00:05:16.980The reason that we decided to do this episode is because the assumptions of capitalism play
00:05:21.540a critical role in basically every single episode that we do.
00:05:25.420I don't think this podcast would exist were it not for capitalism. And I mean that to say that basically all of the problems or all of the lies that we debunk and analyze wouldn't exist without capitalism themselves or like would exist very differently.
00:05:39.960But we've never focused an entire episode on capitalism before and unpacking where our criticisms come from.
00:05:48.380And something that I think is really important to say from the outset is that I know that I am going to be fighting an uphill battle today.
00:05:56.040because I was educated in the United States in the U.S. education system, where you learn that
00:06:03.780the Cold War, yeah, it was about the U.S. and the Soviet Union, but like what you really learn is
00:06:08.120that it was about capitalism versus communism. And you learn that capitalism proved itself to
00:06:13.160be the better system. Communism was this dangerous thing that just failed everywhere. It was tried.
00:06:19.080And you've probably heard one specific phrase about communism before. Kara, what is the classic
00:06:25.960explanation of why communism doesn't work. I don't know if there's a famous phrase,
00:06:31.260but I think the things that I hear are that people no longer feel motivated to work
00:06:35.640and everyone just is poor and broke and unhappy. Yeah. Have you ever heard someone say,
00:06:41.420well, it sounds great in theory, but it doesn't work in practice.
00:06:45.620Yes, yes, yes. It's kind of like, oh, well, that would be great, but it doesn't work. Okay.
00:06:50.640I think we are all going to feel quite a bit of cognitive dissonance today.
00:06:56.680When I was researching it, I felt like Pavlov's dog a little bit.
00:06:59.620I would see the word communism and, like, for the first probably 150 times that I read it in my research, it would spark, like, a little bit of psychological aversion just naturally because I feel like it just gets hammered home.
00:07:12.600And in the past, we've done deep dives into how people get radicalized.
00:07:18.020How does someone fall down the Maha Mama pipeline?
00:07:21.520What about the characters that they're going to encounter on their way to, like, transphobic beliefs?
00:07:26.120But in the United States, your entire life is a capitalist radicalization process.
00:07:31.920It is just the water we're swimming in.
00:07:34.560This episode is probably going to be a little bit more akin to the abortion episode,
00:07:39.300in the sense that it's going to be very heavy on the theory, very heavy on the history,
00:07:43.820and hopefully it's going to give us a bit of a foundation moving forward.
00:07:47.760So when we're talking about things like capitalism or ideas like Marxism in the future, we're all kind of operating from the same level playing ground.
00:07:55.380I was thinking about the idea of being devil's advocate, and I had joked to you, like, well, I actually feel pretty prepared.
00:08:00.100Like, I got a B-plus in macroeconomics.
00:08:02.780I actually know all of the arguments for capitalism.
00:08:05.320And I was thinking how it's funny that even if you are a relatively unsavvy person in the world
00:08:11.120of economic theory and politics, you actually are taught from the youngest age across every
00:08:17.180single school system how to argue on behalf of capitalism. And that's kind of trippy when you
00:08:21.420think about it. You are educated with highly sophisticated arguments, and I can still pull
00:08:27.080them out at the top of my head, even though I have been in artsy-fartsy world for a decade now.
00:08:32.240Well, hopefully today we'll see how unsophisticated many of them are and how quickly they fall apart under prodding.
00:08:39.620But what I want to do today really is lay out a very simple case for the fact that not only can we not conclude that other economic systems don't work based on the history available to us, but that we should probably be asking an even bigger question, which is what do we mean when we say that capitalism works?
00:08:59.320What does it mean for a system to be working?
00:09:02.240First, let's start with kind of a basic question. Who's allowed to criticize capitalism?
00:09:07.600Caro, has anyone ever asked you why you feel qualified to criticize capitalism?0.96
00:09:13.420I think that I give off a fucking mouthy enough vibe on the internet that I don't really get0.93
00:09:18.720too much pushback right now. But we have, I mean, we have gotten some pushback in our0.96
00:09:23.140paid subscriber chat of people being like, hey, I like the idea of this, but I also am not so sure
00:09:28.280that capitalism is as bad as you say it is, blah, blah, blah.
00:09:31.220Yeah. And also, do you feel weird criticizing capitalism as a business owner? I have gotten this before. Well, you're successful under capitalism. Isn't it a little hypocritical of you to be critiquing it? How can you say that it doesn't work when it's clearly working really well for you, right?
00:09:47.240Yeah. And so before we address those questions head on, I kind of want to flip them and say, what do you think someone would say to a poor person who criticizes capitalism? What do you think the response would be if an unsuccessful individual under the system of capitalism critiqued it and was like, this isn't working?
00:10:07.660I feel like they would say, well, you're just upset because you're not capable enough or hardworking enough to make the system work for you.
00:10:13.580Yep. So what I'm trying to get at here is there is no perfect critic. Whether you are successful or unsuccessful under capitalism, your arguments will always be subject to that ad hominem defense that you're either a hypocrite for critiquing it because you're succeeding under it, or your opinion just can't be trusted because you have an ulterior motive for questioning it.
00:10:32.900This is a very strong built-in line of defense that the status quo benefits from.
00:10:38.080So I think we need to get it out of the way before we can get into any theory.
00:10:41.900So let's engage with those earlier questions that are sometimes directed at me or at us.
00:10:46.160What makes somebody successful under capitalism?
00:10:49.560Because you're a privileged white girl who works like 20 hours a day.1.00
00:11:19.860Katie, I'm having like a stupid aha moment because I'm realizing that I only got money0.99
00:11:24.260when I became an owner. That's kind of crazy. I've never even made that connection before.1.00
00:11:27.740Yeah, you became an owner. We own the intellectual property that we personally derive our livings from. We are the laborers. Yes, we are working, but we are also the owners, one and the same. We have autonomy. We benefit from all the upside, and ultimately, we have control over our lives.
00:11:47.540But this isn't just something that business owners do.
00:11:50.340The entire financial and retirement system in the United States relies on people meeting identical conditions.
00:11:57.900So even people who never become business owners, who work for a wage that someone else pays them their whole lives, they're producing value for someone else, right?
00:12:06.160They're being paid less than the value they're creating.
00:12:08.640That's the only reason you would become employed is if you are producing more than they have to pay you to get that value.
00:12:14.840that person, that hypothetical person, that wage worker,
00:12:17.620is only ever able to escape wage labor if they become owners too.
00:12:36.060buys their way enough into the ownership class that they can stop working.
00:12:41.140But if you just labor, if you are only ever a worker,
00:12:44.220If you never become an owner, either through starting a business or buying pieces of the stock market or other assets, your time and energy will always belong to someone else because your survival will always be contingent upon you exchanging that time and energy for the resources that you need to survive.
00:13:01.620Now, bear in mind that, like, a majority of Americans are in this situation.
00:13:05.640A majority of Americans are wage laborers with little to no net wealth.
00:13:11.140So when we say workers are laborers or wage earners today in this conversation, we mean anyone who does not have enough wealth to where they don't have to work.
00:13:20.100If you have to work for money, you are this person.
00:13:22.980If you have to trade your time for money in order to survive, to pay your rent, to buy food, you are a wage worker.
00:13:28.520Now, there's definitely a spectrum here.
00:13:30.460The difference between someone who works for $10 an hour in a factory versus the person who's managing the factory and makes hundreds of thousands of dollars, they're obviously in different positions.
00:13:40.340But ultimately, both of those people lack any sense of power or control over the conditions that they work and exist within.
00:13:48.160Kind of overnight, their whole lives could be upended if the owners of that enterprise decide that they're no longer needed.1.00
00:13:56.440Man, if only we had a real-world situation about a random economic decision totally upending countless businesses across the country based on the whims of a single stupid fucking person, if only.0.99
00:14:11.440But that would never happen because capitalism is secure.1.00
00:14:14.960So it's also very striking to me that we're having this conversation the day that that fucking stupid blue origin flight, the all-female flight, is taking off into space.1.00
00:14:29.980Have you ever seen a great example of the ownership class that they're going to space for 11 minutes and they got a fucking Elle magazine cover?1.00
00:14:37.780Anyways, that's another episode for another time.0.99
00:14:39.480All the neoliberals are just, like, jacking off onto their laptops.
00:14:43.060Okay, so let's spend some time just breaking down the fundamentals.
00:14:48.420What is capitalism, and what does capitalism promise us?
00:14:51.820What is the great promise of this system?
00:14:54.600Okay, in good faith, at its core, capitalism is an economic system that is based on private ownership of the means of production
00:15:02.040and the operation of those privately owned means of production for a profit.
00:15:06.380It is a system that should, over time, drive costs down and make things better through competition between firms.
00:15:15.740And the presence of profits is what kind of creates that potential for reinvestment, right?
00:15:21.700I run a business, I take in more than I'm expending to run that business, and then I can take those profits and I can reinvest them into expanding the business and making it bigger, which is why capitalism is a system that is typically associated with growth.
00:15:34.000Now, this is supposed to bring us, above all, prosperity and freedom. Prosperity and freedom are like the two major promises that capitalism makes to us. And so, again, Caro, in the most good faith interpretation, what would you say that capitalism is defined by?
00:15:53.280I would say meritocracy, innovation is another one. I feel like people often talk about capitalism almost as something that works hand in hand with basic qualities of the human spirit, which is like survival of the fittest. And the more you make, the more others benefit. And like a rising tide lifts all boats. And this whole idea that we've created a system of extraordinary wealth, but also extraordinary creativity.
00:16:18.080Yeah, definitely. Sometimes you'll hear the analogy of the worker's slice of the pie might not be getting any bigger, but the pie itself is getting bigger. The slice is getting bigger, basically. That even if we're getting inequality, that technically things are still improving. Oftentimes people will talk about free markets and how free markets are what gives us these great results.
00:16:39.480You also alluded to the fact that it goes kind of hand in hand with human nature and the human spirit. It's this natural thing, and that's why it works so well. But here's where we're going to start to encounter our first set of problems, because capitalism is not actually defined by markets or competition.
00:16:59.560There were markets and there were competition for thousands of years before capitalism ever existed.
00:17:04.600In some ways, it's not even necessarily defined by private ownership of the means of production.
00:17:10.440What really defines capitalism is that difference between the owners and the laborers,
00:17:15.680that some people own all the stuff that we need to produce the things that we need,
00:17:20.860and other people have to work to produce the things that we need,
00:17:23.960and that the things that we produce are produced for a profit.
00:17:26.960it. This is a pretty simple arrangement. You've got the people who own the stuff who have the
00:17:32.560power to make the decisions that affect everybody else. And oftentimes, this arrangement is
00:17:38.820positioned as like oppositional to another way of structuring society that relies on the state
00:17:45.560to centrally plan an economy. So the government versus the free market is how we typically think
00:17:52.480about the quote unquote choice that we have about how to structure an economy or how to structure
00:17:56.780society. And that's where we encounter our second problem, particularly in the U.S., because in a
00:18:02.380country like the U.S., which is dominated by sprawling enterprises, companies that are worth
00:18:07.480hundreds of billions, if not trillions of dollars, market forces are not acting on the companies.
00:18:15.120The companies are acting on the market forces, and they are shaping the market conditions by
00:18:20.500cooperating with one another and working with the state. So one of the books that informed this
00:18:25.680episode was Vulture Capitalism by Grace Blakely. And she writes about how the quote-unquote
00:18:30.560capitalism that exists today is basically state-sponsored corporate power, where these
00:18:35.660systems of power are mutually reinforcing. For example, Boeing. That's probably the most famous
00:18:41.020case of this. It has no real competitors in the U.S. I mean, you have Airbus in Europe, but like
00:18:46.300in the United States, you kind of just have Boeing. It gets a ton of money in government
00:18:50.920contracts. Its planes can literally fall apart in the sky.
00:18:54.940And you have no choice not to fly on it. It's not an option for people.
00:18:58.520If you're going to fly in the United States, you're almost certainly going to be on a Boeing
00:19:01.600aircraft, right? And there's like little in the way of consequences. The creative destruction
00:19:06.680that is supposed to happen under capitalism to drive us forward and give us better options
00:19:11.920is not happening anymore. And part of the reason that's true in an industry like aerospace,
00:19:17.000base, which we're going to talk about a little bit later, is the fact that it's incredibly hard
00:19:22.300in late-stage capitalism to compete once power and wealth becomes that consolidated. You can't
00:19:28.300really have a startup airline unless you're, what's Daniel Nealman's dad's name?
00:19:41.480It's also interesting because that family dynamic is actually a perfect encapsulation of how American power functions, that you have the patriarch who was born probably in the 40s or 50s, built companies at a time when the corporate consolidation hadn't happened and hadn't basically calcified such that you can't really do the same thing now.
00:20:01.180And now his children are the beneficiaries of all of that wealth and ownership, and now they are basically doing what you do now to communicate your wealth and to build, which is, like, taking a piece of the attention pie.
00:20:12.200So it's kind of perfect that the man who built airlines at a time when you were, like, solidifying that corporate power now has a son who is basically building a corporation of attention capture.
00:20:22.080And in the attention economy, you're effectively an entertainer, right?
00:21:47.860So she basically is tapping into this sense of unfreedom that we know and we can sense, whether consciously or subconsciously, these deep disparities of power that exist within our society, many of which are invisible and therefore very hard to fight.
00:22:03.680People don't know where to start. And so you have this sense of apathy, this sense of nihilism. And these arrangements have drawn a lot of criticism pretty much as soon as they emerged.
00:22:14.680So, the most famous and influential critic was a man named Karl Marx.
00:25:26.320Marxism is what we call the belief system
00:25:28.100that says we can do better than capitalism
00:25:30.020and we ought to try. At its simplest terms, that's what it is. In any society where humans
00:25:36.640are producing things, they will produce more than they need. And the economic system that
00:25:42.040they exist within will dictate who gets to decide what happens to that more. And so what Marx said
00:25:48.240was basically, exploitation exists anytime that that more is taken from the people who produced
00:25:54.100it. And someone other than those people is deciding what happens to it. I watched hours
00:26:00.000and hours and hours of Wolf interviews, debates, speeches. And one of the things that he always
00:26:04.800comes back to is slaves produce the surplus that the masters get, serfs produce the surplus that
00:26:11.240the Lord gets, and employees produce the surplus that the owner or the employer gets.
00:26:17.340Karl Marx basically looked at that and said, that is an inherently unfair way to organize a
00:26:22.560society. And there are a lot of downsides to organizing a society that way. But what's really
00:26:27.720notable about Marx, because I think when we talk about these critiques of capitalism, what we0.84
00:26:31.720almost instinctually learn to go to next, like the next stop on that linear path is like the Soviet
00:26:38.500Union or like the Communist Party in China or other authoritarian versions of communism. I read
00:26:45.040one like Heritage Foundation blog post where they were like, Karl Marx wanted the state to control
00:26:50.200everything, and we all know that that doesn't work. Fast forward to a state that controls
00:26:56.040everything. Meanwhile, Trump's like, I press the tariff button now. While they're just like
00:27:02.760gargling fucking Marco Rubio's balls. But what I found really notable about Marx is that in the1.00
00:27:08.660three volumes of Capital, which are like his capstone work, there's almost no mention of the
00:27:15.180government or the state. He, like, doesn't bring it up. He was primarily concerned with
00:27:20.760understanding the mechanisms of how capitalism functioned, how and why people accept power
00:27:26.720dynamics of what are effectively authoritarian workplaces. But he never wrote about central
00:27:33.480planning. He never wrote about the state at all. All of that came later. All of that came from
00:27:40.060people who were inspired by Marxist critiques of capitalism. And in an attempt to come up with
00:27:46.300something better, basically, we're like, well, we have to take this critique and actually use it to
00:27:51.560make something else. And how are we going to do that? Well, the state has the power, so we're
00:27:55.780going to use the state, right? And there have been two major categories of groups since Marx
00:28:00.360that have attempted to do something like this. Sometimes we call them socialists. Sometimes we
00:28:04.540call them communists. There are some differences and similarities that we're going to get into.
00:28:08.680But the most popular example that I think we would point to of when this happened and when people took Marx's critiques and tried to actually change the way society was run was in the Soviet Union.
00:28:22.520So in 1917, over 100 years ago, a small group of Russian revolutionaries called the Bolsheviks0.71
00:28:29.840that were led by Vladimir Lenin, they were inspired by Marx, they overthrew the Russian
00:28:34.640monarchy, they had a king, and they became the Communist Party of the Soviet Union.0.83
00:28:40.800Now, at this point in history, you have to remember that Russia was basically a peasant
00:29:07.720Another thing that I think comes up when we talk about this is the innate kind of opposition between capitalism and Marxist theory.
00:29:18.060And this idea that, like, well, Marx is clearly—he has no idea the prosperity that capitalism is going to bring us.
00:29:25.880Like, how could you look at the last hundred years and not be like, yeah, we're living radically better lives than people a hundred years ago did?
00:29:33.240But in the Communist Manifesto, Marx and Engels actually praised capitalism. They said it is a revolutionary force. Its emergence liberated humanity from the bonds of feudalism. It unleashed a great economic power, which is like kind of astounding because at the time that he was writing this, there were no labor laws, like child labor was, I mean, it was horrible working conditions.
00:29:56.960So to even look at that and be like, yeah, gotta hand it to it, though, it did get us out of feudalism. But he also predicted that capitalism is going to give rise to a working class, that this arrangement is eventually going to lead to a society where, like, the working class is going to overthrow the bourgeois masters.
00:30:16.800And he also predicted what we now know as the process of globalization, that basically capitalism is going to spread.
00:30:22.620It's going to, like, take over the Earth.
00:30:25.280So in the way that we've come to see feudalism as an improvement over slavery and capitalism as an improvement over feudalism,
00:30:32.740Marx and people who agree with his philosophies often will say capitalism was a necessary stage of economic development.
00:35:26.360Yeah, democracy was the system that we used to have before about January 20th.
00:35:32.840But even democracy is, like, a good example of this.
00:35:35.000Once you decide that you want rule by the people, you have to decide how those citizens are going to govern.
00:35:40.600What political organizations or institutions are they going to need in order to govern themselves?
00:35:45.700Should the majority always prevail, or could a minority ever be empowered to block majority rule?
00:35:50.400Are you going to have direct democracy or representative democracy where you elect people to represent your interests? These were very philosophical questions that are not ordained from on high. People had to figure out how to structure this. And obviously, American democracy, because of capitalism, has really weakened to the point that now we're looking at capitalism's rear guard, which is fascism.
00:36:12.300But in theory, and for a long time in practice, democracy was a system that we figured out how to create. And it would have looked crazy to people that lived a couple hundred years ago.
00:36:25.660I know you've read Dawn of Everything by David Graeber and David Wengroh, and one of the things that I learned in that book is the original explorers and colonists that came to North America and encountered indigenous people, the indigenous people taught them about individual freedoms and liberty and these concepts that we now associate with Western thought.0.95
00:36:48.760But the French got that from indigenous Americans who were like, wait, you have kings and shit?0.58
00:36:55.820Like, you let other people tell you what to do?1.00
00:37:24.580That capitalism is natural because humans are naturally competitive with one another.
00:37:28.780And capitalism gives people an incentive to act in their own self-interest.
00:37:34.140And people who are acting in their self-interest are going to create competition.
00:37:37.360And that competition is going to drive growth and lower costs.
00:37:40.060And like, it's this very elegant system because human nature is just going to make this happen for you.
00:37:45.400And in order to really think that through, we have to explore a brief history of how we got capitalism as an economic system to begin with.
00:37:53.980Before global capitalism, it's generally accepted that people existed in economic relationships that we refer to today as feudalism. It wasn't like called that at the time. I learned that historians don't even like love the term feudalism because it suggests a level of uniformity and universality that like really wasn't accurate throughout the Middle Ages.
00:38:16.100But you can generally think about this period where you had these hierarchies of power, you had people tied to the land that they were working. The bottom line is that there is disagreement about how, when, and why feudalism started and what the word even means.
00:38:30.600In one place, I read that it began toward the collapse of the Roman Empire's slave-owning society, and that with the collapse of that, you had the rise of nobles, kings, lords, and then, like, all the plebs who just, like, worked the land.
00:38:42.460In another spot, I read that it was actually created by Charlemagne, and now what's France and Germany, because decentralizing political power was the only way to control that much surface area of the earth.
00:38:53.720But regardless, we generally think about the feudal system, and again, using this very wide definition, as something that continued for about 1,000 years of human history.
00:39:03.580And thanks to recency bias, we mostly equate capitalism with the Industrial Revolution, with the industrialization of society.
00:39:10.260But the transition from what we reference today as feudalism to capitalism in Europe took about 500 years.
00:44:53.720If I'm being honest, I do see the merits of slavery. No, what I am saying is,
00:44:58.380I actually see there is legitimacy to the logic of this argument because what he is saying is correct. You need to exploit a huge population of people in order for capitalism to function and for a much smaller people on top to benefit.
00:45:14.280And I'm not talking about even Amazon warehouse workers. I'm talking about people in other countries who are slaves. The pyramid that we talk about in capitalism is so much, there is so much below what Americans believe to be the floor in order to keep this system going.
00:45:30.620And I actually think that it's helpful to remember that this is disgusting ethically, but this is at the root of capitalism, is slave labor. It's actually correct. And so at least these arguments lay bare what capitalism is and what it needs to function.
00:45:46.580It's just really out of sight for people in places like the United States, for the most part.
00:45:52.240So I see what you're saying. It's kind of like when Matt Walsh tweets that civil rights are DEI,
00:45:57.400and it's like, well, at least you're coming out and just saying it now. Now we can actually have0.88
00:46:01.100a conversation about what this is about, and we don't have to pretend it's about bathrooms anymore.
00:46:06.800I really appreciate the point about slavery being the economic boom that created the United States
00:46:12.040It's becoming an empire. That's totally correct. And I think it's so important to tie it to the present, which is like, hey, you know that smartphone that everyone has? An eight-year-old is mining the materials that we need in order to do that.0.78
00:46:24.400Even the idea of the Chinese sweatshop, which is vaguely racist in origin. Factually speaking, you need actual literal slaves to get the materials that we have. The electric fucking car that I own, that I drive to Whole Foods and feel superior to everyone else in the parking lot with, that only happens with slaves.
00:53:03.640Today we think of the internet as dominated by major tech companies. We think of like Google when we think about the internet. But the internet has its roots in a government project called ARPANET. So researchers working on ARPANET created many of the internet's defining features, including TCPIP, which is the protocol on which the internet operates, like the one we're using right now.
00:53:26.220In the 1980s, they strung together various government and university networks using TCPIP, thus creating a single worldwide network, the Internet.
00:53:37.560This is from a piece in Scientific American that I'm going to have you read.
00:53:42.020In truth, no private company would have been capable of developing a project like the Internet, which required years of R&D efforts spread out over scores of far-flung agencies and which began to take off only after decades of investment.
00:53:55.840Visionary infrastructure projects such as this are part of what has allowed our economy to grow so much in the past century.
00:54:03.660Creating something as grand and untested as the internet was something that a private company simply couldn't do.
00:54:09.460The project was too big and the payoff too uncertain.
00:54:13.060That's true of most technologies in their infancy.
00:54:15.180The Army created ENIAC, the world's first general-purpose computer.
00:54:20.280and only after the military proved the basic idea was sound did IBM jump into the business.
00:54:26.200Apple began working on a multi-touch interface in the 2000s,
00:54:29.180but that was only after decades of research at other labs,
00:54:32.040including by many researchers funded by the government.
00:54:34.800The American military developed and launched the network of satellites
00:54:37.620that form the Global Positioning System,
00:54:39.940and only then could tech companies come along to make spectacular use of that system.
00:54:44.020Okay, I have something else that is making me angry.
00:54:46.340weeks ago this is the part where i understand it and i get really mad so weeks ago you again
00:54:53.920because you have been very diligently i just want to give you a shout out you just moved you're like
00:54:58.100sitting in your new apartment and you are like delivering a treatise on capitalism that i never
00:55:01.920could do and so weeks ago when i was like hey katie i'm gonna punt this topic to you i need
00:55:06.140you to do this we discussed a new yorker interview with bill gates and in the interview they said
00:55:11.760they asked him very explicitly, do you think billionaires should exist?
00:55:15.520He was like, definitely, we are like really good for society.
00:55:18.920He was like, we are really important. And I don't think that you could see the innovation
00:55:23.120that we have seen if billionaires didn't exist. But the thing that really infuriates me is that
00:55:27.820the people who are actually doing the intellectual labor that leads to the breakthrough are almost
00:55:34.400never the ones who become billionaires. Bill Gates is actually a very unusual example in that
00:55:41.320he did do a lot of intellectual heavy lifting. But even with him, like when you think about people
00:55:45.420who do research for vaccines, when you think about the people who did the work behind SpaceX
00:55:49.880or Tesla, when you think about all of that labor, most of the labor comes from people who will never
00:55:55.520see notoriety, who will never be the beneficiary of these billions, and who did it because they
00:56:00.080are actually interested and curious. And I think that this theory that innovation only works if
00:56:07.020you have a billion-dollar outcome, is like a fiction created by the stupidest and richest0.99
00:56:11.800people in our economy as a way to justify their own self-perceived intelligence. Because it's like,1.00
00:56:17.520okay, so you're associating intelligence with wealth, which means that teachers can't be the
00:56:22.700smartest and most innovative among us. Scientists can't be the smartest and most innovative among
00:56:26.960us. No, it's the guy at fucking Goldman Sachs who is the smartest and most innovative among us0.99
00:56:31.580because he's the richest. It's so insulting to me when they make that argument. Sorry.0.99
00:56:36.380Okay, that took how long? An hour and 11 minutes. Perfect. I was wondering when that was going to happen. I'm really happy that we already got one Karen Ranch like a third of the way in.
00:57:36.120No, shut the fuck up. There's no chance of that.1.00
00:57:39.040People like that tend to be driven by something that is so far beyond
00:57:42.940the prospect of great wealth, that this post-hoc rationalization after the fact of like, well,
00:57:48.240yeah, you need the wealth now. It's like, yeah, but the wealth isn't why you did what you did.
00:57:52.880This idea that you need the prospect of wealth accumulation to get humans to do impressive,
00:57:59.060innovative things is just not true. Anyway, the mobile phone was one that actually seemed to be,
00:58:05.260I will say, it's an exception to this pattern in a sense, but not fully. So I want to talk about it
00:58:10.420because I think that a lot of things in society probably work this way.
00:58:13.460The mobile phone was developed by an engineer who worked for Motorola, okay?
00:58:18.120So to your point about, like, the people who are often, like, making these breakthroughs
00:58:21.600are not the ones that are, like, initially profiting from them.
00:58:24.540And according to a few different histories of the invention,
00:58:27.160the company invested about $100 million over 10 years to figure out how to do it.
00:58:33.160That's a very long investment timeline for a private company.
00:58:36.440But even then, much of the infrastructure that made the modern smartphone possible came from public investment.
00:58:43.740Mariana Mazzucato's book, The Entrepreneurial State, Debunking Public vs. Private Sector Myths, argues that that's how we ended up with Bell Labs.
00:58:52.620The federal government pressured AT&T to reinvest its profits in innovation.
00:58:58.580And this eventually gave us the C++ programming language and cell phone calling technology, among other things.
00:59:05.000Capitalism doesn't actually do this on its own.
00:59:08.500Some of the biggest innovations that have occurred in the last hundred years
00:59:11.440happened in spite of, not because of, the pressures of capitalism.
00:59:16.220It was like an interference in regularly scheduled programming.
00:59:19.620Personally, I think aside from artificial intelligence
00:59:22.280and some of the advances that are being made with AI,
00:59:25.140I think that one of David Graeber's big hobby horses when he was alive
00:59:28.700was the fact that we kind of haven't seen major innovation in the last 20 or 30 years.
00:59:34.260It's not like quality of life has massively improved from the 1990s.
00:59:39.200We aren't really seeing that speed of innovation anymore.
01:04:34.500That's where you should be able to make the best living.
01:04:36.920That's where the best and smartest and most talented thinkers should be attracted to and be all these market forces should be conspiring to get them to do that.
01:04:53.980It's not really about prioritizing according to market forces and allocating capital appropriately.
01:04:58.800So one of the biggest examples of this, it's an example of absence.
01:05:02.880The fact that there is no investment, or, you know, if there is investment, it's not meaningful, in electric mass transit systems in the United States.
01:05:12.980The older a city is, the more likely it is to have public mass transit.
01:05:17.700We have moved farther and farther and farther away from the thing that we know that we need, not because we don't need it, but because it is not profitable.
01:05:26.860Why is the market not giving us electric mass transit?
01:05:30.600Might it be because you can make a hell of a lot more money
01:05:33.380selling individual cars to individual people?
01:06:29.420Yeah, like this massive charging network.
01:06:32.200That is another thing to me that's like, I don't even think infuriating covers it as someone who owns an EV and has all the apps and lives with it.
01:06:39.480I know where I can charge. I still do it. It's the only car we have right now.
01:06:43.440We drive every year, multiple times a year, from Virginia to Massachusetts.
01:06:46.460So we're not just using this around town.
01:06:49.040And when I say there has been close to no construction in terms of making it easier, making it faster,
01:06:55.480it's kind of shocking to be a part of the latest quote-unquote innovation of like the American
01:07:00.900frontier and to see the extent to which things have not grown up yeah that's really interesting
01:07:06.780so I think for me as I was kind of thinking about this because I hadn't really given that
01:07:13.740particular element too much thought is it's really easy to ask well what is capitalism giving us like
01:07:20.660what are we getting out of capitalism but it's harder to confront the question of what are we
01:07:24.900not getting because of capitalism? What greatness is capitalism and the pressures of capitalism
01:07:30.960actually holding us back from as a society? What could we have if we had a different economic
01:07:36.800system? The cheapest electric vehicle on the market in the U.S., I will say, is a Nissan Leaf.
01:07:42.740It is $30,000. That is incredibly expensive. And I say in the U.S. because China actually
01:07:49.340manufactures much cheaper EVs. Have you ever heard of the brand BYD? I actually saw a TikTok
01:07:55.760video of it the other day, and the inside is so fucking cool. Yeah, these cars are not sold in the
01:08:01.260U.S. The cheapest BYD EV is called the Seagull. It is $10,000. If they were allowed to sell their
01:08:09.300cars here, Tesla would go out of business, which might be one of the reasons why Elon Musk is so
01:08:15.500involved in this administration. I don't know. That's conjecture. But it is like widely considered
01:08:20.420true that China's electric vehicles are superior and much cheaper, right? So are electric vehicles
01:08:26.980better for the environment than Ford F-350s? I mean, sure. But it is telling that we jumped
01:08:31.120right past the solutions for climate change, like electric public transit, that would make a much
01:08:36.460larger difference. And we went right to private vehicle ownership. And the batteries that are
01:08:40.960required to produce EVs have issues of their own. You kind of already alluded to this, but I want
01:08:44.880to spend just a second longer on it. So this is from the Chicago Policy Review.
01:08:50.980EV production is unsustainable. EV batteries are composed of several rare earth minerals,
01:08:56.440including cobalt and lithium. Yeah, I read this first article like a day after I bought my
01:09:00.480fucking overpriced EV. Mining companies expose nearby communities to high levels of toxins that0.99
01:09:06.060are especially harmful to children. In the Democratic Republic of the Congo, yep, here we go,
01:09:10.420they violate human rights via unsafe working conditions. There's also a lack of regulation
01:09:15.240over the large volume of water necessary to mine lithium, causing water shortages for local
01:09:20.640farmers and causing harm to the surrounding ecology. Moreover, cars require large amounts
01:09:26.320of steel, lead, plastics, and other chemicals whose production contributes to high greenhouse
01:09:31.240gas emissions. Yeah, this is the part of the episode where we rip back the curtain and we go,
01:09:36.500capitalism is still dependent on the violent exploitation of people and societies that we
01:09:40.400have intentionally stripped of their natural resources. This is the international piece that
01:09:45.460we alluded to. Why hasn't capitalism enriched what we call the, quote, developing world?
01:09:52.840It comes back to imperialism and which countries industrialized first. So, Lenin called imperialism
01:09:59.020the highest stage of capitalism. And Blakely writes about this in Vulture Capitalism. She says,
01:10:04.640Dependency theorists realized that because of the dynamics of the commodity cycle and the rules and
01:10:10.180norms promulgated by powerful states and international institutions, peripheral societies
01:10:15.900remain unable to industrialize in the same way as core states once were. They are trapped in a
01:10:22.200position of dependency relative to the core. They have no choice other than to export primary
01:10:27.100commodities to wealthy economies that need them, but they find themselves unable to convert the
01:10:31.800revenues from these exports into the resources required for industrialization. This is how
01:10:36.360global capitalism works. I think I've referenced this on the show before, but this is why it works.
01:10:41.520The global North is rich because of the exploitation of the global South. Capitalism
01:10:46.880cannot work for those places the way it worked in the United States because they don't have
01:10:51.900anybody else to exploit. The global South doesn't have their own global South.
01:11:55.060and I'm willing to take on to some extent
01:11:57.400the criticisms of capitalism and all the warts it has,
01:12:00.580And say, I think that's better than any other system that's ever been tried in human history.
01:12:04.520And generally speaking, when social systems have been tried, it has resulted in huge amounts of poverty, destitution and enslavement of humanity.
01:13:46.300and that it was going to spread out of control,0.89
01:13:48.700Kind of like the trans high school volleyball players of the 20th century.
01:13:52.380So this interpretation was basically either completely untrue or, like, greatly exaggerated, Bevin's writes.
01:14:01.240And regardless, the nascent CIA created by President Truman in 1947 was really concerned about the spread of communism, and particularly about the power of the Soviet Union.
01:14:13.160So after World War II, the CIA was totally compromised by a Soviet mole.
01:14:19.420And they found the Soviet Union more or less impenetrable.0.74
01:14:23.740So instead, they turned their attention to the communism that was growing in what was then known as the Third World.
01:14:29.720And for a little bit, the CIA was really in its flop era.
01:14:32.800And by flop era, I mean they were literally hunting leftists who were establishing communist parties all over the world
01:14:38.260in an attempt to prevent them from gaining power and just, like, failing.
01:14:42.880Like, it just wasn't really working that well.
01:14:46.860So, in South Korea, for example, U.S. forces installed a Christian anti-communist
01:14:51.060who had lived in the U.S. for decades named Syngman Rhee.
01:14:54.180His authoritarian government proceeded to massacre tens of thousands of people.
01:14:58.760War eventually erupted and the northern communist troops pushed into Seoul.
01:20:13.000The first formidable and nearly successful attempt of Kremlin-directed communists to seize a whole state in the Americas has apparently been crushed.0.99
01:20:20.880In what looks like the first successful anti-communist revolt since the last war, the communist, oh my God, the communist-dominated regime in Guatemala has been overthrown, and the new provisional regime, headed by a military junta, has taken immediate steps to rid the country of the communist menace.
01:22:07.720It is in the private contracting of the military.
01:22:10.500And the people who get rich and the effect of all these different private contractors that make money off of our military, which is, what, in the trillions now each year, the amount of money that we set aside for the military budget.
01:22:22.320And so a rational person would start to look at these unimaginable massacres that we participate in every 10 years or so and think that we are basically upholding our economy by killing millions of people, whether that's through the slave labor or the exploitation or whether that is through literally dropping bombs on them.
01:22:44.200It's hard to comprehend, and I know that we can't be too heavy, otherwise people will turn this episode off. But I think it's worth just one moment of being like, the people that we are killing, people who are just trying to live their lives, and I don't think that it's even possible to comprehend the amount of destruction that we have caused that the average American citizen is not even remotely aware of. It's heart-wrenching to think about.
01:23:07.500it. Yeah, I think one of the most unsettling periods of disillusionment in my life was
01:23:13.700realizing that America's the bad guy. And I know that sounds a little melodramatic, but I think
01:23:19.480when you grow up being told that your country is a force for good and that everybody is thankful
01:23:25.780that your country is so powerful and strong, and then you learn the real history. Because you know
01:23:30.540that they say, like, history is written by the victors. Yeah, obviously, we're going to learn
01:23:34.220that, that like we are the good guys. But to your point, I think oftentimes in that clip that we
01:23:39.660heard of that guy giving his opening statements in the debate where he talks about the millions
01:23:43.120in poverty because of communism, there were certainly failures of communism. But if you
01:23:47.800want to compare death tolls, there's almost no force in history with the exception of like the0.99
01:23:55.040fucking asteroid that has killed more people than global capitalism. Of course, human race has a0.95
01:24:01.940long bloody history. But these were like actual battles of survival and of civilizations that
01:24:07.700were much less sophisticated than our own in terms of technology, in terms of communication,
01:24:12.180different languages, like the ability to communicate and fight. These were battles
01:24:15.960of starvation, of famine. And so we are now living in a time period where like we are dropping bombs
01:24:21.800on people that there is no connection. There is no reasonable person could argue that this is for
01:24:27.860our own survival. This is to make a very small group of people fractionally more wealthy.
01:25:23.120So Indonesia is where the Communist Party was really dominant. This is the interference for which the book The Jakarta Method is named and for which the actual method itself comes to be. So I'm going to have you read an excerpt that describes what's happening there.
01:25:40.060In 1956, the Indonesian Communist Party did even better than it had in 1955.
01:25:45.800The PKI was the most efficient professional organization in the country.0.85
01:25:50.040Crucially, in a country plagued with corruption and patronage,
01:25:53.500it had a reputation for being the cleanest of all the major parties.
01:25:57.040Its leaders were disciplined and dedicated.
01:26:27.580the communists could probably not be beaten in election campaigns
01:26:31.060because they were so well organized, end quote.
01:26:33.720And most importantly, Jones recognized the PKI was going into the countryside, delivering the kind of programs that spoke directly to the people's needs.
01:26:42.340The party was working hard and skillfully to win over the underprivileged, he worried.
01:26:46.860There you have the president of the U.S. being like, yeah, democracy's probably not going to work there because they're going to elect communists.
01:26:53.220Yeah, the Communist Party in Indonesia was about anti-imperialism.0.64
01:26:56.380It was about fighting for independence from exploitation by the Dutch, this imperial power.
01:27:02.560And the Indonesian president, this guy named Sukarno, appealed to the U.S. at one point.
01:27:07.600He was like, hey, you guys were once a colony.
01:27:10.280You know how it feels to fight for your independence and to fight for your freedom.
01:27:17.000And the communists more or less supported Sukarno.
01:27:20.280So Sukarno was not a communist, but, like, the communist party in Indonesia supported him.
01:27:24.840But there was a group of rebels who were anti-communist in the country, and they also did not like Sukarno's government.
01:27:31.120And you know what's weird about these rebels is that they had suspiciously modern weapons.
01:27:36.520And everyone was like, how did these rebels get these weapons?
01:27:39.640And at one point in the fighting, the Indonesian army, again under Sukarno, shoots down this plane that was dropping bombs on another part of the country.
01:27:47.880And who is ejected and floats down but an American CIA agent.
01:27:53.520At one point, the CIA even generated a very rudimentary version of AI revenge porn,
01:27:59.720where they hired an actor who looked like the Indonesian leader0.51
01:28:03.120and produced a sex tape to try to damage his reputation.0.73
01:28:07.680But they never released it because it wasn't very good.
01:28:09.880Dude, it's like always sunny in Philadelphia hearing about these CIA.1.00
01:28:13.620I'm like, that is like the idiot plot to end all idiot plots.1.00
01:28:17.400It's such an interesting contrast where it's like they are murdering.1.00
01:28:21.740It's like they are engaging in these like heinous crimes, but they're also so incompetent that it's almost like this comedy of errors in Cuba.0.77
01:28:30.580So U.S. had been using Cuba for economic purposes. Hershey Chocolate had a sugar plantation there.
01:28:36.880And Batista was a dictator with very close ties to American businesses and the American mob.
01:28:43.820So when Fidel Castro and his guerrilla forces overthrew the dictatorship in 1959,
01:28:50.020they were not openly communist. They were not aligned with the Soviet Union yet.
01:28:54.920But he was accompanied by this guy named Che Guevara. Have you heard of Che Guevara?
01:30:04.760And so they have to take different defense mechanisms in order to engage with capitalism. That's so interesting.
01:30:11.780Yeah, I mean, I think if you think about it at its most basic level, like if you are somebody that wants independence in one of these countries and you want a socialist government and you see in all these other countries that there is this major superpower that comes in and just kills everyone who believes what you believe or is like dropping, literally dropping bombs on your country.
01:30:34.360yeah, you're going to internalize a certain viewpoint of like,
01:30:37.260okay, well, it kind of seems like the only way to achieve this is violence
01:30:40.460because they won't let us have it democratically.
01:30:43.140Right, and I think, too, the thing that I'm kind of chewing on
01:30:46.180is the idea that I have always been under the impression
01:30:49.160that any of these Marxist or communist figures
01:30:52.440have just ethically believed that it's the right thing to do or whatever,
01:30:56.400but I'm realizing now that it's like, even if they wanted to,
01:30:59.960capitalism would not be the correct strategy for them
01:31:02.780because they're always going to lose the game of capitalism.
01:36:39.620Famously, famously hated person Nelson Mandela.
01:36:43.140U.S. officials also set the Middle East on a new path in 1963.
01:36:47.560Outside Indonesia, the largest communist party in the Bandung countries was the Iraqi Communist Party, ICP, which had grown in opposition to dictator Abd al-Karim Qasim.
01:36:59.560The ICP thought of making a bid for revolution, and the Soviets advised against it.
01:37:04.640But Washington backed a successful coup by the anti-communist Baath Party, which immediately moved to crush the ICP.
01:37:10.980The CIA supplied lists of communists and alleged communists to the new regime, which slaughtered untold numbers of people. Nice.0.95
01:37:19.960A Ba'ath Party member named Saddam Hussein, only 25 years old, took part in the U.S.-backed anti-communist terror that followed.0.91
01:37:30.740oh my god this is like when you find out that like the person in your friend group1.00
01:37:37.260who always claims to be the victim is actually the fucking asshole who's stirring shit with1.00
01:37:41.460everyone and you're like you're the reason that we don't get along anymore this sucks1.00
01:37:45.460but then you realize that the person is you
01:37:47.520this is why it's like kind of impossible to talk about 21st century american intervention and like
01:37:56.940the war on terror without it's like well we should probably go back like 40 more years though
01:38:00.640What did we do in this region? Terrorists don't, like, come from nowhere.
01:38:05.620I was checking our paid subscriber chat before we logged on to this call, and someone basically said something to the effect of, is anyone else having a really hard time with cognitive dissonance right now? Like, we are watching the collapse of democracy, and we're all just, like, going about our daily lives? And I'm listening to you give me this history, and all I can think of is what you have said in the past, which is, babe, this didn't happen with the Trump administration.
01:38:30.140This is not news. Like, I'm hearing the stuff that the CIA is doing, and I'm like, oh, the only difference is that, like, we have more exposure. Social media has just given us a faster route to understanding what is happening, whereas previously we sometimes had to wait decades to find out about this, that this even happened to begin with. The lunacy of this second Trump administration is in many ways so deeply American.
01:38:55.820There's a really good essay that I'm going to put in the show notes for this episode.
01:39:01.440It's an N plus one essay, and it's called The Last Taboo.
01:39:05.060And it was about that signal chat that leaked.
01:47:02.660What a fun, a diabolicalized celebrity.
01:47:05.160I love this example because I think it shows us two things.
01:47:08.900Number one, they basically were trying to organize their economy
01:47:13.040the way like a modern Walmart is structured.
01:47:15.880Walmart is one of the largest corporations on Earth. If it were a country, it would be top 20 or something. It's enormous. And they centrally plan every single aspect of production. What's coming in? What's going out? What's going wrong?
01:47:32.660There is a very sophisticated method of organization that is deployed within these firms. And the Chilean government was trying to, again, 55 years ago, was trying to create something similar to manage their entire economy. And the point is like, A, that they were trying something really innovative. And B, we don't really know what would have happened because the U.S. sabotaged it.
01:47:57.060whether it would have worked or not. Maybe it would. Maybe it wouldn't have. We just we don't
01:48:00.940know. But it's those sort of experiments. We have so few real world examples of them. And in that
01:48:08.280case, it was working well and it was extremely advanced for its time. Do you think it would be
01:48:13.140fair to say that at this point, whatever next economy were to happen, if and when I think you
01:48:19.580and I would both say reasonably that, of course, capitalism isn't going to last forever? No,
01:48:23.000economy lasts forever, that the only way to replace a capitalism would have to be at a global
01:48:29.340scale. There's really no world in which one country becomes anti-capitalist. Because I think
01:48:34.560that one of the criticisms of this argument against capitalism is, well, then why doesn't
01:48:39.660someone do it? And I think that it's important to note that this isn't, well, some country should
01:48:43.900just become the next type of economy that grants more equity. It would have to be a global shift.
01:48:49.800That was definitely, I would say, represented in the research that I did for this episode. I can't remember exactly what source it was, but it did come up that in order for capitalism to, like, really be, quote-unquote, overthrown or to fail, it has to fail globally.
01:49:04.520In summation, right, we just talked about a bunch of different countries. There are dozens of them. There's a map at the back of the book that shows, I mean, it points out every country and the death toll, and every death toll ranged from, like, a few thousand people to over a million.
01:49:18.500Bevins called this the state-organized extermination of civilians who opposed the construction of capitalist authoritarian regimes that were loyal to the United States, and they unleashed extreme violence, murdering communists and socialists to protect the structure of the global capitalist system.
01:49:37.680Up to a million civilians were accused of being communists or harboring communist sympathies in Indonesia and systematically exterminated by a dictator who was ruling with U.S. support.
01:49:50.240Bevins, for this book, interviewed one person who was a schoolteacher at the time.
01:49:55.060And in this excerpt, PKI is like the acronym for the Indonesian Communist Party.
01:50:01.280Though he worked as a schoolteacher and not as an actual PKI member,
01:50:04.820he said he was arrested and tortured for days
01:50:07.040before watching his cellmates dragged off one by one, never to return.
01:50:11.100He was spared for reasons he never understood and spent over a decade in prison.
01:50:15.960But it wasn't only communists and leftists who were victimized.
01:50:20.200Untold numbers of people were tortured, raped, and killed
01:50:23.540for being accused of being communists or for belonging to an ethnic minority
01:50:27.520or simply being an enemy of some member of the officially sanctioned death squads.
01:50:34.320We're really barely scratching the surface.
01:50:35.980But he writes at the end about how, yeah, it's true that Soviet Russia had its own internal contradictions.
01:50:42.540He described their collapse as, quote-unquote, accidentally destroying their own state.
01:50:47.300It's also true that many atrocities have been carried out in the name of communism.
01:50:50.860But I think what the Jakarta method teaches us is that the notion that capitalism is the only system that's been proven to work is just simply not true. The existence of global capitalism and what he calls Americanization, the process of Americanization, as we know it now, was enforced at every turn by state-sanctioned violence. This is not, you know, the forces of the free market.
01:51:17.600The invisible, the hand was extremely visible and it was throwing grenades.
01:51:22.320These places just never got a fair shake.
01:51:24.760He writes, these countries were trying to do something very, very difficult, and it doesn't help when the most powerful government in history is trying to stop you.
01:51:32.900Here is one other worthwhile quote that I think we should close this objection out with.
01:51:38.600Many of the global left-wing groups that did survive the 20th century decided that they had
01:51:44.300to employ violence and jealously guard power or face annihilation. When they saw the mass murders
01:51:49.980taking place in these countries, it changed them. Maybe U.S. citizens weren't paying close attention
01:51:55.600to what happened in Guatemala or Indonesia, but other leftists around the world were definitely
01:52:00.420watching. When the world's largest communist party without an army or dictatorial control
01:52:05.700of a country was massacred one by one with no consequences for the murderers. Many people
01:52:11.320around the world drew lessons from this with serious consequences. You know what's so interesting
01:52:16.120that I'm thinking about now is that I don't think it's actually occurred to me until now,
01:52:19.840but I have memories throughout college and in like the years as a young 20-year-old before I
01:52:25.180became radicalized. A young Mitt Romney supporter.
01:52:28.160When I was a young Mitt Romney supporter, of kind of viewing capitalism, socialism,
01:52:33.600and communism as these three battling forces without ever really interrogating that.
01:52:39.580And I think what's really interesting is that socialism and communism are largely theoretical.
01:52:45.340We use examples of people who'd had like brief uprisings based off of the foundations of
01:52:51.300communist ideology or based off of the foundations of Marxist beliefs.
01:52:55.240But we've actually, of course, never seen a global socialist order.
01:52:59.240We've never seen a global communist order.
01:53:01.900Even China, like I understand that China is run by a communist party, but it participates in a capitalist economy. And so there's this whole idea of these economies that we are fighting against, but to say that they are boogeymen is a huge understatement. They have never actually existed. They've never actually reached full actualization because we have a capitalist world economy.
01:53:25.220Even these words, I think I'm just realizing, like, I think that you and I are frequently asked now because of this podcast, well, what are you?
01:56:28.260Because if you honestly, like I'm joking,0.91
01:56:30.180but I'm also really fucking serious.0.86
01:56:31.720Every time we have an example of grassroots support for an idea that would give more back to workers, you see a very fucking swift institutional intervention. And sometimes that is the CIA installing a dictator. And sometimes that is a group of people claiming that Hillary won a little town in West fucking Virginia when no one voted for her. And so to the research people, connect the dots.0.97
01:56:55.840I love how every single episode ends here.0.50
01:56:59.620Every episode that we do ends with Caroline being like,0.99
02:01:35.780Because the negative externalities were just too damaging. That same dynamism that drives
02:01:41.680things forward also crushes people. A capitalist might describe this process as creative destruction
02:01:47.740or like the process of evolution under capitalism, which sounds good until you remember that
02:01:53.100evolution is a process where the unlucky die, right? So Marx said that crises under capitalism
02:02:00.000are not the result of a shortage of goods, but from overproduction, and that if goods cannot
02:02:05.060be sold profitably on the market, the system will go into crisis because lending and investment will
02:02:11.220stop, leading to worker layoffs, leading to firms going out of business, leading to banks going
02:02:16.600under. You kind of have to have manufactured scarcity in order for this to work. And after
02:02:24.540the stock market crashed in 1929, Americans were like getting pretty skeptical about capitalism.
02:02:29.800They're like, not so sold on this. Don't really feel the prosperity. And the Socialist Party in
02:02:35.800America was growing. And the Great Depression had the effect of shifting attitudes leftward.
02:02:42.080and President Roosevelt included left-wing protests in his New Deal coalition by using
02:02:47.440two basic tactics. First, he responded by incorporating their rhetoric into his and
02:02:52.840second, he absorbed the leaders of their movement into his following and like folded them into his
02:02:58.160version of capitalism. This is a passage from the Hoover Institution called How FDR Saved
02:03:03.580Capitalism. I'm going to have you read. Franklin Roosevelt demonstrated his skill at co-opting
02:03:09.080the rhetoric and demands of opposition groups the year before his 1936 re-election, when the
02:03:14.240demagogic Senator Huey Long of Louisiana threatened to run on a third-party Share Our Wealth ticket.
02:03:20.820This possibility was particularly threatening because a, quote, secret public opinion poll0.97
02:03:25.760conducted in 1935 for the, oh, the fucking Democratic National Committee, for the Democratic0.89
02:03:32.480National Committee suggested that Long might get three to four million votes, throwing several0.96
02:03:37.320states over to the Republicans if he ran at the head of a third party. At the same time,
02:03:42.560several progressive senators were flirting with a potential third ticket. Roosevelt felt that as a
02:03:47.640result, the 1936 election might witness a progressive Republican ticket headed by Robert
02:03:53.080La Follette alongside a share our wealth ticket. Wow. To prevent this, Roosevelt shifted to the
02:03:58.500left in rhetoric and to some extent in policy, consciously seeking to steal the thunder of his
02:04:03.500populist critics. In discussions concerning radical and populist anti-capitalist protests,
02:04:09.300the president stated that to save capitalism from itself and its opponents, he might have to,
02:04:13.940equalize the distribution of wealth, which could necessitate, quote, throwing to the wolves the 46
02:04:19.320men who are reported to have incomes in excess of $1 million a year. Hell yeah. Roosevelt also
02:04:26.820responded to the share the wealth outcry by advancing tax reform proposals to raise income
02:04:31.960in dividend taxes, to enact a sharply graduated inheritance tax, and to use tax policy to
02:04:37.720discriminate against large corporations. Huey Long reacted by charging that the president was
02:04:42.820stealing his program. Interesting. So basically in the period where like the Socialist Party of
02:04:48.120America or like progressives have power, the Democratic president's like, fuck, I need to0.99
02:04:53.700shift left. I'm like, where have I seen this before? I've seen this play before, almost.0.99
02:04:59.000For anyone to believe in a progressive ideal, it actually requires so much effort that to have three to four million people at that time who were interested in that would mean that given a little bit more time and funding, you could very easily shift an entire nation.
02:05:14.520We so often are like, well, they're not popular. And I'm like, well, no, it's not that they're popular. They're just not fucking taught from the moment that you walk into a school. You have to do a lot of effort to understand these things.
02:05:24.860Oh yeah. One economic system is our entire education system is designed around inculcating people to believe that it works. And the other, you literally maybe get a passing mention is like, and those people were poor. Anyway, moving on.
02:05:38.880Right. So it's just always striking to me when people will talk about that as if there's no possibility of that number growing when, in fact, it's actually kind of astounding that you could get millions of people to ever believe it in a country that puts so much effort into not even allowing it as like an intellectual consideration.
02:05:56.400Yeah. So the Great Depression, that was a big pivotal moment. FDR was a very pivotal president. We still benefit from a lot of the things that FDR did in this country. Labor protections, Social Security.
02:06:11.960For now. He did. And that is actually, I love that you said for now because that is a very important element of what we're going to end up talking about with American capitalism.
02:06:20.640Wait, Katie, so you're telling me that the president who had to adopt leftist policies implemented the only benefits that we currently have as Americans, that we take for granted as inherent to capitalism, and we don't even acknowledge that as, like, the result of leftist activism.
02:06:43.840But you saw similar sentiments after the Great Recession.0.99
02:06:47.740I think Occupy was kind of a flash in the pan of that, of people, again, being like, this shit's not working. What the fuck are we doing? Though the government reacted pretty differently this time. Under President Obama, we effectively nationalized the banking system in response to the great financial crisis. This was like peak neoliberal policymaking, right?1.00
02:07:07.140If we save Goldman Sachs, the wealth will trickle down and everyone else will be fine.
02:07:12.300Meanwhile, your average like middle class person, they're in foreclosure and are like losing their house, right?
02:07:18.780So the government pours trillions of dollars into preventing the banking system from collapsing.
02:07:23.640And I think people are pretty well aware of like why the great financial crisis happened.
02:07:28.020But just as a, you know, refresher, the banks had basically lent out too much money for assets that ended up being junk.
02:07:36.160And in capitalism, the banks are the most powerful institutions because they are essentially the groups that control the power of investment. They shape the futures that we get because they decide who gets investment and who doesn't. They can basically will futures into being and prevent other futures from happening.
02:07:52.820And the great financial crisis led to such a protracted downturn because they had gotten themselves so overleveraged that they, A, needed to be bailed out by the government so society wouldn't collapse, and we're talking globally now because the whole thing is connected now, and B, had to be restructured and recapitalized.
02:08:11.580So there was a long period of time when there was just less money for loans, for business investment, which led to corporate bankruptcies, which led to layoffs, which led to high unemployment.
02:08:21.580And this spiral meant that other industries eventually needed to be bailed out too. So like the airlines, the auto manufacturers, it had this horrifying ripple effect. And in order to reach the point again where things can be sold for a profit, labor costs have to go down, which means all of these circumstances culminated in having the effect of driving down wages.
02:08:42.740And because we didn't really have strong labor unions anymore, there was no countervailing force to push up against that. So in this instance, it's like you have all this government spending, you have this same playbook being run, but instead of benefiting the people, it's basically socialism for the rich.
02:09:01.420Now, the stock market and economic indicators
02:09:04.240said that we recovered from the GFC by around 2013.
02:09:28.760Do you mean that we had a huge level of almost government intervention to keep this struggling economic system afloat, and now that economic system is reliant on that intervention?
02:09:42.500One person who I really like who talks about this is Gary Stevenson. Gary Stevenson is an ex-trader for Citibank in the UK. And he talks about the great financial crisis as a time when he started to recognize something that was happening globally that he felt other people were not noticing, which was the fact that the government was spending all of this money into society to try to, like, keep the system from collapsing.
02:10:10.360And the people, the average person, was getting into more and more debt.
02:10:15.300But he was like, but where is the money going?
02:10:17.920You can't have a system where, like, the government is going, quote-unquote, bankrupt, isn't a ton of debt.
02:10:23.160And the people, like, where is this money accumulating?
02:10:26.200And, of course, now we know the answer to this.
02:10:28.080It's accumulating in assets that primarily very rich people owned.
02:10:32.960So what we're experiencing, I think, is the fact that all of that injection of money into the system to save it back then because of the way it was done, it mostly just served to inflate asset prices.
02:10:46.880And then it created this playbook that was used again during the pandemic where more money is coming in.
02:11:01.800It's just making wealth inequality go parabolic because the people who already own everything are getting richer at such an advanced rate. That problem will never fix itself. The only way out of that is to confiscate the wealth of those people.
02:11:16.460I think I'm understanding. So basically, I'm almost visualizing it as these were problems that were already inherent to capitalism, but there was this tectonic shift that allowed this gap to grow. And it's almost like the iceberg was chipped off. And like a small group of us were kind of pushed away from like where you can access the wealth.
02:11:36.200I'm sure that you and I could both count the generation above us is largely like it was
02:12:05.260And so I ask, how do we know that this is ultimately working? When will we know that capitalism has failed? If it has to periodically be bailed out by a powerful backstop, is it actually fair to say that it is working? And to answer this question, I think we have to look at what's normal under capitalism. What is the norm?
02:12:22.520And this is a question that's going to lead us to some powerful answers, because the U.S. is, at present, with maybe the Scandinavian countries that we're going to talk about in a second, the biggest beneficiary of capitalism on the global stage.
02:12:35.960We just talked about all the countries that have been violently crushed and continue to be exploited for the good of American interests.
02:12:42.100The U.S. sits at the top of that pyramid of capitalism, right?
02:12:46.100So the outcomes that we are getting here are probably about as good as it's going to guess.
02:28:45.320We know that like these magnificent seven stocks, these tech stocks and these companies, when anyone even slightly looks competitive, they just buy them.
02:28:53.680Facebook now owns international communication.
02:29:00.980That is the only option for you to communicate with people is to technically have some sort of Facebook account.
02:29:06.760So all competition eventually produces monopoly power.
02:29:09.960This is maybe the biggest contradiction of capitalism, the most unavoidable one, since competition is thought to be the force that prevents monopoly.
02:29:21.100Intervention from some outside source, usually the state acting in its antitrust capacity, has to intervene constantly to resolve this problem.
02:29:30.760The fifth contradiction of capitalism.
02:29:33.140You see this similar dynamic play out geographically as monopoly power and competition create uneven development.
02:29:39.960So we've already discussed how this happened internationally, how these peripheral societies get stuck in this cycle of dependency where they can't get out from under the basically major economies in the global north.
02:29:50.500And this is partially why China is so formidable now is because they just basically sealed themselves off from the rest of the world and said, we are going to focus on building up our own thing.
02:30:00.320But you also see it within the U.S.0.61
02:30:02.920As certain regions become more valuable, that value begets more value.
02:32:00.680And is therefore personally driven to create great shoes.
02:32:03.500Those are jobs that foster relationships within your community. So even if you fucking hate making shoes, you're seeing the people that you live amongst.0.89
02:32:12.700Yeah, and you're retaining social connections with everyone versus now where it's like you're working at a bullshit job and you're working with people who don't live in your neighborhood. You might even be remote. And so not only does your job have no inherent value, but it doesn't provide any inherent social or community building value either.0.66
02:32:29.040The area of contradiction here is not just the social cost of the cost to human flourishing and humans being able to find meaning in their lives and work. It's that you're literally creating conditions that make people not want to work. That's actually a pretty bad way to structure a society.
02:32:46.420I think that the workforce participation rate in the United States is something like 60 percent.
02:32:52.100And I learned the other day that Norway's participation rate, where they have the robust social safety net that, like, Republicans tell us if we have it, no one will work, they're obviously still capitalists. Their workforce participation rate is 80 percent.
02:33:05.900Americans' workforce participation rate is quite low compared to countries like Norway.
02:33:11.240But in the U.S., the only way to solve these conditions of like, well, in order to maximize profit, we have to put people in these soul-sucking conditions, is to maintain the constant threat of poverty.
02:33:58.080And I'm also saying that, like, the U.S. can't afford under capitalism to abolish poverty because if we abolished poverty or if poverty weren't a condition that people feared, the incentive to work would go away because we've created a system where work has very little meaning on its own for the vast majority of people.
02:34:15.880And then the final contradiction of capitalism is the role that technology plays. Because the use of technology and automation drives productivity, it can create jobs, but it also eliminates jobs. And without intervention, the technology will destroy as much as it builds. This is the challenge that we're facing right now, that if AI replaces huge sectors of the economy and nobody can find work, where will they get money? What are they going to do?
02:34:38.820There was a famous quote from Barack Obama a few years ago when people were really pushing for Medicare for All, and this was in the period where they're developing the ACA.
02:34:47.820And he basically said, well, we can't abolish private health insurance because it employs millions of people, and millions of people will lose their jobs if we fix this problem.0.98
02:34:58.860So in that respect, we are being held back from something better.0.99
02:35:02.320We're being held back from real progress because of the structure of our economy.
02:35:06.220So this technology piece does pose an existential threat because of what we said earlier about how capitalism relies on artificial scarcity because we actually do have an abundance of everything we need. And if that abundance were actually allowed to reach the masses, how's that, Derek Thompson, for your theory, that the system wouldn't work. You rely on scarcity. And the promise of technology is that you could live in a post-scarcity world.
02:35:29.960That's not to say that it wasn't an improvement over what came before it. It's not even to say that capitalism isn't still giving us something. It's just that it's no longer giving us more than it's taking from us. And for the majority of human beings alive today, it never gave them enough. It was never good for them.
02:35:47.860And earlier in this conversation, I said fascism is capitalism's rear guard.
02:35:52.380That was a quote that I read in my research.
02:35:54.440And I think that doing this episode really clarified for me why we face a fascist threat
02:36:00.200at this particular moment, because more people are becoming aware of these shortcomings.
02:36:05.020I think it's fair to look at all of this taken together and ask the question, has capitalism
02:36:17.300The wild thing is that a lot of what we're dealing with right now was predicted by very
02:36:22.000smart people. So I'm going to have you read a paragraph, and then I want you to guess who said
02:36:28.080it and when. Taylor Swift? Okay. Private capital tends to become concentrated in few hands,
02:36:35.260partly because of competition among the capitalists, and partly because technological
02:36:39.800development and the increasing division of labor encourage the formation of larger units of
02:36:44.620production at the expense of smaller ones. The result of these developments is an oligarchy of
02:36:50.000private capital, the enormous power of which cannot be effectively checked even by a democratically
02:36:55.220organized political society. This is true since the members of legislative bodies are selected
02:37:00.620by political parties, largely financed or otherwise influenced by private capitalists who,
02:37:06.260for all practical purposes, separate the electorate from the legislature. The consequence is that the
02:37:11.440representatives of the people do not in fact sufficiently protect the interests of the
02:37:15.340underprivileged sections of the population. Moreover, under existing conditions, private
02:37:21.100capitalists inevitably control, directly or indirectly, the main sources of information,
02:37:27.000press, radio, education. It is thus extremely difficult, and indeed in most cases quite
02:37:32.940impossible, for the individual citizen to come to objective conclusions and to make intelligent
02:37:37.820use of his political rights. This is either like a hype speech by Peter Thiel or it is
02:37:44.380or it is a criticism. Was it by Karl Marx? That was an essay by Albert Einstein written in 1949.
02:37:54.340Wow. Predicting what would happen to democracy under capitalism. Many, many years before this
02:38:01.200was probably on anyone else's radar. I mean, I know that this was a period of time when like
02:38:05.080the Socialist Party in America had gained a little bit of steam. But still, I mean,
02:38:08.940extremely prescient. Also crazy that he's like, they own the sources of information.
02:38:13.340I'm like, that was even true back then? Holy fuck.1.00
02:38:16.580It's really interesting. And I, again, this is another trick of growing up in America is that1.00
02:38:21.740you only learn how many famous people were anti-capitalist once you're on this journey.
02:38:27.320So it's like, you can't learn about it and go, oh, Albert Einstein held socialist beliefs.
02:38:31.960Maybe I'll look into socialism. You're never going to fucking find that out until you're already, until the algorithm has already deduced that you're a leftist.0.95
02:38:40.560You're already three hours into diabolical lies.1.00
02:38:43.080Yes, you're already three hours into diabolical lies.
02:38:45.520But that is worth noting that if anyone wants to spend three hours looking through how many famous people throughout history have maybe not said, hey, I'm a socialist, but have basically like communicated this criticism, which is this economy does not work.
02:38:58.840We need something else. It's kind of shocking.
02:39:01.460I don't even think one three-hour podcast episode is going to undo the decades of propagandizing
02:39:06.900that I'm sure we've all been subjected to.
02:39:10.200But I did want to chip away at a lot of the myths, the contradictions today.
02:39:13.980I wanted to just, for anyone who came into this listening and thinking one thing, I wanted
02:39:18.060people to have their worldview shifted just on its axis a little bit and be like, huh,
02:39:22.160maybe a lot of the things that I've been told aren't actually as true or as fair as I had
02:39:28.660And so that leads me to ask you, Caroline, my kind of concluding question and how I want to close out today, which is capitalism. It sounds nice in theory, but it doesn't really work in practice, does it?
02:39:41.760So what comes next? That's kind of the grand question. What do we do, right? Where do we go from here? Okay, if this doesn't work, what the fuck do we do about it?
02:39:49.500I think that the answer will be found once we have an inspiring vision for the sort of world
02:39:55.980we would rather live in, even if it is a world that has never existed before. Because there's
02:40:01.240this idea that capitalism is the only system that can provide us with abundance, and that
02:40:05.040if we were to venture into something else, we'd be faced with poverty. We'd have to give up all
02:40:09.120the creature comforts that we have come to enjoy, like HBO and bubble baths and high-speed internet.
02:40:14.060but what if liberating ourselves and our stuff from the pressures and the contradictions
02:40:21.440of capitalism will make it all better what if it could make luxury and free time more available to
02:40:28.920us not less and what if capitalism isn't pushing us forward anymore but what if it is holding us
02:40:33.800back from the world that we could have i think the person who probably is most known for making
02:40:42.260that first grand stake into what the fuck are we going to do instead is a guy named Aaron Bastani.
02:40:49.240He wrote a book in 2019 called Fully Automated Luxury Communism. And I think this is the big0.94
02:40:56.420sort of grandiose thinking that we're going to need if we are going to get people on board and
02:41:02.980have a vision that's not just about the fear that capitalism uses. What is it that we could have
02:41:08.860if we were liberated from this system.
02:41:11.340And Aaron says that automation is not something to fear
02:41:14.860if that automation serves people and not profit
02:41:17.860because it can create what he calls a post-work society.
02:41:21.320This is basically a full circle moment for me personally
02:41:23.660because my interest in personal finance
02:41:25.720and financial independence was effectively seeking that.
02:41:28.940I wanted to get a post-work life for myself,
02:41:32.280but under the conditions of capitalism.
02:41:33.900That's why I got interested in financial independence.
02:41:36.360but fully automated luxury communism says hey that's a version of individual solution or freedom
02:41:42.360under capitalism that can actually scale what's really cool about this i was looking this up this
02:41:48.440morning actually in china they have factories already where there are no people in them they're
02:41:53.000fully automated when you have a society that is organizing itself around the idea that eventually
02:41:58.500people will not have to work that like all these things that we need all these jobs the screwing
02:42:03.120the thing into the iPhone. The guy was like, yeah, we're going to bring that factory back
02:42:07.080to the U.S. There's already no people in that factory in China. They've already solved for that,
02:42:12.560right? This is a utopian vision for sure, but it's not outside the realm of possibility as
02:42:17.780much as we've probably been led to believe it is. And I am going to have you read a book summary
02:42:24.820and review from Annie Lowry about this book. Annie Lowry, famously the other half of the0.99
02:42:31.340Ezra Klein power couple who unfortunately had to be the one to give birth to the children.
02:45:02.720And so I would say that as a way of kind of like galvanizing people, which is like, it's not a question of whether we're moving towards this future.
02:45:08.940It's how much power you can grab back in the process.
02:45:11.460Do you want the oligarchs to control this technology or do you want it to be democratically owned and controlled?
02:45:16.680I think that's the other thing is socialism is economic democracy.
02:45:20.600that's really what its aims are just like our political democracy is not perfect and has flaws
02:45:28.840but we still think that it's better than monarchy and better than authoritarian regimes the fact
02:45:36.760that i think a lot of the communist governments that have been tried ended up becoming authoritarian
02:45:42.260is very instructive that is a risk and that like when you are trying to accomplish that in the
02:45:50.200world that the U.S. built in the 20th century, like, it's probably not really a surprise that
02:45:55.860these leaders became very authoritarian and very militant and very violent, because they thought
02:46:00.460it was the only way that they were going to achieve their goals. But it doesn't have to be
02:46:04.760that way. And I think it reminds me a little bit of that cartoon of a guy in a suit on a stripper
02:46:10.080pole, and these two people are watching him. They're like, the billionaire loves me. I just
02:46:14.320know it. And he's like, that's, I think, the attitude that we have to really work diligently