Late Stage Capitalism, Part 1

Lately there has been considerable interest in ‘late stage capitalism’, and even mainstream publications such as The Atlantic are writing about it. Reddit’s r/latestagecapitalism, much like r/collapse and r/lostgeneration, has become a popular destination for disaffected millennials to discuss how and why society went wrong, although generally from a left-wing perspective.

Wikipedia defines late stage capitalism as:

“Late capitalism” is a term used by neo-Marxists to refer to capitalism from about 1945 onwards, with the implication that it is a historically limited stage rather than a permanent one. This period includes the era termed the golden age of capitalism.

IMHO, the demarcation between ‘late’ and ‘normal’ capitalism is 2008, although this is highly subjective. Some could say it’s 1989, the fall of the Berlin Wall; or 1945, the end of World War 2; or 1992, the collapse of the Soviet Union; or 2001, the September 11th attacks. In the aftermath of the financial crisis, a ‘new’ capitalism emerged that favors ‘capital’ more so than ever. Although ‘capital’ has been in a ‘boom’ since the bottom of the Great Depression, things have really accelerated since 2008.

From the post Accelerationism:

The evidence suggest that capitalism has accelerated since 2008, but it’s a different kind of capitalism. Capitalism–-as in the acquisition and ownership of capital–-has been on a tear since 2008 and is stronger now than ever before; capitalism, as in entrepreneurship and small business (except apps and social networking), maybe not.

So we have two types of capitalism: transaction-based capitalism (such as commerce, labor, goods) and asset-based capitalism (stocks, homes, etc.)

When economists such as the late Milton Friedman talk about capitalism it’s usually in the context of the first one: consumer choice (Free to Choose), voluntary transactions between buyers and sellers, or how capitalism is superior to communism. But the second form is sorta like the red-headed stepchild of capitalism. It’s easier praise capitalism on the grounds of trade and rising standards of living than, say, defending or explaining why a 1 bedroom home in Palo Alto should cost $1 million or why rent in many areas is so obscenely expensive relative to inflation. And then there is the entire free trade debate. (Although the answer is supply and demand, and then there are arguments as to whether supply is being suppressed due to regulation.)

Pre-2008 capitalism:

*wealth is created primarily through entrepreneurship and wages
*wealth inequality
*participation of middle class (top 50%)
*cyclical behavior of interest rates
*high borrowing costs for everyone
*boom-bust cycle
*2-5% profits & earnings annual growth for S&P 500 companies
*abundant, good-paying jobs for all IQ and education levels
*US middle class consumer very important
*homes bought by Americans
*$100-300 million was considered a ‘big’ tech start-up valuation
*home ownership
*…but not as much choice


*wealth is created primarily though asset appreciation such as Bitcoin, stocks, web 2.0 valuations, real estate, etc. (the everything-goes-up economy)
*bigger-is-better, winner-take-all (tech companies such as Facebook, Google ,and Amazon keeping getting bigger and more powerful; far fewer competitors) From HBD-as-Destiny Thesis (part 5 of predicting series):

Also back in the late 90′s to early 2000′s, the internet was chaotic and dispersed…there were about seven major search engines (Alta Vista, Yahoo, Lycos, MSN, Google, Ask Jeeves, etc.), five or so major online retailers (Amazon, Ebay, Overstock, eToys, etc.), etc. Now it’s just Google and Amazon, both having long ago established market dominance. In 2004-2006 there were many social networks (Classmates, Friendster, Myspace, Facebook, etc.), but the market soon consolidated, with Facebook (and Instagram, which Facebook owns) the overwhelming winner.

*high borrowing costs, high rent, high insurance; everything seems expensive unless it’s electronics, food, and clothes
*extreme wealth inequality
*participation is mostly restricted to the top 10%, who benefit the most from asset appreciation and rising inflation-adjusted wages
*forever-low interest rates
*low borrowing costs for US govt. and multinationals; high borrowing costs for everyone else
*pronged ‘boom’ as measured by GDP, rising stock prices, and other economic indicators, but to most of the country it still feels like a recession
*deterministic economy (Inevitablism), biological determinism
*double-digit profits & earning growth (S&P 500 earnings have grown at a 16% annual rate since 2008, versus the long-term average of just 7%)
*’hollowing out’ of the middle due to many good-paying medium-IQ jobs being permanently gutted during the 2008 recession, the result being a bifurcation of a handful of high-paying high-status creative jobs at the top and lots of low-paying service sector jobs for everyone else
*rise of the global ultra-wealthy consumer
*homes bought by wealthy foreigners, private equity
*more like $10-60 billion; $100-300 million is just the starting round
*thousand of TV shows and movies on Netflix; thousand of apps on mobile phones

Continue to part 2…