Capitalism, Meritoctatic Democracy, and Legitimacy


Piketty (top) and Reich have both taken on the subject of Inequality
Piketty (top) and Reich have both taken on the subject of Inequality

Piketty on Capital and Reich on Inequality are both essentially saying the same thing, that inequality is structurally bad, and growing. (We can revisit posts on social mobility and the inevitability of capitalist collapse to understand some of the ways in which this manifests itself.)  In essence, Piketty – and Reich – argue that capital will continue to accrue to fewer and fewer people.  There is a possible alternative, extended, dystopian view that suggests that capital – through the corporation – actually transcends human ownership entirely and become a virtualized entity in and of itself, a creature of law, that exists to perpetuate itself and grow.  Therefore, in essence, capital exists to extract wealth from people, and rather than realising an objective of ‘raising all boats’, it actually pushes all boats into the water to the point of sinking, though not quite. For to sink those boats would be to undermine the source of wealth itself, and the essence of capital growth, which capital needs to survive.

Capital – in a country – is private capital plus public capital minus private debt minus public debt.  The nebulous nature of location, and the attachment of capital to a state make nationalisation, as an option, difficult to execute.  Capital, essentially, is wealth. But capital in and of itself – or wealth – are not to be confused with social value.  Social value, in fundamental terms of food and shelter, and in the extrapolated values of health, education and prosperity, is generally derived from capital, either directly (I own capital and use it to procure social value) or indirectly (my country or group retains shared capital which is distributed – hopefully – in an equitable way amongst the group).

The legitimacy of the state is essentially tied up in the extent to which it equitably distributes the derived social value of capital.  The discourse on inequality is generally preoccupied with the distribution of capital, and wealth, rather than of social value.  And the answer to the problem of capital inequality is somewhere in the re-assertion of a more equitable distribution of social value. Which is a bit like communism, but in a democratic sense; more like social democracy.  A bit like the NHS in the UK, though there are failings there too.  A bit like Obamacare, which arguably doesn’t go far enough.


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