In a long essay, I write
The reduced significance of capital means that the cost of entry is lowered in many industries. Today, we see this in the shops that people have set up on eBay or in the blogs that compete with traditional pundits.
…When a new project can be hatched in a basement on a small budget, fast failure is more efficient than organized planning.
…My belief is that this is the wrong time in history to adopt European-style democratic socialism. Under capitalism without capital, we should encourage people to be self-educating and self-starting, not state-parented. Our government should be compassionate and generous to those with mental illness and physical disabilities, but otherwise it should have a smaller footprint, not a larger one.
UPDATE: for more, see Jim DeLong.
For Discussion. What are the implications of rising absolute standards of living, particularly among the poor, with greater inequality as measured top-to-middle or top-to-bottom?
READER COMMENTS
Lawrance George Lux
Jan 3 2005 at 2:19pm
Bloggers an online shops are simply the new ‘Mom and Pop’ stores. The old ones were driven out of business by Corporate concentration and financing. The actual level of small entreprueneral businesses probably has decreased, though wild successes are internationally noted. lgl
spencer
Jan 3 2005 at 3:10pm
The classic view has been that the inherent problem of capitalism is income inequality creating large gaps between potential output and effective demand. It was widely believed that the social revolutions of the 1930-40s where govt took on a major role of income redistribution and demand management saved capitalism from itself.
It now looks like the US is undertaking a big gamble to test that thesis. We are clearly seeing a major shift in income inequality accompanied by a major slowdown in the rate of growth of the economic wellbeing of most of the population.
Moreover, the slowdown in real income growth for the bulk of the population has been in the face of strong productivity and massive debt.
The risk is that these trends, and the building of massive debts proves that the earlier thesis that income inequality is the inherent problem of capitalism proves to be correct and we return to a depression scenario.
Deb Frisch
Jan 3 2005 at 3:29pm
Sure, I’d be stoked if Uncle Sam skimmed less than $2.3 trillion a year from the economy.
I’d be even happier if he spent the money he takes making Americans and other people happier, healthier and safer instead of what he does now –
lining the pockets of tobacco farmers and steel workers, destroying Iraqi infrastructure, maiming Marines, destroying Humvees, etc.
Lemme guess – you still think that the difference between the left and right, economically, is that the left is for big government and the right is against it?
p
Jan 3 2005 at 5:59pm
I’m not sure how the observations aptly made by Kling translate into Capitalism without Capital. The observation of the long tail is in no way an indicator of reduced capital requirements. The observations made suggest that retail will change as the tail grows more profitable to serve. One may even argue that it will increase capital requirements to cover the long tail.
In addition, we see no real signs that capital requirements are falling. One can argue that it is easier to secure capital than in the past. This however is a very different argument.
I think that the real question we need to wrestle with is how can America prosper when it is systematically blocked from leveraging its intellectual and economic capital in the world economy.
Deb Frisch
Jan 3 2005 at 10:13pm
“I think that the real question we need to wrestle with is how can America prosper when it is systematically blocked from leveraging its intellectual and economic capital in the world economy.”
You have hit the nail right on the head. The rules that govern international trade are absurdly biased against Uncle Sam’s Club. It is time for us to stand up and say we are MAD AS HELL AND WE ARE NOT GOING TO TAKE IT ANYMORE!!!!
You go, dude. You are so right on.
Ronnie Horesh
Jan 3 2005 at 11:17pm
Tell that to would-be exporters of agricultural products to the USA.
Alistair Kelman
Jan 4 2005 at 2:58am
In the long article you said:
It is worth looking at this piece from yesterday’s Financial Times – the full text is included since I do not have the URL to hand.
Nathan Cheng
Jan 8 2005 at 8:28pm
Kling relates “capitalism without capital” to the long tail through the Internet. It is the Internet, Kling states, that facilitates capitalism without capital. So Kling’s thesis is that the Internet facilitates capitalism without capital and therefore–because of such a low-barrier entry–we see the long tail.
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