Best of 2023: The Decadent Opulence of Modern Capitalism
Here is the last of this week’s highlights from 2023, so we will have the decks cleared for action when I return to work next week, starting with coverage of the 14th Amendment rulings on Donald Trump’s candidacy and the problem of “Substack Nazis.” A lot of important people have been hard at work over the holidays, so the rest of us are going to have to catch up.
Below is an article from July 22 discussing a big piece of positive news about the achievements of modern capitalism. When you read it, make sure you have a supply of bananas stored up, shipped all the way from some sunnier clime to the cold north.
This article is an important reminder that while we tend to focus on stories about everything that has gone wrong, in the long run, the bigger news always ends up being the impact of growth and innovation. But because we’re so pre-occupied with everything else, it tends to sneak up on us.
Combine this with my argument at Discourse that robotics and artificial intelligence will not take away our jobs but instead will inevitably make us all richer. After all, mechanization and automation making everybody richer is how we got to this point.
Also take a look at my observations on the rise of the “produpic,” which glorifies the creation of a beloved product—one of the few ways we allow ourselves to recognize and celebrate the achievements of capitalism.
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Yes, We Have No Bananas
I sort of missed out on the Great Socialist Banana War and had to catch up on it by way of a few of the newsletters I read (there are some good comments here). The upshot is that one group of socialists declared that, come the revolution, there will be no bananas in the supermarket, because we wealthy Westerners will just have to tighten our belts to stop the exploitation of the global proletariat, i.e., farm workers in Ecuador—who will somehow be helped if no one is consuming one of their largest exports.
See an overview that takes this debate way more seriously than it deserves. Here’s the upshot.
Some leftists believe that economic justice will require an end to economic growth as we’ve known it. More concretely, they think that workers in the United States (and other wealthy countries) will need to consume material resources at a much lower rate in order to accommodate both (1) higher rates of consumption in the Global South and (2) the imperatives of ecological sustainability. In theory, the American people will still end up better off in this utopia, since they will gain a great deal of leisure time and economic security in a socialist system, even as they forfeit, say, the freedom to get around in a personal automobile, purchase vast quantities of consumer goods, or eat tropical fruits on a daily basis (privileges that, in these socialists’ estimation, do not contribute all that much to the average American’s well-being).
Other socialists reject this perspective. They argue that the “de-growth” left’s austere vision is antithetical to both Marxist theory and political practicality. In their account, socialism is a fundamentally modernist ideology: Marx celebrated capitalism’s extraordinary productive capacity but argued that socialism could generate even greater abundance for ordinary workers. The aim of leftist politics isn’t to deny the western working class its decadent treats so much as to universalize and expand material abundance.
The reason I say this takes the issue way too seriously is that this ship already sailed for the far horizons a long time ago. The socialists did, in fact, claim that they were trying to “expand material abundance” and “generate abundance for ordinary workers”—and they failed, every time. So the “de-growth” left is a necessary and inevitable reaction. Pushed to choose between socialism and economic growth, the left long ago chose socialism and rejected growth.
The fallback for the left, going back to Lenin, is that developed capitalist countries use “imperialism” to export poverty to other parts of the globe. This seems to be the idea behind the Banana War. Those tricky capitalists are bribing us with bananas so we won’t notice the exploitation of paesants in Ecuador. But we are long past the point when this claim is no longer plausible, because so many of the “colonial” countries that trade heavily with the developed West have used that trade to become relatively wealthy themselves. Anti-imperialist Marxism has proved just as much of a bust as the original edition.
This particular debate is mostly a bit of Twitter ephemera for a slow news week, but there is one entry in the discussion that indicates a wider issue. This is from a leftist seeking to dismiss our desire for bananas.
No one, absolutely no one—not even the most dishonest globe emoji neoliberal freak—buys a banana at Trader Joe’s in Calgary in December and marvels in ecstasy at the decadent opulence of modern capitalism. They dully cross it off their list and move on, barely conscious of it.
Well, I don’t know about anyone else, but I do occasionally take time to marvel in ecstasy at the decadent opulence of modern capitalism. More to the point, it is interesting to note that socialists are now forced to acknowledge that capitalism produces widespread opulence. Since socialism failed to deliver abundance, the socialists have write it off as "decadent."
“Opulence” really is the right word, and that is the big story I want to end with. Capitalism hasn’t merely lifted us out of poverty and delivered us from the threat of chronic starvation. It hasn’t just made us comfortable and prosperous. It is making everyone rich.
The Decadent Opulence of Modern Capitalism
We are now fifteen years out from the financial crisis of 2008, and that helps us put the Great Recession into a wider perspective.
In the left’s view, market crashes and recessions reveal the real essence of the capitalist system. In reality, they are just temporary glitches and setbacks in a larger story of persistent innovation and growth.
This has gained some attention recently with new figures showing the widening gap in wealth between the US and Europe. Jim Pethokoukis describes it as a Doom Loop of Decline and attributes it partly to the impact of heavy European regulation. The basic driver is this: “Europe has an aging population that values its free time and social benefits over work and productivity. (This reduces labor force participation, innovation potential, and the economic growth of the continent.)” The numbers (quoted by Pethokoukis from a paywalled article in the Wall Street Journal) are stark.
The eurozone economy grew about 6% over the past 15 years, measured in dollars, compared with 82% for the US, according to International Monetary Fund data. That has left the average EU country poorer per head than every US state except Idaho and Mississippi, according to a report this month by the European Centre for International Political Economy, a Brussels-based independent think tank. If the current trend continues, by 2035 the gap between economic output per capita in the US and EU will be as large as that between Japan and Ecuador today, the report said.
Noah Smith adds a caveat to those figures, arguing that Europe’s problem is primarily driven by Southern Europe, which has recovered slowly (or in the case of Greece, not at all) from the 2008 crisis. But even in Smith’s figures, there is no Northern European economy that outperforms the US.
But I would like to focus on the positive side of this story: The US economy has grown 82% in fifteen years! Barring anything more than a mild recession, that means that we can expect the US economy to more than double by the time we hit 20 years from 2008. Isn’t that wonderful?
It’s not just a case of doubling the overall size of the economy. The increase in wealth has been widely distributed.
I was struck by a calculation by George Washington University’s Stephen Rose that he describes at a center-left newsletter called The Liberal Patriot. Deciding what is “middle class” versus “lower middle class” versus “upper middle class” is difficult, and every analysis sets up different cutoffs between these categories. But Rose sets a reasonable level, describing “upper middle class” as an income between $100,000 and $350,000. Rose does not account for regional differences in cost of living but argues that these will tend to even themselves out. For every person wrongly counted as “upper middle class” in Manhattan or San Francisco, there will be people who are undercounted in Wichita or Central Virginia. But $100,000 is five times the official poverty level, so you can live on it pretty comfortably just about anywhere.
What this analysis finds is extraordinary.
Using this measure, there was real growth in every rung of the economic ladder over the period from 1979 to 2019, with each ascending step having slightly higher percentage gain….
In brief, economic growth from 1979 to 2019 led more of the population to move up to higher social classes. As Table 1 shows, the bottom two categories—poor and near-poor plus lower middle class—went from a combined 49 percent to 29 percent…. The size of the [core middle class] also declined, down from 39 percent to 31 percent over these years. These declines manifest themselves in a massive—and massively under-covered—growth of the [upper middle class], spiking from 13 percent in 1979 to 37 percent in 2019.
America has always thought of itself as a middle-class country. But we are rapidly becoming an upper-middle-class country. This is now the largest category, and at the rate we’re going, it will soon be an outright majority.
I don’t think this has ever happened before for a nation of any significant size. Liechtenstein, maybe, but not a vast country with 330 million people.
Diseases of the Rich
Kyle Smith points out a consequence of our becoming an upper-middle-class country, linking to Jim Geraghty’s article on the increase in ticket prices at Disney theme parks. In an upper-middle-class country, Disney may well be able to transform its resorts into a luxury product.
Geraghty spins this as an explanation for why Disney has been getting invested in the culture wars; the idea is that it sees an interest in appealing to the values of the college-educated upper-middle-class, who are now its customer base. But I have used this as an explanation for why both left and right are focusing on the culture wars.
I would like to think that an upper-middle-class country would definitively move on from leftism. How do you sell a narrative about the oppressed proletariat to a nation of bourgeoisie? Then again, upper-middle-class people can afford more welfare-state spending, and they also have more access to education and, frankly, the luxury of agonizing over something other than our pocketbooks. It has been a long time since most Americans were concerned about how to put a roof over our heads, so we have moved on from “kitchen table” issues to concerns about values and status and self-image.
Yet I would note that in this context, the Old Left welfare-state programs look, not merely unnecessary, but callous and cruel. See a good overview by Cato’s Michael Tanner on how the incentives created by welfare programs discourage work for the poor. But in a growing and thriving upper-middle-class country, this looks like a way to create a permanent underclass who are kept in poverty so we can congratulate ourselves on our compassion and generosity—rather than encouraging them to embark on the upward trajectory that will allow them to rise into the middle class, then into the upper middle class.
Come to think of it, some of this may also explain the right’s belligerent opposition to immigration. If we are becoming an upper-middle-class country, perhaps we are taking on some of the attitudes of a gated community that wants to keep out the riff-raff. We wrinkle our noses at the prospect of taking in new immigrants who would be as poor, dirty, and ignorant as our grandparents and great-grandparents were when they came to this country.
But all of this seems like complaining, like trying to find the cloud in the silver lining.
Instead, let’s just take a few moments to eat a banana and marvel in ecstasy at the decadent opulence of modern capitalism—and at the fact that America is leading the way.