How to Outcompete Capitalism? 17


So you don’t like capitalism? Alright, what is capitalism then? No, no, really please, off the hip, what’s your razor sharp definition of capitalism? … It’s kind of tricky when you think about, isn’t it? Okay, let’s cut it down to its most basic component: capital. What is capital then? And no, you are not allowed to say money. Not sure then? Okay, what if we look at what capital does? No, not just a lot of evil stuff, what is the most basic mechanism of capital?

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Mind if I have a go at it? Alright, here’s my take on capital, it is:

Something that creates a positive feedback loop,
which changes social relations,
so that power is accumulated,
for the person or organization to which the feedback loop is linked.

So anything that makes you more powerful vis-à-vis others, and that can grow and expand itself by proper management, is capital. The positive feedback loop means that you tend to get more of it once you have a certain amount; it creates an advantage from which you can get more of the same or more of something similar.

It’s possible to add another dimension: Capital must have some kind of psychological lure or desirability. There must be something we can fetishize, something we can crave, possess, call our own, and/or be possessed by. Otherwise it won’t do anything and thus it cannot be capital.

That means this isn’t the only form of capital:

50cStunt

Money is a kind of capital yes, but not the definition of capital in itself.

Another form of capital is this:

Arnold

Sexual attractiveness and even good health is a form of capital. Remember, capital has the quality that one form of it can be exchanged for another. Being fit and beautiful can potentially give you a movie career and the social capital gained from that can sometimes even be exchanged for political capital – and, not least, a lot of money capital as well. It can also get you laid; in fact, pretty much all kinds of capital can get you laid. And erotic capital itself can likewise be exchanged for almost all other kinds of capital.

That means even this is a form of capital:

friends21

Having good friends and loving family relations is also a form of capital, so called social capital. The number of friends and contacts, and the quality of those relations, can give you many advantages; in fact, it’s almost impossible to accumulate other forms of capital without it. With social capital you can ask someone favors you otherwise would have paid for, for example make a good friend help you move; and if you have many friends and contacts other people are more inclined to want to know you simply because you know “everyone”. It also makes it more likely for you to get a good job; in fact, if you’re not capable of establishing that initial social capital at the job interview you probably won’t get it.

So just like having lots of money helps you get even more money (that’s the positive feedback loop), so does having a lot of friends help you get even more, and, these things can be exchanged for each other. Can’t buy friend you say? Well, why do rich people usually have a lot of people they call their friends, while bums on the street tend to be all alone? Capital attracts other capital, and if you have a lot of one kind it’s easier to get the other kinds you need.

So what other kinds are there? Historically, this has been the most important form of capital:

300

Organized violence, to be specific. Prior to the modern era the ones who controlled an army were usually also the ones who controlled the economy. By having a big army rulers and warlords could simply accumulate all other forms of capital by the sheer use of force, and often by the mere threat of it. Controlling a piece of land with an army could grant one additional land by conquest and thus further increase the size of one’s army by gaining even more soldiers and resources and so on (until they met someone else with an army to counter their force). This is the positive feedback loop. Organized violence could be exchanged for other forms of capital such as food, money, social status etc. – and who doesn’t want to be friends with the warrior chief himself!

History is not shy of telling us that organized violence has been the most fundamental form of capital throughout history – and with a modern phrasing, one with a very favorable exchange rate. So that’s what the past has looked like, before money capital ruled the world (as it does today). But, in the future, this form of capital will be king:

chuyen-ve-nghe-si-duong-pho-800x534

These people might look cute and harmless, but they are increasingly a force to be reckoned with. This is because they have large amounts of cultural capital. In the future this form of capital, not money capital, will be at the center of the economy. The ones who have large amount of cultural capital are able to exchange it at ever more favorable exchange rates; that means getting other forms of capital in large quantities for a smaller quantity of their precious cultural capital. But not only are such people getting well paid for their services; in virtue of their larger amounts of cultural capital they are better at getting and keeping the precious attention of others, more likely to be listened to. And their ability to gain the attention of others will make them increasingly more powerful in the future, to an extent that they will finally dominate the economy. But more on that later. This leads us to the next question.

“Our time and attention is more fundamental than money and work.”

What is Economy?

What is “economy”? Not just the economy. What does the term “economy” actually mean? And no, economy is not just about flows of money and material goods. What is economy essentially about? What is its most fundamental mechanism?

Work! you might reply, is what economy is all about. Well, it’s also about work, but since our present definition of the word tends to only cover those services exchanged for money it doesn’t quite cut it. For instance, just think about “house work”, put forth by many feminist scholars. This activity usually doesn’t involve the exchange of money and is mostly not considered economically relevant, but the domestic duties performed by women throughout history have been absolutely crucial for the functioning of society. Taking care of your children is usually not considered work, but if someone does it for money it suddenly becomes “real” work. However, it’s still the same activity; still the same economic task being performed.

Or think about sex. Not considered work right? Unless you prostitute yourself! Although the activity, per se, is still the same, but the exchange of money suddenly turns it into work. Is it work if I clean your house for free? Just because I like you? Or fuck you? Economically the same task has still been performed whether you pay me or not. The real output is the same, but it doesn’t get measured in monetary value and thus usually isn’t seen as an economical matter. You won’t find the work I put into helping my friend move in the GNP, but still a valuable task has been performed.

So if “economy” can’t merely be boiled down to money or work, what is it then?

Let’s look at the root of the word itself:

Economy (noun):
Borrowed from Latin oeconomia, from ancient Greek οἰκονομία meaning:
“management of a household, administration”
(οἶκος ‎(oîkos, “house”) + νόμος ‎(nómos, “law”) (surface analysis eco- +‎ -nomy).

In the Scandinavian languages there is actually a common word that roughly translates into “management of a household” or “to economize”: “hushålla”/”husholde”, literally “to hold house”.  It’s a verb, meaning that it’s something you do. But what is it, most fundamentally, that you do, when you are “holding house” or “economizing”?

Yes, it includes the management of limited assets, manufactured goods and natural resources and the work included in producing and distributing these things. But you’re managing something more fundamental than that, something that goes beyond the concrete work tasks and physical resources: namely, our most limited resource – time and attention.

Economy is about the management of our time and attention. Money and work are just abstractions and surface phenomena of these two much more fundamental aspects. Money is merely a crude measure of evaluating the worth of someone’s actions in relation to someone else, and what we see as “actual” work is merely a social construct, a convention and definition of what is considered to be actions creating economic value for others – in our day and age usually the kind of actions by which a monetary exchange takes place.

Our time and attention is more fundamental than money and work. It’s what is at the very core of the economy. For example, you reading this text and giving me your attention is an economic action. You could have done something else, but you chose to, you economized, those scarce resource (that is, your valuable time and attention) to read. In that regard all our actions are economic priorities. All of them. Taking a hike in the forest, talking to your neighbor or doing activism are all economic actions. You could have done something else.

Hence “economy”, or to “economize”, is all about behaviors and relations. It’s about the behaviors we spend our time doing and towards which relations we direct our attention.

So, this ain’t it:

Charlie-Sheen-as-Bud-Fox-in-Wall-Street

You won’t find the essence of economy from studying the wizardry of stock exchange brokers, bankers and other financial occupations that we’re so accustomed to. The economy runs much deeper than the numerical values presented by statistics on monetary exchanges.

A Crash Course in Economic History

With this short introduction I welcome you to a crash course in economic history: A tale of how different forms of capital have shaped our behaviors and how technological advances have turned the dynamics and mechanisms of the economy upside down.

If you already feel familiar with the history of the world, you can skip past it and go straight to the final point “What to do with Capitalism?” [Link]

The Agrarian Revolution

Let’s begin with the emergence of the “agrarian regime” which can be divided into two overarching steps of development.

Step one, the agricultural revolution per se: This initial step revolves around the management, investment and timing of the surplus energy of the natural world.

The novel invention of the agricultural revolution was the way in which humans began to deliberately extract, manage and alter naturally occurring resources by investing surplus resources in expectation of a greater yield the coming harvest. And people developed methods to time those measures so as to maximize its output or, with another word, to profit. In short, by refraining from consuming resources immediately and determining the optimal conduct for future yields, humans had developed a new way of production. Sounds familiar? Just wait.

But then a new problem arose. The denser societies and closer proximity to other, often competing, societies meant that conflicts became inevitable. Anthropological as well as archaeological investigations show that war seems to be endemic among horticultural (early agrarian) societies. Security, rather than mere survival, thus became the most critical concern. This circumstance paved the way for the next step of development.

Step two, the emergence of state-like structures or “civilizations”: Economically the second step revolves around the exploitation of a new energy source: that of human bodies.

The way in which human bodies can be seen as an exploitable energy source is obviously not that this measure of production had not been available prior to this turn in history (of course people had used their bodies to extract resources from the environment before). But because of the new circumstances that arose in large sedentary farming communities with steep social hierarchies other humans suddenly became “exploitable” for other purposes than their own – however, this was true only for particular agents who had the appropriate means to do so. That “means” was organized violence. And as the large agrarian societies managed to produce sufficient surplus resources to support full-time warriors, rulers secured their grip on power and acquired the measures to make people do what they wanted.

Slaves and other dependents were treated as human stores of energy, “living batteries” so to speak. And because humans are more efficient converters of food into energy than many animals (and can perform many tasks that the animals can’t) they were often more valuable. Human beings as an effective source of energy explains why slavery was so universally prevailing in the pre-modern world, just as the use of fossil fuels is in the modern; which further explains why fossil fuels eventually made slavery unfashionable.

Aided by organized violence, and since agriculture generated a considerable amount of surplus labor not preoccupied with food-production, rulers could use their authority to allocate the energy of other human beings to tasks that had been difficult, if not outright impossible, in the “foraging regime” – such as erecting large monumental buildings and the mass production of crafted goods. This surplus also made possible the growth of administrative, intellectual and religious endeavors. All these activities accumulated to an extent never seen before. In short, agriculture and organized violence fostered what has been termed “civilization”.

Then everything changed again.

“The logic of the capitalistic regime is one that is born from the abundant amount of organized violence”

The “Capitalist” Revolution

Whereas organized violence was the primary capital to organize society in the agrarian regime, modernity has money capital as its primary means to manage the collective actions of humans. With the what we usually call the “capitalist” revolution, controlling a big army was no longer the most crucial measure of power.  When the descendants of the medieval merchants started to control huge amounts of money they could muster larger armies and weapons than the old landed elite – not least by entering alliances with the kings. The logic of organized violence became subordinated to the logic of money capital. The masters of the world were no longer the aristocratic knights in shining armor, but the accountants and savvy merchants in humble suits. By managing the surplus energy of human labor and carefully investing and re-investing human labor for productive uses, they could accumulate larger amounts of resources and power than any warrior by means of plunder alone. And when this was coupled with newly discovered methods to exploit the energy of millions of years of stored sun power in the form of underground fossil fuels: Boom! A new age dawned, and we saw the beginnings of the society we have today. With modernity the hard logic of one regime was finally supplemented by another.

The “agrarian regime” had supplemented the “foraging regime”. Now the agrarian regime was supplemented by the capitalist-industrial regime. And Britannia ruled the waves, as the first truly emerging capitalist power. Those who commanded the greatest capital also commanded the greatest military power. Eventually, nations began to compete less by means of warfare and more by means of economic growth.

So let’s return to the initial question. What is capitalism?

Well, capitalism is simply the management of human surplus by means of money capital.

(Note that the terms used here: what we usually think of as “capital” is money capital and that has, by tradition, given us the name conventional name for “capitalism” – which is when money capital govern our lives. But our everyday lives can be governed by other forces as well, by “other capitals”, and under such circumstances, we wouldn’t call it “capitalism”.)

Like the agrarian regime, the modern (money) capitalist industrial one also developed in two steps.

Step one, the emergence of capitalism: This initial step revolves around the management, investment and timing of the surplus energy of the human world.

Investing the surplus of human labor in new productive measures is basically the core of capitalism; and that goes whether it is the state or a private entrepreneur who does it. (This means that Soviet communism wasn’t less “capitalist” than its counterpart in the West, hence it has often been termed “state capitalism”.)

We need to note that this was something entirely new. The agrarian regime did not manage to invest the surplus of human labor in productive measures, but merely exploited what was currently available through plunder or taxation (which is often more or less the same). If anyone (usually kings) had money they did not use (that is, essentially, surplus labor), it got locked away in treasure chests. And when it got used, it usually was not invested in new productive measures, but spent on luxury items or to build big castles or pyramids; it basically went to waste­ – according to the capitalist logic. But when the Dutch during the 17th century managed to pool their resources, and the risk, into companies (the first of their kind), they created social machines with delicate mechanisms to generate increased economic growth by careful management and investment of surplus capital into productive measures. Money in a mattress doesn’t do anything, but money in a company does tremendous things.

So what made this development possible?

Well, because organized violence became so abundant, so total through the early modern state’s monopoly on violence, focus shifted from violence to money – from one hard logic to another (somewhat less hard) logic. Because when you have enough security (to a certain extent), and the state’s monopoly on violence secures one’s property, the game changes completely and the exchange of property by means of money moves to the center of the economy (which used to be more or less moneyless).

Remember that, before the modern state, rulers could just confiscate your property, and there were no police to defend you from robbers either. If you did not have a warrior to protect you it was “game over” – and warriors are usually not very concerned with respecting other people’s property. That makes security the main concern, and organized violence the primary capital to acquire it. But when violence is abundant, exactly because there is so much of it – or to be more exact the amount of organized violence is so total – then it ceases to be an issue to the people living under the state’s monopoly on violence, and then property becomes the main concern instead of security (which is obtained through that monopoly). And the means to get property, is money.

So to sum up: The dominant logic in the agrarian age was a quest for security where the effective management of organized violence was the crucial ingredient. The logic of the capitalistic regime is one that is born from the abundant amount of organized violence, the state’s monopoly on violence, which reshapes the main quest into one of property instead. And the effective management of money capital thus becomes the crucial ingredient in this endeavor.

The Rulers who merely invested their surplus into great building projects, such as pyramids and cathedrals, with no apparent utility (according to a capitalist logic) – or spend it on bling-bling – would eventually lose out to the capitalists. But those rulers who most efficiently allied themselves with the champions of capital became the most powerful persons in the world, in effect out-competing those who failed to do so.

Money capital began to dominate the earlier “capital” of organized violence.

And then, a new discovery made further developments possible.

Step two, the industrial revolution: The second step largely revolves around the exploitation of a new energy source, that of fossil fuels.

While following a similar development of first finding new ways of managing surplus energy, and then discovering a new energy source, modernity reversed the two-step developmental sequence of the agrarian regime by addressing human aspects first and natural ones second. The agrarian age revolutionized, as mentioned, productive measures by: 1) the management, investment and timing of the natural world and its surplus energy; and 2) by exploiting a new energy source, that of human bodies. Modernity, however, revolutionized the economy by: 1) managing the surplus energy of the human world, and 2) by exploiting a new natural energy source, that of fossil fuels.

Capitalism and industrialism generated progress and material growth to an extent never seen before. Prior to this turn growth was too slow and sluggish for people to even notice it, but now it became obvious that things were changing rapidly during one’s own lifetime. This made thinkers speculate about the notion of development, further fueling the idea that the future could be very different from the past, perhaps even better. The idea of progress was a mental and cultural revolution. Pre-modern peoples are usually not aware of the possibility of technological and scientific progress, and only barely of economic growth for that matter. This constitutes a huge difference between the modern and the pre-modern mind, and one to widen the gap between those still stuck in the old mindset and those who embraced the brave new world of modernity.

This way of thinking also had great political consequences. If the economic and technological base of society could change, maybe even society itself could be different; and not only in the distant future, but soon, and not only in the next life, but this one. And off went the king’s head.

Just like the agricultural revolution was not just about putting seeds in the ground and breeding livestock, the industrial revolution was not just about steam engines and fossil fuels, but about the way in which the whole thing was organized; how the entirety of society was to be reorganized around these new modes of production and how power relations accordingly were to be changed. As the capitalists seized the economic power they also demanded political power, and if the people were to work in factories and learn how to read and write they likewise demanded representation to secure their interests.

Let’s take a brief look at the two, two-step models again:

THE AGRARIAN REGIME

  • Step one: Management of the natural world and its surplus energy, investment and timing of it (Agrarian revolution).
  • Step two: Exploitation of a new energy source, human bodies (The emergence of civilization).


THE INDUSTRIAL CAPITALIST REGIME

  • Step one: Management of the human world, investment, coordination and timing of its surplus energy (The emergence of capitalism).
  • Step two: Exploitation of a new energy source, fossil fuels (Industrial revolution).

We see that the structure and sequential logic of these two developmental models resemble each other and are rather symmetrical. First humans learn to manage the surplus energy of an existing resource, then they discover how to exploit a new energy source. Yet, there is also a qualitative progression: In the agrarian regime the main concern is security and the primary “capital” to achieve that is organized violence, but when the early modern state finally acquires a firm monopoly on violence, the main concern moves towards property and the primary capital to acquire that becomes money.

Outcompete1

However, that’s not all. Capitalism relies on delicate measures of handling information. And with the invention of the printing press information got much cheaper and abundant. With widely available printed accounts of trading opportunities, commodity prices and exotic tales from faraway lands, merchants could more effectively estimate the profitability of their activities and thus increase the economic growth in their home countries. The printing press also gave rise to the scientific revolution, and with time thus even further economic growth – but that’s a whole other story.

The industrial economy also created an entirely new class structure. The managers of money capital, the so called capitalists, moved to the top of the new social hierarchy, pushing the old landed elite aside, and at the bottom a new class of industrial workers emerged, the proletariat, those without property. A bourgeois middle class also emerged, striving towards becoming capitalists themselves while fervently avoiding to become proletarians. Even though the initial emergence of capitalism caused slavery to increase, industrialism eventually abolished this practice. Slaves were no longer needed as it turned out people on the brink of starvation made less loyal workers (remember, you need to feed your slaves), and the possibility of becoming a capitalist yourself made the growing petty bourgeoisie industrious and loyal to the new regime.

Let’s compare the two in a bit more detail.

Outcompete2

Note that I have called the era preceding modernity the “faustian” era, or metameme; derived from the story of Goethe’s Faust who exchanged his soul for power – which was exactly what humanity did at the advent of civilization. You can read more about this in my books.

Transitional Eras

But something is missing. The transition between the two was not a sudden event, but a more gradual with long transition periods.

“The economic engine of society still relied upon agriculture and the only way to govern an agrarian society was with a firm monopoly on violence in the hands of a small privileged elite.”

The Axial Age

Before the emergence of capitalism the agrarian regime was profoundly changed by the intellectual developments that began in the so called “Axial Age” c. 500 BCE, which introduced ethics and spiritual traditions – all conveyed through literary masterpieces. The philosophy of the Greeks, Confucius’ writings in China, Buddhism and the Judaic tradition, which later evolved into Christianity and Islam, changed how we thought about the world, life and how we should organize society. And it all became possible with the invention of a new information technology, something more than just writing, namely literature.

Combined with the state’s ever firmer monopoly on violence, growing wealth and increased literacy in a wider proportion of the populace, new dangerous ideas started to emerge as both political and intellectual challengers from the periphery began to erode the existing base of power – rebels like Jesus of Nazareth and the Buddha emerged. The old myths and the political legitimacy of the established political order were scrutinized from a more critical point of view, while novel ways were sought to address the dire needs of all the forgotten souls of the empire and the hardships of life in agrarian civilization. The old myths didn’t satisfy the emotional and spiritual needs of people any more, the divine sun king didn’t appear as morally legitimate any longer and new radical solutions were needed to meet the growing social unrest and discontentment with the political elite’s oppression and mistreatment of people. For all the progress we had made life shouldn’t be this hard and unjust, but what could be the remedy? Sounds familiar? Just wait.

But, what started as a revolt against the establishment was eventually adopted by the empires themselves to provide them with the necessary moral legitimacy, and the rebels themselves gradually became part of the new established order (seen that before). A new bargain was made, replacing the “faustian” one, as rulers ultimately agreed to subject themselves to a new moral order in exchange of staying in charge. They relinquished their claim to divine exclusiveness and accepted the role of merely being the divine’s mediators and foremost representatives on Earth (Evident in for example the Chinese idea of the Mandate of Heaven.) With the invention of divine law rulers had to govern in accordance with higher moral principles not even they stood above, and they only upheld their political legitimacy as long as they did so. And with the invention of the idea of “the soul” not only the elites were considered to have heavenly qualities; now everybody had a piece of inviolable divinity within them. An agreement was reached that rulers retained their higher status within the realms of the earthly mundane, but in heaven everybody was on a more equal footing.

This development also created a new class structure. The clergy became a political force to be reckoned with, unlike the simple scribes and ceremonial leaders (who were often the rulers themselves), of the previous era. And since rulers couldn’t rule without the blessings of God (or other divine principles), they had to act like noble Kings and uphold certain principles. Being a tyrant or despot wasn’t good enough anymore. Likewise, artisans and merchants, growing in numbers, became a group with distinct interests and ideas of their own. And to some extent even slavery was dismantled – but only to the extent that you couldn’t enslave people of your own faith (and later, among Europeans, your own skin color, but that’s another story).

But demands for social justice and the moral legitimacy of those in power were not the only issues; the way in which people were to treat one another was a great concern too. The brutish and nasty ways in which people often treated each other in agrarian society needed to change. The cruelty had to stop. Moral teachings of pro-social behavior were developed and preachers encouraged people to let go of their immediate self-interest in furtherance of the greater good, often with the promise of eternal bliss in the afterlife if they complied.

However, as we know, the critics of the faustian agrarian regime only partly succeeded in creating a fair society. They rarely – or never – achieved the divine state they preached about. But many brutal customs were abandoned and behaviors that previously had been commonly accepted as part of everyday life were now frowned upon. Pious attitudes and behaviors were rewarded and rulers could not behave as arbitrarily as before. Society became a little bit more humane, and many people acquired higher things to believe in and higher principles to strive towards.

But the productive “engine” of society wasn’t replaced by these social and moral developments. The economic engine of society still relied upon agriculture and the only way to govern an agrarian society was with a firm monopoly on violence in the hands of a small privileged elite. So even if the new spiritual and ethical traditions tried to change the prevailing power relations, they only managed to a limited extent. So on one hand society was equipped with a new cultural and moral superstructure on top of its agrarian engine – permeating more or less every aspect of society. But on the other hand, given the still relatively brutal and oppressive circumstances of the agrarian era, its ethical properties may appear as nothing but a superficial veneer. It does sound familiar, doesn’t it? Well here goes:

“…postmodernity does not really have any means to replace the logic of capitalism – nothing to replace the regime of hard, cold cash, that is.”

Postmodernity

Now, let’s move to the postmodern era. That is today! Mass media and a literate public have changed modern, capitalist society just like literature changed agrarian society. It has increased awareness and critical thinking, new ideologies to have “faith” in have appeared, but it hasn’t replaced the productive engine of capitalism.

Postmodernity is a cultural, transitional, phase – just like the one that began with the Axial Age that I have given the name “postfaustian” (with the addition of the “post”-prefix it has been my intention to stress the similarity). Such phases tend to revolve around new standards of ethics and notions of equality to counter the elitist and exploitive tendencies of the established regime. And in that regard postfaustianism did succeed, to some extent, by providing marginalized groups certain rights and powers they did not have within the faustian regime. The great project of these “post-”stages can be said to be one of equalizing power relations and redistributing authority in accordance with new moral guidelines. They also tend to make societies a little “smarter” by emphasizing intellectual developments, and socially more efficient and robust by cultivating more benign social relations and encouraging spiritual growth.

Postmodernity emerged, just like its postfaustian predecessor, from the ethical shortcomings of the established regime. As soon as modern capitalist society matured into its early industrial form, the critics followed. At first, these were a few individuals – intellectuals, artists and even mystics. But in time, the many springs gathered and grew into a flood: the young Marx’s romantic death sentence to capitalism, major philosophical schools – like existentialism and phenomenology – that sought to emphasize the spiritual and existential sides of life, and finally full-blown student revolts in Paris and on US campuses in 1968. And lately, mainstream culture has itself become critical of modern society, not least thanks to electronic mass media.

Postmodernity is a reaction against the perceived superficial and soulless rationality of modernity and the many injustices modern capitalism entails despite its promises. Initially the modern worldview was criticized, by the movement known as Romanticism, for not sufficiently capturing the manifold beauties of human life and for not providing meaningful spiritual experiences. With time the criticism advanced to a point where modernity’s pursuit of knowledge and progress was claimed to be illusory and shallow, and the prevalence of illegitimate totalitarian principles embedded in its ideas of “progress” and “rationality”. The postmodern thinkers and intellectuals labor to expose these hidden power structures and to challenge them. According to these critics the modern approach had been one-dimensional and failed in its task of enlightenment and emancipation. And as an alternative a wide range of new equally valid perspectives have been offered along new approaches to science, art and philosophy.

So as with its postfaustian predecessor, postmodernity also has its righteous rebels and affiliated “churches” such as queer-feminism, post-colonialism and environmental protectionism. These rebels can be said to constitute a new “priesthood”, also known as the inherently postmodern invention of the “intellectual”, who’s mission it is to discipline and correct those unfortunate enough to subscribe to the dated ethics of the past. Despite being a minority, “pomos”, in virtue of often higher levels of education, but also since their arguments conceptually beat modern (and traditional postfaustian) arguments at their own game, have managed to change public discourse in favor of postmodern values to a considerable degree.

The result of this is that modernists and postfaustians often pretend to conform to the postmodern ideology. Postmodern arguments on ethics are conceptually simply superior, and most people at least want to pretend that they subscribe to it. No one wants to be a racist, or a sexist, and who can argue against the fact that the environment is important. But in reality, many in late modern society are merely paying lip service to the ethical code of postmodernity. This phenomenon does deserve comparison with the pious pretentiousness associated with the traditional, postfaustian religions.

But despite the priestly characteristics of its disciples postmodernity is actually more secular than modernity. Jean-François Lyotard wrote in 1979 that “[s]implifying to the extreme, I define postmodern as incredulity towards metanarratives, by which he meant all teleological narratives that guide or structure explanations of social reality. This has had the effect that many of our beliefs have been brought into question, critically deconstructed as nothing but beliefs, “mythologies” relying on faith, including all of the grand ideologies such as liberalism, communism and socialism. Democracy and capitalism have likewise been critically examined and deemed to be little more than naive beliefs. Even an idea such as scientific objectivity has been proclaimed to be just another myth, and our notions about gender as a biological constant have been exposed to be culturally and socially derived conventions. In light of the rampant ecological destruction and the unequal distribution of its spoils, the modern idea of progress has also been harshly criticized and exposed as a harmful myth. But the foremost mythologies to have been brought to the slaughter are perhaps those from which power and authority are derived. Postmodernity is inherently hostile towards all authorities and social hierarchies and has as its central objective to reveal all the injustice and oppression and the arbitrary narratives on which it all relies.

The above mentioned postmodern philosopher Lyotard also once wrote that postmodernism is …the consequence of capital and informational flows that have moved beyond political or instrumental control.” Citizens of late modern societies are often wealthy enough, have the sufficient educational level and adequate access to information technologies, so as to defy the center of political and economic control. Again we see the equalizing tendency of a transitional stage of development in action. And just like the societal developments in late faustian societies allowed for challengers to arise from the peripheries of the center of power, so does the technological complexity and level of wealth in late modern society generate opponents from the margins to counter the accumulation of power and wealth by the elites today. And just like their postfaustian predecessors, these pomos likewise seek to redistribute wealth and power in accordance with new moral standards. By criticizing modern capitalism their goal is to alter the rules by which power relations play out.

But just like postfaustianism, postmodernity does not have any groundbreaking suggestions for how the logic of the productive regime can be fundamentally changed. Although this is a contested claim, I would argue that postmodernity does not really have any means to replace the logic of capitalism – nothing to replace the regime of hard, cold cash, that is.

So even if postmodern thinkers have suggestions to democratize power over capital, it is still money, and as such still the engine of money capitalism that runs society and the economy as a whole. And as long as money is the logic by which the economy runs (paying people to work and so on), it is, by definition, still capitalism – and as such, a logic inherently alien to the many social and emotional aspects postmodernity seeks to address.

Postmodernity wants to change the principles on which money and property are distributed in society, but still runs on the very same logic of – you guessed it – money and property. A hard logic is still lacking for generating a new engine of production. And as this fact has become increasingly more obvious since the end of the Cold War and the fall of socialism, postmodernity has consequently become more prone to sarcasm and cynicism, merely mocking its modern opponents and using its cultural and ethical superiority to position itself favorably within the current system. It appears as if postmodernity, now in its mature form, has moved to a point which equals its postfaustian predecessors at the later stage following the initial revolutionary era of the Axial Age: a condition where worldly matters are largely left to the ruling structures of the productive regime while settling for influence over the moral and cultural sphere.

Postmodernism is currently – and rapidly – constructing an entirely new cultural superstructure on top of the modern, capitalistic engine of production. Still, this superstructure is one that can be said to be merely a veneer around the capitalist engine, just like that of its postfaustian predecessor.

Postmodernity has made life a little more humane. Tolerance of ethnic and sexual minorities has improved, gender relations are not as rigid and oppressive as before and measures have been taken to save the environment. And where modernity – inhibited by the logic of its national ethnocentrism – failed in creating a larger circle of solidarity encompassing all people, in all nations, postmodernity is currently succeeding in producing “world-citizens” with multiculturalist values and global perspectives. So just like the postfaustian traditions managed to create great civilizational world-religions, incorporating people of many different creeds and cultures within the same mythological imagined community, postmodernity is currently narrating the tale of one world and one humanity.

Here is a presentation including the transition eras.

Outcompete3

As you see, we are right in the middle of a transition period. The engine of our economy is still industrial capitalism, and the main concern of society, which pretty much all of our institutions are designed for, revolves around property – which is acquired with the means of money capital.

However, some elements are different from the capitalist society described by Marx in the 19th century, most notably the class structure. Instead of the traditional division into proletarians and bourgeoisie (which I have divided into capitalists and middle class), the new class structure in late modern or postmodern society has been accompanied by the precariat and the creative class. The precariat is currently a growing demographic, consisting of people in a variety of “precarious” situations – who find it difficult to gain a foothold on the labor market. The precariat should not be confused with the working class and they don’t identify with the traditional organized working class, with its ties to the unions and labor parties. Often they have very different interests than the working class, not only because they don’t have the same ties to the labor market, but also because they often don’t have the same values and aspirations in life.

The creative class, the ones preoccupied with the manufacturing of new symbols and information, not merely the reproduction hereof, is also a growing group of people. Despite their sometimes relatively high incomes and on the surface white-collar occupation, they don’t fall into the same category as the traditional, bourgeois middle class because their values are usually much more progressive. They tend to be exceedingly post-material and their interests are more aligned with emotional needs such as self-realization than with the typical property rights of the bourgeoisie.

So what do I want to say with all of this?

Well, the capitalist society we live in today is very different from the one described by Marx in the 19th century. It still runs on the productive engine of industrial capitalism – but there are differences. Postmodern philosophies, inherently hostile towards the capitalist regime, have succeeded in changing public discourse and they have empowered oppositional groups. Electronic mass media have expanded and saturated our lives to a degree where they have come to play the defining role in how we perceive the world, also making way for marginalized and previously invisible groups to make their voices heard. Information technologies, AI and robotics have progressed to a level where more and more jobs are getting automated. Symbols, not manufactured goods, have moved to the center of the economy; whereby the growing emphasis on innovation and new signs and symbols has given rise to an emerging creative class and made those who master the symbols most competently the new masters of the world. And globalization has pushed the production of industrial goods to the margins of the world economy, leaving a growing precariat behind in the old industrial heartlands of the West. All of this has led to a version of modernity, a postmodern kind, where physical reality has become increasingly subordinated to the logic of the symbolic.

However, for all these changes, despite the huge differences between a modern and a postmodern society, and even if the economy on the surface level has moved far beyond its old industrial form of the steel and coal era, it’s still capitalism. The postmodern society, of which we have only seen the beginning, is going to change the way in which we think about reality, how we relate to others and even our level ethical conduct. It will change our culture in its image. But it won’t fundamentally change how capitalism works. It will never abolish capitalism despite the many passionate attempts. It would like to, but it simply cannot because it lacks the analytical means to do so. It can only develop a cultural, or ethical, superstructure on top of the existing capitalistic engine of production. This is what qualifies postmodernity as a transitional phase.

Luckily, postmodernity is not the end of history. In what almost appears as a “law” of history, every cultural and intellectual transition phase, such as postfaustianism and postmodernism is followed by a new productive logic (which couldn’t be provided by the “post-” paradigm due to its core ideology), that has the capacity to outcompete the productive logic of the preceding regime, which then renders the transitional paradigm largely irrelevant, only to be challenged by a new emergent transitional phase, and so on – until, who knows, the logic breaks down and gets replaced by a new law yet to be discovered.

“In the end, money capital outcompeted violence as the most effective means of coordinating people’s productive actions.”

What to do with Capitalism?

Postmodernism can’t abolish or replace capitalism because it doesn’t provide any means to compete with the logic of money capital. Even if we find ways to democratize power over capital, even if the use of capital is heavily regulated and even if we distribute capital more evenly, yes, even if we abolish the free market altogether and implement fixed prices and planned economics; it is still a form of capitalism since money remains the primary means of exchange and property (the question about who gets what); money is still the all-embracing issue the whole shebang revolves around.

It is a telling sign that all non-authoritarian socialists and anarchists have been intellectuals without political power. Their ideas have simply not been realizable. And this is also why all communist societies were state capitalist. As long as money remains the primary and dominant means of economic exchange and organization and as long as it is the one measure to which the value of most products and services are measured, l money be the logic by which the economy runs and we’ll continue to be subjects of capitalism. Unless you have another logic that beats money capital at its own game you cannot go beyond it.

So how can we abolish capitalism then? …you might ask. But that’s the pomo talking! The simple answer is that you can’t. You cannot remove capitalism altogether, just like you cannot remove the state’s monopoly on violence (without getting into trouble – and then you’ll return to status quo). Remember the history lesson above. The postfaustians tried to abolish all the wicked evil-doings of violent men, they tried to build a peaceful kingdom on Earth in the image of God by moralizing and turning the other cheek, and they all utterly failed! They didn’t have a competitive logic to replace the dominant capital of organized violence. But money capitalism never made way with the state’s organized violence, it didn’t even try. It did something else. In fact, it used the state’s monopoly on organized violence, abundant violence, to finally create a situation where security became such a minor issue that the quest for property with the means of money capital, rather than violence, came to dominate the economy. In the end, money capital outcompeted violence as the most effective means of coordinating people’s productive actions. It beat it at its own game by subordinating it to the logic of money.

Now, money is the logic and means by which people that don’t have personal relations of a loving kind exchange products and services – and that’s going to be with us for a long time. We’re not going to see a real communist society where everyone shares everything with each other as in a family any time soon. But, the exchange of product and services doesn’t need to be the most fundamental aspect of the economy. The acquisition of property doesn’t need to be the primary concern in people’s lives. In fact, for some lucky individuals it isn’t. And for many of us, a great deal of our everyday activities is not concerned with property.

This brings us to the next question.

“Only if you can reliably organize and coordinate the behaviors of millions of people by another logic than money, then will you have created a relation between humans that is non-capitalist.”

How Can we Outcompete Capitalism?

So, how can we do that? Think about it! Are there things out there we could do to outcompete capitalism? What about these things, for example?

  • Local grass root movements?
  • Protest marches?
  • Off grid communities?
  • Petitions?
  • NGO’s?
  • Community kitchens?

Hmm, you sure about this? I mean, these are all good things indeed, but they don’t exactly go beyond capitalism. Some of these things (like NGOs) even depend on the capitalist engine of production to provide them with the necessary resources to function. But it’s not just the dependency on money that is a problem. The main issue is that none of the above is capable of supplementing the logic of money with a higher, more competitive logic; hence they are all, ultimately, subordinated to the iron law of capital in the end. A crucial ingredient is missing.

Capitalism out-competed the old agrarian regime because it managed to make money capital more effective than violence capital, and in effect subordinated organized violence to the logic of hard, cold cash. So, what could be the means to outcompete the logic of money capital? Only if you can reliably organize and coordinate the behaviors of millions of people by another logic than money, then will you have created a relation between humans that is non-capitalist. But for that you’ll actually need another form of capital, and remember, there are many forms of capital out there so what could it be?

Now, it’s not so simple that some forms of capital are just superior to others. You can’t just pick the highest card in the stack and run with. It all depends on the context, and current situation. Remember, for money capital to become the dominant mechanism for managing people’s behaviors and relations, society first had to evolve to a very high level of development. So we need to look into the current developments and try to foresee the future.

“It is the ones who control, manage and create new symbols, the lords of information – not of property – who will become the most powerful ones in the future”

The Attention Economy

Postmodernity still runs on money and property, but the emergence of mass media has changed the game to some extent. People are better informed than ever and information has become extremely cheap. But recently a new media phenomenon appeared you might have heard of, the internet. Now, the internet is not just a further development of the electronic mass media of the 20th century, it is to the postmodern phenomenon of mass media what the printing press was to literature. I don’t want to sound like a cliché, but yes, it has revolutionized everything. But if you think it has truly changed our society now you haven’t seen anything yet. We’re just at the beginning.

The internet has substantially increased the amount of information, made it available to virtually everyone and lowered the price to almost zero. Together with AI, robotics and 3D printing it will soon dramatically reduce the price of material goods as well.

Now, before we move on I just need to add that just like agricultural products are just as crucial today as during the agrarian era (we all need to eat), manufactured products will remain just as important in the future. Without food, housing and all the products we surround us with our way of living obviously wouldn’t be possible. However, just like farmers lost their key economic role with the emergence of industrialism, so will industrial manufacturers lose their primacy in the future – and to some extent they already have. It is the ones who control, manage and create new symbols, the lords of information – not of property – who will become the most powerful ones in the future, simply because industrial goods will become so abundant and easy to manufacture and new symbols, information and ideas so much harder to produce and manage.

Will this mean a classless society where everybody can have their material needs met? Yes and no. Material gains will be much cheaper to acquire, and in such an economy political measures will more likely than not be sought to provide people with most of the things they need. We will see a political alliance between the growing creative class and the equally rapid growing precariat to make sure that happens. These groups are also characterized by their predominant “post materialist values”, not meaning that they are non-materialists, but that they strive towards something more than just material gains. For example, emotional needs such as self-esteem, peace of mind and self-realization become central – in short a meaningful, and happy, life beyond material acquisitions.

It will lead to a society where the old property-based upper-class will lose out to the creative class, first economically and later politically, and the old Left won’t be able to rely on the working class which will decrease in size on behalf of a precariat – a group whose interests are not equal to those of the working class.

However. The end result will not be a classless society. One class structure will just replace another. At the top of this new social hierarchy we’ll find the so called “netocrats” (a notion put forth by the philosopher Alexander Bard), the masters of the symbols and information, and at the bottom a class of people who merely consume what the netocrats produce, the consumtariat. Those who direct attention – and those who are left in the audience.

In this new economy the concern with physical property will decrease because of the abundance, and the means to acquire it, money, will thus decrease in importance, especially among the ruling netocrat elite more preoccupied with all the things money can’t buy. Money will thus lose some its power over people; it won’t motivate them as much since other concerns than property are perceived more desirable, and money capital won’t be able to manage people behaviors to the same extent as before, that is, make them do what money used to make them do.

When people’s material needs are met it’s not more money they are after, but emotional needs such as good relations, self-esteem and self-realization. And for that you need attention, you want people’s recognition – and when working with information or symbols, as more people are doing, one’s work is essentially worthless without other people paying attention to you.

This will be a fierce battle with proud winners and sore losers. Since symbols can be reproduced infinitely, only the best will have an audience.

And remember, by creating the symbols everyone desires, you can exchange that for money – if that’s what you want after all. One form of dominant capital can always be exchanged for another, subordinated, form of capital at a very favorable exchange rate.

“…emotional energy is essentially what we have been seeking the entire time.”

Emotional Energy

So what is the main concern in the attention economy? What is the prime quest, the stuff everybody is after in an economy where property has become of secondary importance?

Emotional energy! It’s the stuff everyone basically wants, all the time. Positive feelings, right? And, of course, avoiding negative ones.

Both violence and money produce emotional responses; in fact, that’s actually the most fundamental feature of these measures: point a gun at someone’s face and you produce an emotional response that alters that person’s behavior. The mechanism of the stick. The same goes for money, wave a stack of money bills in front of someone and you might produce an emotional response that make that person do what you want. The mechanism of the carrot that beats the power of the stick.

But emotional energy is essentially what we have been seeking the entire time. Not the money or the gun itself. With the proper use of symbols one can actually make someone do what you want them to do with a will and desire that guns and money can’t compete with. People might alter their behaviors because they are scared of your gun, or because they need money to pay their bills, but getting them excited and wanting to do the best they can requires more delicate measures. And if they aren’t scared or have enough money to pay their bills, being able to master such symbols is much more powerful. And who cares about someone offering you a carrot if you just ate.

You think I’m kidding? Well, just look at the feverish eager of young activists who decide on joining some cause or the other instead of earning more money. Or people paying good money to stand and scream at someone performing a music piece. The church has actually known about this mechanism for a while, but has recently lost some of its competitive edge in generating high level of emotional energy. And by the way, why are you still reading this piece, it’s pretty long, and you are not getting paid? Some exciting symbols made you keep reading this text because it causes some amount of emotional energy.

But wait, if emotional energy is the main concern in the attention economy, what would then be the new dominant means of capital to acquire it? The form of capital destined to outcompete money capital?

“when property becomes so abundant that it ceases to be the main concern, emotional energy moves to the center of the stage and the means to acquire it, and to create it, thus becomes cultural capital.”

Cultural Capital

Cultural capital is the stuff that’s going to outcompete money capital. So what is it then? Well, it’s the form of capital that makes me capable of writing – and reading – this post; it’s the capacity to create a song everyone wants to listen to; the game everyone wants to play; it’s knowing the stuff everyone wants to know; and it’s the capacity to come up with the new facebook or twitter, inventing a flying car and all the ideas in the heads of scientists that make them capable of doing their jobs. Cultural capital is basically the mastery of symbols. And if you have high enough cultural capital you might even create new high-value symbols.

In the new emerging economy that makes the ones with high cultural capital increasingly powerful over the ones who only have money capital because the exchange rate of money will decrease while that of cultural capital goes up. And in the era of the internet the ones with high cultural capital don’t really need anything else but a cheap laptop with an internet connection to do their work. They don’t need a lot of money to get started, buying land or building a factory. And what you do with that laptop if you have high cultural capital can be exchanged for money capital, often at a generous exchange rate – if that’s what you desire.

And just as importantly, cultural capital can also be exchanged for political, social and other kinds of capital. And it can get you laid. By having access to large amounts of cultural capital you can win against those who only have only have money, and eventually someday become even richer than them.

To sum up: In the agrarian regime the main concern was security and the most effective form of capital to achieve that was organized violence. But as the amount of organized violence became so abundant with the early modern state’s monopoly on violence, the main concern instead moved towards property and the capital to acquire it thus became money. Now, when property becomes so abundant that it ceases to be the main concern, emotional energy moves to the center of the stage and the means to acquire it, and to create it, thus becomes cultural capital.

But what’s not abundant in the new economy is attention. Emotional energy is difficult to quantify, but attention is actually a more quantifiable asset that can be economized if we think about it: the time and intensity with which direct our attention can be measured. As all scarce resources in the past, attention is actually likely to hit the political agenda in the future. Some might even talk about creating a more “listening society”, for instance (wink, wink).

Attention is often needed to generate emotional energy; people need to be seen, they want to be heard, they want someone to care about them. But in order to get attention beyond a smaller circle, one needs to have some amount of cultural capital, you need something of interest to other people, a reason for them to listen to you – otherwise they don’t get any emotional energy from you, it’ll be uneconomical to pay attention to you.

Material wealth is actually not the greatest concern in the most developed nations today. It seems as though, as pointed out by the philosopher and sociologist Jürgen Habermas, that in late modern society, the main concern is actually lack of “motivation” – that is, of emotional energy. To make people do all the good things we want and need them to do, if money doesn’t motivate them, we need something else to foster the needed emotional energy. In this situation the ones who’ll be able to create that emotional energy will be the next rulers, they’ll acquire the political as well as the economic power.

Here is the final table with all of the above developments included:

Outcompete4

“The only thing that can replace capitalism is something that beats it at its own game”

What the Hell are You Talking About?

…you might think. I know. You might say that “it’s not very concrete, is it? After all, money makes the world go round, and the material economic hard facts of life are essentially what counts in the end.” Well, the capitalistic economy with money was actually a very subtle and delicate matter in the minds of most people 250 years ago. Back then you might have replied that “it’s not very concrete what the accountants and merchants are doing, is it?  No way these abstract numbers and arbitrary values far from concrete reality could become the dominant forces of society. What really matters is the concrete sword of the king, yes?  After all, security counts more than anything else, and a good sword makes that more likely to happen than a stack of papers in your hand. Right? How could these wimpy figures who wouldn’t last one day in battle become the new kings?”

Well they did.

Simply because they were better at affecting the behaviors and relations of human beings. And in a future society where material gains, property, is so abundant that it ceases being the main concern, the ones who most effectively generate emotional energy by managing the cultural capital that make the new world go round, they, will be the new kings. God have mercy on their souls.

This won’t create a utopian society, one without struggle and competition. There will still be winners and losers. But it will be qualitatively different from a capitalist society, and it will be able to mend some of its greatest maladies. After all, being consumtariat and lacking the cherished positive attention of others is not fun – but it is a better place to start for creating a fair society, than is material poverty and being tied to wage labor.

In the internet age, the revolution of cultural capital can topple money capitalism and create a more free, fair and equal society – more than any of the socialist ideas ever could. But the promised utopia is still only a relative utopia. I say it’s still worth going for; because it will dramatically improve people’s lives. It will still be more fair and equal than what our friends the socialists have managed to offer.

The only thing that can replace capitalism is something that beats it at its own game, given the specific economic and technological circumstances. We cannot moralize it away or purify it away with the piety of our critical minds and the goodness of our hearts. That will only ever be veneer on the slick capitalist engine, still running society.

The way to outcompete capitalism is to politically strengthen the currents that draw us beyond it – towards a world ruled by cultural capital. And then we take it from there. We must the opportunities that these new forms of non-capitalist human life can offer to create a free and equal society.

Because these developments are underway whether we like it or not, we are wiser to shape them in the direction of equality and fairness than to play along with the regime of money capitalism. The risks are great – but so are, undeniably, the possibilities for radical social change.

Let’s not waste the opportunity.

-

Hanzi Freinacht is a political philosopher, historian and sociologist, author of the upcoming books ‘The Listening Society’, ‘Nordic Ideology’ and ‘The 6 Hidden Patterns of World History’. Much of his time is spent alone in the Swiss Alps. You can follow Hanzi on his facebook profile here.


17 thoughts on “How to Outcompete Capitalism?

  • Oliver Amorowosn

    I don’t see how this proposal transcends capitalism if the cultural capital is ultimately converted to money.
    Also, I’d like to see you weave in the theme of automation/singularity in to this narrative. In light of Ray Kurzweil updating his prediction for the technological singularity to 2029.

    • Hanzi Freinacht Post author

      It’s not that cultural capital is just ultimately converted into money, some of it might some of won’t and some of it will be converted into other forms of capital, but what’s crucial is that the logic of money will be submitted to that of cultural capital when emotional energy becomes more important than property.

      It doesn’t really matter about the singularity, as long as there’re still sentient beings (as in we haven’t been killed by Terminators) the logic will remain the same, in fact, our growing technological capabilities are destined to expedite the arrival of this new logic – and that of the next one, which no one really seems to have figured out.

    • William R. Stmson

      I think you’re onto something here. Interestingly, I’ve been working off and on over the many years on a science fiction novel of the future and some of your more advanced ideas are recognizable to me because of scenes I’ve developed in various versions of that ongoing work. Also, certain kinds of imaginative work I’ve done have also given rise to ideas not unlike your own. We don’t replace the old by tearing it down and putting something else in its place. e.g. Communism fighting Capitalism and forcibly displacing it, as happened in the Cuba where I lived as a child. That didn’t work. Leave that whole power structure and game intact. Instead start up something utterly new that will outgrow it, grow up alongside it, and in the end attend to what it didn’t and enable the development of what it didn’t. I especially like your new category “Precariat.” I’ve been a member of this for the better part of my life. Back when I lived in New York City I was surrounded by many others of that category. Living in Taiwan now it’s different. I find a clean schism between an older generation governed by money and a younger one governed by purpose. Here I’ve only come across a few would-be Precariats. But even they are usually defeated and have their lives re-directed by the ruling older generation’s value system. It’s not all so cut and dry. But your ideas definitely resonate with my own experience. I think you are right and wish you the best. Thanks for this piece. And, you are right. It is overly long.

    • Hanzi Freinacht Post author

      “When Judas had eaten the bread, Satan entered into him. Then Jesus told him, “Hurry and do what you’re going to do.”

      – John 13:27

  • David Harold Chester

    It is necessary to define capitalism before wanting to eliminate or modifying it. Most people in economics think that capitalism includes landlordism too. However, after Adam Smith showed their different functions, John Bates Clark and others in about 1900, used this deliberately confusing combination to show that the theories of Henry George (“Progress and Poverty”, 1897 about how land-value speculators were ruining the economy and causing poverty to spread), to be nullified. Clark wrongly claimed that capitalists aparenty were also landlords as well. They are not, the two concepts and their roles in the social system are significantly different.

    When we appreciate this fact, we find that the process of business-management is also about land allocation (its use for productive activity by entrepreneurs and its speculative values when banks support its owners.) This happens when it is being withheld for gain, as the tax money collected by local authorities and government is being partly used to improve the infrastructure. This activity makes the land more useful and valuable. It provides a source for immoral and unjust speculative gain. Consequently George’s way of separating these two kinds of activities and eliminating the unjust way that land-values are being speculated in will achieve the aim of bringing capitalism into its correct focus. When the benefit from land values is shared by taxing it instead of allowing the landlords to enjoy what they have not earned, then we will be on the way to appreciating the proper role that each of these two entities play.

  • Anders Nilsson

    It’s not complicated at all, and there is a rather strong consensus regardless of how impressed you are of it: Capitalism is an economic system based on private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, and competitive markets. In a capitalist market economy, decision-making and investment are determined by the owners of the factors of production in financial and capital markets, and prices and the distribution of goods are mainly determined by competition in the market.
    It’s rare in real societies, but most western countries is getting closer to it. And the closer they get the more dysfunctional they become. One rather true/neoliberal version might be Soviet unions after it’s breakdown 1991.
    The less under some kind of democratic/common control, the more capitalistic.

  • David Harold Chester

    Anders, by private property I suppose you include land. Land is not capital on a person owning some is know as a landlord and not as a capitalist. The reason for this division is because of the way that changes occur in our social system, which causes these two role-playing entities to behave differently.

  • Alejandro Alvarez

    It was a rewarding lecture, totally worth of my attention. It catched my attention because I have been thinking on similar ideas but centered in product design; since materials such as plastic can last for generations and trowing them away causes pollution and many people lack basic things, why keeping up this vicious cycle? I think changing the system for one were things are meant to be used forever and produced just once resonates with an Attention Economy. I will develop further my idea. Thanks for feeding it!

  • Maria Ku

    A very inspiring article. It would be interesting to read more examples on how the new concept “will dramatically improve people’s lives”.
    It seems to me that “soul selling” will continue to take place. There will be creative people – netocrats? – who actually produce the information but arguably without mediators of some sort they might not get enough attention. Therefore, the mediators will play a key role and have the power, that is, brain-hunters who do not produce ideas but are able to use the ideas of others to meet their own goals. Hopefully, it does not mean that value substitution and the “age of illusions” awaits us all.

  • Elizabeth Carlile

    The article was very informative and I see how the progression towards cultural capital is generally a positive shift, but I saw the word attention many times and the word love not once. It seems to me that attention is an ego-centered need. Not bad, but not love. I envision an enlightened society where people share, are kind, listen to each other, meet each others’ needs because they know that love is the only capital. If everybody just loves everybody, everything else works itself out. I’m not suggesting that we don’t need food, shelter, medicine, education, clothing, etc. But if we care for one another as we care for ourselves, there is plenty on this planet to go around of all the things that humans need.

    • Hanzi Freinacht Post author

      Hello Elisabeth! Thank you.

      About love, I agree with you that it is a fundamental form of value, more so than “attention”. In the sense that there is an “economy of happiness” or simply an “economy of emotions” the amount of love that goes around can be increased or decreased. By improving upon the games of everyday life, we can shift society towards a greater portion of win-win settings, which would then be conductive towards a more loving society.

      What I am getting at in this post however, is the crude competitions at the heart of economic life in general. To understand the shifts in the world markets, and the new dynamics that flow from these shifts, it is more useful to look at attention. It would be difficult to argue that love is what drives the new games of the global economy.

      • David Harold Chester

        We tend to think of love as something that is beyond having a lot of money and even of sharing it. A poor couple are supposed to be able to love one another without material needs entering the scene. But as we all know, and so much has been written about it already, even with a good supply of money being present (rather than because of it) love often fades and even true love has tragic endings. So what i am saying is that we still need to consider the economics and capitalist sides of human relationships, even with love being present.

        I feel love for all of humanity and because of this I wish to direct it towards the better understanding about how our social system works. I feel that when the people in our world have a more equal sharing of opportunities to both earn and to reside, that capitalism will have properly found its place. Unfortunately we are far from this today and the basic cause is what we should be examining. The existence of poverty can be eliminated by the introduction of a socially just taxation system as outlined below.

        Socially Just Taxation and Its Effects (17 listed)

        Our present complicated system for taxation is unfair and has many faults. The biggest problem is to arrange it on a socially just basis. Many companies employ their workers in various ways and pay them diversely. Since these companies are registered in different countries for a number of categories, the determination the criterion for a just tax system becomes impossible, particularly if based on a fair measure of human work-activity. So why try when there is a better means available, which is really a true and socially just method?

        Adam Smith (“Wealth of Nations”, 1776) says that land is one of the 3 factors of production (the other 2 being labor and durable capital goods). The usefulness of land is in the price that tenants pay as rent, for access rights to the particular site in question. Land is often considered as being a form of capital, since it is traded similarly to other durable capital goods items. However it is not actually man-made, so rightly it does not fall within this category. The land was originally a gift of nature (if not of God) for which all people should be free to share in its use. But its site-value greatly depends on location and is related to the community density in that region, as well as the natural resources such as rivers, minerals, animals or plants of specific use or beauty, when or after it is possible to reach them. Consequently, most of the land value is created by man within his society and therefore its advantage should logically and ethically be returned to the community for its general use, as explained by Martin Adams (in “LAND”, 2015).

        However, due to our existing laws, land is owned and formally registered and its value is traded, even though it can’t be moved to another place, like other kinds of capital goods. This right of ownership gives the landlord a big advantage over the rest of the community because he determines how it may be used, or if it is to be held out of use, until the city grows and the site becomes more valuable. Thus speculation in land values is encouraged by the law, in treating a site of land as personal or private property—as if it were an item of capital goods, although it is not (Mason Gaffney and Fred Harrison: “The Corruption of Economics”, 2005).

        Regarding taxation and local community spending, the municipal taxes we pay are partly used for improving the infrastructure. This means that the land becomes more useful and valuable without the landlord doing anything—he/she will always benefit from our present tax regime. This also applies when the status of unused land is upgraded and it becomes fit for community development. Then when this news is leaked, after landlords and banks corruptly pay for this information, speculation in land values is rife. There are many advantages if the land values were taxed instead of the many different kinds of production-based activities such as earnings, purchases, capital gains, home and foreign company investments, etc., (with all their regulations, complications and loop-holes). The only people due to lose from this are those who exploit the growing values of the land over the past years, when “mere” land ownership confers a financial benefit, without the owner doing a scrap of work. Consequently, for a truly socially just kind of taxation to apply there can only be one method–Land-Value Taxation.

        Consider how land becomes valuable. New settlers in a region begin to specialize and this improves their efficiency in producing specific goods. The central land is the most valuable due to easy availability and least transport needed. This distribution in land values is created by the community and (after an initial start), not by the natural resources. As the city expands, speculators in land values will deliberately hold potentially useful sites out of use, until planning and development have permitted their values to grow. Meanwhile there is fierce competition for access to the most suitable sites for housing, agriculture and manufacturing industries. The limited availability of useful land means that the high rents paid by tenants make their residence more costly and the provision of goods and services more expensive. It also creates unemployment, causing wages to be lowered by the monopolists, who control the big producing organizations, and whose land was already obtained when it was cheap. Consequently this basic structure of our current macroeconomics system, works to limit opportunity and to create poverty, see above reference.

        The most basic cause of our continuing poverty is the lack of properly paid work and the reason for this is the lack of opportunity of access to the land on which the work must be done. The useful land is monopolized by a landlord who either holds it out of use (for speculation in its rising value), or charges the tenant heavily for its right of access. In the case when the landlord is also the producer, he/she has a monopolistic control of the land and of the produce too, and can charge more for this access right than what an entrepreneur, who seeks greater opportunity, normally would be able to afford.

        A wise and sensible government would recognize that this problem derives from lack of opportunity to work and earn. It can be solved by the use of a tax system which encourages the proper use of land and which stops penalizing everything and everybody else. Such a tax system was proposed 136 years ago by Henry George, a (North) American economist, but somehow most macro-economists seem never to have heard of him, in common with a whole lot of other experts. (I would guess that they don’t want to know, which is worse!) In “Progress and Poverty” 1879, Henry George proposed a single tax on land values without other kinds of tax on produce, services, capital gains etc. This regime of land value tax (LVT) has 17 features which benefit almost everyone in the economy, except for landlords and banks, who/which do nothing productive and find that land dominance has its own reward.

        17 Aspects of LVT Affecting Government, Land Owners, Communities and Ethics

        Four Aspects for Government:
        1. LVT, adds to the national income as do other taxation systems, but it replaces them.
        2. The cost of collecting the LVT is less than for all of the production-related taxes–tax avoidance becomes impossible because the sites are visible to all.
        3. Consumers pay less for their purchases due to lower production costs (see below). This creates greater satisfaction with the management of national affairs.
        4. The national economy stabilizes—it no longer experiences the 18 year business boom/bust cycle, due to periodic speculation in land values (see below).

        Six Aspects Affecting Land Owners:
        5. LVT is progressive–owners of the most potentially productive sites pay the most tax.
        6. The land owner pays his LVT regardless of how his site is used. A large proportion of the ground-rent from tenants becomes the LVT, with the result that land has less sales-value but a significant “rental”-value (even when it is not used).
        7. LVT stops speculation in land prices and the withholding of land from proper use is not worthwhile.
        8. The introduction of LVT initially reduces the sales price of sites, even though their rental value can still grow over a longer term. As more sites become available, the competition for them is less fierce.
        9. With LVT, land owners are unable to pass the tax on to their tenants as rent hikes, due to the reduced competition for access to the additional sites that come into use.
        10. With LVT, land prices will initially drop. Speculators in land values will want to foreclose on their mortgages and withdraw their money for reinvestment. Therefore LVT should be introduced gradually, to allow these speculators sufficient time to transfer their money to company-shares etc., and simultaneously to meet the increased demand for produce (see below).

        Three Aspects Regarding Communities:
        11. With LVT, there is an incentive to use land for production or residence, rather than it being unused.
        12. With LVT, greater working opportunities exist due to cheaper land and a greater number of available sites. Consumer goods become cheaper too, because entrepreneurs have less difficulty in starting-up their businesses and because they pay less ground-rent–demand grows, unemployment decreases.
        13. Investment money is withdrawn from land and placed in durable capital goods. This means more advances in technology and cheaper goods too.

        Four Aspects About Ethics:
        14. The collection of taxes from productive effort and commerce is socially unjust. LVT replaces this extortion by gathering the surplus rental income, which comes without any exertion from the land owner or by the banks– LVT is a natural system of national income-gathering.
        15. Bribery and corruption on information about land cease. Before, this was due to the leaking of news of municipal plans for housing and industrial development, causing shock-waves in local land prices (and municipal workers’ and lawyers’ bank balances).
        16. The improved use of the more central land reduces the environmental damage due to a) unused sites being dumping-grounds, and b) the smaller amount of fossil-fuel use, when traveling between home and workplace.
        17. Because the LVT eliminates the advantage that landlords currently hold over our society, LVT provides a greater equality of opportunity to earn a living. Entrepreneurs can operate in a natural way– to provide more jobs. Then earnings will correspond to the value that the labor puts into the product or service. Consequently, after LVT has been properly introduced it will eliminate poverty and improve business ethics.

  • Oskar

    GENIUS! This makes me see the world so much more clearly, what it is and what it can become. This is fortunate, since a clear view is absolutely essential to aiming for any kind of future at all. I was about to say “let’s make this happen!”, but I realize that as we are making it happen we are already part of the thing that is happening. I wish a happy happy life for us all!

  • Mary Anne

    Hi Hanzi,

    I, for one, would really like you to address Elizabeth Carlile’s response about love being more a more fundamental and deeper human need need than attention. All of the world’s spiritual traditions would agree with Elizabeth, including her point about ego. Additionally, we must take into consideration the realization that ego can never be transcended.

    Thank you!

  • Mark Lewis

    Bravo!

    If total capital is a combin­ation of social capital, cultural capital, economic capital, emotion­al capital, sexual/erotic capital and good health – how does skill/intellectual capital fit in this model – my real-time capacity to provide a valued service to another OTHER than creating memes? My power to create my life – to use and trade my intelligence/knowledge to navigate the environments in which I move – seems to me my central form of capital, of which all the other forms are tools. Isn’t this your (personal) central form of capital? (before your books make you famous, I mean).

    Is this an extension of the labor/capital distinction? Gouldner?

    I can understand the consequences of the definition, and you can certainly create the memes of your choosing! I just don’t understand why you are focusing on the steering aspects of capital and ignoring the engine aspects. Wealth must be created to be shared/traded. It gives a color to your thesis that feels continually garish to me – I am still adjusting to it, uncertain if it is genius or clumsy. Thoughts?

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