I have a deep dispute, though with (I think) the whole crowd of formalists.
The Aretae model of the world has
- Economic Growth as the god-metric, because it buys whatever folks want
- no clubbing baby seals,
- environmental benefits
- enhanced liberty,
- avoiding the riff-raff.
- Hot cars and fast women
- Economic Growth is caused almost exclusively by disruptive innovation.
- The Rich care (almost) exclusively about social position, not absolute wealth (Envy>Greed).
- The only way to maintain social position (in economic reality) is to avoid disruptive innovation
- All politics is coalitional.
- The coalition can be (almost correctly) claimed to be a coalition of the currently rich.
- The coalitional nature of government is therefore primarily interested (in effect) at stopping innovation.
- RIAA
- General Motors
- GE
- Microsoft's Patent Strategy
I think that this line of reasoning ... the awareness of the importance of generating scarcity as a (the only important) political goal ... is at least a strong challenge to the formalist conception of a $-based patronage system. The rich (0.1%) don't need money. They need to stop the inventors from breaking their business model, and becoming even richer themselves. Therefore...the only governmental coalitions that (can?) succeed in a stable state are ones that work to stop innovation.
On the other hand...if the state is unstable...and there is a perceived outside danger...Then the coalition members may be more concerned by the external threat than the internal threats...which would lead to lower disruption of innovation in at least some cases.
Aretae theory therefore says that the only way to get econ growth/tech innovation is to avoid large central power structures. IF there is a large central power structure, you're just screwed...full stop...no $200. Balanced powers that internal actors are afraid of are the only path. Hyper-federalism, or else small states....or prepare to decline.
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All very true. Authoritarianism and capitalism aren't good friends.
As you say, too much authority and you get less growth.
But not enough authority and you get utter chaos. = No growth at all.
Power tends to grow. There's a constant drive to centralize it. See China: they were awesome when divided, but still couldn't stop killing each other trying to centralize.
Small states are unstable. Macedon conquered Greece. Napoleon conquered Italy. Prussia conquered Germany. Britain conquered India.
So there's a trade-off here.
I agree that growth is driven by innovation. I disagree that innovation has to be disruptive to the powerful. It depends on whether or not they stand to capture the benefits.
In neocameralism they do. When innovation causes economic growth, the tax base grows. Taxes go up accordingly. The owners gain that much more income. So long as the joint stock design is working, the state has every incentive to promote innovation. The state is a nearly pure profit maximizer.
While one can imagine a neocameral state owned only by the top 0.1%, that's not what I expect. Such a state would be an ultralarge company with expectation of extremely long life and very reliable dividend. As such, it would be the perfect vehicle for many investors, big and small, who seek reliability of return over high returns. So you should expect mass ownership. (Compare to modern blue chips.) As such, there would mass of investors who do not care at all about status. They are there strictly for safe and reliable dividend. As such they want all the growth the state can promote.
But what of the case where, for some reason, only the top 0.1% are owners? This may be the case, for example, when a neocameral regime is just getting started. You'll say that the new zillionaires created by some kinds of innovations is disruptive. Again the saleability of shares is key. If the new zillionaire wants to own, he simply goes on the market and buys shares from the most marginal owner willing to sell. Thus, the ownership group is adjusted and stability is maintained.
I am willing to posit, though, that perhaps such a limited-ownership neocorp would be less friendly to innovation to protect the social standing of its owners. I think, though, that this would not last. All dynasties decay; in time, as these ultrarich died with many heirs, the ownership group would broaden away from the 0.1%. In this I think there is a dynamic analogous to democracy's always broadening the voter base; even if there were limits on the ability to sell to other zillionaires initially, the rich would want the ability to will shares to their non-zillionaire descendants. Gradually any sale restrictions (other than banning concentration) would fall away, and the state would evolve to a pure profit maximizer.
Your examples of large modern corporations acting like monopolies is purely an artifact of their time and place. I.e. the patent system is what it is; Microsoft cannot change it unilaterally, so it plays the game. Even Google with their (IMO sincere) desire not to be evil has bought up a huge patent portfolio for defense.
The most neocameral-like current states are Singapore and Dubai. Do these places strike you as hostile to innovation?
I don't have to prove formalism incorrect about its assertions because it assumes coercion is okay and I don't.
Even if it turns out to be as utopious as advertised, that just means it solves all my problems except my most pressing problem.
I think it would be a good think for us to distinguish formalism from neocameralism.
Formalism is the idea that all ownership (which includes political power, that is, the right to coerce) should be formalized as private property; that there should be no informal ownership.
Neocameralism is a particular design for a state, namely, its ownership by a joint-stock corporation, ideally using fancy cryptological security to cut off otherwise dangerous failure modes.
One expects a neocameral state to be fairly formalized. Going the other way, formalism if maintained would obviously lead to neocameralism. Also, both things are propounded by about the same set of people, not limited to Mencius Moldbug. Nonetheless, they are distinctly different concepts.
In particular, formalism is an ideal. Utter formality is impossible. Also, it is possible to imagine a neocameral state with a variety of informal power relationships in it for various reasons.
Leonard,
1. By observation...wealthy folks have always, everywhere, bought themselves into royalty. Rich moneymakers/lenders have always interbred with Royalty.
2. For a Bill Gates equivalent...richest man in the world...probably a heavy stakeholder in whatever state apparatus gets generated...HE is better off without Google than with Google. So too are all the other IT-heavy stakeholders (Oracle, Yahoo). Also...the only folks near the government who know anything about IT are probably Microsofties, etc. As a matter of preference, all stakeholders in government who know something about IT are benefitted by preventing change in IT. Similarly, all automotive stakeholders preserve their power best through limiting change in cars.
The rich have an interest in the status quo. If Google happens, then Bill Gates loses massively (it did, he did). Either...Bill Gates has no influence...or he does. If he has influence...then what he wants is to preserve his OS monopoly by suing the shit out of Android phone makers. Wealth has NO influence on him, because he already has the most. The thing that he wants is to maintain the mostest...which he can ONLY do by preventing Sergei Brin (Jeff Bezos, Larry Ellison, etc.) from surpassing him.
You don't appear to take the relative positioning issue seriously enough.
Spandrell,
That's very well said. Trade-offs FTW.
Aretae, Bill Gates has a wealth of some $56 billion. Add another $20 billion in his fund. So for the sake of argument and simplicity, call it $100 billion.
The USG tax receipts in 2011 were $2303 billion. But that is not the total tax take of its sovereign area, which is shared with states. I don't have a reference for them offhand but my guess is that they take in about half of what the Feds get. Perhaps a total tax value for the American patch is $3500 billion. (The specific figure is not important.)
That is not its value as a neocorp. That is just its income. Assuming that the neocorp slashes outlays considerably, the profit would be most of the income. (I cannot see much reason for USGCorp itself to employ more than a few hundred thousand men, mostly army, for its own security.)
But anyway, for a round figure let us assume that USGCorp can get $1000 billion a year in profit. (IMO it would soon be much higher. But that's another argument.) Then, if we take the very modest P/E figure of 15, we find a value for USGCorp of 15000 billion.
Now compare to Bill Gates. If he takes his entire fortune and buys USGC, he controls 1/150 of the stock. A big shareholder, yes, but one which no longer has an interest in MS. If he only uses say 1/3 of his fortune, then he is a 1/450th owner, and still has a strong interest in using USGC to manipulate the software market for MS.
I do not regard a 1/450 voter, powerful as he is, as capable of manipulating a democratic vote in an appreciable way.
So how is Bill Gates to manipulate USGC to screw Google? I cannot see why the other 449/450 have that interest. They want innovation to create wealth, because they get a share of all wealth created in US-land.
As for your (1), in any formalized system, it is trivial for the wealthy to buy in. It is hard in an informal system. So, yeah, I expect it.
I do not exactly think of shareholders as royalty, but you can certainly look at them that way. (At least, shareholders with at least, say, 1/10000 or whatever of the total shares. There would be scads of smaller shareholders.) I have suggested at MM's site that perhaps in the future, it is in the interest of the sovereign owners to force everyone else to call them "sir". That is, a very small tax in "kind", not cash, with large status redistribution effects.
MM would counter that he expects most owners of any given patch to live elsewhere; thus, there is no majority for such a policy.
Leonard's last point is one I made in my reply back at AnomalyUK. As Steve Sailer recently observed, it is an absurdity that governments can be bought so cheaply.
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