What kind of evidence would change your mind on capitalism*?

Friso

23

Disclaimer: politics is really hard and really controversial, and I'm about to give a political opinion.

I think the evidence is already overwhelming that capitalism is suboptimal. The difficulty isn't in providing evidence for that, it's in providing evidence for a specific superior system. No matter how clever you are, you can't write down a system for the organization of an entire world economy and know with perfect accuracy what would happen if that system were put into place. The world is too complicated. This isn't really a problem with anti-capitalism, but rather a problem with non-reformism. EA's have differing political opinions, although they cluster around social liberalism/social democracy (if the polls are to be believed), but they're universally reformist because reform is just a way safer bet.

For example, it's generally uncontroversial that markets lead to inequality of wealth, and if you're a utilitarian you should consider unequal distribution of wealth to be suboptimal (in a vacuum at least), because of the principle of diminishing marginal utility. In fact if you believed that market outcomes were axiologically perfect, you wouldn't be an effective altruist, because in order for that to be the case all dollars spent would have to have an equal effect on global utility. So let's say you're an EA looking at the cause area of "wealth inequality" and you brainstorm some solutions:

Organize a large group of revolutionaries to overthrow a government and institute a one party state that appropriates private property and runs the economy via a central plan.
Institute a higher progressive income tax, using the revenue to fund more social programs, a universal basic income, and public housing.
Organize a large group of revolutionaries to overthrow a government and institute a stateless gift economy that relies on negotiated coordination between firms to distribute goods and services according to need.

The empirical data doesn't like the first idea. It's been tried, and it successfully reduced inequality, which was the goal. In 1980, the GINI coefficient of the USSR was .29, which is pretty equal! But the country was plagued by political problems, mostly a result of a lack of democracy, which lead to mass executions, ethnic cleansing, and other things but I think we've proved the point already. The same approach led to similar problems elsewhere.

The second idea has also been tried, and it also successfully reduced inequality. The country with the highest income tax in the world is Belgium, which... okay that's a bad example because they also committed mass executions and ethnic cleansing. But the second highest income tax in the world belongs to Finland, which has a GINI coefficient of .26, even lower than the USSR! And it's a stable democracy with a very high standard of living. Other countries with mixed market economies and strong welfare states achieved similar results. This seems like the standout intervention so far, AND it requires the least effort!

The third idea has never been tried on a large scale, so there is no empirical data. You could give arguments for why it would or would not work, but it would ultimately all be speculative. I'm not sure what kind of non-empirical data would convince me that the non-speculative opportunity cost of revolution is worth the speculative benefits. Also, I have extremely strong suspicions that it wouldn't work because of things like price signals and rule of law.

The odds that the current global economic status quo is better than any possible alternative is 0%. However, constructing a system that performs better is very difficult. If it were easy, someone would have done it by now. There are some very interesting models of socialist economies. I find the Cockshott-Cotrrell model really interesting, I really like the Lange-Lerner model. I don't like Parecon. But can these models perform as well as or better than the current world economy? Predicting the behavior of the capitalist economy is infamously difficult, and we have hundreds of years of empirical data to work with. Predicting the behavior of an economy that doesn't even exist yet is impossible. It's too complicated. I can't predict what would happen if the whole world adopted the Lange-Lerner model, but on priors, I think that any system made "by hand" is automatically at a loss against a system with hundreds of years of tweaks, regulations, and real life trial-and-error adjustments to its known failure modes.

So I guess the only thing that could convince me to agitate for the founding of a specific radically different system would be if that radically different system already existed and was superior according to my value system. Previous attempts at socialist economies produced low inequality, low unemployment, and decent growth, which is cool and all, but the Nordic model can do exactly the same thing but with more consumer goods, more democracy, and without the shortages and surpluses that plagued the soviet bloc. I am aware that this approach means that there are utopias in possibility space that I am actively ignoring, but I think the risk-neutral approach is to do exactly that.

EA's of different political opinions than my own likely have different justifications.

David T

2y

3

I think you're absolutely right about the evidence strongly supporting capitalism being less than ideal from a utilitarian perspective but also not supporting any putative drop in replacement system (and providing a lot of evidence that revolutions are a terrible idea in most places). As Churchill once said of Parliamentary democracy, it's the worst system apart from all the others that have been tried.

But I would think for critics of capitalism there are plenty of feasible options short of completely eliminating it. The Nordic model is (for better and for worse) notably less capitalistic than the United States model, for example. Many well established problems with market economies like externalities and lack of public goods (and utilitarian issues like wealth inequality) are feasibly solvable to a much greater extent than under the present system, and seem to fall into the category of "system[s] involving power structures for which there is a lot of attention on the left but almost no attention within EA"

I think there are other reasons why EA doesn't get involved (there is has a lot of attention as a problem already, achieving change is extremely difficult and costly, and given uncertainty and different starting premises EAs are highly unlikely to agree with each other. though the latter hasn't stopped them exploring other fields). I'm not sure getting more actively involved in the politics of economic distribution would actually improve EA as a movement, pursue the 'right' goals or achieve any success though.

Friso

2y

3

Thank you so much for your comment! I think this is roughly the view I held before writing this post, although you did it better than I could have.

There are two issues that come to mind.

Is it not also the case that these social democracies and their welfare states benefit from, and perhaps even rely on for their high standard of living, the suffering of others? Whether that's suffering of others in the past (colonialism), present (think horrendous labor standards at the bottom of Western supply chains), or future (extractivism/general profit over planet markets often effectively take welfare from the future's poor and give it to the present's rich). Finland would be much poorer if it were not part of a larger global market in which a lot of the existing wealth was accrued via oppression. Bottom line: if it is the case that social democracies with high standards of living can exist only by distributing fairly among its citizens wealth which was partly created unfairly (even if not directly by the Finns but by someone else and then paid for by Finns, e.g. cobalt mining in Congo), then it's not clear to me that a world in which every country becomes like Finland is just. And perhaps it is not even possible, in that the extraction of resources necessary to give the entire world a standard of living similar to that of European social democracies may well be unsustainable (e.g. it seems very unlikely 88% of the world could own an electric car as is the case in Norway).
If we retroactively apply the idea that radically different system would have to exist and be superior according to your value system, we seemingly miss out on most of the world's great cases of moral progress. Athenian democracy, the abolishment of slavery, the introduction of voting rights for women, perhaps most cases of great moral progress came at the expense of a status quo for which much more evidence was available. Could you not make the case that a similar move would be necessary to end what we might call global apartheid?

Sarah Weiler

2y

1

I don't draw precisely the same conclusions as you (I'm somewhat less reluctant to entertain strategies that aim to introduce untested systemic changes on a relatively large scale), but I really appreciate the clarity and humility/transparency of your comment, and I think you outline some considerations that are super relevant to the topic of discussion. Thanks for writing this up :)!

Ebenezer Dukakis

2y

11

I actually did change my mind recently about free trade after reading this book:

https://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596915986/

I wish more EAs would read it, it affected my thinking about development economics a lot. However, it's not an anti-capitalist book, just pro-government-intervention.

As for radically reworking capitalism -- I'm excited about this and have some ideas for doing it (example idea: citizen assemblies that attempt to measure externalities of individual Fortune 500 companies and set their corporate tax rate accordingly, then perhaps a prediction market for the decision of the citizen's assembly). But I think the thing to do is to prove the idea works on a small scale and then gradually increase the scale. Do it in a town. When it works in a town, do it in a district. When it works in a district, do it in a province. When it works in a province, do it in a country. When it works in a country, do it all over the world.

Jason

2y

4

[Disclaimer: I consider myself low on "EA orthodoxy" relative to the median poster here. As relevant here, I would find a world in which all good-seeking work was done in an EA way deeply unsatisfying. And I think the ideal state of the world is, at a minimum, less "capitalistic" than the current state.]

As for myself, I don't really reach the theoretical question posed here due to skepticism about tractability as a practical matter. So my first point of interest would be learning more about effective (yet ethical) ways of bringing about socialism. My view -- obviously overgeneralized! -- is that the current left spends a lot of its time and energy on virtue signaling rather than getting its hands dirty with practicalities. It's also unclear what the counterfactual impact of -- I say this lovingly! -- a few thousand smart ~nerds and a few billion dollars would be here.

Many EAs would probably assert that they are doing more for communism's potential than all but perhaps a few left activists, because radical change is clearly a long-term project and will never happen if (e.g.) AI or a pandemic kills us all first.

D0TheMath

2y

3

The same standards applied to anything else: A decent track record of such experiments succeeding, and/or well-supported argument based on (in this case) sound economics.

So far the track-record is heavily against. Indeed, many of the worst calamities in history took the form of "revolution".

In lieu of that track record, you need one hell of an argument to explain why your plan is better, which at the minimum likely requires basing it on sound economics (which, if you want particular pointers, mostly means Chicago school, but sufficiently good complexity economics would also be fine).

Friso

2y

3

I don't feel like you are taking my question head-on.

I'm asking you to envision something that could convince you about systems other than capitalism. Just saying successful experiments and well-based arguments feels like you are evading my question a little. Especially because it is not clear how such an experiment could succeed (as in, what result are you're looking for?), or what kind of arguments would be convincing. What if a more just world would require that we end the state of global inequality, and that simply requires lowering the standard of living in much of the Global North? Or if justice requires that we end the extraction of much of the planet's resources? I assume an experiment that tells you some people might need to become much worse off for justice to occur will not convince you.

I also don't understand why that would mostly mean Chicago school. To change your mind on capitalism, you need a specific school to change their mind first? And not some school, but one that was 1) explicitly set up to defend laissez-faire capitalism, 2) largely relies on simplifying assumptions we simply know to be false (rational choice, perfect markets, etc.), 3) is incredibly controversial even for many mainstream economists (e.g. even Paul Krugman called it "the product of a Dark Age of macroeconomics in which hard-won knowledge has been forgotten") and for environmentalists especially?

Jason

2y

2

What do you perceive as "types of evidence at the top of the EA hierarchy of evidence"? I sense that the use of evidence has at least somewhat changed since early critiques of this sort.

Friso

2y

1

I was mostly thinking of high quality empirical work (RCTs and the like) and fields that study/mostly operate within the status quo (orthodox economics, psychology).

Don’t get me wrong, I definitely acknowledge that EAs engage in abstract philosophical discussions, but aren’t these generally on how the status quo might become much worse (AI, XR) rather than how the status quo could be changed to make things better?

It might very well be true that even the status quo is so incredibly tough to study that it will take most of our efforts. But that seems like quite a biased way to study truth, no?

Jason

2y

3

I think that many EAs' ideas about how the "status quo could be changed to make things better" run through radically different pathways than yours -- status-quo-shattering positive effects of artificial general superintelligence that doesn't kill or enslave us, space colonization (through the power of said AGI), brain uploading, etc. Not all of that sounds like my idea of a good time, to be honest, but it's definitely present within EA.

I think the focus right now is on "how the status quo might become much worse" because that existential AI risk is believed to be close at hand (e.g., within a few decades), while the positive results are seen as likely if only we can get over the existential risk segment of our relationship with EA. And much of the badness of AI catastrophe is attributed to the loss of that future world that is much better than the status quo.

Nisan

2y

1

I've seen a few proposals for a world without power structures, and they've all had glaring theoretical problems. They don't have great answers to all of:

What if there's a bad harvest?
What if someone gets cancer?
What about children?
What about people who don't like the system?

If I saw a description of a way of organizing society without power structures and that addressed all of my theoretical objections, I'd start to get interested.