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Capitalists like to throw the word “incentives” like it’s a magic word that somehow proves that capitalism is preferable to socialism
I say that incentives are exactly the problem with capitalism.
Thread: (1/10)
I say that incentives are exactly the problem with capitalism.
Thread: (1/10)
Incentive is something that encourages somebody (be it a person or a group of people - an enterprise) to do something.
Incentives are tightly coupled with objectives: things that somebody is trying to achieve (2/10)
Incentives are tightly coupled with objectives: things that somebody is trying to achieve (2/10)
What are the objectives?
In capitalism, by definition, it’s a long-term profit maximisation.
In socialism, by definition, it’s what society decides, for example: economic output, life expectancy, life satisfaction, work-life balance, quality of environment etc. (3/10)
In capitalism, by definition, it’s a long-term profit maximisation.
In socialism, by definition, it’s what society decides, for example: economic output, life expectancy, life satisfaction, work-life balance, quality of environment etc. (3/10)
It’s important to understand that the above-mentioned objectives of socialism are not set in stone, can change with time, and can be decided by people in a multitude of ways: referendums, polls, assemblies, representation etc. (4/10)
As such, the problem with capitalism is obvious: its reductionist objective incentivises unethical behaviour, resulting in disastrous outcomes: climate change, deterioration of worker’s rights, exploitation of consumer’s attention, private prisons, wars etc. (5/10)
Capitalists often point out that profit principle is necessary for innovation.
To some extent it’s true: you need incentives.
However, socialism can deal with that, if one of the set objectives is economic output (6/10)
To some extent it’s true: you need incentives.
However, socialism can deal with that, if one of the set objectives is economic output (6/10)
In fact, there may be more innovation in socialism.
The objective of capitalism is not economic output, but profit-maximisation, which acts as a proxy for economic output.
Monopolistic behaviour and trading are examples of profit-maximisation without wealth creation (7/10)
The objective of capitalism is not economic output, but profit-maximisation, which acts as a proxy for economic output.
Monopolistic behaviour and trading are examples of profit-maximisation without wealth creation (7/10)
But how are you going to reward innovation in socialism?
The same way as in capitalism, but to a lesser degree. People will still pursue entrepreneurship if they think it will benefit them.
Would Jeff Bezos pursue Amazon if he had $20m instead of 200$b? Absolutely (8/10)
The same way as in capitalism, but to a lesser degree. People will still pursue entrepreneurship if they think it will benefit them.
Would Jeff Bezos pursue Amazon if he had $20m instead of 200$b? Absolutely (8/10)
As such, capitalism is not only a reductionist system, which often leads to bizarre behaviour and sociopathic outcomes, but is also extremely wasteful and inefficient, as in the case of zero-sum or even negative-sum behaviour when pursuing profit maximisation. (9/10)
I hope the next time you hear the word “incentives” with regard to capitalism, you’ll be able to respond.
If you liked the thread, please share, and I’ll do more of these.
End of thread. (10/10)
If you liked the thread, please share, and I’ll do more of these.
End of thread. (10/10)
