Revisiting The World After Capital

Where Albert Wenger and I May Disagree

@CharlieLongren

TLDR: In the Knowledge Age, where the individual’s attention is the most scarce resource, capitalism will be instrumental in society’s continued success.

In The World After Capital, Albert Wenger explains that scarcity of attention is giving rise to a new economic age, the knowledge age. He believes that capitalism in its current state will be an inadequate economic system for three reasons. He believes that there will not be prices for potential societal needs, that capitalism causes an unhealthy concentration of wealth, and that capitalism works to preserve the interest of capital over the interest of knowledge. I disagree with these limitations because I believe that capitalism is fundamentally about decentralization rather than about capital.

I used to love to play a game with my friends that is fairly popular with people of all ages in the U.S. We would ask each other the question ‘for a million dollars, would you…’ We sometimes played with sums of money we could actually afford. I have seen more friends earn a quick buck by eating insects than I would like to admit. The more we played the game, the more extreme the game became. After a while scenarios where you would have to give up your limbs or your senses were considered child’s play.

A few weeks ago I wrote a paper titled, “Why Are Price So Important?” where I explained the reasons why central authorities are inadequate to manage global economies. I further explained how capitalism is better at managing large economies because it allows the individual to exploit their unique informational advantages. Price is the medium through which capitalism is possible. Albert’s first criticism of capitalism is that there are issues that we should be paying attention to that are not priced. He states space travel, the climate crisis, and the individual finding their purpose as examples.

My friends and I didnt know of a real market where we could trade our ability to hear for 5 billion dollars, but nevertheless we each had a price. Everything is priced. Even though a market may not exist for something like finding your purpose, it does not mean that finding your purpose is not priced. Often, the price of s comes in the form of something existential is the opportunity cost. You may not be paid in currency to find your purpose, but there will definitely be a high cost for living life without one. So, what are you willing to give up in order to live a purposeful life? Most people alive today would be willing to “pay” a large amount of money and more importantly spend a large amount of their attention to find their purpose.

Wenger also argues that capitalism will not allow for adequate attention to be paid to solving existential threats like meteors and climate change. I would argue that there are increasing amounts of attention being allocated to those issues every year, and while the attention paid to those issues may be inadequate now, it is unlikely to remain that way in the future. In 2019, space infrastructure and support industry revenues increased 16.1% from $103 billion in 2018 to $119 billion. While, I do not think that revenues are a good metric for determining the amount of attention an industry is receiving, I do think it is one of the best metrics available to determine whether an industry is receiving more or less attention than it did in the past. The increasing amounts of attention paid to industries like space travel and climate change whose outcomes are largely “unpriced,” demonstrates that capitalism is effective at allocating attention to future threats.

Wenger believes that capitalism has limited means of dealing with wealth inequality, but quite the opposite is true. Again, capitalism is about decentralization. It has been proven true that capitalism often results in monopolies, but if those monopolies do not produce more value to the individual than they cause her harm, the individual will find or create alternatives. Capitalism is the only economic system that allows the individual the freedom to find and/or create those alternatives.

I agree that capitalism contributes to wealth inequality in the world, and I agree that the same digital technology that is ushering in the Knowledge Age is exacerbating wealth inequality. But, wealth inequality is not caused by capitalism or digital technology. It is the result of human evolution. When we were a more primitive species, being able to accumulate land, food, and other resources was the difference between survival and death. Ambition is hard coded into our D.N.A. The only way to deal with wealth inequality is to change the way we view scarcity. We will change the way we view scarcity over time through evolution in an environment with decreasing levels of scarcity.

Wenger and I agree that the current owners of capital will likely attempt to keep society from transitioning into the Knowledge Age in order to preserve the value of their capital. Because owners of capital have the ability to influence policy and cause regulatory capture, countries across the world have created crony capitalist societies, where governments prioritize the interest of the few over the interest of the many. Whether or not crony capitalism is the ultimate result of all capitalistic societies is beyond my knowledge. However any attempts to prevent the transition into the Knowledge Age will definitely be futile. Heavy government regulation on technology forces innovation toward black markets(unregulated markets). Government regulation is not capable of killing innovation.

When we have fully transitioned into the Knowledge Age, capitalism will become all the more important. At the extremes, there are only two ways that people are able to organize. There can be a central authority that makes important decisions for everyone, or you can leave those decisions in the hands of the individual. Socialism creates a central authority and capitalism creates a system of decentralization. Most economies fall somewhere in the middle of these extremes. However, because it is impossible for a central authority to aggregate enough qualitative and quantitative information to make good decisions, societies that err on the side of decentralization (a.k.a capitalistic societies) tend to be more successful. In an age where the most scarce and most valuable asset is the individual’s attention, it will be important for individuals to decide themselves how to best allocate their attention. No central authority will be able to make those decisions better than the individual could. Capitalism is vital to society’s success in the Knowledge Age.