The capitalism vs. communism debate, part 2

People talk a lot about government failures, but the private sector is no stranger to failure either, although, overall, in spite of such failures capitalism is superior to communism (again, assuming one much choose between either or, which is never the case anyway), but I will give some examples of capitalism failures anyway. For example, huge tech companies such as Google and Microsoft are constantly releasing upgrades and features to their products, that users seldom want and degrade the user expedience due to slow load times, confusing interfaces, and excessive bandwidth consumption. This has been a complaint of some Gmail users, because each new version seems slower and less responsive than the last. The 2018 discussion thread Anyone else find the new Gmail interface sluggish? got over 400 up-votes and hundreds of comments, indicating considerable agreement. An anonymous Google engineer replied that they are are incentives, such as promotion, to create features even if they don’t work well.

As evidence of such consumer resistance to change, many individuals, especially institutions, still use Windows XP or Windows 7 in spite of the best efforts by Microsoft to force upgrades. The query “remove Cortana” (which is Microsoft’s shitty attempt at copying Siri) is so commonly searched, that it is auto-prompted and there are hundreds of websites and tutorials about how to remove this useless Windows 10 feature.

But when buying a new computer, there is often no choice in this regard unless you buy an older operating system, which some people actually did in protest of the release of Windows Vista, in 2006, and Windows 8, in 2013. In economic terms, this is a massive deadweight loss, and Windows 8 was so bad that it depressed 2013 PC sales and Microsoft was forced to release a patch to revert many of the features that users detested. So why do huge, already successful tech companies add such features even if many users find them annoying? Because having a monopoly is not good enough; you still need manufactures and consumers to buy your products, and the only way to do that is to keep coming up with new iterations.

Capitalism requires competition, so it axiomatically follows that most people will fail, but also most people are not competing with other businesses or with each other, but rather are working under or beneath someone else, so rather than the government being the tyrant, it’s the boss. Socialism and communism promise, in theory, enough for everyone, but at the possible cost of personal autonomy and individualism, and even if living standards are not as good compared to capitalist societies [but , again, purely capitalist or communist societies don’t really exist, at least not anymore. Even Venezuela has businesses], for some people this is a worthwhile trade-off nonetheless.

The indefatigable pursuit of wealth and material goods leads to careerism, the ‘rat race,’ and other ills of modernity. American culture has cultivated an artificial or manufactured sense of scarcity, but as shown by the huge covid bailouts and stimulus programs, such fears are possibly unfounded: the government just gave 80 million Americans a $1,200 check, and inflation didn’t budge nor did society collapse into a communist dystopia [this may not be sustainable if repeated over a long period, but it is unprecedented and inconceivable when Yang proposed a similar idea just a year ago].

Just last week, Joe Rogan signed a $100 million deal giving Spotify exclusive broadcasting rights to The Joe Rogan Experience, the S&P 500 has gained nearly 30% from the lows of the pandemic and keeps going up, and the stock prices of companies such as Zoom and Shopify keep making news highs, so to say that the stimulus, which is like a soft form of UBI, threatens capitalism and wealth creation, is unsupported by reality. A less consumerist, less competitive society may mean that parents may have more time to raise their children, rather than having to outsource childcare to daycare and schools, where children are indoctrinated and brainwashed into hating themselves for having the wrong skin color.

It’s not so much communism cannot work but that it does not work at achieving the same goals as western democracies, so there is less consumerism and materialism, but more nationalism and centralization. It also depends on how one practices communism, as there are many variants, with varying amounts of central planning and despotism. Post-Stalin communism was paradise compared to the hellscape that was the Khmer Rouge. When people say that communism failed, what they are often doing is comparing the economies and living standards of communist countries to the US, but the US is an outlier of developed countries, having emerged from WW2 mostly unscathed and being especially prosperous compared to other developed countries. You cannot use an outlier as your control group. When compared to the average of developed countries, communist countries still lag but not as much. Although Soviet Russia was bad, post-war Britain and Germany were not that great either.

As shown below, although the US has much higher living standards on a per-capita basis compared to the USSR and other countries, it also started at a much higher point too:

So in 1900, the then Russian Empire started at $1,000 and the US started at $4,500 per capita (in 1990 dollars). By early ’90s, just before the collapse of the USSR, the USSR stood at $7,000 per capita and the US at $23,000, so the USSR actually gained more (600% vs. 410%).

In regard to the argument of Chinese goods being inferior, contrary to popular belief, it’s not that products manufactured in China are crap, but rather products sold outside of America are. China is hardly the only manufacture of electronics and other consumer goods, but most goods do not meet the quality standards set by the US, so those goods are sold elsewhere.

However starting around the early ’80s, the Soviet economy began to stall, and the US has since pulled way ahead (not just the USSR but also post-USSR Russia). The fact that post-Soviet Russia has also lagged economically, especially since 2008 relative to the US and China, shows that the problem cannot be blamed only on communism.

The correlation between economic success, such as inflation and US-dollar adjusted per capita wealth and economic growth vs. type of government, is inconclusive. Brazil, Turkey, Greece, and Italy, despite not being communist, have lagged considerably economically behind China, Singapore, Hong Kong, South Korea, and other authoritarian countries and planned economies. In terms of living standards and per-capita wealth, my hunch is that IQ matters more than the type of government or even economic system. Low IQ countries stagnate because they cannot raise total factor productivity, so wealth is unable to be concentrated on a per capita basis. IQ is the underlying variable that explains much of the difference between nations of dissimilar and similar systems of government. So smarter countries can still be economically successful even with a lot of regulation and social programs.