The Rise & Fall of Capitalism

Today's episode of Diabolical Lives was brought to you by President Eisenhower's Kink for covert ops, Senator Joseph McCarthy's therapist, every grind set bro on Twitter who uses socialism as a catch-all term for things they don't like or understand and the communist manifesto. Caroline, before we get started today, I think an episode about capitalism would be an appropriate time to formally announce our very fancy business plan. Yeah, so when we started this podcast, we knew from the jump that we wanted it to be funded by subscribers rather than by advertisers, so that was kind of part one of our financial foundation setting of this company that I think in the long run you and I do want to be our source of main income. So I think that we had this challenge of like how do we build a profitable business that we feel like will continue to grow and will provide us stability as we do this research. But how do we also make it new? And so part one was having it be fully subscriber funded so that we're not taking corporate money. And part two is something that we've alluded to once or twice in the past, which is that we wanted to find a way to redistribute a certain portion of our funds in the most effective way possible. And so what we agreed to in the jump before doing any research or figuring out how we would do it was that before we had any money. And before we had any money was that we were going to split it up by thirds where with net profits, you get a third, I get a third. And a third of it, we give back. And so it has been a long journey of us trying to figure out how to do that in America. It's not necessarily easy to figure out how to do that with taxes. And so we have finally gotten to the point where we feel pretty comfortable figuring out how we're going to do that. And so moving forward, we can guarantee that at the bare minimum, a third of our net profits will always go towards redistribution. We're going to try different models of that as we go on different ways of redistributing. We want to eventually get our paid subscribers involved. But in the meantime, to kind of jumpstart this, we wanted to start with an initial redistribution amount. We've been doing this show since June, but we didn't turn on any sort of paid subscriber revenue into October. So we're about six months in. We had just been letting it accumulate in the account. We hadn't really done anything with it, but we're making our first distributions imminently. And right now, the plan is to give $15,000 to run for something, which is an organization that works to get progressive candidates elected at the local level. And then the other cause that we're going to donate to, we're kind of weighing a couple different options right now. But we're going to redistribute another $15,000 to a reproductive justice collective of some capacity. So we have a couple different ones that we're thinking about, but basically our first batch of redistribution is going to be for about $30,000. Our hope is that we can really ramp this up quickly. And as we're going to talk about today, I think our grand vision is that our diabolicalized local groups, which have kind of organized themselves spontaneously, which is super cool, will become involved in deciding how this money gets allocated in the future. But grand slam vision is that every year, diabolicalized is giving away at least $100,000. Yeah, I think it's lit. And I'm glad that we started with a third at the jump because I feel like if we hadn't put that number out, we would have looked at the money later and been like, "Wow!" So I'm glad that we kind of forced ourselves into doing that. I think that there's this constant balancing that you're doing when you're a progressive person of long-term vision setting and short-term relief. And so I think I'm really happy to be contributing to the long-term goal of getting corporations out of politics. I would also be really open if anyone knows of any Republican groups that support candidates who don't take corporate donations. I would really love to know about them because I think it's a bipartisan issue. I just don't think Republicans care as much, but we'll see. And then I love the short-term immediate relief to women who are moving through reproductive challenges. I know the Black community is disproportionately impacted by this. And so we want to make sure that we're giving to a nonprofit that prioritizes that. As far as the Republican orgs, I think, Carrie, you're familiar with Turning Point USA and their advocacy. Are they anti-corporate interests? They are one big corporate interests. Yeah, they are corporate interests. All of this is to say that if you haven't yet become a paid subscriber of Diabolicalize, you can now move forward knowing that officially, a third of whatever you give to us each year is going towards the redistribution of the exact issues that we talk about. And so we want to keep making this a dynamic conversation. We're so grateful for the interest that we've seen so far and we can't wait to explore this more. Yeah, so with that said, Caroline, what do you know about capitalism? Okay. So we have been talking about doing this episode for like a month now. First of all, I was like, Katie, you know that this has to be you. Like I'm all vibes, no academics. And then when we got closer to it, I was like, fuck, I am about to be big time outed. So I'm just going on vibes to on this conversation today. That's perfect. I want you to go on vibes because I think most people and their defensive capitalism is just vibes. The reason that we decided to do this episode is because the assumptions of capitalism play a critical role in basically every single episode that we do. I 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 would exist very differently. But we've never focused an entire episode on capitalism before and unpacking where our criticisms come from. And 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 because I was educated in the United States in the US education system where you learn that the Cold War, yeah, I was about the US and the Soviet Union, but like what you really learn is that it was about capitalism versus communism. And you learn that capitalism proved itself to be the better system. Communism was this dangerous thing that just failed everywhere. It was tried. And you've probably heard one specific phrase about communism before. Sarah, what is the classic explanation of why communism doesn't work? I don't know if there's a famous phrase, but I think the things that I hear are that people no longer feel motivated to work and everyone just is poor and broken unhappy. Yeah. Have you ever heard someone say, well, it sounds great in theory, but it doesn't work in practice. Mm-hmm. Yes, yes, yes. It's kind of like, oh, well, that would be great, but it doesn't work. Okay, I think we are all going to feel quite a bit of cognitive dissonance today. I know I did. When I was researching it, I felt like Pavlov's dog a little bit. I 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's just gets hammered home. And in the past, we've done deep dives into how people get radicalized. How does someone fall down the Maha Maha pipeline? What about the characters that they're going to encounter on their way to like transphobic beliefs? But in the United States, your entire life is a capitalist radicalization process. It is just the water we're swimming. Dude. This episode is probably going to be a little bit more akin to the abortion episode in the sense that it's going to be very heavy on the theory, very heavy on the history. And hopefully it's going to give us a bit of a foundation moving forward to 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. I was thinking about the idea of being devil's advocate and I had joked to you like, well, I actually feel pretty prepared. I got to be plus in macroeconomics like I went to UVI. I actually know all of the arguments for capitalism. And I was thinking how it's funny that even if you are a relatively unsavvy person in the world of economic theory and politics, you actually are taught from the youngest age across every single school system, how to argue on behalf of capitalism. And that's kind of trippy when you think about it. You are educated with highly sophisticated arguments. And I can still pull them out at the top of my head, even though I have been in artsy, artsy world for a decade now. Well, hopefully today we'll see how unsophisticated many of them are and how quickly they follow part underpronting. But cool. 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? What does it mean for a system to be working? First, let's start with kind of a basic question. Who's allowed to criticize capitalism? Carol has anyone ever asked you why you feel qualified to criticize capitalism? I think that I give off a fucking mouthy enough vibe on the internet that I don't really get too much pushback right now. But we have, I mean, we have gotten some pushback in our paid subscriber chat of people being like, "Hey, I like the idea of this, but I also am not so sure that capitalism is as bad as you say it is blah, blah, blah." Yeah. And also, do you feel weird criticizing capitalism as a business owner? I have gotten this before, if 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? Yeah. 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 I was like, this isn't working. I 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. Yep. So what I'm trying to get out of 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. This is a very strong built in line of defense that the status quo benefits from. So I think we need to get it out of the way before we can get into any theory. So let's engage with those earlier questions that are sometimes directed at me or at us. What makes somebody successful under capitalism? Because you're a privileged white girl who works like 20 hours a day. Break it down even simpler. What do you mean? Do you get blonde? Okay. Privileged white woman who works 20 hours a day. All those things are true. But it's because I have money. It's simply because I have money. Okay. Yeah. How did I get money? I became an owner at the smallest scale of interpretation. I came to own the means of production that I benefit from. So like with money with Katie. Wait. Go ahead. Katie, I'm having like a stupid aha moment because I'm realizing that I only got money when I became an owner. That's kind of crazy. I've never even made that connection before. Yeah. You became an owner. We own the intellectual property that we personally derive our living 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. But this isn't just something that business owners do. The entire financial and retirement system in the United States relies on people meeting identical conditions. So 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? They're being paid less than the value they're creating. That's the only reason you would become employed as if you are producing more than they have to pay you to get that value. That person, that hypothetical person, that wage worker is only ever able to escape wage labor if they become owners too. They just do it differently. They often do it by investing in the stock market via a 401k. The 401k and plans like it or stock options. Yes, it's literally the only way that your average laborer, little by little, slowly over time, buys their way enough into the ownership class that they can stop working. But if you just labor, if you are only ever a worker, if 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. Right. Now bear in mind that like a majority of Americans are in this situation. A majority of Americans are wage laborers with little to no net wealth. So 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. If you have to work for money, you are this person. If you have to trade your time for money in order to survive, to pay your rent, to buy food, you are a wage worker. Now there's definitely a spectrum here. The 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. But ultimately both of those people lack any sense of power or control over the conditions that they work and exist within. Kind of overnight, their whole lives could be upended if the owners of that enterprise decide that they're no longer needed. Man, if only we had a real world situation about a random economic decision totally upending countless businesses across the country based on the overnight of a single stupid fucking person. But that would never happen because capitalism is secure. So 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 and they're like, feminism, girl boss. Have you ever seen a great example of the ownership class that they're going to space for 11 minutes and they got a fucking L magazine cover? Anyways, that's another episode for another time. All the neoliberal are just jacking off onto their laptops. So let's spend some time just breaking down the fundamentals. What is capitalism and what does capitalism promise us? What is the great promise of the system? Okay, in good faith. At its core, capitalism is an economic system that is based on private ownership of the means of production and the operation of those privately owned means of production for a profit. It is a system that should, over time, drive costs down and make things better through competition between firms. And the presence of profits is what kind of creates that potential for reinvestment, right? I 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. Now, this is supposed to bring us, above all, prosperity and freedom. Presbyterity and freedom are like the two major promises that capitalism makes to us. And so, again, Carol, in the most good faith interpretation, what would you say that capitalism is defined by? I 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. Yeah, definitely. Sometimes you'll hear the analogy of the workers 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. You 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. There were markets and there were competition for thousands of years before capitalism ever existed. In some ways, it's not even necessarily defined by private ownership of the means of production. What really defines capitalism is that difference between the owners and the laborers, that some people own all the stuff that we need to produce the things that we need and other people have to work to produce the things that we need and that the things that we produce are produced for a profit. This is a pretty simple arrangement. You've got the people who own the stuff, who have the power to make the decisions that affect everybody else. Oftentimes, this arrangement is positioned as oppositional to another way of structuring society that relies on the state to centrally plant an economy. The government versus the free market is how we typically think about the "choice" that we have about how to structure an economy or how to structure a society. That's where we encounter our second problem, particularly in the US, because in a country like the US, which is dominated by sprawling enterprises, companies that are worth hundreds of billions, if not trillions of dollars, market forces are not acting on the companies. The companies are acting on the market forces and they are shaping the market conditions by cooperating with one another and working with the state. One of the books that informed this episode was "Vulture Capitalism" by Grace Blakely. She writes about how the "capitalism that exists today" is basically state-sponsored corporate power, where these systems of power are mutually reinforcing. For example, Boeing. That's probably the most famous case of this. It has no real competitors in the US. I mean, you have Airbus in Europe, but in the United States, you kind of just have Boeing. It gets a ton of money in government contracts. Its planes can literally fall apart in the sky, and you have no choice not to fly on it. It's not an option for people. If you're going to fly in the United States, you're almost certainly going to be on a Boeing aircraft, right? And there's like little in the way of consequences. The creative destruction that is supposed to happen under capitalism to drive us forward and give us better options is not happening anymore. And part of the reason that's true in an industry like aerospace, which we're going to talk about a little bit later, is the fact that it's incredibly hard in late-stage capitalism to compete once power and wealth becomes that consolidated. You can't really have a start-up airline unless you're what's Daniel Neelman's dad's name. -Riz Neelman. -Riz Neelman. It's just extremely difficult to compete because over time, wealth gets wealth and power and gets power. It'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. And 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 taking a piece of the attention pie. So it's perfect that the man who built airlines at a time when you were solidifying that corporate power now has a son who is basically building a corporation of attention capture. -And in the attention economy, you're effectively an entertainer, right? Which like, "Hey, no shade. We're literally on a podcast right now, so we don't really have room to talk." -I think we can do shade. I think we can do some shade. I'm fine with shade. -So spend self-awareness for the next three hours. You're basically like drop shipping meat from someone else's farm. They're selling you flowers that were grown in another country. I mean, it really is like the perfect encapsulation of late-stage capitalism. -They sell mixing bowls from Ukraine. -It's so ridiculous. -No, your farmer know your food. Okay. Anyway, this puts those of us who live in advanced capitalist democracies in a bit of the rock-and-a-hard-place situation, which Blakely sums up like this. -When politicians mess up, we're told that the state has grown too big, so we should cut public spending and hand more power to unaccountable corporations. And when corporations abuse their power, we're told that the solution is to give more power to the politicians who are funded by those corporations. Power remains concentrated at the top of the same institutions, even as politicians lose elections and corporate executives are replaced. This elite carousel gives many people a deep sense of hopelessness. No matter who you vote for, no matter what products you buy, no matter where you work, it doesn't seem to make a difference. Yet we're supposed to live in a free market democracy. We're supposed to be free. -So 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. People 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. So the most famous and influential critic was a man named Karl Marx. Have you ever heard of him? -Daddy Marx, I have heard of him. -So Karl Marx was born in 1818. He died in 1883. So he basically lived for almost the entirety of the 19th century. He was only 30 years old when he wrote the Communist manifesto. -Dude blow my brains out. -I know. -Like, well I teach people about rough iron rings. -I was about to say I wrote a 400 page novel about a tradwife. -See capitalism really is making this all dumber. So Marxism is how we refer to the philosophies of this person, Karl Marx, which really was like at its core just a systematic analysis that was focused on economics and devoted to critiquing capitalism. Marx is the thinker who has had the biggest impact on how we think about these things. Though the collective psyche of the United States has like a pretty big educational blind spot here. Did you ever learn about Karl Marx's ideas? Did they ever teach you about Marxism in school? -No, not at all. I kind of like you, but maybe in a dumber way, have come to this whole criticism, this kind of anti-capitalist criticism that we move through kind of instinctually. And one of the things that I learned about Marx through was Sally Rooney, who is probably one of the first Marxists that I became culturally aware of. And something she has said that really was a light bulb for me was Marxism can be applied as a political theory, which I'm sure we're going to talk about. But it's also just a framework to talk about capitalism. And that was a huge unlock for me because I think that when you grow up in American colleges, it's like as soon as you even reference communism or socialism or Marxism, they're like, "Will are you one?" But you have to have a working understanding of those theories to be able to even understand capitalism. You can reference Marxism. You can use Marxist theory without calling yourself a Marxist. It's just one of the many ways that you need to even begin to have a conversation about this. Marxism in the United States is like a four letter word, a generic term used for anything bad. Cultural Marxism is a thing that right-wingers love to say. That doesn't mean anything. That literally is a meaningless phrase, but because people understand vaguely Marxism bad because it's not capitalism, it functions that way in the zeitgeist. When we think about the cultural implications of Marxism, I think that I would have thought up to five years ago that it was intellectually unserious, that only very smart and intellectually serious people that they are capitalists because that is the only one that has worked. To be advocating for Marxism or communism or socialism is kind of akin to being a tree hugger. It's like you're an unserious person who does not care about serious things. You're just a very naive person who does not care about serious things like the stock value of Tesla. So, Karl Marx produced very elaborate and detailed critiques of capitalism, but that is basically as far as he took it. So Marxist professor Richard Wolff said in one interview that I watched, Marxism is what we call the belief system that says we can do better than capitalism and we ought to try. At its simplest terms, that's what it is. In any society where humans are producing things, they will produce more than they need. And the economic system that they exist within will dictate who gets to decide what happens to that more. And so what Marx said was basically exploitation exists any time that that more is taken from the people who produced it and someone other than those people is deciding what happens to it. I watched hours and hours and hours of Wolff interviews, debates, speeches, and one of the things that he always comes back to is slaves produce the surplus at the master's get, serfs produce the surplus at the Lord gets, and employees produce the surplus that the owner or the employer gets. Wow. Karl Marx basically looked at that and said that is an inherently unfair way to organize a society. And there are a lot of downsides to organizing a society that way. But what's really notable about Marx, because I think when we talk about these critiques of capitalism, what we almost instinctually learn to go to next, like the next stop on that linear path is like the Soviet Union or like the Communist Party in China or other authoritarian versions of communism. I read one like Heritage Foundation blog post where they were like Karl Marx wanted the state to control everything. And if we all know that that doesn't work fast forward to a state that controls everything. Meanwhile, Trump's like, I press the terror button now. While they're just like gargling fucking Marco Rubio's balls. But what I found really notable about Marx is that in the three volumes of capital, which are like his capstone work, there's almost no mention of the government or the state. He like doesn't bring it up. He was primarily concerned with understanding the mechanisms of how capitalism function. How and why people accept power dynamics of what are effectively authoritarian workplaces. But he never wrote about central planning. He never wrote about the state at all. All of that came later. All of that came from people who were inspired by Marx's critiques of capitalism and in an attempt to come up with something better. Basically, we're like, well, we have to take this critique and actually use it to make something else. And how are we going to do that? Well, the state has the power. So we're going to use the state, right? Right. And there have been two major categories of groups since Marx that have attempted to do something like this. Sometimes we call them socialists. Sometimes we call them communists. There are some differences and similarities that we're going to get into. But 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. So in 1917, over 100 years ago, a small group of Russian revolutionaries called the Bolsheviks that were led by Vladimir Lenin, they were inspired by Marx. They overthrew the Russian monarchy. They had a king. And they became the Communist Party of the Soviet Union. Now at this point in history, you have to remember that Russia was basically a peasant society ruled by a king. It was one of the most impoverished countries in Europe and it was largely considered an undeveloped society by the rest of the world. And that's partially why it's so impressive that they beat us to space after 40 years. They went from peasants ruled by a king to beating NASA in basically no time. But I'm getting ahead of myself. Another thing that I think comes up when we talk about this is the innate kind of opposition between capitalism and Marxist theory. And this idea that like, well, Marxist clearly, he has no idea the prosperity that capitalism is going to bring us. Like how could you look at the last 100 years and not be like, yeah, we're living radically better lives than people 100 years ago did. But in the Communist manifesto, Marx and Engels actually praised capitalism. They said it is a revolutionary force. This 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. So to even look at that and be like, yeah, got a hand at 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. But this arrangement is eventually going to lead to a society where like the working class is going to overthrow the bourgeois masters. And he also predicted what we now know is the process of globalization that basically capitalism is going to spread. It's going to like take over the earth. So in the way that we've come to see feudalism as an improvement over slavery and capitalism as an improvement over feudalism, Marx and people who agree with his philosophies, and we'll say capitalism was a necessary stage of economic development. It's just not the final stage. We can evolve past this now. It got us here and now something else is going to take us somewhere better. It also makes me think about Noam Chomsky has a very famous line that he said, I think it was in a debate, but maybe it was written in one of his books as well, where when people will say the thing of like, well, capitalism, you have such a better life today than you did two hundred years ago, he always just says like, well, the slaves of the 1800s had much better lives than the slaves of the 1600s. It's a very easy argument to make innovation happens every two hundred years. That does not mean that all of a sudden you're in a position of empowerment. That's a very different conversation. Yeah, it's like, okay, we're done now. It's like, cut away to like a woman giving birth on the Amazon warehouse floor. Okay, so what's this thing that will replace it? Marx didn't say. I remember when I first learned about all of this and had my brain blast moment of like, holy shit, like I can see the matrix. I was like, so what do we do? What do we call Marx? We should do. And like, I asked my brother-in-law, Steven, who has been like a Marxist for years. And he's like, oh, Katie, that's like, that's a question. What a mic shop for him to just like analyze everything and just back other him also. Now that I know that he was 30 when he wrote that book, I'm just, it's a countdown for whether you or I have the first sex dream about Karl Marx. I thought you were going to say the countdown to the nervous breakdown. And I was like, I give it like four minutes, we'll get there. Marx used a lot of terms interchangeably though, like positive humanism, socialism, communism, the realm of free individuality, free association of producers. For a long time, and by a long time, I mean like the six months that I've cared about this, I thought Marx said that socialism was supposed to be the transitional state on the way to communism. You go capitalism, then you have socialism, and then you reach communism. But I learned while researching this episode that even that idea of it being like a transitional state came later. He never said that. So according to the Oxford handbook of Karl Marx, quote, the notion that socialism and communism are distinct historical stages is alien to his work and only entered the lexicon of Marxism after his death. This is where you're going to see one of the most popular misconceptions today, which is socialism is when the government does something. Socialism is when the government instead of the free market does something. And that is not the case. That's not the goal, right? The eventual goal, if you're talking utopian vision, is a classless, stateless society, where there's no centralized power. There's no coercive force. It's free self-determination. So it's not that you want a state to have all of the power to determine your life any more than you want corporations to have all of the power to determine your life. You know, so interesting is that I'm currently doing research for my next outline. And it's required me to do a lot of research. It's just about the advent of AI and how this technological change is coming. And it is really interesting because I think that when you, when you imagine socialism or communism, the way like a lay person like myself would alongside capitalism, those imaginings are basically like as far as we can imagine within this technological age that we're living through. So when you're talking about this utopia, it is going to happen. It would only happen with the next technological advance, which is AI. Your underlying point is true that like a lot of this comes from technological breakthrough. And that like, I mean, imagine going back to somebody in like the 1500s and being like, yeah, in 500 years, there's going to be a metal tube that will take you across this entire continent in five hours. And you can watch moving motion pictures and like take a shit in the sky. And people would be like, no fucking way. You're crazy. And it's going to crash every few months and no one gets there because there's going to be this company called Boeing. And they're just going to like leave candy wrappers in the installation. There's just going to be no regulation. And every whistleblower will die. But it's, it's suicide. You're not going to have to walk, but everyone will fucking shut the windows so that you cannot see space. But we're also going to have this thing called Xanax. We're going to be bored so fucking quick of the sky. Anyways, go on. Okay. So the TLDR is like, yeah, a state can own something. A state can control something. But if the public does not have control over it, then it's not socialist. Okay. So in other words, socialism is just economic rule by the people. Caroline, does rule by the people remind you of any other ideas that we hold dear in the American psyche? Does that ring any bells? Or is it democracy? Yeah, democracy was the system that we used to have before about January 20th. But even democracy is like a good example of this. Once you decide that you want rule by the people, you have to decide how those citizens are going to govern. What political organizations or institutions are they going to need in order to govern themselves? Should the majority always prevail or could a minority ever be empowered to block majority rule? And then you 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. But 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. I know you've read Don of Everything by David Graber and David Wengrow. 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. But the French got that from indigenous Americans who were like, wait, you have kings in shit? Like you let other people tell you what to do. You fucking pussy's. So anyway, democracy was a system we had to figure out how to create. So all that sounds great, right? Like, yeah, economic democracy, economic freedom. How do we have rule by the people in our economy in a real way? But we haven't only talked about like the major objections to this way of thinking it. So today we're going to focus on three of them. The first is something that you already kind of hit on, Caroline. It's that capitalism is natural. That capitalism is natural because humans are naturally competitive with one another. And capitalism gives people an incentive to act in their own self-interest and people who are acting in their self-interest are going to create competition and that competition is going to drive growth and lower costs. And like, it's this very elegant system because human nature is just going to make this happen for you. And 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. Before 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 love the term feudalism because it suggests a level of uniformity and universality that like really wasn't accurate throughout the Middle Ages. But 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. In 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 pleaps who just like worked the land. In 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. But regardless, we generally think about the feudal system. And again, using this like very wide definition as something that continued for about a thousand years of human history. And thanks to Recizzi Bias, we mostly equate capitalism with the industrial revolution, with the industrialization of society. But the transition from what we reference today as feudalism to capitalism in Europe took about 500 years. Wow. 500 fucking years. Oh, so we're not going to see this isn't going to end in our lifetime. Well, okay. Okay. Okay. So it began with the crusades and it happened in fits and starts. It happened in phases. A feudal manner would disintegrate. It would implode the serfs would all run away. They would like find some new fucking town. They'd be like, how do we live in this town? They'd like made deals with one another. And somebody in that town will be like, I'll give you these coins. If you like, stay here and make this shit for me. And they'd be like, cool. There's a lot of experimentation. Things that they learned. Hey, we're going to keep doing this. Things that they were like, we're never going to do this again. And it took a lot of time for the conditions to fully change to the point where it was like, okay, we're doing this now. Capitalism is what we're doing now. They didn't even call it capitalism for a long time. But yeah, it took 500 years, give or take, to like fully transition to what we would now define as capitalism. And was the distinction that they were basically to a certain extent able to negotiate their wages? I think it was the disconnection from the land. Your effort and time, you could now sell that to the highest bidder as opposed to your like personhood being tied to a particular plot of land or Lord or whatever. Gotcha. So there's like a little bit of like no madism to the economics. I guess you could say that. Yeah, I hadn't thought about it that way. In terms of just being able to like more freely move. That free moving and that exploration is going to become really important for how capitalism developed. But like even banks didn't exist until like the 17th century, relatively recent in the span of human history. But to your point about no madism, the real turning point in the emergence of global capitalism was slavery. Something that became very clear to me while learning about capitalism for this episode was that you don't get global capitalism without colonialism. Europe's ability to industrialize rested almost entirely on control of enslaved people in the Americas, who were of course working land that was originally taken by force from the people who already lived there. And so it turns out cotton produced by people who are not being paid on land that you violently stole pretty cheap to make it. You can make a very profitable way to structure a business. This is a piece from Sven Becker, who's a professor of American history at Harvard. We cannot know if the cotton industry was the only possible way into the modern industrial world. But we do know that it was the path to global capitalism. We do not know if Europe and North America could have grown rich without slavery, but we do know that industrial capitalism and the great divergence in fact emerge from the violent culture of slavery, colonialism, and the expropriation of land. In the first 300 years of the expansion of capitalism, particularly the moment after 1780 when it entered into its decisive industrial phase, it was not the small farmers of the rough New England countryside who established the United States economic position. It was the backbreaking labor of un-remunerated American slaves in places like South Carolina, Mississippi, and Alabama. When we marshal big arguments about the West's superior economic performance and build these arguments upon an account of the West's allegedly superior institutions like private property rights, lean government, and the rule of law, we need to remember that the world Westerners forged was equally characterized by exactly the opposite. This confiscation of land and labor, huge state intervention in the form of colonialism, and the rule of violence and coercion. And we also need to qualify the fairytale we like to tell about capitalism and free labor. Global capitalism is characterized by a whole variety of labor regimes, one of which a crucial one was slavery. Bearing that in mind, I'm going to have you read one other passage, though this one is much older. Those people who are as different from others as body is from soul or beast from human, and people whose task that is to say the best thing to come from them is to use their bodies in this condition. Oh, I know who said this. Those people are natural slaves, and it is better for them to be subject to this rule. Did Thomas Jefferson say this? Close. I'll give you another hint. Tyler Swift referenced this thinker in a lyric in a song that subtly implied that Travis Kelsey is dumb and she is not. You know how to fall. Oh, oh, oh, oh, I know, I know, I know, I know, I know, you know how to fall, I know, oh, stop, stop, stop. Whitman? Is it Whitman? You know Aristotle. Oh, fuck. Okay. But also like so perfect that you were like Thomas Jefferson. It was definitely Thomas Jefferson because he almost certainly agreed. Dude, Thomas Jefferson has written so much of this. Yeah, yeah, yeah. Yeah. So that was Aristotle justifying slavery in ancient Athens. Aristotle's defensive slavery starts from the principle that in order to be just social norms must reflect what is natural and accordingly society may practice slavery if there are some people who are just naturally suited to be slaves. This is one of the most influential philosophers of Western thought defending slavery as the natural economic condition. I prefer this slavery. If I'm being honest, I do see the merits of slavery. So what I am saying is I 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. And 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. And 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. It's just really out of sight for people in places like the United States for the most part. So I see what you're saying. Kind of like when Matt Walsh tweets that civil rights are DEI and it's like well, at least you're coming out and just saying it now. Now we can actually have a conversation about what this is about. Yeah. And we don't have to pretend it's about bathrooms anymore. I really appreciate the point about slavery being the economic boom that created the United States 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? And eight year old is mining the materials that we need in order to do that. Even the idea of the Chinese sweatshop, which is vaguely racist and origin like 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. And so these innovations and just liven out in your EV. Listen, as you climb abundance, bet very proudly not a Tesla. Literally every single thing you just said is a segue to 10 pages from now. So that was justification for slavery. Like we said, feudalism, not really a word that was used at the time it was happening, but there were a lot of instances that I found of prominent philosophers that you and I have both heard of like Thomas Aquinas, Thomas Hobbes, John Bodan from hundreds of years ago arguing that monarchy and by extension, the feudal system was the most natural state of order for society. Hobbes in particular is like famous for this argument that human suck and say gotta keep them in line. Basically, I'm I'm paraphrasing. No, that was basically a Hobbes was like worse than that. He was like bitchier than that. Hobbes was so bitchy. Yeah, and even like Plato and like the philosopher King, like there's long been a belief system that like no, you should like kings are pretty good because King's kind of keeps shit in line. And you see these ideas being related back to the natural, quote unquote natural family structure that is they would draw parallels between the man as the ruler of the household and the king as the ruler of society. And they would say this is how we know it's natural because it's paralleling this other structure that is natural. And so like we as people in the 21st century can look at that and be like okay, like even granting that that is natural, suppose that like their basic claim is correct. We could sit here all day and debate that, but even if it were it's like okay, well does natural mean that that's how we want our society to function? We have free will. We can make a different choice. Right. Anyway, the idea that something is the most natural form of human interaction or economic organization has been used to defend every system we have ever had. But the fact that capitalism is like a couple hundred years old at most and global industrial capitalism is even newer should indicate to us that there is nothing natural about it, at least no more natural than whatever came first. So a the transition to capitalism to hundreds of years was full of backslides. B, the original sources of labor and profit came from the inherently violent forces of slavery and colonialism. So the idea that this system just developed naturally via people trading and competing with one another by choice to create net new value is just patently untrue and see the it's the system most in line with human nature and or it's the most natural economic system are defenses that have been applied to every system that preceded it too. So maybe the idea that it's inevitable or natural isn't actually all that compelling, right? But what about all the innovation it has brought us? That brings us to objection number two capitalism is the only or alternatively the best way to create innovation. Carol what would you say were the most important or game changing innovations of the last hundred years? In terms of innovation, I think that vaccines are probably a pretty massive innovation in terms of technology. I mean, obviously transportation and then a communication. Okay. I think being able to transport either like your intellectual value or your physical self, I think has been a pretty big explosion. I'm like, well, the golden doodle is like a pretty incredible invention. I love Oli Pop. So actually the way that you phrase that of like transportation of like your physical self and your ideas is perfect. A couple things that I found in my digging is aviation and space travel, the internet and the mobile phone that these are things that have like fundamentally changed the way that we live and the way that we work and like the the fabric of the society that we live in are different now because of these things. And not a single one of those massive innovations would have been possible without massive long term planned government investment. So we're going to start with aviation. You probably recall the story of like the Wright brothers at Kitty Hawk. This is from a 2001 paper by a NASA historian called the Wright brothers government support for aeronautical research and the progress of flight that I'm going to have you read. The vast majority of breakthroughs in aerospace technology have been the result not of the rights or of other independent inventors, but have well healed R&D organizations usually funded by government large s great leaps forward and technological capability almost always require a significant long term investment in research and development. Research and development that is not have explicit short term return to the bottom line and may not yield even long term economic return yet. Can I just say this makes me so fucking mad because it makes me think of who one of the biggest propagators of capitalist bullshit is today who is Elon Musk who has been the beneficiary of untold amounts of government funding. It is so fucking infuriating that these billionaires tout innovation as something that they are responsible for when they are writing the long tail slide of decades of government talking investment. They are writing the long they are writing the long hard dick of government. Yeah, there's an amazing piece of what I'll call slian poetry called Elon Musk welfare queen. Oh, yes. So good. Lays out this argument perfectly, but this is one of the biggest contradictions of capitalism. Yeah, you're incentivized to seek profit for sure, but often profit and true innovation are like directly at odds with one another because innovation requires venturing into the unknown. And typically people who are interested in making a lot of money try to eliminate as much of the unknown as possible. What do you hear constantly right now about the tariffs and like why they're bad for business is because it generates uncertainty. Businesses want as much information and as much certainty that something is going to work before they try it. Those are not exactly the conditions that are most conducive to major breakthroughs. Right. What about the internet? Today 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 ARPnet. So researchers working on ARPnet created many of the internet's defining features, including TCP IP, which is the protocol on which the internet operates, like the one we're using right now. In the 1980s, they strung together various government and university networks using TCP IP, thus creating a single worldwide network, the internet. This is from a piece in scientific American that I'm going to have you read. In 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. Visionary infrastructure projects, such as this, are part of what is allowed our economy to grow so much in the past century. And then this one from Slate. Creating something as grand and untested as the internet was something that a private company simply couldn't do. The project was too big and they pay off too uncertain. That's true of most technologies in their infancy. The Army created ENIC, the world's first general purpose computer, and only after the military proved the basic idea was sound, did IBM jump into the business? Apple began working on a multi-touch interface in the 2000s, but that was only after decades of research at other labs, including by many researchers funded by the government. The American military developed and launched the network of satellites that formed the global positioning system, and only then could tech companies come along to make spectacular use of that system. Okay, I have something else that is making me angry. But weeks ago, this is the part where I understand it and I get really mad. So weeks ago, again, because you have been very diligent, like, I just want to give you a shout out, you just moved. You're like sitting in your new apartment and you're like delivering a treatise on capitalism that I never could do. And so weeks ago when I was like, Hey Katie, I'm going to punt this topic to you. I need you to do this. We discussed a New Yorker interview with Bill Gates. And in the interview, they said they asked him very explicitly, do you think billionaire should exist? He was like, definitely we are like really good for society. He was like, we are really important. And I don't think that you could see the innovation that we have seen if billionaires didn't exist. But the thing that really infuriates me is that the people who are actually doing the intellectual labor that leads to the breakthrough are almost never the ones who become billionaires. Bill Gates is actually a very unusual example in that he did do a lot of intellectual heavy lifting. But even with him, like, when you think about people who do research for vaccines, when you think about the people who did the work behind SpaceX or Tesla, when you think about all of that labor, most of the labor comes from people who will never see notoriety, who will never be the beneficiary of these billions and who did it because they are actually interested and curious. And I think that this theory that innovation only works if you have a billion dollar outcome is like a fiction created by the stupidest and richest people in our economy as a way to justify their own self perceived intelligence. Because it's like, okay, so you're associating intelligence with wealth, which means that teachers can't be the smartest and most innovative among us. Scientists can't be the smartest and most innovative among us. No, it's the guy a fucking Goldman Sachs who is the smartest and most innovative among us because he's the richest. It's so insulting to me when they make that argument. Sorry. Okay. That took how long our hour and 11 minutes. Perfect. I was wondering when that was going to happen. I'm really happy that we already got one carrow ranch like a third of the way in something that I actually we had talked about with that interview when you sent it to me was this is something that I noticed a lot with these people, people like Bill Gates. Not that there's that many of them. But in the first half of the interview, he's justifying why the ability to become a billionaire is so necessary as a driving force of innovation that the prospect of that wealth is what gets people to innovate, right? But then in the second half of the interview, he's talking about how obsessed he was with programming as a teenager. He did it all day long. He was absolutely enthralled with programming. Are you telling me that if you went back and said to 17 year old Bill Gates, hey, you're only going to make $50 million from this. You still want to tinker around the computers in your dorm room? You're telling me you would have been like, ah, never mind. Fuck it. Guess what? Go study investment. This is serious. No. Shut the fuck up. There's no chance of that. People like that tend to be driven by something that is so far beyond the prospect of great wealth that this post talk rationalization after the fact of like, well, yeah, I need the wealth now. It's like, yeah, but the wealth isn't why you did what you did. This idea that you need the prospect of wealth accumulation to get humans to do impressive, innovative things is just not true. Anyway, the mobile phone was one that actually seemed to be, I will say it's an exception to this pattern in a sense, but not fully. So I want to talk about it because I think that a lot of things in society probably work this way. The mobile phone was developed by an engineer who worked for Motorola. Okay. So to your point about like the people who are often like making these breakthroughs are not the ones that are like initially profiting from them. And according to a few different histories of the invention, the company invested about a hundred million dollars over 10 years to figure out how to do it. That's a very long investment timeline for a private company. But even then much of the infrastructure that made the modern smartphone possible came from public investment. Mariana Mazakado's book, The Entrepreneurial State debunking public versus private sector myths argues that that's how we ended up with Bell Labs, the federal government pressured AT&T to reinvest its profits in innovation. And this eventually gave us the C++ programming language and cell phone calling technology among other things. Capitalism doesn't actually do this on its own. Right. Some of the biggest innovations that have occurred in the last hundred years happened in spite of not because of the pressures of capitalism. It was like an interference in regularly scheduled programming. Personally, I think aside from it artificial intelligence and some of the advances that are being made with AI, I think that like one of David Graber's big hobby horses when he was alive was the fact that like we kind of haven't seen major innovation in the last 20 or 30 years, it's not like quality of life has massively improved from the 1990s. We aren't really seeing that speed of innovation anymore. Yeah, I'm trying to think right now. I think one innovation that I genuinely think is incredible is starlink. And I would be curious to know how that kind of functioned. But it definitely is the beneficiary. I know it's the beneficiary of huge amounts of government funding. But I do think again, it's notable that we're having this conversation about a stalling out of innovation on a day when we are seeing a forced publicity initiative of a bunch of chicks going to space. That happened 40 years ago. There is nothing that they are doing that is new or novel. And it's being reframed as something new and novel as a way to kind of, I would say like as a way to almost plagiarize an idea of innovation that has not happened. So one last example that I thought was pretty pertinent is one of the biggest medical breakthroughs in recent years has been GLP ones. And their ability to treat diabetes really effectively. And they owe their active ingredient to government research. It was VA researchers drawing on earlier NIH research who discovered the yellow monster venom could be used in that way. I just think that it's really important to think about what actually drives innovation, what type of conditions are actually conducive to those types of discoveries. And when you introduce pressures like needing something to be profitable within a short period of time, needing it to benefit the bottom line, you play it much safer. Carolyn, one thing that I want to ask you about that I think is, I'm sure there are some listeners that are like why have they not talked about this yet? For an hour and you haven't even mentioned it. If you had to identify the single largest issue, the most existential issue that we face today, the existential threat of our lifetimes, what would it be? Is it red food dye and our packaging? I've heard that that's pretty concerning. Close. It's actually seed oils. Climate change? Climate change. Yes. Okay. So let's do a little brief climate science aside. Earth system scientists warn that the world is now perilously close to a hot house earth, in which catastrophic climate change will be locked in and irreversible. The ecological, the social, the economic cost to humanity of continuing to increase carbon emissions by 2% per year as they have in recent decades. And failing to meet the minimal annual reductions in emissions that are currently needed to avoid catastrophic destabilization of the earth's energy balance incalculable, right? This is an extinction level crisis that we are dealing with. It's so fucking crazy when you say it out loud. What is the one thing that we have a lot of in the United States that we know contributes to making this problem worse every single day, the thing that most people own at least one of? Cars. Cars. Cars. Of course. America. Evie Mags loves highways of America. Favourite patriotic topic. Cars. That's right. What is the most popular car in the US? You know? Oh, shit. Is it a pickup truck? It's an F-150. Fucking of course it is. So if capitalism is really about solving the world's problems, if it's the only system that's capable of recognizing these problems, prioritizing them via market force is according to their importance. And then producing the technology necessary to solve them, we're fucking cooked because what the fuck are we doing about climate change? Not shit. Not only are we not solving it, there's basically no attention. This is kind of an anecdote, so I'm not trying to suggest that this is data backed, but I have a friend who went to Dartmouth and then went to Harvard Business School and really wanted to work in climate science engineering, basically working on these solutions to figure out what the fuck are we going to do? He moved to San Francisco with this elite pedigree. He's extremely smart trying to get a job doing this and he's just going to go into finance out because there's no jobs. He was like, "Yeah, there's just like not a market for it. There's really no funding for it." Again, that's one person's experience, but that really shook me to my core. I've not been able to stop thinking about that. Yeah. No, I think that's very correct that there isn't, yeah, high paying jobs or even like respectable jobs. Yeah, that there are people out there who do that, but inherently you are going to be losing a large portion of people who do want to make money and feel very comfortable and you shouldn't have to lose any percentage of people. With the exception of Candace Owens, wouldn't we all agree that that is the biggest problem facing humanity, that that is the most worthwhile problem to be solving? Yeah. That's where the highest paying jobs should be, according to the logic of the market. That's where you should be able to make the best living. That'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 their. No, none of that is happening. Why not? Because capitalism isn't really about solving problems. It's not really about innovating. It's not really about prioritizing, according to market forces, and allocating capital appropriately. So one of the biggest examples of this, it's an example of absence. The fact that there is no investment, or if there is investment, it's not meaningful, in electric mass transit systems in the United States. The older a city is, the more likely it is to have public mass transit. We 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. Why is the market not giving us electric mass transit? Why does it need to be? Because you can make a hell of a lot more money selling individual cars to individual people. So what do we get instead? We get luxury electric vehicle brands. And we get a lot of them talking about milk and freedman freedom of choice, right? You can buy a Tesla, you can buy a Rivian, you can buy a Lucid. Capitalism will even give you a $400,000 electric Rolls Royce, but it will not get you trains. Shut the fuck up, dude. I also want to say anecdotally, so I do have an electric car. I've had it for three years now. And I also, before that, we were in like a monster truck for two years. And the spiritual hangover from that was significant. And so we really wanted to have a good EV. And so we got it three years ago. And I can now say I live in Virginia. I am shocked at the lack of infrastructure growth I have seen in the last three years. When we bought the car, we were already told it's on its way. It's already been paid for. Yeah. Like this massive charging network. That 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. I know where I can charge. I still do it. It's the only car we have right now. We drive every year, multiple times a year from Virginia to Massachusetts. So we're not just using this around town. And when I say there has been close to no construction in terms of making it easier, making it faster, it's kind of shocking to be a part of the latest quote-unquote innovation of like the American frontier. And to see the extent to which things have not grown up. Yeah, that's really interesting. So I think for me, as I was kind of thinking about this, because I hadn't really given that particular element too much thought, is really easy to ask, well, what is capitalism giving us? Like, what are we getting out of capitalism? But it's harder to confront the question of what are we not getting because of capitalism? What greatness is capitalism and the pressures of capitalism actually holding us back from as a society? What could we have if we had a different economic system? The cheapest electric vehicle on the market in the US, I will say, is a Nissan leaf? It is $30,000. That is incredibly expensive. And I say in the US because China actually manufactures much cheaper EVs. Have you ever heard of the brand BYD? I actually saw a TikTok video of it the other day and the inside is so fucking cool. Yeah, these cars are not sold in the US. The cheapest BYD EV is called the Seagull. It is $10,000. If they were allowed to sell their cars here, Tesla would go out of business. Which might be one of the reasons why Elon Musk is so involved in this administration. I don't know, that's conjecture. But it is like widely considered true that China's electric vehicles are superior and much cheaper. Right? So, our electric vehicle is better for the environment than Ford F350s, I mean, sure. But it is telling that we jumped right past the solutions for climate change, like electric public transit, that would make a much larger difference. And we went right to private vehicle ownership. And the batteries that are required to produce EVs have issues of their own. You kind of already alluded to this, but I want to spend just a second longer on it. So, this is from the Chicago policy review. EV production is unsustainable. EV batteries are composed of several rare earth minerals, including cobalt and lithium. Yeah, I read this first article like a day after I bought my fucking overpriced EV. Mining companies expose nearby communities to high levels of toxins that are especially harmful to children. In the Democratic Republic of the Congo, yep, here we go, they violate human rights via unsafe working conditions. There's also a lack of regulation over the large volume of water necessary to mine lithium, zig water shortages for local farmers, and causing harm to the surrounding ecology. Moreover, cars require large amounts of steel, lead, plastics, and other chemicals whose production contributes to high greenhouse gas emissions. Yeah, this is the part of the episode where we rip back the curtain and we go, capitalism is still dependent on the violent exploitation of people in societies that we have intentionally stripped of their natural resources. This is the international piece that we alluded to. Why hasn't capitalism enriched what we call the "developing world"? It comes back to imperialism, in which countries industrialized first. So Lenin called imperialism the highest stage of capitalism, and Blakely writes about this in vulture capitalism. She says, "dependency theorists realized that because of the dynamics of the commodity cycle and the rules and norms promulgated by powerful states and international institutions, referral societies remain unable to industrialize in the same way as core states once were. They are trapped in a position of dependency relative to the core. They have no choice other than to export primary commodities to wealthy economies that need them, but they find themselves unable to convert the revenues from these exports into the resources required for industrialization." This is how global capitalism works. I think I've referenced this on the show before, but this is why it works. The global north is rich because of the exploitation of the global south. Capitalism cannot work for those places the way it worked in the United States because they don't have anybody else to exploit. The global south doesn't have their own global south. Right. Right. So, if it's not natural, and it doesn't really drive innovation in the way that we typically think it does, well, man, it still must be a pretty tenacious system though, right? Like, it lasted this long. Everything else has managed to use surface, so it must be working well enough, which brings us to objection number three. Socialism and communism have never worked anywhere they've been attempted. In order to really lend some color to this objection, I want you to hear how this guy Matthew Lesh opened his comments in a debate that I watched that was designed to discuss capitalism and Marxism. This is the guy arguing the pro-capitalist side. He basically says, "Yeah, capitalism has problems, but anytime they've tried socialism, it's like everyone becomes poor and it doesn't work." And results in all these terrible things. You can have this idea of this ideal world, and you say, "Well, capitalism hasn't given us everything we want out of society, but I think you actually have to, you know, and I'm willing to take on, to some extent, the criticisms of capitalism and all the warats have." And so I think that's better than any other system that's ever been tried in human history. And generally speaking, when social systems have been tried, it has resulted in huge amounts of poverty, destitution, and enslavement of humanity. Have you heard this before? Yeah, I think the argument is generally like, sure, capitalism has problems, but it's the best option we have. Nothing else actually even works. Right. Barry Weiss, famously saying, "There is no such thing as luxury communism." Yeah. Bravely asking the question, what if we just refused to evolve? What if we just kept doing this? So one of the books that I read for this episode was The Jakarta Method by Vincent Bevin's. Have you ever heard of it? I have heard of it. I haven't read it. Okay. This is the part of the outline that fucked me up the most, if I'm being honest. Up until this point, I was kind of like, yeah, yeah. And then I got here and I was like, "Oh, fuck me." Like this is really horrifying. You're telling me the impending crisis of mass extinction didn't make you say, "Fuck me." Yeah. You're telling me to be saying something so brace yourself because it's about to get a lot of worker. So after World War II, America emerged as the most powerful country in the world. And this was a surprise to everybody including the Americans. So remember that like America at this point in history wasn't a partied society where you had an entire population that was legally second class citizens. So we were not exactly crushing it in the liberty and justice for all game. But if you remember the Bolsheviks and their Russian Revolution in 1917, there was a belief at the time that the Soviets were pushing for revolution worldwide, that they wanted to invade the rest of Western Europe. And communism was thought of like an infection, like it was a virus and that anywhere it was present in small numbers, it was assumed that there would be a plot to overthrow the government and that it was going to spread out of control, kind of like the trans high school volleyball players at the 20th century. So this interpretation was basically either completely untrue or like greatly exaggerated Bevin's rights. And regardless, the nascent CIA created by President Truman in 1947 was really concerned about this spread of communism and particularly about the power of the Soviet Union. So after World War II, the CIA was totally compromised by a Soviet mole. And they found the Soviet Union more or less impenetrable. So instead, they turned their attention to the communism that was growing in what was then known as the third world. And for a little bit, the CIA was really in its flop era. And by flop era, I mean, they were literally hunting leftists who were establishing communist parties all over the world in an attempt to prevent them from gaining power and just like failing. Like, it just wasn't really working that well. So in South Korea, for example, US forces installed a Christian anti-communist who had lived in the US for decades named Sigmund Rhee, his authoritarian government proceeded to massacre tens of thousands of people, war eventually erupted and the northern communist troops pushed into Seoul. The US fought with South Korea, China fought with North Korea over the three years of the fighting. The US dropped more than 600,000 tons of bombs on Korea, killing an estimated 1 million civilians. This is also confusing to me because I thought that the US government would never kill tens of thousands of innocent people in other countries. I thought that that's just something that we just don't ever. We would never do that in present day, would we? We wouldn't kill probably hundreds of thousands of innocent civilians in another country than our own. I can't imagine not in a capitalist democratic society. So Katie, you must be wrong. Go on. Yeah, right. Liberty and justice for all, baby. So after the fact, after all this happens, after we kill a million Koreans, we learned that all of the intelligence that the CIA had was manufactured by North Korea and China. So good job, guys. Well done. Basically, Bevin's rights about this period of flops were like they're trying to interfere in these different places and like either the left wing parties are too powerful, the communists are too organized or like their CIA is just basically incompetent and like they can't gain any traction. But then they get their first win in Iran. I'm going to have you read a passage from Bevin's explanation of what happened in Iran. And just at the White House at the beginning of 1953 were a very big help to the supporters of regime change in Iran. newly elected Republican president Dwight Eisenhower appointed John Foster Delis to serve as Secretary of State and tapped his younger brother Alan Delis to lead the CIA. John Foster had two lifelong obsessions according to historian James A. Bill, fighting communism and protecting the rights of multinational corporations. It sounds like Ted Cruz. These came together in Iran. Things about communism and the availability of petroleum were interlocked. Together they drove America to a policy of direct intervention. The Delis brothers and the CIA got the green light. Kermit Roosevelt, grandson of President Theodore Roosevelt, whom Wiesener had hired in 1950, took charge of the mission, which they decided to call Operation Ajax. He had a million dollars to spend in Iran as he pleased, a huge sum for the kind of help he wanted to buy. The CIA pried every politician it could, nice, and looked for a general willing to take over and install the new Shah as a dictator. Agents paid street thugs, strong men, and circus performers to riot in the street. When CIA station chief Roger Guaran argued the US was making a historic mistake by aligning itself with British colonialism, Alan Delis recalled him to Washington. Perfect. He was like, "Nobbage. Get back here, broke boy." Yes, they rigged the elections. The Soviet Union, who was supposedly extremely powerful and imposing in Iran, did nothing. So interesting. Then came the Philippines and then came Guatemala. Guatemala had a particularly interesting situation because they were actually trying to become a modern capitalist state. They weren't even like communists. The government began to buy up large unused land holdings and distribute them to the indigenous people that lived there in the peasants because their intention was to make productive use of the land and the law said that Guatemala would pay based on the land's official value. Well, the United Fruit Company, which was an American corporation that controlled Guatemala's economy for decades, had been criminally undervaluing the land to avoid paying taxes on it. It just so happened that the United Fruit Company was very well connected with the Eisenhower administration. So the CIA began a public relations campaign calling the leader of Guatemala a communist, "In Guatemala, the North Americans did their best to create a pretext for intervention. The CIA planted boxes of rifles marked with communist hammers and sickles so they could be, quote, "discovered as proof of Soviet infiltration." After three coup attempts, Washington finally succeeds in ousting the president. And the president resigned to hands over power to this other person who's like, I guess, they think the United States will approve of. But the Americans didn't like the new leader either, and they ended up installing a different guy, and then handed over a, quote, "long list of Guatemalans who would need to be shot because they are communists." And according to Bevin's, quote, "slavery returned to Guatemala." In the first few months of his government, Castillo Armas, the American-installed leader, established anti-communism day and rounded up and executed between 3,000 and 5,000 supporters of the old president. There's a state department document that's now publicly available that said the risk was that the communist, quote, "infection would inspire similar social reforms in other Latin American countries." And that was what the US wanted to prevent. And just for FUNZY's caro, I pulled the New York Times coverage about the events in Guatemala from that summer. Oh, fucking Christ. Were they worried about trans people in Guatemala? It's Ross Dauphin being like, "Well, this is good for them, actually." Two sides to every story. David Brooks, fucking. The first formidable and nearly successful attempt of Kremlin-directed communists to seize a whole state in the Americas has apparently been crushed. And 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. Dude. Good shit, guys. Good shit. Okay, I have something else I want to say. I hate it here. [laughter] I want to pause here and just have us say with this because we're moving through a lot of really horrible things. There's a number that you mentioned, which is a million Koreans that died. And we have talked about this in previous episodes. The global death count that countless researchers have started to estimate in terms of the implications of our invasion of Iraq is six million people. Holy fucking shit. Not just in terms of bombs, obviously, but in terms of the global starvation and economic collapse that we caused, that we caused. Like, we are responsible for it. Five, six million people. In Vietnam, the estimated death count is something like two million people, half a million children born with birth defects from the amount of essentially bombs and fertilizer that we dropped on their land. I want to sit with those numbers and think about that because as you've been talking, the thing that I've been thinking about is I just paid the biggest tax bill I've ever paid in my life. And in many ways, it's a huge privilege. I'm so lucky that I am now in a position of financial stability. And all I could think about, I was looking at the number that I was about to submit. And all I could think was that 80% of this is going to the military. It is going directly to the military. And when you think about what is upholding our economy and where we actually have profit seeking endeavors that are successful, it is in bombs. It is in the private contracting of the military. And 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. And 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 rather that is through literally dropping bombs on them. It'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 like 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 like heart-wrenching to think about it. Yeah, I think one of the most unsettling periods of disillusionment in my life was realizing that America is the bad guy. And I know that sounds a little melodramatic, but I think when you grow up being told that your country is a force for good and that everybody is thankful that your country is so powerful and strong. And then you learn the real history, because they say history is written by the victors. Yeah, obviously we're going to learn that. But like we are the good guys, but to your point, I think oftentimes in that clip that we heard of that guy giving his opening statements in the debate where he talks about the millions in poverty because of communism, there were certainly failures of communism. But if you want to compare death tolls, there's almost no force in history with the exception of like the fucking asteroid that has killed more people than global capitalism. Of course, human race has a long bloody history. But these were like actual battles of survival and of civilizations that were much less sophisticated than our own in terms of technology, in terms of communication, different languages, like the ability to communicate and fight. These were battles of starvation of famine. And so we are now living in a time period where like we are dropping bombs on people that there is no connection. There is no, no reasonable person could argue that this is for our own survival. This is to make a very small group of people fractionally more wealthy. Anyways, continue. The thing that the Jakarta method really drives home so eloquently is this idea that like almost always US intervention abroad is justified by again, the pushing of values that we want you to have a liberal capitalist democracy like us so your lives can rock and you can make spreadsheets all day too. But in almost every case, they're installing a dictator. They're destabilizing democracies, right? So it's just with the most basic level of information, you scratch the surface a millimeter and you're like, wait a second. So I just have the New York Times coverage was like amazing because we're called that the Soviet weapons were planted by the CIA. The paper of record everyone was the so called communist menace was just redistribution of land from an American multinational corporation to the people who actually fucking lived there anyway moving on. So 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. In 1956, the Indonesian Communist Party did even better than it had in 1955. The PKI was the most efficient professional organization in the country. Crucially, in a country plagued with corruption and patronage, it had a reputation for being the cleanest of all the major parties. These leaders were disciplined and dedicated and Howard Jones, US dude, my notes, US guy, and Howard Jones, US dude, I think which keeps that in saw quickly that they actually delivered on what they promised, especially to peasants and the poor. Jones was not the only one in the US government who understood why the communists kept winning. The vice president at the time, Richard Nixon, gave voice to the general feeling in Washington when he said a democratic government was probably not the best kind for Indonesia because quote, the communists could probably not be beaten in election campaigns because they were so well organized. End quote. And most importantly, Jones recognized the PKI was going into the countryside, delivering the kind of programs that spoke directly to the people's needs. The party was working hard and skillfully to win over the underprivileged he worried. There you have the president of the US being like, yeah, democracy is probably not going to work there because they're going to look at communists. Yeah, the Communist Party in Indonesia was about anti-imperialism. It was about fighting for independence from exploitation by the Dutch, this imperial power. And the Indonesian president, this guy named Sikarno, appealed to the US at one point. He was like, hey, you guys were once a colony. You know how it feels to fight for your independence and to fight for your freedom, like support us, basically. And the communists more or less supported Sikarno. So Sikarno was not a communist, but like the communist party in Indonesia supported him. But there was a group of rebels who were anti-communist in the country. And they also did not like Sikarno's government. And you know what's weird about these rebels is that they had suspiciously modern weapons. And everyone was like, how did these rebels get these weapons? And at one point in the fighting, the Indonesian army, again, under Sikarno, shoots down this plane that was dropping bombs on another part of the country. And who was ejected and floats down, but an American CIA agent. At one point, the CIA even generated a very rudimentary version of AI revenge porn where they hired an actor who looked like the Indonesian leader in producer six tape to try to damage his reputation. Oh my god. But they never released it because it wasn't very good. Dude, it's like always sunny in Philadelphia hearing about these CIA. It felt like that is like the idiot plot to end all idiot plots. It's such an interesting contrast where it's like they are murdering. Like they are engaging in these heinous crimes, but they're also so incompetent that it's almost like this comedy of errors in Cuba. So US had been using Cuba for economic purposes. Hershey chocolate had a sugar plantation there. And Batista was a dictator with very close ties to American businesses and the American mob. So when Fidel Castro and his guerrilla forces overthrew the dictatorship in 1959, they were not openly communist. They were not aligned with the Soviet Union yet, but he was accompanied by this guy named Shay Guevara. Have you heard of Shay Guevara? I see him on t-shirts all the time. Okay. I feel like Shay Guevara was like the original Bernie Sanders, right? Or is that wrong? Shay Guevara was a Guatemalan Marxist who had been more or less radicalized by what the US did to his country, Guatemala, which we already kind of talked about. Classic. Yeah. Taylor's oldest time, babe. I'm going to have you read a quick little lurch. He's like, hey, thanks for fucking me big time. I'm not going to spend my life trying to fight you. Trying to rectify these wrongs. Shay Guevara, the committed Marxist who had come to the conclusion while watching the Guatemalan coup in 1954 that the United States could not be trusted. Capitalist imperialism, Shay believed, would wage war on any democratic socialist project. And therefore, armed struggle and a tightly controlled state were the only options open to third world revolutionaries. Wow. Okay, wait. This is so interesting because it's very clear that he internalized what you're talking about and what Grace Blakely talks about, which is like the global South cannot pull from anything below them. And so they have to take different defense mechanisms in order to engage with capitalism. That's so interesting. Yeah. 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. Yeah, you're going to internalize a certain viewpoint of like, okay, well, it kind of seems like the only way to achieve this is violence because they're never, they won't let us have it democratically. Right. And I think too, the thing that I'm like kind of chewing on is the idea that I have always been on the impression that any of these Marxist or communist figures have just ethically believed that it's the right thing to do or whatever. But I'm realizing now that it's like even if they wanted to, capitalism would not be the correct strategy for them because they're always going to lose the game of capitalism. Yeah. It wasn't going to work for them. It's only going to work for like the very small handful of countries at the top. And so no wonder they're like, yeah, we need a strong government structure in order to defend ourselves from fucking capitalism. Yeah. And so Castro actually wanted to have good relations with the US. Bevin says, but he started nationalizing things and the US didn't like that. So we imposed strict trade restrictions on Cuba. We basically like starved them out. And so Cuba was forced to go to the Soviet Union for its fuel imports. And so when they do this, so the US is like, yeah, they're going to the Soviets. Yep, they're communist. This is a problem. We need to take care of this. So in 1961, the CIA attacked Cuba using CIA-trained X-Cuban X-Siles in the infamous clusterfuck, the Bay of Pigs. When they tried to retake the island from Castro and assumed the Cubans were going to support them, this goes to put it lightly very poorly. It does not work. Hundreds of people die. And JFK doesn't use more military force because he's afraid it's going to start World War 3 and cause an all-out war with the Soviet Union. Then the Soviet Union after this clusterfuck puts missiles onto the island of Cuba. The thing about this is that it was really bad timing because three days before the failed Bay of Pigs endeavor, the Soviet Union won the space race. It developed the technology to send demand to space faster than the capitalist superpower of the United States did. And this is why the new finish line of like, well, actually the real goal is to go to the moon. That's why that gets introduced. Maybe it arouses a bunch of peasants according to me. I feel like the JD Vance of back then, you know how JD Vance keeps calling Chinese people peasants? He's such a fucking loser. Anyways, I'm sure that there was a JD Vance of his era being like, these Russian peasants and meanwhile Russia's like, go fuck yourself. Sorry, I can't hear you from space bitch. Yeah, I mean, it's just, oh my God. The tie-ins to President Day are so salient because you're absolutely right this morning. I was reading about how advanced the Chinese manufacturing sector is and how there's this like still very pervasive belief that Chinese sweatshops and low-wage laborers like what were no dude, they get more time off than we do. They have factories that don't even have people in them. They were locked the fucking, they are so far ahead of us. This thing I was reading was basically like, American exceptionalism blinds us to the reality that we will never catch up. Everything is gone. They are so far ahead of us and it's a very similar thing of, we thought of them as peasants, we thought of them as beneath us. My thesis right now is the downfall of the American empire is hubris is will be caused by the fact that like we think that we are innately better than everyone else. Dude, quick cutaway to Joe Biden on 60 minutes. I think a year and a half ago where he said that the United States is the greatest empire in human history and the person interviewing him went like in all of history like more than like the Roman Empire and he was like, yes. And then they were like, okay, grandpa, let's help you back out to the limo. I know it's pretty late and then he's sundowned. Anyways. As a result of like the Bay of Pigs being a giant disaster and the Soviets getting the space first, the CIA becomes obsessed with killing fiddle Castro in a series of failed plots. Like mean girls, it's like mean girls with the charge. Fadal Castro is a fugly slut. Do not trust. This is a fugly bitch. Please read. Oh, it's so funny. Okay. I can't, I'm now imagining this written in a burn book with like a lipstick kiss next to it. Okay. The CIA had already sanctioned outlandish attempts on Castro's life. After Eisenhower, they tried poison as cigars, no fucking way, and attempted to make his beard fall out. They apparently thought that Cubans would respect him less clean shave it. Oh, wait, I'm dying. That actually might work on JD Vance though, because have you seen him clean shave it? The agency had contracted the mafia to murder Castro after the Bay of Pigs, the agency built upon this tradition. They created a scuba diving suit contaminated with spores, but couldn't get it to the Cuban leader. Wait, this is blowing my mind. One plan revolved around an exploding seashell. It's so good. Okay, well, that actually is so good, but now that we have had exploding cell phones, that's that's also pretty dark. The Miami CIA station became the largest in the world and offered cash bounties for dead communists, holy shit, Edward Lanzdell, the same man who had created vampire victims in the Philippines, discussed spraying civilian sugar workers in Cuba with biological warfare agents, as well as faking the second coming of Christ. What are we doing, guys? Holy what are we doing? Holy shit. Wow. So the government has always been pretty wheels off. Oh, unbelievably so. We did shit in Africa. We did shit in the Middle East. You're going to actually meet a character in this next passage who will be familiar to Americans who were born in the 1990s and wrote poems in the early 2000s called the War in Iraq. Please read. All right. In Africa, the US took a different direction. With CIA assistance, white South African authorities arrested Nelson Mandela in 1962. Nice. Famously, famously hated person Nelson Mandela. US officials also set the Middle East on a new path in 1963. In Indonesia, the largest communist party in the bandung countries was the Iraqi Communist Party, ICP, which had grown in opposition to dictator, Abdel Karim Qasim. The ICP thought of making a bid for revolution and the Soviets advised against it, but Washington backed a successful coup by the anti-communist bath party, which immediately moved to crush the ICP. The CIA supplied lists of communists and alleged communists to the new regime, which slaughtered untold numbers of people. Nice. A bath party member named Saddam Hussein, only 25 years old, took part in the US backed anti-communist terror that followed. Good stuff, right? Oh my god. This is like when you find out that like the person in your friend group who always claims to be the victim is actually the fucking asshole who's stirring shit with everyone and you're like, you're the reason that we don't get along anymore. This sucks. But then you realize that the person is you. This is why it's like kind of impossible to talk about 21st century American intervention and like the war on terror without, it's like, well, we should probably go back like 40 more years. Yeah. What did we do in this region? Terrorists don't like come from nowhere. I 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. This 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. Terrorists previously we sometimes had to wait decades to find out about this that this even happened to begin with. The lunacy of the second Trump administration is in many ways so deeply American. There's a really good essay that I'm going to put in the show notes for this episode. It's an N plus one essay and it's called the last taboo. And it was about that signal chat that leaked. And it's an interesting incredible essay. The part of what he kind of focuses on is a lot of the themes that we're circling right now is the fact that the majority of the hubbub about the signal chat was about the rules being broken. Well, you're organizing war crimes the wrong way. You're supposed to do your war crimes over there that obsession with etiquette around these heinous things. They blew up an apartment building to get one person and everyone's like American flag emoji, fist emoji, fire emoji. That's so it was like cares what app they're using to talk about this. I just can imagine being somebody whose family members died in the apartment collapse and then watching US media be like, can you believe they're using the wrong app to talk about their war crimes? Oh my god. How inept how incompetent. Well, it makes me think of, I mean, again, the exploding seashell several months ago from this recording. There was that exploding page or incident. I think it was in Lebanon and it killed dozens of civilians. I think maybe more. I mean, these death counts also we should note US death counts should never fucking be trusted. We are always being very conservative on the low end of any death counts. That's another thing is that the US will like come in, drop like five billion bombs and then be like, yeah, so according to us 10 people were killed and we're really sorry about it. I'm like, can we just redo that math? And they were also they were Hamas too. Right. Everyone was Hamas. Everyone was all the kids Hamas. Yeah, quick kind of way to like a fucking candy shop with a pile of dead kids. Anyways, literally 20 minutes ago, you're like, we should be this dark. Yeah, whatever. Fuck it. Anyone who's made it as far as like a real G. Okay. So one thing that came up in my research that I thought was really interesting and I had never heard about before with the exception of maybe some brief mentions over the last six months is I've just independently become interested in like, what is socialism all about? This capital is something that's going to be working very well for much longer. So in Chile, Salvador, I end day is a socialist who gets democratically elected in 1970. He starts nationalizing companies. He starts raising wages for the lower classes, which then boosts spending, which then causes manufacturing growth. So like things are being stimulated and like the economy is growing and they needed a good way to manage and allocate resources effectively across this economy. Because again, they're nationalizing companies. They're trying to centrally plan and control their economy. We are going to watch a video about the way that they attempt to do this. It's called project cybersen. Now bear in mind, we are talking about a socialist government in the early 1970s. I end day was elected in 1970 and by the end of 1971, he had nationalized over 150 enterprises and kicked out the exploitative American companies. I end day had an impressive first year and a half. And CIA documents confirm this. An 8.5% jump in GDP, a lower inflation rate than under previous administration, and the lowest unemployment rate in a decade. Reactivation of the economy resulted largely from Iandes early bid for popular support by sharply boosting the real wages of Chile's lower classes. Because of the consumer buying spree that followed, manufacturing output increased by about 12% in 1971. Increased government outlays for housing also brought a 12% jump in construction activity. Both industries had ample unused capacity on which to draw. And their increased production activity brought about a decline in the unemployment rate in the Santiago area from 8.3% to 3.8%. Coming off the heels of the economic success and nationalization campaigns, the Iandes government needed to find a way to manage all these new industries and ensure a positive trajectory for the Chilean economy. Fernando Flores, a cabinet minister under President Ayende, reached out to a British cybernetacist whose work he admired and asked for assistance in developing an innovative system to manage the Chilean economy. The cybernetacist was a man named Stafford Beer. Beer held left-wing sympathies and he admired the Chilean goal of implementing worker autonomy and maintaining democracy within a socialist framework. He was involved in management cybernetics and wrote theories on the topic which Fernando Flores took a liking to. Stafford Beer agreed to help Fernando and the Iandes government. He flew out to Chile where he had a Chilean team hard at work as well as a team back in Britain. Beer proposed something called Project Cyberstride which later took on the name CyberSyn and Cyber Stride remained only as the name of the software they created. It was a system designed to collect data and metrics from production centers like factories, process it using a central mainframe and generate predictions of future trends based on past data. Project CyberSyn was based on a theory that focused on creating organizations that can adapt, stay effective and sustain themselves over time. It included four main components. One, a network of telex machines set up in state run enterprises and factories that would send and receive information to the government which would then be inputted into a modeling software. Two, the modeling software which was called Cyberstride would monitor production indicators. Things like raw materials, production output, inventory, absent workers, and flag any abnormalities. If something was a cause for concern the workers would be alerted and given an amount of time to fix the issue. If they could not fix the issue within the time frame, only then would the central government be alerted. This was a strategic design to ensure that the workers had as much control and autonomy over their work spaces as reasonably possible. Three, an economic simulator software called Chico. The data and information would also be inputted into Chico to predict possible economic outcomes. These software were written by Chilean engineers with the help of a team in Britain and functioned using techniques like Bayesian recursive estimation and intelligent control to gauge probability. Four, a control room designed to help managers view important economic data come up with solutions during emergencies and send instructions to factories and businesses through the telex network. This was Stafford Beers' attempt to quote "implant an economic nervous system into the Chilean economy." It wasn't meant to overstep on the workers, but to spark collaboration between the laborers of all industries, machines, and the government in a synergistic way. Hence the name Cybersyn, Cyber for cybernetics, and Synn to represent the synergy between workers government and machines to create an outcome greater than the sum of its parts. I know it's hard for free market dogmatists to imagine a mechanism greater than the market when it comes to resource allocation. Theories like the economic calculation problem are often cited as proof that the only effective economic structure could be market capitalism. The many technical issues with this theory aside, the free market is animated by profit, not human well-being. It leaves a good amount of people hungry and houseless. That's not optimal resource allocation or societal organization. When we look at the ambitions of the I&A government, they understood this about markets. They also understood that Soviet style planning was not an appropriate fit. They moved forward with the goal to create an equitable economy that served everyone, not just the rich and powerful. They did this in 1971. Are you telling me that there's nothing we could learn from what Stafford beer and the I&A government achieved in those two short years under dire political restraints? Unfortunately, as this project was still in its infancy, the US backed sabotage of Chile was becoming more intense after I&A's successful first year and a half. Due to everything mentioned earlier, the US led financial blockade, economic warfare, and the wealthy in Chile, withdrawing large amounts of capital from the country without reinvesting, contributed to significant economic instability and shortages. This led to I&A resorting to money printing, which in this case contributed to inflation and exacerbated the economic crisis imposed upon his country. Wow. Dude, Stafford beer is the man who coined the phrase the purpose of a system is what it does. No fucking way, really? Yeah, that Stafford fucking beer. I feel like I just met a celebrity. Fun connection. Yeah. What a fun, a diabolicalized celebrity. I love this example because I think it shows us two things. Number one, they basically were trying to organize their economy the way like a modern Walmart is structured. Walmart 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? A 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 US sabotaged it. Whether it would have worked or not, maybe it would, maybe it wouldn't have. We just, we don't know. But it's those sort of experiments. We have so few real world examples of them. And in that case, it was working well and it was extremely advanced for its time. Do you think it would be fair to say that at this point, whatever next economy were to happen, if and when, I think you and I would both say reasonably that of course capitalism isn't going to last forever, no economy, last forever, that the only ways for a place to capitalism would have to be at a global scale. Yes. And no world in which one country becomes anti-capitalist because I think that one of the criticisms of this argument against capitalism is, well, then why doesn't someone do it? And I think that it's important to note that this isn't well. Some countries should just become the next type of economy that grants more equity. It would have to be a global shift. That was definitely, I would say, represented in the research that it did for this episode. I can't remember exactly what source it was, but it did come up that in order for capitalism to really be "overthrown" or to fail, it has to fail globally. Right. Insumption, 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 a few thousand people to over a million. Bevens called this the state-organized extermination of civilian to oppose 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. Up 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 US support. Bevens, for this book, interviewed one person who was a schoolteacher at the time, and in this excerpt, "PKI" is like the acronym for the Indonesian Communist Party. Though he worked as a schoolteacher and not as an actual "PKI" member, he said he was arrested and tortured for days before watching his cellmates dragged off one by one never to return. He was spared for reasons he never understood and spent over a decade in prison. But it wasn't only communists and leftists who were victimized. Untold numbers of people were tortured, raped and killed for being accused of being communists, or for belonging to an ethnic minority, or simply being an enemy of some member of the officially sanctioned death squads. The whole book is excellent. We're really barely scratching the surface, but he writes at the end about how, "Yeah, it's true that Soviet Russia had its own internal contradictions." He described their collapse as "accidentally destroying their own state." It's also true that many atrocities have been carried out in the name of communism. But 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 the. Both the forces of the free market. The invisible hand. The invisible hand was extremely visible and it was throwing grenade. These places just never got a fair shake. He 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." Here is one other worthwhile quote that I think we should close this objection out with. Many of the global left-wing groups that did survive the 20th century decided that they had to employ violence and gellously guard power or face annihilation. When they saw the mass murders taking place in these countries, it changed them. Maybe US citizens weren't paying close attention to what happened in Guatemala or Indonesia. But other leftists around the world were definitely watching. When the world's largest communist party without an army or dictatorial control of a country was massacred one by one with no consequences for the murderers, many people around the world drew lessons from this with serious consequences. You know what's so interesting that I'm thinking about now is that I don't think it's actually occurred to me until now, but I have memories throughout college and in the years as a young 20-year-old before I became radicalized. My young Mitt Romney supporter. When I was a young Mitt Romney supporter of kind of viewing capitalism, socialism, and communism as these three battling forces without ever really interrogating that. I think what's really interesting is that socialism and communism are largely theoretical. We use examples of people who had brief uprisings based off of the foundations of communist ideology or based off of the foundations of Marxist beliefs. But we've actually, of course, never seen a global socialist order. We've never seen a global communist order. Even 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 boogie men is a huge understatement. They have never actually existed. They've never actually reached full actualization because we have a capitalist world economy. Even 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? Are you a socialist podcast? Are you a Marxist podcast? Or it's like, what is this desire to give this one word? Or people who are like trying to have these conversations about this. And I feel like this is clarifying my discomfort, which is those are words that have been largely used and defined as this vague opposition of a bully that we kind of build up in theory. And whatever I want to come next probably won't be either of those words. It's probably an economy that we haven't even yet fully theorized. I just think it's extremely important that when we talk about how capitalism, because I think that what you're saying sometimes actually gets spun by proponents of capitalism, and go, yeah, socialism has never existed. If it were so great, it would have existed. It's almost as though the fact of existence of capitalism is taken as evidence that it works and that it's the best thing we got. The best thing we've ever tried, right? But you cannot separate the existence of capitalism from the fact that it was violently enforced. Right. Without the military, who knows what would have happened? That's kind of this other piece of this, which is not only has socialism never really existed in practice, capitalism really hasn't either. Right, right, right, right, right. Like the idea of it as we understand it is not real. It's not real. Well, we have in America isn't even really like theoretically pure capitalism either. Right. After the debates I watched, capitalism versus socialism debate between Richard Wolfe and this libertarian economist, the libertarian was basically arguing like, well, I want to get government intervention out of capitalism. We're not even doing real capitalism. If we were doing real capitalism, all of this would be better. You can't really tease that argument apart without running into this brick wall of, well, without the government, there is no capitalism because capitalism rests on private property. You need the rule of law and you need institutions to enforce private property. Right. Right. There is no capitalism without government. And yet they say capitalism with government isn't real capitalism. So you run into this same like weird theoretical loophole when you're discussing both systems and both critics and supporters will like take different sides of the same argument. Yeah, that makes sense. So I think to like close out this section, I want to ask, so is communism an unpopular and weak failure of an economic system that never works in practice like we've been told? Or is it such a powerful global threat to capitalist freedoms everywhere that we need covert murder campaigns and to install dictators in a dozen countries to make sure communist don't democratically gain power? Well, which is it? Is it a weak system that never works or is it like a global threat that we need to exterminate anyone who thinks that we should try it? I think the perfect example is did Bernie not win the 2016 presidential election or did the DNC keep him from winning? Because if you honestly like I'm joking, but I'm also really fucking serious. Every 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, we know that's the die. I love how every single episode ends here. Every episode that we do ends with Caroline being like, and we had a politician. I want to pause really quickly and absorb this because you're giving me a ton of information. Like with most things, I go off of vibes and I know that I was right to not like capitalism, but I feel like now I'm gonna have to go down the way. I'm gonna search to back it up. Yeah, exactly. Now I want to turn our attention. We've talked about these three objections to why capitalism is the best thing or why capitalism is the only thing that works. So now I want to turn our attention to what we even mean when we say that capitalism works. So you hear that one guy say it's worked better than anything else, right? And we often shock up all the good stuff that we have in life today, all the innovation we say, oh, it's because of capitalism. And we treat things like recessions as aberrations. Like, oh, you know, we went off the tracks a little bit. But there was a time in US history when Americans were not so sure that capitalism quote unquote worked. Everything that we just talked about, that whole section about the Jakarta method and things that I learned while reading that book for this episode. All of that happened after World War II. America emerges from World War II and they have all this money, they've all this power, their country is not decimated like Europe. And so they're like, dope, what we're going to do with all this. But World War II, incidentally, was what made capitalism work again in the country to begin with after it failed in the early 20th century. By the time that FDR was inaugurated president in 1933, this is America in 1933, okay? The banking system had collapsed. 25% of the labor force was unemployed. Prices and productivity had fallen to one third of their 1929 levels. Reduced prices and reduced output resulted in lower income in wages, rents, dividends, and profits throughout the entire economy. Factories were shut down. Farms and homes were lost for closure. Mills and mines were abandoned. People went hungry. The resulting lower incomes meant the further inability of these people to spend or save their way out of the crisis. This perpetuated an economic slowdown in a seemingly never-ending cycle. It would have been a never-ending cycle had the US government not intervened. As we know, FDR, he creates dozens of national agencies following the 1937 recession. Roosevelt adopts the economist John Maynard Cain's notion of expand the deficit spending to stimulate demand. Because it's like, the economy is not economy-ing. We have to pump money into it to make it, so you're poking with the stick, being like, do something. In 1938, the Treasury Department designed programs for public housing, railroad construction, and other massive public works. But the real boost happened because of the massive public spending that was stimulated by World War II. Even after 1938, private investment spending, housing, non-residential construction, plans, and equipment, all of that still lagged. It was war-related export demands and expanded government spending that led the economy back to full employment capacity production by 1941. Which means, the left to its own devices, capitalism crashed and burned spectacularly in America. Wasn't it also partially because of tariffs? I bring that up just because I think we talk all the time about what capitalism means. I think you and Grace Blakely both do such a good job of being like, "Well, no, this is what capitalism really is." You can say that capitalism values free trade, but it's not about free trade. You don't need free trade. It's about growth and it's about profit. So it's like, everything else can be tweaked in order to prioritize growth at all costs. So, tariffs is a really great example of that where you don't see any of these right wingers being like, tariffs are not representative of the capitalist dream of free markets because they know that free markets is just the way that they fucking sell it to people. It doesn't have to be a free market. We just want growth. I mean, that's just me spitballing, but that feels correct to me, so I'm going to say it. Well, you are representing the vibes side of the conversation. Capital V vibes. So, yeah, capitalism had crashed and burned. The country was in the doldrums a big time. And there was kind of this recognition that like, hey, maybe an economic system that's just boom and bust over and over again isn't an ideal way to structure a society. And they're like, shut the fuck up. And they're like, hey, you're like, shut the fuck up. And then, you know, you're like, shut the fuck up. This is not working. What the fuck are we doing? Does the government react to 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 policy making, right? If we save Goldman Sachs, the wealth will trickle down and everyone else will be fine. Meanwhile, your average middle-class person, their in foreclosure and are like losing their house, right? So, the government pours trillions of dollars into preventing the banking system from collapsing. And I think people are pretty well aware of like, why are the great financial crisis happened? But just as a, you know, refresher. The banks had basically lent out too much money for assets that ended up being junk. So, they owned a bunch of bad debt. And 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 and decisions that we get. They basically will futures into being and prevent other futures from happening. And 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. So, 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. And this spy role 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 points 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. And because we didn't really have strong labor unions anymore, there was no counter-vailing force to push up against that. So, in this instance, it's like you have all this government spending. You have the same playbook being run, but instead of benefiting the people, it's basically socialism for the rich. Now, the stock market and economic indicators said that we recovered from the GFC by around 2013. So, it takes like five to six years for the economy to like get back on track. But in many ways, the United States economy has like never been the same sense. That was a paradigm-shifting event. The amount of quantitative easing, the amount of money that has been injected into the system now to keep things running. I want to ask a question about that. So, when you say it's never the same, do 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, one 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 this system from collapsing. And so, the average person was getting into more and more debt. But he was like, "But where is the money going?" You can't have a system where like the government is going, quote unquote, bankrupt is in a ton of debt. And the people like, "Where is this money accumulating?" And of course, now we know the answer to this. It's accumulating in assets that primarily very rich people owned. So, what we're experiencing, I think, is the fact that all of that injection of the money is going to be a lot of money. 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. And then it created this playbook that was used again during the pandemic where more money is coming in. And what happens? The stock market goes up. Housing values go up. But it's not translating to real productive capacity. It's not translating to wages. It's just making wealth inequality go parabolic. Because the people who already own everything are getting richer. It's such an advanced rate. That problem will never fix itself. The only way out of that is to confiscate the wealth of those people. I 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. I'm sure that you and I could both count. The generation above us is largely like it was largely parents who dealt with us. And I can probably name 20 people I know whose parents never recovered and who have had like really hard. And who were privileged for the record? Who like were in positions of quote unquote upward economic mobility and were just totally crushed. I think when we think about those two, I'm picking the two biggest events. Right? The great depression and the great recession to kind of be like, this is part of capitalism. This is just what happens. And 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? And this is a question that's going to lead us to some powerful answers because the US 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. We just talked about all the countries that have been violently crushed and continue to be exploited for the good of American interests. The US sits at the top of that pyramid of capitalism. Right? So the outcomes that we are getting here are probably about as good as it's going to guess. This is as good as the cats. We're at the top of the pyramid. So what you see here is best case scenario. I'm having a little bit of a realization that I just want to tie back to because I've been. I was kind of cycling on this at the beginning as you probably noticed. I'm like trying to tease out the differences between the feudal idea of landlords versus people on land versus capitalism. And I think something that you changed my brain with. I mean, you changed my brain so much all the time, Katie. But particularly when we did the private equity episode and you were talking about how so much of our economy is now in financialization, my grandfather grew up at during the Great Depression. And when he died, my parents found $30,000 in cash in beneath the floorboards. And he was very famously against the stock market because he was a child who grew up during the Great Depression. And I, of course, am much more modern and it's like, oh, my God, well, the stock market's always going to go up. But it's really interesting because I'm thinking about feudalism and I'm like, well, feudalism never had a bailout. There was no abstract value. It was all literal. It was the products that you're making. And if there's a famine, people die. But there isn't this idea of all of our value is now theoretical from the financialization, from the banks, from the debt leverage, to all these things. It's all theoretical. And so you can have different economists just lie about their interpretation of it or give you a different interpretation. But when you're constantly dealing with a theory of money, no wonder it's so unstable. Well, the other thing that I'm thinking about with feudalism is feudalism relied more explicitly on violent force to enforce it. Right. The myth of capitalism is that it's sophisticated and non-violent and just about like generative forces and like everyone has freedom and everyone's participating in the cream of rise to the top or whatever. But capitalism is just as reliant on violent force as feudalism was. It's just that feudalism was more specifically and openly about like, no, I like have all these like knights who I like pay to protect the men. Beard was literally to capitating a farmer with like a scythe. And capitalism is like a drone strike from 5,000 miles away. It's one guy in a bunker pressing a button and there we go. BP, your province for next quarter or guaranteed, we're going on the. Yeah, queue like 5 million just like slick little ducks covered in oil. So no worries. So let's talk about the norm in America. I think this is going to surprise you even though I know you're pretty woke about wealth and equality. 60% of the American population relies solely on wages and possesses almost no net wealth. So the majority of Americans own functionally nothing. 42 million Americans need assistance to afford food. That's 13% of the population. If something is true for 42 million people, do we think it is an individual issue or might there be something more systemic at play, particularly in a food system where we know we produce way more than we could ever eat? Should we just mail all of them bootstraps? No, Caroline, that would be too much intervention. The US suffers an economic recession every six and a half years on average. This is wow. Again, part of how capitalism works. This isn't because it's not working. This is how it works. It is a feature not a bug. The top 10% of Americans own about 72% of the country's total wealth. And that is extremely meaningful when you consider how much of the global wealth is in the United States. The average wealth of someone in the top 10%, take the 1% out for a second because they skew the average so high up that it kind of fucks it up. But if you take the 1% out and you just look at like 10 to 2, we're talking about the average wealth of around $2 million. So if you have less than $2 million, you're in the bottom 90%. Wow. But even in that top 10%, 30, 35 million people, right? There are about 200,000 Americans who own 10% of the country's wealth on their own. So it becomes extreme as you reach the peak. I mean, it goes parabolic at the end really fast. Wait a minute, Katie, do you know what this is making me think about? What? This is making me think about the letter that Osama bin Laden wrote where he described the oil theft as the greatest theft in human history. Good shit, right? It's good. That is good shit. That Osama, he can write a letter. No, when you just said this isn't just national wealth. This is global wealth. I know this is going to make me sound like a fucking radical, but that's not your money. That money is coming at the direct cost of the poverty of so many people. Like it's not just money that's generated in the US. This is wealth that is being sucked in from all over the globe. It'd be one thing if all of the countries on earth had like equal amounts and we were just talking about 200,000 people that own 10% of one of. It's like, no, they own. Let's put it in perspective. American baby boomers own about 20% of the world's wealth. Just that generation. Oh my god. Okay, so like. Fucking baby boomers. They're so fucking selfish. So if 60% of the country, a majority only gets by on labor income and one in 10 Americans owns three and four dollars of our country's wealth, then that means the normal state of existence under capitalism, the average, the norm, is to have nothing or next to nothing. Capitalists love to talk about rational self-interest, right? This is like, "Econ 101, people are going to act in their rational self-interest." But if you consider that the average person under American capitalism in America, in the place where it's the best, where you are benefiting the most from the global order, has nothing or next to nothing on average, that means that the most rational, self-interested thing for almost everyone is to want socialism. So I want to take a second to talk about social democracies. Social democracies are what we call countries like Denmark. They have a robust welfare state within a capitalist system to help mitigate some of its worst downsides. Now, that would be a really big step forward for the United States. However, it is ultimately a temporary solution, because it doesn't challenge power, right? It leaves control in the hands of the few, it just eaks out some benefits from them, but it also means that the few in power have the ability to revoke those concessions whenever they want to. It's also restating that that also in many ways relies on imperialism. The wealth that those countries have that they use to fund the welfare state also comes from the mechanisms of global capitalism that are very extractive. And I should note, I mean, number one, Norway's oil is where they're funding all of this, and these countries are famously incredibly diligent about not letting their populations grow. It's just very notable. Like Norway has one of the strictest immigration processes in the world. I almost want to push back on that, because you and I talk a lot about being like, can't we just be more like Scandinavia? So do you think it's correct that if we could push a button and have that right now, we would, but the point is that it's not the long term goal. It's the most humane version of capitalism. So is it better than what we have now? Is it probably going to be the first step that we're going to have to take to get anywhere better? Yes. The point is just that it doesn't address the inherent power imbalance. It just makes that power imbalance more tolerable. And bringing this up, because I think that this is often something that comes up when we talk about this is you guys talk all the time about how great life isn't Denmark and how great life is in Norway and Sweden and like their capitalist society. So like, why can't we just have welfare capitalism and then stop there? What is the need to go further? I think the need to go further is probably a little clearer now that we've had this conversation. Yeah. Is it possible that the Scandinavian countries and other countries who have social safety nets and pretty much every other developed nation than our own has benefits because they benefit from us being so aggressive and militant around the world by maintaining capitalism. And therefore, if the United States were to change and become more of a socialist democracy with less of an emphasis on military, there would be a trickle down consequence. Is it possible that they are fish sucking on our shark belly? And if we decided to become a socialist democratic fish to all of a sudden there's no capitalist shark and things fall apart or is that not correct? I will say that metaphor confused you. I'm like, okay, so we're the shark. Super salient comparison. My instinct is to say yes, I will say that's a very popular argument about why the US can't be a social democracy because we have to spend all the money on the military to like protect the world. Yes. So it's like, well, we're defending the global order and by the global order, we mean capitalism. I think that what you're saying is probably true that it would cause a large shakeup if we suddenly like demilitarized and spent that money on like I don't know cancer research and health care, something we'll never do. But I'm also conscious of the fact that because it's often used as an argument against why we can't have a safety net that there's probably more to it than what I'm expressing right now. Okay, that makes sense. Okay, we've talked about why some of these major defenses don't quite hold up that it's only natural that it's the thing that drives innovation that capitalism organically spread throughout the world because it was the best thing for everyone. And now that we've established what we mean when we say it's working and like what the norm of life is in America under capitalism. Let's talk about the major contradictions that are hiding in plain sight because I think this is what's going to really help drive home why we have so many issues in this system that supposedly works like really well because if you look at it a little more critically, you're going to notice at least seven unavoidable contradictions. So number one, in capitalism, the objective of any action is to maximize profit. So this incentivizes you to prioritize the thing that you can sell for the most money, the $400,000 rules, Royce, not the electric mass transit system. The fancy definition that is used to describe the thing that you can sell for the most money is the thing that has the highest exchange value that when you exchange it, you get the highest value in return. How much can you exchange this thing for? But that's not the only value that something has. Some things have very high use value, but not very high exchange value. So a good example of this is a childcare center in a low income neighborhood. This is a service that is extremely valuable and is extremely useful. Because the customers don't have much money to pay for it, the exchange value of that service is not very high. And so if you flesh this out over an entire economic system, what you find is that people are mostly incentivized to focus on producing things with high exchange value called commodities, things that have a high potential for profit, not to focus on solving problems or providing things with the highest use value that actually have the highest use for humanity. The second contradiction is that the interests of capital and the interests of labor will always be in direct opposition to one another. There is an unresolvable tension between capital and labor because capital isn't incentivized to get their costs as low as possible to use automation to suppress wages to employ as few people as possible. And laborers are incentivized to try to drive their wages up and improve their working conditions. And this is where legal intervention becomes absolutely necessary to maintain a functioning society. That's why we have labor law. It's what gave us the 40 hour work week, weekends, minimum wages, unionization protections. None of that exists naturally under capitalism. It produces none of those things on its own. And without those interventions, we would probably devolve into like a violent mad Max scenario and like three weeks. But even with those interventions, the social tensions that this creates and the real world impact of that inequality is still unavoidable and suboptimal. And again, because those rights have been hard won by left wing groups like we talked about, they can be stripped back at any time. You can have a fascist president coming to power and give the keys to the kingdom to the unelected billionaire who can just go into the social security office and delete like at any point that could happen. Right. Right. It's like a feature, not a bug. Yep. The third contradiction is private property rights and the public good. So private property rights. We've kind of addressed this already. It's a single person's legally enforceable right to own and control assets. It's the reason why you own your home and the law and the force of the state will back you up if someone tried to take it from you. That is protected and enforced by the state without the state you're on your own. Right. Right. Mad Max. Law is involved. The threat of the state's legitimate use of force and violence is involved or like the legal system too, like not necessarily violent force. But you can sue. You can take somebody to court. Like there is a major apparatus that is there to backstop you if something goes wrong. Capitalism requires that to function. But the state is also tasked with maintaining the public good. And there are a lot of times when the public good isn't direct opposition to private property rights. Climate change. Bingo. The contradiction between being a public entity tasked with engendering the public good and also being the body tasked with enforcing the rights of landlords and fossil fuel companies. Direct opposition to one another. It's making me think about nimbyism or about the idea of the way that most people up until the last 10 years as you're noting that we're having this kind of like implosion. The whole idea of building wealth has been tied into owning your home and having property value. Which puts you in direct opposition to affordable housing units or. Thank you for building out or any of those things. It actually makes me feel really sad because I totally understand why people shut down things for the greater good because there is so much panic and survivalism and being like, well wait, I've been paying $20,000 a year in interest alone that I'm never going to recoup from my mortgage and now you're telling me that my property value is going to go down. I can't afford for my property value to go down. It feels like you're in a battle for your life. Yes. And you know, I'm also paying property taxes to the state. Yeah. That like will never end even when I own this property outright. I still will have to pay property taxes forever on the value of this property. So it's a lose lose another article. I'm going to link in the show notes is I think it's called like housing is a paradox by Jerusalem Demsos. It's basically this amazing argument that like housing cannot both be a wealth building mechanism for the middle class and an affordable thing that everyone can have. It can't be an asset that's growing in value faster than inflation. Right. And be affordable. That's literally impossible. So these contradictions are everywhere. The fourth one is the dynamic between competition and monopoly power. So competition between firms is supposedly what prevents monopoly power. Right. You want firms competing with one another because monopoly power is bad in capitalism. It gives one firm too much power. And then when one firm has too much power, they can control prices and do whatever the fuck they want. But Carol, you were a college athlete. What is the natural result of competition? Someone becomes the best winners and losers. Yeah. Someone's going to win. Someone's going to lose. And as you win, you gain market share. You get bigger. You gain more control. You become even harder to compete with. I can't think of a single industry that doesn't have a monopoly at this point. You can raise prices. It's almost impossible for any. How are you going to compete with Amazon? Who on earth has that? I mean maybe Alibaba, the Chinese equivalent of Amazon? Yeah. You aren't going to compete with Amazon. Jeff Bezos can crush you like a bug. We know that like these magnificent seven stocks, these tech stocks and these companies when anyone even slightly looks competitive, they just buy them. Facebook now owns international communication. They own WhatsApp. Yeah. There is actually no alternative. That is the only option for you to communicate with people is to have technically have some sort of Facebook account. So all competition eventually produces monopoly power. This is maybe the biggest contradiction of capitalism, the most unavoidable one since competition is thought to be the force that prevents monopoly. Right. It causes monopoly intervention from some outside source. Usually the state acting in its antitrust capacity has to intervene constantly to resolve this problem. The fifth contradiction of capitalism. You see this similar dynamic play out geographically as monopoly power and competition create uneven development. So we've already discussed how this happened internationally, how these peripheral society is stuck in this cycle of dependency where they can't get out from under the basically major economies and global north. And this is partially white 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. Right. But you also see it within the US as certain regions become more valuable that value gets more value. The opposite is also true. Think about how much the government spends intervenes in the states whose economies were decimated by the civil war. The South in some ways has never recovered. The southern states are still the poorest in the country. It's been hundreds of years. A more recent example comes from the Rust Belt. These are the places that are often like bandied about when we're talking about bringing manufacturing jobs back. These places were hollowed out. And without intentional intervention without intentional investment to the tune of billions of dollars. The money is just going to keep flowing to the coasts because that's where it already is. Capitalism left completely unabated would basically create a country that's just New York and San Francisco and nothing in between. Yeah. The sixth contradiction is that capitalism incentivizes conditions that lead to worker alienation. So if you are an owner, what is more efficient to you? One dude who sits in a shed and makes shoes from scratch or a factory where a single person is in charge of placing one piece on a million shoes a day. The latter is going to be far more successful for you if you are running a capitalist model with the priority of maximizing profit. But the human cost of that choice means that workers are going to feel increasingly disconnected from the work that they do. You hear this sense of alienation constantly in a modern economy where people do I call them spreadsheet jobs where it's the bullshit job theory. You're doing a job where you feel no sense of connection, no sense of purpose, no meaning, you're a cog in a machine and you feel increasingly disconnected from that work. That creates profound social costs because most people don't want to live that life. Most people don't want to work that job. Ironically, you're technically one of the privileged ones. Usually if you have a bullshit job. Yes. So where in the case of the individual cobbler, you might have a person who fucking loves making shoes or at least enjoys it. Yeah. And is therefore personally driven to create great shoes. Those 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. Where are your shoes? Yeah. 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. The 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. Right. I think that the workforce participation rate in the United States is something like 60%. Interesting. And 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 capitalist. Their workforce participation rate is 80%. Interesting. Americans workforce participation rate is quite low compared to countries like Norway. But in the US, 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. That's the only reason you can get people to do deeply soul sucking work anyway because they're too afraid to do something else. They know that they will lose their health care. They might become destitute. And in America, if you become impoverished, your life is fucking terrible. So now I'm understanding the point workforce participation is higher because people are more willing to take jobs that might be lower paying but that don't risk like you might be a teacher or like a daycare provider or any of the other jobs or researcher or any of the jobs that have so much inherent value but don't lead to high compensation. Is that what you're saying? I'm saying that. And I'm also saying that like the US 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. Right. Okay. And then the final contradiction of capitalism is the role that technology plays because the use of technology and automation drives productivity that 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? There 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. And 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. Such bullshit. So in that respect, we are being held back from something better, we're being held back from real progress because of the structure of our economy. So 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-sacrificity world. This must say that it wasn't an improvement over what came before it. It's not even to say the 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. And earlier in this conversation, I said fascism is capitalism's rear guard. That was a quote that I read in my research. And I think that doing this episode really clarified for me why we face a fascist threat at this particular moment because more people are becoming aware of these shortcomings. I think it's fair to look at all of this taken together and ask the question, has capitalism already failed? Is what we're doing now even capitalism, or are we already in a period of transition, and we actually just haven't even recognized it as such? Right. The wild thing is that a lot of what we're dealing with right now was predicted by very smart people. So I'm going to have you read a paragraph. And then I want you to guess who said it and when. Taylor Swift? Okay. Okay. The result of these developments is an oligarchy of private capital, the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists too, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information, press, radio, education. It is thus extremely difficult and indeed in most cases quite impossible for the individual citizens to come to objective conclusions and to make intelligent use of his political rights. This is either like a hype speech by Peter Teal or it is or it is a criticism, was it by Karl Marx? That was an essay by Albert Einstein written in 1949, predicting what would happen to democracy under capitalism. Many, many years before this was probably on anyone else's radar. I mean, I know that this was a period of time when like the Socialist Party in America had gained a little bit of steam, but still I mean extremely pressioned. Also crazy that he's like they own the sources of information. That was even true back then, holy fuck. It's really interesting and I again this is another trick of growing up in America is that you only learn how many famous people were anti-capitalist once you're on this journey. So it's like you can't learn about it and go, oh Albert Einstein held Socialist beliefs. Maybe I'll look into socialism. You're never going to fucking find that out until you're all ready until the algorithm has already deduced that you're a leftist. 43 hours and diabolicalized. Yes, you're already three hours into diabolicalized, but 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. We need something else. It's kind of shocking. I don't even think one three hour podcast episode is going to undo the decades of propagandizing that I'm sure we've all been subjected to. But I did want to ship away at a lot of the myths, the contradictions today. I wanted to just for anyone who came into this listening and thinking one thing I wanted people to have their worldview shifted just on its axis a little bit and be like, huh, maybe a lot of the things that I've been told aren't actually as true or as fair as I've been led to believe and 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 and theory, but it doesn't really work in practice. Doesn't. So 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? Right. I think that the answer will be found once we have an inspiring vision for the sort of world we would rather live in even if it is a world that has never existed before. Because there's this idea that capitalism is the only system that can provide us with abundance and that if we were to venture into something else, we'd be faced with poverty. We'd have to give up all the creature comforts that we have come to enjoy like HBO and bubble baths and high speed internet. But what if liberating ourselves and our stuff from the pressures and the contradictions of capitalism will make it all better? What if it could make luxury and free time more available to us, not less? And what if capitalism isn't pushing us forward anymore, but what if it is holding us back from the world that we could have? I think the person who probably is most known for making that first grandstake into what the fuck are we going to do instead is a guy named Aaron Bistani. He wrote a book in 2019 called "Fully Automated Luxury Communism." And I think this is the big sort of grandiose thinking that we're going to need if we are going to get people on board and have a vision that's not just about the feet. And Aaron says that automation is not something to fear if that automation serves people and not profit. Because it can create what he calls a post-work society. This is basically a full circle moment for me personally because my interest in personal finance and financial independence was effectively seeking that. I wanted to get a post-work life for myself, but under the conditions of capitalism, that's why I got interested in financial independence. But fully automated luxury communism says, "Hey, that's a version of individual solution or freedom under capitalism that can actually scale." What's really cool about this, I was looking this up this morning actually, in China, they have factories already where there are no people in them. They're fully automated. When you have a society that is organizing itself around the idea that eventually people will not have to work, that all these things that we need, all these jobs, the screwing the thing into the iPhone, the guy was like, "Yeah, we're going to bring that factory back to the US." There's already no people in that factory in China. They've already solved for that, right? Right. There's a utopian vision for sure, but it's not outside the realm of possibility as much as we've probably been led to believe it is. I am going to have you read a book summary and review from Annie Lowry about this book. Annie Lowry, famously the other half of the Ezra Klein power couple who unfortunately had to be the one to give birth to the children. The Ezra Klein industrial complex? Yeah, Ezra Klein industrial complex. I'll joke inside, she's brilliant and I really admire her. It's so funny to me that Annie Lowry is clearly preoccupied with socialist theory, which means that Ezra Klein is probably preoccupied with socialist theory, but it just can't make it onto the mainstream. I'm just like, "Come on, man. Come on. I know you're talking about it at home with your wife. I know what you're doing." Thank you about how much power he wields, how much how many minds could be changed? Okay, bestonnie believes that we are already living through a potentially ethical transformation of the economy, as ethical as the establishment of agriculture and the introduction of engines and electricity. Artificial intelligence, machine learning, and advanced computing might be about to eliminate the need for human labor in no small part, bestonnie claims. That could mean the continued rumination of the planet as oligarchs throw thought conferences on yachts and the masses struggle to make rent. Or it could mean the healing of the planet and the thriving of all its inhabitants. What it might take is converting the world to solar and other renewable forms of energy, mining asteroids for raw materials, implementing communist political systems, and guaranteeing everyone basic services. Enter utopia, a healthy world and an economy of abundance free and accessible to all. So I know that that sounds really pie in the sky, but the transition to capitalism took 500 years. It's not going to happen overnight. And it's failure and the transition to something better is not going to happen overnight either. But I think the first battle we have to win is on the grounds of opinion. And it's on the grounds of getting enough people to see these systems for what they are and to come around to the possibility, not necessarily the belief, but just being open to the possibility that something might be better. I also think it's important to note that. Yeah, sure. Maybe the idea where it all works out is a little bit pie in the sky or I can see how someone would think that. But it's not a question of whether this shift is happening. It is without question that in our lifetimes, I would say at least half probably significantly more of the jobs that college educated people, get out of graduation will be automated. That is a thing that I actually take comfort in. There isn't a question of whether or not we're going to move into a new economy. The cats out of the box or whatever the fuck we are rolling towards that. And 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. It's how much power you can grab back in the process. Do you want the oligarchs to control this technology or do you want it to be democratically owned and controlled? I think that's the other thing is socialism is economic democracy. That's really what its aims are. Just like our political democracy is not perfect and has flaws, but we still think that it's better than monarchy and better than authoritarian regimes. The fact that I think a lot of the communist governments that have been tried ended up becoming authoritarian is very instructive. That is a risk and that like when you are trying to accomplish that in the world that the US built in the 20th century, like it's probably not really a surprise that these leaders became very authoritarian and very militant and very violent because they thought it was the only way that they were going to achieve their goals. But it doesn't have to be that way. It reminds me a little bit of that cartoon of a guy in a suit on a stripper pole and these two people are watching him. They're like the billionaire loves me and just knowing. And he's like that's I think the attitude that we have to really work diligently to disabuse a lot of Americans of because I still think a lot of people think that leaving the control in the hands of the few is the best bet we got. Yeah, it sure isn't. I just spent three and a half hours down the way I don't think that that's the case and it's going to take all of us to figure out what comes next as the whole point. It's not going to be dictated top down. Right. Let's fucking go. That's all. That's capitalism.