#fuedalism

Is this a good system to live under? Well, I guess it depends on your priorities. A Capitalist economic system would seem to be at odds with a Democratic or Republican (the concepts, not the US political parties) system of governance where power is supposed to rest with the people and/or with their elected representatives. There is also no mechanism in Capitalism which would prevent collaboration or collusion by multiple owners (Capitalists) to grow their own capital at the expense of others. In general, uninhibited Capitalism seems, both in theory and in practice, to result in increasingly sparse industries as powerful companies use their market power to force out competitors, drive up prices for consumers, and drive down wages for workers.

That seems pretty negative, so let's talk about the general positive features of Capitalism. People are much more likely to put effort into improving something when they will personally reap the benefits of that improvement and, generally speaking, the more improvement there is of the means of production across a society, the better off we all are. It's also the case that its decentralized nature allows it to better address small problems that might be overlooked in a more centralized system. Thousands of entities with ownership of their own means of production are much more likely to fix a thousand small problems than one entity with ownership of all means of production.

So yeah, that's what Capitalism is, which brings us naturally to the next question…

CAPITALISM?

The question then is, do we live in a Capitalist society? Well, yes and no.

On the one hand, we do live in a society where the means of production are generally privately owned, but there are limitations to this. Obviously, the private owners of the means of production are not allowed to do literally anything they wish with them, but are constrained by law in what they are permitted to do. It is also the case that, through government taxation and spending policies, we have some aspects of a Socialist economic system with regards to welfare for individuals. Finally, one could make a reasonable argument that we also have some aspects of a Socialist policy with regards to even private owners of the means or production, with the government intervening to keep their private property from collapsing in many cases.

Overall, though, we do live in a society that is more Capitalist than any other economic system. The means of production in this country are privately owned and, despite the many, many claims you may hear to the contrary, the rights of the owners of those means of production to do whatever they wish with it are far broader than the limits placed upon them. More to the point, the monetary benefits of improvements to the means of production primarily go to the private owners with a tax policy that even helps pay for some of those improvements with nothing demanded in return.

That said…

There is an argument to be made that we are either no longer in or at least at the cusp of no longer being in a Capitalist society.

Remember the above, how a Capitalist society is defined by the private ownership of the means of production? I brought up the limitations that government places on what the owner can do with their property because such limitations represent a limitation on ownership. True ownership means you can do whatever you want with your property, if someone else also directs that property then they are the owner in proportion to their ability to direct that property.

So let's ask the question, does the private owner of the means of production have true ownership of the means of production in our society? As I said before, there are limitations placed upon them by the government, but the bulk of the power over that property, especially the right to benefit from it, is still in the hands of the private owner. There is, however, another force that is increasingly limiting the rights of the private individuals of the means of production from doing as they wish with their property.

Imagine you've invested your money (Capital) in a small business making widgets and you want your company to sell these widgets to private individuals (retail). Will it make a difference to your business if Amazon will not host your product? I think, fairly clearly, the answer is a resounding "yes". The same is true if Google or Meta will not advertise it. If it's an app, being excluded from the Apple or Google store is practically a death sentence. That business may still be able to find and secure a customer base, but they are effectively excluded from the largest and busiest marketplace in the country.

In other words, these platforms, Amazon, Google, Meta, Apple, Etsy, Uber, AirBnB, and dozens of others depending on the industry, have fairly strong control over what the owner of the means of production (the Capitalist) can do with their property, having the ability to deny them access to the marketplace if they do not comply. There's a word for the economic system where someone controls the means of access to a market, we call it Feudalism.

In fact, there's a lot of ink being spilled these days making a surprisingly coherent argument that much of our consumer economy here in the US has actually transitioned from being Capitalist in nature to being what is termed "Techno Feudalist", meaning that the means of access is being gatekept by these large technology corporations.

At this point many of you are probably asking "well, it's just another big company in control of things, isn't that still Capitalism?" and I can see why you ask that, but let's refer back to our definition of Capitalism in the last section. The key there was the "means or production", does Amazon (the sales platform, not the company itself) produce anything? How about Etsy? AirBnB? None of these platforms actually produce anything at all, they're simply places where producers and consumers are able to meet. In this way they're much less comparable to a medieval tailor than they are to a medieval market square where the tailor has to go to meet the people who will buy his product, and the company that owns the platform is effectively the medieval lord who controls the square and charges for the privilege of accessing it.

Also, Remember that whole "benefits of improvement" thing? At the scale that Amazon is at, is it likely that they're going to see any real benefits from small improvements to their interface? Will they likely see any detriment to small negative changes? I mean, people might complain about it, but they're kind of locked in. Where else can a business go to access so many customers or a customer to access so many businesses?

In this sense, Amazon doesn't make money by manufacturing a product, they make money by controlling access to a "commons". They make this money whether they make any significant improvement to the commons or not simply because there are no real alternatives to the commons. This is a phenomenon known as "rent-seeking" and it's a particularly damaging type of economic inefficiency. In other words, Amazon, Google, and the other tech giants are not Capitalist in the traditional sense of owning the means of production and using those means to produce a product, they are increasingly Feudal in that they own a sort of commons and extract wealth from it.

So are we still living in a Capitalist society? Probably, but I'm less sure of that than I used to be.

CORPORATE GOVERNANCE

Finally, the last economic thing I've been thinking about recently with any sort of coherence, is corporate boards. Specifically, the failure of corporate boards.

First off, what is a corporate board? Let's start with a corporation, a corporation is a company or business is an independent legal entity that is owned by one or more people. This independent entity can enter contracts and own things of its own and those who own it own a proportion of it based on a number of "shares" that they have, making them "shareholders". A corporate board of directors, then, is a governing body that oversees the operations of a corporation on behalf its owners, the shareholders, when there are too many shareholders for them to coherently oversee the corporation themselves.

The corporate board, on behalf of those owners, then hires and oversees the management of the corporation. Specifically, they hire and oversee the executives of the corporation who manage it at the highest level. Executives then hire and oversee managers and supervisors who then hire and oversee the actual workers of the corporation and, when all of this is done, the corporation that controls some means of production produces some sort of product and, if it is reasonably well managed, turns a profit that is then in some way returned in some way to the shareholders.

Again, this is ideally how it works. In reality… well, when was the last time you heard of a corporate board of directors that has fired a CEO without a major catastrophe occurring?

The truth of the matter is that corporate boards are mainly toothless these days, they simply don't have the tools they would need to adequately oversee the executive board that they supposedly manage. The main factor in this is simply that just about all of the information that the board of directors has about a company is provided to them by the very executives they are supposed to be managing. Even worse, it has become very common these days for board members to sit on the boards of multiple companies, further impeding them from actually gathering information on any one of them. I'm also a shareholder in several major corporations and I can tell you from personal experience that the corporate board itself is not even overly responsive to its shareholders, I have yet to receive a shareholder's ballot for an election to a corporate board that actually had any contested seats; every single one of them is basically a Soviet election with one candidate per position, meaning that the shareholders themselves are even farther removed from any actual decisions of governance.

With these major limitations, it has become practically impossible for the corporate board to actually carry out its task of properly overseeing and, if necessary, disciplining the executives of a corporation which has led to a growing executive class in this country that are largely able to hold positions at the heads of major and powerful corporations with no effective oversight or challenge to their authority.

At this point, it's not clear to me that major corporations are actually being managed in the best interests of their actual owners, it seems, instaed, that most corporations these days are actually being managed more in the interests and based on the desires of those who are supposedly hired to manage the corporation on behalf of the shareholders, but seem to be increasingly managing it for themselves.

I have no idea (well, some ideas, but nothing I've actually thought through in any sort of depth) what the solution is or should be, but I have no confidence at all that our modern corporate system is actually Capitalist in the sense of the owners of Capital having genuine control over the means of production. It genuinely seems more Feudal in the sense of executives effectively having lordship over their corporations and controlling then like a medieval baron.

CONCLUSION

Obviously we're living in an economic system with lots of problems. Housing, education, and medical care, for example, are getting increasingly unaffordable and financial existence in general is getting increasingly precarious for more and more people. Some of those problems are due to Capitalism, like the consolidation of industries across the economy, but some of them aren't.