holds that "inefficient monopolies" will always bring forth competitors who trash their margins, which means that any actual monopoly we see in the wild must be efficient. If it wasn't, it would have been competed out of existence by now. QED. This means that you can be a "pro-market" think-tank and take infinite money from monopolists without any contradiction: by definition, any monopolist with extra cash on hand to fund your PR blitz on its behalf must be efficient, otherwise it would have gone broke.
This is the structure of so many of economics' "empirical, scientific" theories that boil down to new ways of saying, "Actually, your boss is right."
Take "revealed preferences," the idea that people's actions are a better indicator of their preferences than the things they say they prefer. While this theory has a certain superficial plausibility, it can really only be embraced by people who have suffered the highly specific neurological injury you get by taking an economics degree: an injury that makes you incapable of perceiving or reasoning about power.
To fully embrace "revealed preferences" is to observe someone who has just sold their kidney to make rent and exclaim, "Look at this person with a revealed preference for only having one kidney":
Then there's the right's conception of regulatory capture. When you think of "regulatory capture," you might picture a company or sector that has grown so powerful that it can boss the government around, so that it can abuse you with impunity. But for a neoclassical, "regulatory capture" isn't the result of too much corporate power – it's the result of too much state power. If states have the ability to do real things (the theory goes), then capitalists will do everything they can to take over the state and use it to punish their competitors, so the only answer is to eliminate state capacity altogether:
And finally, there's "meritocracy," which is a way of dressing up the Puritans' concept of divine providence as a scientific theory about how society must work. Puritans insisted that their god reached down into the human realm to elevate the truly virtuous among us, and that this divine favor could be discerned in the way that wealth and power were distributed among us. The rich and powerful were god's "elect." You could tell this was true, because they were rich and powerful. The corollary is that the poor and downtrodden are disfavored by god, and must therefore lack some virtue that the rich and powerful possess.
This same syllogistic thinking underpins the economic doctrine of "meritocracy," which holds that markets are giant computers that process uncountable trillions of decisions we all make about what to buy and sell and at what price, seeking out the "correct" price for every commodity and also elevating the people who are best at allocating capital in ways that arrive at the best prices for the best goods. Just as a Puritan believes that wealth is evidence of virtue, a hewer to economic orthodoxy believes the meritocratic system graces the best among us, giving them control over our lives by allowing them to "allocate capital" to create or destroy jobs, or entire firms, or whole sectors of the economy. You can tell they're the right people to do be doing this because the market chose them – if they were bad capital allocators, they'd have gone broke by now. QED.
When capital allocators' kids end up allocating capital too, well, that just shows that "merit" is a heritable trait and the people who have it are born to rule over us. Meritocracy cashes out to a eugenic belief in royal blood and royal dynasties. We know King Arthur was suited to rule us because he pulled a sword out of a stone, and we know Bill Gates is suited to rule over us because he pulled a fortune out of an operating system:
Consumer welfare, revealed preferences, regulatory capture and meritocracy are just some of the ways that capitalism's alleged defenders cooked up to insist that they love the competitive discipline imposed by markets while being totally dependent on self-described capitalists who have utterly escaped from that discipline and have committed to doing everything in their power to prevent themselves from ever coming under any form of constraint.
These champions of "free markets" have spent decades defending policies like noncompetes, which makes it a crime for a fast-food worker to quit their job at Wendy's and take a job at the McDonald's across the street in order to get a $0.25/hour raise:
They defend anticircumvention laws that make it a literal felony for you to install someone else's app store on your phone or put someone else's ink in your printer:
They somehow believe that value arises when the best among us are forced to contend with the stark terror of losing everything to a competitor, but also that there is a group of people who are so perfect, so virtuous and brilliant that they do not need this kind of goad to prod them into action. Indeed, these genetic sports and generational talents are so amazing that to force them to sully themselves with grubby competition is to deny us all the fruits of their genius.
Who are these people? Why, they're billionaires of course. All billionaires: after all, if providence and the market's invisible hand has seen fit to bestow nine or more zeroes upon someone, that is an indicator of 10^9 times more virtue than someone with only a dollar to their name. But especially: intellectual billionaires, the kinds of "curious" billionaires who write books, give lectures, and (especially), make gigantic cash donations to think-tanks, university economics departments, conferences and journals.
Billionaires like Peter Thiel and Elon Musk, in other words.
These are the billionaires that capitalism's (alleged) defenders are caping for when they deplore "billionaire derangement syndrome," and fret that candidates for office now routinely cite enmity for billionaires in their campaign materials:
But as Tim O'Reilly writes, these billionaire-defending intellectuals always told us that markets would protect us from the madness of kings, by constraining the folly of the wealthy and powerful through the discipline of competition. Meanwhile, those billionaires were busily transforming themselves into kings, unshackled from rules, morals or consequences:
Reflecting on this, the political scientist Henry Farrell notes that the most vocal defenders of billionaireism – the Musks and Thiels of the world – never made a secret of their desire to become kings and insulate themselves from markets and discipline of every kind, and they've grown brazen. Musk makes social media posts deploring the very idea of elections, agreeing with the idea that only "makers" should be allowed to vote and that "takers" should not, because "universal suffrage leads to universal suffering":
As for Thiel, he has long openly advocated the idea that there exists among us a latent aristocracy who do not need the discipline of markets to keep them from lapsing into folly or self-dealing. These people – born to found tech startups and to rule – are nonconformists who, in Thiel's writing, are "the most important" and "should be let off the hook":
Thiel makes no bones about his idea that people who have the right stuff should be exempted from any constraint. He writes "capitalism and competition are opposites." Rather than compete, Thiel says the true entrepreneur should seek to establish a monopoly, because "Monopolists can afford to think about things other than making money; non-monopolists can’t…Only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits."
It's not that Thiel opposes constraints per se – he clearly thinks that most of us should operate under constraints – constraints that are dreamed up and enforced by people like him. Those people are born to rule: they emerged from a lucky orifice, in possession of lucky genes. How can we tell they were born to rule? Because they're ruling. If they weren't born to rule, they wouldn't be in a position to rule. As ever, a syllogism solves all our ideological and existential problems.
Thiel lives in what Naomi Klein would call "the mirror world." While counterculturists have long celebrated misfits and communities of nonconformists, they were invested in the idea of a space protected from power, where weirdos could let their freak flags fly:
But Thiel's version of this is to celebrate the "nonconformists" whose heterodox belief is that labor, privacy, finance and consumer protection laws shouldn't apply to them. He wants to protect those people so they can wield power. They should form "mafias" (like the "Paypal mafia") not solidaristic affinity groups. As Farrell writes:
Entrepreneurial risk taking can be awesome; weird people are often more likely to be original; densely linked communities have many advantages. Furthermore, I would guess that none of these factors was sufficient on its own to precipitate the madness of princes that we see today. It is perfectly possible that they would have worked together in much more benign ways under different external circumstances. But we are in the world we’re in: one where the boundless appetites and irrationalities of a small number of billionaires seem increasingly incompatible with the need to maintain a stable civil society.
A new would-be aristocracy was always the visible trajectory of these guys. The only people who couldn't see it were the think-tankies they funded to write papers explaining that their paymasters didn't need market discipline to keep them from sinking into folly or attempting to overthrow democracy.
Today, these Renfields clutch their pearls at the "demonization" of the ultra-rich, calling it "billionaire derangement syndrome." But the only "billionaire derangement syndrome" that matters is the syndrome that affects billionaires and convinces them that they are above any discipline or rules.
The Juggler, from J. J. Grandville’s Another World, 1844.
Read Patricia Mainardi on the unique work of the 19th-century illustrator now recognised as a major precursor and inspiration to the Surrealist movement: https://publicdomainreview.org/essay/grandville-visions-and-dreams
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