As illustrated in our last post, the only thing Capitalism rewards is access to capital. Capital never leaving the closed loop of the “market of markets” to extract profit from differences in value is parasitic, a drain on resources that should be going to the real economy, to fund innovation, experimentation, and new solutions to existing problems.
Private equity buying established companies to “make them more efficient” by cutting quality, labor costs, research and development, and stripping them down to the barest of operational structures to cook the books to make them look profitable for sale after extracting huge fees and profits is a plague of enshittification that has claimed legacy brands and retailers that retain nothing but the trademarks of formerly great companies. Even publicly-traded companies get roped into the “efficiency” craze, with CEOs selling off company-owned real estate, renting it back to the company, laying off huge amounts of labor, and cutting everything to the bone.
We recommend “Plunder” by Brendan Ballou, or this article about the book if you want a quick primer. Josh Kosman’s classic “The Buyout Of America” is also fantastic.
It is a business orthodoxy that is practically religious dogma that has led to this death spiral/race to the bottom that has claimed legitimate American brand institutions. Elon Musk’s twitter, Bungie, Sears, all followed to the letter the PE strategy, and have collapsed as a result. How does this obviously poisonous strategy perpetuate? It makes the right people richer. And they don’t care about anything else.
Just as you cannot sustain personal health by starving yourself to death, you cannot cut your way out of the red. This is proven time and time again. As consumer tastes change, and these stripped companies have no resources to develop new products or services to meet the changing needs of the consumer.
Call this Kelso’s First Law: you cannot get out of the red by making your product worse. Ever. Actually, Kelso’s First Law is “thou shalt not catch feels for the bartender”, but that’s a different sphere, and more advice than observation. Still, both are true.
Capitalists tout the profit motive as the fundamental driver of the economy, largely because they are greedy sociopaths who see money as points in a game that comes with perks like their own pet Congresspeople and a lot of sex tourism. Yet this is not only demonstrably false, it illuminates the exact fatal flaw of Capitalism. If everything is done simply for money, then sidestepping the actual work of doing anything but arbitrage and rent seeking is grossly over-incentivized, and leads inevitably to ruin. As you win more and more of the “money making money” game, you are more and more able to tilt the table in your favor, making more money. And there we are, like clockwork, death spiral.
That’s where we are now. A religious devotion to wealth, fame, and power for no reason other than status and ego. Jeff Bezos’ upcoming nuptials may not actually cost $600M, but just the fact that he could if he wanted is goatfuckingly insane. Bezos and other billionaires flying private jets to Burning Man completely destroys the whole idea and ethos of Burning Man.
So why do it? It’s all to dunk on the poors. And by poors, I mean those with paltry centimillion fortunes. Musk tweets literally hundreds of times a day, while purportedly running at least three major companies. Bruh, fund cancer research and just go play Diablo IV for the rest of your life, instead of destroying our system for your fascist little ego. OK, it’s literally pathological narcissism, so I guess that’s kind of ableist. Still, toxic running up of the score in a way that has zero real impact on your quality of life while you blame starving families fleeing war and violence is just the fucking worst. And these apex predators of Capitalism have gotten an entire global cult to buy into this religion.
I’m burying the lede here, but I wanted to set the stage for what constitutes the foundations of the flawless argument against this horrific, oppressive system that still rewards what amounts to colonial conquest and imperial repression. Ready?
The purpose of building shoes is to provide shoes.
Necessity is the mother of invention. Not greed. The purpose of products in a market economy of any kind is to make available a solution to a problem. This seems obvious – it is obvious – but it is absolutely buried under the weight of self-serving grabby hand propaganda and huge amounts of money thrown at Economics and Finance as disciplines.
“I have made things that help my feet not hurt. If you hunt for food for me, I can make some for you, and then hunting will be easier. We all benefit from this.”
The purpose of building shoes is to provide shoes. That has to be the foundation of a market economy. Innovation solving problems in the real economy.
How we determine value and fair trade is insanely complex in the modern age, and relies on a metric fuckton of emotional manipulation. Demand’s utility function is completely warped by out of control marketing and relentless advertising. Pretty sure trying to develop an indifference curve between Funko Pop figures and Stanley Cups would make Mises’ head explode. However, the fundamental, historic process of trade goes back thousands of years. Making a fair sysytem is by no means impossible, even today.
The legally-enforceable fundamental fiduciary duty of execs to make money for their shareholders uber alles demonstrates the priorities of a sick system that shrugs off plane crashes and dead kids as acceptable losses, action only taken when profits are threatened. Everything must generate profit. That is the only goal, and marks Capitalism as an unsustainable system that serves an increasingly small number of individuals, whose inherent human inability to handle these bonkers levels of power, wealth, and fame poisons the fountainhead until we all die.
Necessity gave us the polio vaccine (fuck you, RFK Jr), profit motive gave us the Snuggie and Jake Paul. Flawless victory.
Elon signs checks while actual scientists and engineers solve the problems faced by space flight and exploration. We get no transparency, no accountability, no ownership of results, just Elon cashing even bigger checks as he grabs from investors and government contracts with both hands. Despite the governments of myriad countries paying to develop COVID-19 vaccines (fuck you, RFK Jr), with government funded research into mRNA tech, the patents are owned privately. It’s not the white coats that make up “Big Pharma”, it’s the suit coats. Labs good, corner offices bad. The waste of resources in a country where we buy EVERYTHING from third party vendors is fucking crazy.
Every step that demands profit for entities outside the production process is waste. Executive management is there solely to make money and maximize shareholder value and profit. Not only are they completely unnecessary, they are a vital component of enshittification. They are paid to be antagonistic to both labor and consumers, to find out how far they can push demand and production to extract profit for the rent-seeking class. The more they can pay less for more production while charging more to the consumer, the wilder their compensation packages are.
The primary purpose of building shoes must be to provide shoes. Not wealth for a parasitic class of psychotic hoarders who will never have enough. We need shoes. We do not need an entire financial sector that has no function but making everything worse.
Kelsoland.Institute 