Capitalism 2.0 Will Include a Healthy Dose of Socialism | Eric Weinstein

Read more at BigThink.com:
Follow Big Think here:
YouTube:
Facebook:
Twitter:
Transcript: I get asked a lot about the state of capitalism and I think that for those members of society of a certain age we think of capitalism as being locked in an ideological battle with socialism perhaps or even communism.But we never really saw that capitalism might be defeated by its own child – technology. And I think that what we find is that even the most diehard free market economists usually save place for what they call market failure.
That is, markets really only work when the value of something and the price of that object or service coincide. So the key question is: what causes value and price to get out of alignment? And, in fact, every government on earth has a form of levying taxes of some form, because at some level there are certain things that need to be paid for that cannot, in fact, be priced where they must be valued.
So, for example, raising a standing army is tough because if somebody chooses not to pay for it it’s very difficult to exclude them from the protection of that army. So that in general—what we find is that these market failures are found in every economy, but they are also hopefully a small portion of the economic activity so that we can deal with them as a special edge case.
Now the problem with this is that technology appears to do something about figuring out the size of that small slice and making it rather large. So, for example, if I record a piece of music, once upon a time if you wanted a high quality version of that music you had to go to the folks who actually pressed the record albums.
But now I can record music with arbitrary fidelity and share it as a small file. And my having a copy of that file doesn’t preclude anyone else from copying the file and using it themselves. There’s no question that the number of times I use that file doesn’t really degrade the file because it’s, in fact, digital. So in that situation musicians were among the first to feel the earth crumble beneath their feet and they had to find new business models because, in fact, they found that they had gone from producing a private good where price and value coincided to producing a public good.
And the idea of taxing people to pay for both an army and their diet of jazz and rock n’ roll probably didn’t make a lot of sense.
So the danger is that more and more things are being turned into small files, and that means that the portion of the pie that is private goods is likely to shrink. This is one of several different forces.
Another one that I talked about in an essay called Anthropic Capitalism is that software has some very peculiar features.
Traditionally technology has moved us from low value occupations into higher value occupations. So while we always decry the loss of jobs we usually create new jobs which are more fulfilling and less taxing.
And therefore those who have cried wolf when they’ve seen technology laying waste to the previous occupations, those people have usually just been wrong. The problem with software is that software spends most of its time in loops. Almost all code can be broken into two kinds of code. Code that runs once and never repeats and code that loops over and over and over. Unfortunately what jobs are is usually some form of a loop where somebody goes to work and does some version of whatever it is they’ve been trained to do every day. Now the danger of that is that what we didn’t realize is that our technical training for occupations maneuvers the entire population into the crosshairs of software. It’s not just a question in this case of being moved from lower value repetitive behaviors into higher ones.