Perspectives on the Death of Capitalism - Part I

Following are some notes on the death of capitalism -

+ Marx was first to call for the death of capitalism – The Communist Manifesto (1847), Das Kapital (1867)
+ Herbert Stein, a former chairman of the President’s Council of Economic Advisers and an American Enterprise Institute fellow, claims that capitalism died with the advent of federal taxes (Stein, 1992). Using this rationale, one could date the death of capitalism to 1862, when the first federal income tax was imposed (during the American Civil War). However, this first tax was later repealed.
+ In 1913, Congress passed the 16th amendment to the constitution, authorizing the federal government to impose income taxes (Stein, 1992). Stein fervently believes that this was the beginning of the end of capitalism. Note that the first income tax was a paltry 2% and was applied only to the wealthiest Americans – a far cry from today! According to Stein, capitalism in the US died with Bush’s tax increase in 1990, a tax increase that was equivalent to 0.5% of GNP and led the country into recession. Stein equates federal taxation with totalitarian communism, and says that (today) ”It is taxes that make the world go round – or keep it from going round.”
+ In 1996, Lester Thurow, a widely respected economist and a Professor at MIT’s Sloan School of Business, published “The Future of Capitalism” (Thurow, 1996). Thurow does not so much call for the death of capitalism as much as for the end of capitalism as we know it.
- According to Thurow, there are five fundamental macroeconomic forces that will shape world markets in the 21st century –
* The end of communism – and the need to digest about one-third of humanity into a mostly capitalist system
* Shift to the information economy – and the geographical freedom “Man-made brainpower industries” allow for
* A new demography, characterized by two major trends:
> Massive migration from poor to rich countries, exactly when non-skilled labor is no longer needed
> New, very large class of elderly retired people in capitalist economies who depend on government payments for most of their income
* A global economy – “anything can be made anywhere on the face of the earth and sold anywhere on the face of the earth” – national economies less important, global conglomerates more important
* No dominant global power – “unipopular economic world dominated by the United States is over” (not sure I agree with this one, though)
* The two – conflicting – trends Thurow feels will bring about a massive change in capitalism as we know it are technological and ideological in nature –
* As far as technology is concerned, skills and knowledge have become the only sources of sustainable strategic advantage
* But ideologically, people are increasingly seeking to satisfy a need for short-term individual consumption maximization
* The development of skills and knowledge requires massive investments in infrastructure and education that are long-term in nature

(more to come)

Myths and Facts About...Venture Capitalists

For some more myths and facts about venture capitalists see:

Article in the Israeli business daily

See also my own...

Interesting Facts About Venture Capitalists

ragingacademic

The Speed of Progress in Mobile Technology

The mobile phones of the not-so-distant future are expected to have as much functionality as an advanced laptop has today (Upton and Steel, 2006). In early 2001, one could not hold an operational 3G phone in the palm of their hands for more than 10 seconds without receiving severe burns; technology has advanced so much since that 3G phones are now as common as pagers used to be just a decade or so ago. A 2003 handset exceeded 20mm in thickness and could accommodate dual bands, a single radio and one antenna, and was capable of transferring data at speeds of 70 to 80 Kbit per second with no capacity for memory storage. In contrast, 2008 handsets will be less than 15mm thick, and within the confines of this smaller footprint will be able to accommodate up to four bands plus a variety of wireless technologies such as Bluetooth and wifi as well as three or more simultaneously operating radios, five or more antennas, transmitting at between 100 and 480 Mbit per second with several gigabytes of storage to boot… (Upton and Steel, 2006, p. 23). Following in the footsteps of Moore’s Law, Kryder’s Law, Hendy’s Law, and other guidelines that predict the speed of development of technology, advances in information technology and communications are expected to continue at an accelerated pace for the foreseeable future.