← History 102 with WhatifAltHist's Rudyard Lynch and Austin Padgett
History 102 with WhatifAltHist's Rudyard Lynch and Austin Padgett
Explaining Capitalism's Rise + Fall + Rise
02:23:44
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- [00:03]
A
Welcome to History 102 where YouTube creator what if alt hists Rudyard lynch and I dive into critical moments in history and tease out patterns to help us predict the future. Let's jump right in.
- [00:16]
B
Hi everybody. Welcome to a new episode of History 102 with our continuous co host, Austin Padgett. I am Rudyard lynch and this episode is on the Rise and history of Capitalism. Hello, Austin, Professional libertarian. So this is in his wheelhouse.
- [00:36]
C
It's getting personal. Sorry, forgive me in advance.
- [00:40]
B
Where you're allowed to. I think people should be allowed to express emotions and personal biases in intellectual topics if they're self aware about it and state it because we are all humans who come from our own narratives and stories and the only way we actually understand the world is through those. But, but you have to cross reference what's a personal bias or a cultural bias or objective. And the only way you can do that is through talking it through.
- [01:12]
C
It's not my fault I'm right. Okay, don't shoot.
- [01:15]
B
Yeah, yeah, yeah. I mean it is my fault I'm right, but I made sure that was true. And what I think ends up happening with the modern form of scholarship which basically totally removes the personal, is you end up with sort of highly schizophrenic and highly disorganized understandings of how the world works. Because you're confusing a lot of things trying to appear objective. And then you end up with like whatever the Marxists do where you have a narrative which you claim to be objective but is actually a rationalization for your animal desire to steal stuff. And the Marxists are very good at clouding what are very sort of dark nihilistic urges as scientific. And if you want to blame any given issue in modern intellectualism on one thing, it's the Marx having to do all this like fake math work to explain how that actually makes sense.
- [02:24]
C
Yeah, There's a lot of basic corollary. The modern economics is usually more a justification for things that people already wanted to do rather than an idea that people got from the paper. Yeah, it's more I want to do this thing. Let me find a paper that allows me to do this thing rather than these think takes are actually like influencing the policy.
- [02:48]
B
Yeah, you have to judge it by the end points. Modern monetary theory. Modern monetary theory being the dominant economic school in most of the world for actual policy means the field of economics has failed on a very profound level. I don't care if you can send me a list of like five smart economists or if there's several universities that have good economics programs. If in China, Europe, America, many other countries, if their dominant economics civil institutions are saying printing infinite money has no consequences and in fact is good, that means the entire system, the system that produced this outcome needs renovation in a way that's very comparable to trans or culture doesn't matter or the past doesn't matter. Where you people are very good at sort of like doing intellectual scrimmaging of you make a point. Here's a 500 page sort of like logical rabbit holes for why I can ignore the one sentence point you made. And the way people do that is by confusion and you confuse people by making arbitrary standards. Does that make sense?
- [04:06]
C
Yes. And then there's a lot of. It is kind of these internalized presuppositions that you picked up from the culture or the education system that you didn't realize was a theory and not just an explanation. And those are embedded in your subconscious in ways that are hard to understand. Which I think is a famous Bastiat quote or someone that you're basically ruled by the ideas of dead men that you don't even know existed.
- [04:33]
B
Yeah, I found that where I've run into a lot of sort of. I call them like American imperial institutions. The institutions that create the types of people for the American empire, whether the academic system or corporations or people who are involved in like political pundits attached to the parties. And what's really fascinating at a lot of them is they are selecting from a very specific subset of the population. Then they work with those cognitive biases. They never check those cognitive biases. And then I'll talk to these people and it's weird because they'll have all of these internalized rules that they have inside their system which they're not honest about discussing, but you're not allowed to get past them. And the Wikipedia founder Larry Something Sanger, I think he made this acronym I liked a lot today called gasp which is globalist academic, Globalist academic progressive, secular Globalist academic, secular progressive paradigm where for a lot of these people, if you bring up religion as a vector to understand the world, you kind of see their faces go white. They don't know how to process it, they're taught not to process it. They don't actually know the logic for why it's not okay. Or they're. If you bring up sort of different nationalities having different drives, that is that you get the white face too. I can't say white faced in this culture. Like the sort of, you know, when you talk to someone, it's like they saw a ghost. That's what I'm talking about.
- [06:13]
C
The blood draining.
- [06:14]
B
Yeah, yeah. And so it's fairly easy to hit those buttons on them. And it's weird that they exist in these sort of intellectual ghettos that are so removed from everything else and then they have. They don't even know that. But this is not the topic at.
- [06:30]
C
Hand, although a transition for that is. I remember in 2013 I saw some one of my brother's friends who went to Harvard grad school or something, maybe 15, posted a snippet from his textbook from Harvard and it was just like a thing about regulations that treated it as just like a definitional necessity. And then I looked at the list of things that it cited and was like improving, protecting the dignity of the profession, product quality, boosting exports, safety. And they're exactly the list of talking points that used to be used to justify pre industrial European guilds. And no one kind of tries to justify those anymore, but people don't even realize that they're falling into those exact patterns.
- [07:25]
B
Yeah.
- [07:27]
A
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- [08:13]
D
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- [10:08]
B
You'Ve made that point for a while, and I think it's one of your better points where so one of the things we're talking about the podcast is there are two core enemies of capitalism over its history. And capitalism is an archetypal emergent phenomena where capitalism is more so a function of having rule of law and property rights alongside transportation. Once you have these two things, capitalism will emerge as a natural force from that society. And I'm going to split the history of capitalism into three sort of things. Where you have ancient capitalism, which culminated in the Greeks and the Romans, stemming back to Mesopotamia and Egypt. You have Asian capitalism, which was held together by the Silk Road and encompassed everything from Islam to China. And then that ultimately got superseded by those societies decay over the medieval and early modern periods, followed by the European takeover of the global system. And then you had modern Western European capitalism, which is the one we're going to talk about all three, but we're going to focus, I would guess like 80% of our energies on the third. But to speak to the point you made, it's interesting that the two core enemies of capitalism in these two systems were in the Western system were were firstly the monarchist nobility who tried to crush capitalism so that the old regime can stay in power, and then the progressive leftists. And this was a drive against capitalism by two forces, one pulling from the nobility, the other from populist thugs claiming to defend the working classes, which they really didn't. And both of them pushed against capitalism. And they used the same justifications where Europe for a lot of the medieval and early modern period was controlled by these highly constrictive guilds, which stopped free market competition. And the countries that got rid of the guilds as soon or as much as possible were those that dominated the modern world, like Britain or the Netherlands, while those that did not, much like the Mediterranean were. We're not able to do that. And it's very interesting that the modern progressives have the exact same justifications for why their guild structure should stay in charge.
- [12:42]
C
And it's just so much easier to argue against removing those standards in the 1600s because everybody knows like the Dutch produce ships 10 times faster. And you can't argue it's less personal and attached to our current ongoing experiments. And the point you mentioned about the monarchists is really important because they're still trying to deal with the aristocracy is still trying to deal with the accepting the concept of the peasantry basically being free to do all sorts of things they want. They lost control of society and they still don't understand how society could function absent their rule. So they're still panicked about that. And they've been trying to bring it back forever. And it fits perfectly into this pattern where you have the alliance of like the monarchists and the populace and today you have this alliance of technocrats and activists. So like the big oligarchs are aligned with the communist activists and growing the state because they're totally aligned. And sometimes they have ideological crossover and then the only way to kind of counter that is an alliance of what I call entrepreneurs and patriots. So it's like aristocracy and left wing populace versus like merchants and nationalists.
- [14:11]
B
Yes, that's correct. And I'm going to look at Britain as a microcosm of that, where Britain has become one of the most successful capitalist economies in history and then they threw it away. Where in the trends across Western Europe which we're going to explore, they have sort of parallels in Britain, but then Britain went in its own direction and there's several different trajectories going on that we'll investigate later. But in Britain and a lot of Western Europe, they had this issue of sort of the centralization of their monarchical institutions over the early modern period, where medieval governments were absolutely tiny. You have stories from 12th century France where the king of France's army was just his friends. Sometimes it was as low as like in the two digits or the three digits, where the king of France could mobilize like his 50 hunting buddies or like 500 men from his local retinue. And early modern France was a failed State. And England was a little bit what was better off. Where Alfred the Great and his house unified. England was centralized country. And England was the 1 country in medieval Europe which fairly consistently maintained its unity. But it was still a highly decentralized country by any modern standard. And capitalism gradually evolved in Western Europe over the high medieval period, partly due to contact with the Muslim world, who also had a more highly developed capitalism, which they had regulated out of existence in the late medieval and early modern periods. So capitalism gradually emerged over the European high Middle Ages as a function of how these governments were so small they couldn't actually maintain power where medieval society, and thus the creation of the modern west only occurred because power was so decentralized that social authorities could not basically tyrannize the population. Where you saw the, you saw the, the church, the state, the nobility, the merchant guilds, who were the main capitalist force, and sometimes the peasants all pushing up against each other. And, and so in England, you saw this latent capitalism develop from the feudal society. And capitalism, as we'll talk about later, is a natural outcome of feudalism. And so by the time of the Black Death, serfdom was over and England became a fully capitalist economy based off money and based off free labor transactions. What happened then across Western Europe was that the monarchs, who had spent centuries using gunpowder to establish more centralized control over their countries, tried to pull on this earlier feudal monarchical tradition from the Middle Ages to centralize power. And so you saw this, this society in the 17th century try to use this sort of false myth of the Middle Ages to enforce this modern tyranny on the population. Where the king of England was saying, because we're the king, I am the king. Because the nobility are the high borns who deserve this stuff. We can develop a highly complex regulatory structure where we give my buddies monopolistic power over the economy. But that was never what the Middle Ages were like. And so you saw the rebellion of the English people, who were also pulling on their sort of medieval tradition where the English people said, we have always been a free nation and the king is violating that the king would say, I am chosen by God. And so they butt heads. And what happened in England was that the parliament and the merchant classes won. They sort of disempowered the king. And then capitalism developed. And from that you saw the agricultural revolution, the growth of science, the British Empire, the Industrial revolution, the Enlightenment, and all of these trends were implicit on Northwest Europe's decision to allow capitalism and deregulation in the early modern period.
- [18:35]
C
That's amazing. You mentioned the them calling back to the previous monarchists as in the medieval ages, as a justification for the regulatory structure because it gets to a very central point about top down versus bottom up. And people have, a lot of people think that the only option is like more or less regulations. They don't understand there's different ways to regulate, which is you have the tort law and common law versus bureaucracies. And the legal system is incredibly important for capitalism to function just as much as property rights, which is incorporated in it. And these common laws traditions would develop across small towns or you know, kingdoms throughout Germany and the rest of Europe and England, which was fractured. And people would see which legal codes functioned and then adopt them. So the decentralization is not contradictory with like the adoption of shared standards based on selection processes. It's more like how language develops, law can develop like language versus you know, trying to regulate the language top down, which obviously misses a lot of the nuances and, and the potential for it to evolve.
- [19:57]
B
That's very much true. And the reason that the Catholic Church was so powerful in the Catholic Church and later the Protestant churches, Christianity was so powerful in pre modern Europe because the state was so weak. You needed the religion as a way to socially organize across the continent. Because when the government can enforce things, people have to rely on each other. And that also helped establish West Europe's ideals of personal responsibility and the individual. Because self regulation became dependent on individuals, not on, as Fukuyama calls it, the tyranny of family and culture and custom or on the state. And so they used the religious code as a way for individuals to sort of grow as people to hold Europe together. And when you deal with, let's say I'm going to call this the Will Durant time period, because this is. Will Durant is one of my favorite historians and he wrote like six books on the time period between the Black Death and the French Revolution. Actually it's just early modern Europe, let's be real. But in early modern Europe and medieval Europe, so much was going on that you can't really keep track of it all. And you have to remember this is all part of an organic process where the same people were doing these different things, where something sort of happened in Western Europe in that time period and that thing made the modern world. And you have, you could disentangle the different bits, but you have to remember this was a single thing between the rise of capitalism, the Protestant Reformation, the Renaissance, the rise of science, the agricultural revolution, the military revolution, the centralization of governments, the printing press and the information revolution. Later on, the French Revolution and the political revolution. Western Europe had 20 different sort of social or technological or cultural revolutions in the time period between the Crusades and World War I, which was most concentrated in the early modern period, from like the Black Death to the front to like the 19th century. And the engine for that was capitalism, because behind all of these social changes was the ability for individuals to make a living outside of rigid family and land ties, where in most of the rest of the world you were either attached to your clan which lived in the same family compound for a century straight, or to a nobleman who owned you. And in Western Europe the ability to sort of monkey branch, which was partly an outgrowth of West European individualism, but a variety of other factors, was if you didn't like your small town in Brittany, you could move to Paris, become a cobbler in Paris, meet a bunch of other cobbler friends there, and then join a Protestant association. If you were stuck in your village in Brittany, you would have to live with your extended relations forever. You could never become a Protestant because they would. Your shared social network would all be built around Catholicism. And Joseph Heinrich has a really interesting idea when he says part of the reason the west had so much scientific innovation was in the guild, in the apprentice system, where in Western Europe a tradesman would work at several different masters and then he'd pick his best master and then become his sort of student, and then he'd inherit the business from the master, start his own. Is that once someone is trying out multiple masters, it means that they're going to compare which techniques are best. And it creates this enormous cross referencing system which allows you to assort for better methods. And that's very powerful when you're dealing on wide scale population levers. He did a statistic, a statistical survey that found that the areas of Europe that had this practice during this time period and the kinds of people in this system were heavily responsible for most of Europe's technical breakthroughs.
- [24:18]
C
And that's a perfect point for me to clarify. Yeah, that when I speak about guilds, guilds started as voluntary associations like of expertise, and. And then they turned into legally mandated monopoly. So when I talk about them in the negative sense, it's the monopoly sense. It's the same as the American Health Care association, for example. It used to be one of many competing health care associations and then it got a legal monopoly and it controls all the states licensing boards. So that's the semantic distinction there.
- [24:51]
B
Something that a lot of Americans don't get is just how dense Europe is, where if you look at Ohio, Michigan, Indiana, those states there, each of those states is roughly the size of England, and most of them are fairly comparable. Midwest gang, you can criticize me for saying this, but if you're from Ohio, I'm not going to say Michigan because I know their rivalry. If you move from Columbus to Indianapolis, you're going to understand the culture pretty well and it's going to feel fairly similar. But if it doesn't work for those two cities, you could pick two other cities in any of those states and it would work. But then you go to Europe, where France is the size of Texas, England is the size of Michigan, and they have highly distinct cultures, histories. And then inside each of those sub regions are their own distinct regional cultures with their own dialects, their permanent rivalries against the other regions. Then those sub regions in turn, like Aquitaine, have also gone through periods when they were militarily divided, when they had their own separate cultural renaissances in certain areas, but not others. And so when you're talking about the sort of era of the Western revolution, there's just this infinite level of complexity. You have to keep in mind where what you said guilds is true. And there's an interesting book called Europe Emerges by Reynolds. And it was written in the 20th century when historians were really obsessed about sort of material conditions for history. And that was due to Marxist influence, where you're like, what was the exact economic system in each sub region of Europe in the 17th century? There was a period of obsession about that in the mid 20th century, and Reynolds was part of that. But he talks about the institutions in medieval Europe that allowed the later Industrial Revolution. And he and a few other authors from that time period traced the culmination of the Industrial Revolution in the Middle Ages. Because medieval Europe had an interconnected trade system with a stock market, with guilds, with merchant sort of transnational organizations, employer employee relations. The nobility had distinct relations with all of the peasants they worked with. So in feudal Europe, every nobleman had his own distinct contractual relationship with his peasants that was different from all the other peasants. And what that meant is that it gave peasants in medieval Europe a degree of sort of economic mobility we've forgotten about where if your lord is mean to you, you can just run away to the next lord, and he's trying to economically compete. And so this valve function, it kept medieval Europe a significantly more creative population than a lot of people think. But you also had stuff like the scientific method or universities or parliaments where almost every institution in the modern west stems from the high Middle Ages. And with the capitalist institutions, they formed in around, let's say 1100 or 1200 earlier on in the medieval period. And they tended to be quite open. Where I was reading this primary source about these Dutch settlers who went out to Schleswig Holstein on the border between Germany, Denmark and the Slavic tribes. And they actually lived pretty good lives. You could tell from this book, this thing written in the 12th century. They were all quite prosperous. The Lord was giving them a lot of freedom. And when we think of the Middle Ages, we think of this gradual descent from sort of barbaric tyranny into a modern society. But what happened in reality was these guild institutions or these economic structures or these apprentice systems were fairly open at the start of the Middle Ages. By the time you get to the late Middle Ages, they'd become highly constrictive, where guilds were hereditary and you couldn't just go into a trade and you had these rigid economic regulations. And then what happened is you saw a divergence where lots of northwest Europe sort of took an axe to these medieval institutions that had grown sort of decadent and fossilized, while Mediterranean Europe doubled down on them. And this is why you saw the shift in the early modern period, where at the time of Shakespeare in 1600, Italy was significantly wealthier and more cultured than England. But by 1700, England had surpassed Italy.
- [29:38]
C
Yes. And I was recently watching a show called Sharp about the Napoleonic War starring Sean Bean. Really amazing. Yes. And you read the books, I watched the show. And then they use. There's a Pennsylvania rifle shows up in the show and they're talking about how it's the best rifle. And. And then I. Then I'm thinking, like, wait a minute, we're in the middle of these two huge armies, like the centers of global capital and like the pinnacle of technology. How are they being out competed in arms manufacturing by like a comparative swamp in Pennsylvania. And then I thought, oh yeah, of course, the guild. So I looked it up and there was a London gun making gun makers guild which was created in the 1600s, which basically had a big influence over the rest. So even like England and the Netherlands were better than the rest of Europe, but America was a whole nother frontier, so to speak. And so even though we were way less the center of global capital and wealth, we pioneered the best rifles or the first rifles, all the revolvers, all the lever, lever action, semi automatic. So it's like we were on the pinnacle of gun making technology. Over 100 years before World War I, which we don't really think about.
- [30:54]
B
So firstly, Pennsylvania is not a swamp. That's Delaware. We're.
- [30:58]
C
Well, it used to be sort of parts of it are considered a swamp.
- [31:01]
B
Delaware Valley was a swamp. Philly, South Philly was a malarial swampland. Once you get off the coast, it's forest and it's mountain forest. And. Yeah. So the Pennsylvania rifle, that was made by, I believe, German immigrants who went to Pennsylvania. They had a lot of advanced gun manufacturing in Germany and then it got popularized in America and our snipers would use it to fight guerrilla wars against the British in the Revolution. Then the Brits started using it. It's kind of like how the British learned to use rocket, rocket artillery from fighting in India, because the Indians had a tradition of rocket artillery which fits with the Indian military tradition of putting on a nice show and then failing. I'm sorry.
- [31:51]
C
And that fits with Steinway pianos because that was a German guy, right? Because that's exactly a perfect way to describe it. Because the main industry was in Europe. Like all of the. Most of the pianos being manufactured and guns were, were in Europe. So this guy was in the piano industry. He was an expert, but he couldn't take it to the next level. So he moved to America and then boom. Steinway pianos.
- [32:13]
B
Yeah, yeah, that's true.
- [32:16]
C
He wasn't even allowed to make and sell his own pianos. He got arrested for it.
- [32:20]
B
And it's interesting that. So we read a lot of early modern Europe and we'll see these highly rigid social institutions like feudal nobilities. And in a lot of Europe, it wasn't until the Napoleonic wars banded serfdom. Denmark had serfdom until the Napoleonic Wars. It's crazy. They have such high social trust. A lot of Germany had serfdom, Eastern Europe did. Then you have a highly rigid Catholic Church. In a lot of Europe you had government monopolies like Spain or France, England in part of the 17th century. And then you have separate town legislation. So you can look at early modern Europe and think this is a highly regulated sort of socially controlled society. But then you will get the output from it. And it produced all of these cultural forms, all of this innovation and creativity. Now you look at modern Europe and they've gotten rid of all of that. Where modern Europe doesn't have those sort of same social institutions on paper, but in reality the government's replaced it. Where in most modern European countries, the government makes up at least like 40% to half of the economy by some metrics, it's 2/3. And in the early modern medieval period the government was like 1 to 5% of the economy. It was often like 1 or 2%. And so when you're looking at these sort of social institutions that add up to a lot of things, it's easy to judge that time period, but you have to take a step back and think as the Bible says, do not judge the moat in another man's eye when you have a log in your own right.
- [34:02]
C
This is why, partly why I make fun of late stage capitalism, because I literally cannot think of a period with higher levels of state control. And which brings me to another point about how the medieval governments were small. Right. And this relates to kind of what happens in dark developing countries when you have a primarily agrarian economy. And then you start to develop all these new industries pop up. So they pop up and then people get into them and then they want to protect their share of those industries. And so then there's an incentive to create a whole new bureaucracy around new industries. Because obviously that bureaucracy couldn't exist before the industry existed. And so resisting that pressure and is hard. And the US had a value structure aligned towards resisting it. So it took about 120 years of propaganda and control of information to be able to get the government to as large of a size as it is now. But in developing countries they don't always have those values that are automatically aligned against bureaucracy. So once they adopt some basic property rights and develop that, the bureaucracy grows much faster around those industries. So what took us 120 years, took China 20 years to get to similar levels of public spending and bureaucracy.
- [35:19]
B
Yeah, I'm glad you said that. It was something we talked about before the show started that you and I have both lived in the third world and it really teaches you how so many of the of the bureaucracy we told were told we need in the west is not necessary where in Mexico the public sector is an utter mess. You cannot trust the government to provide even basic services. And Mexico still works. And you, you go around and you find the all these family businesses of shop of families who use their sort of the front room of their house as a small business in their nearly universally trustworthy. Sometimes you'll get a bad stuff, sometimes you get the curse of Montezuma. But you can normally trust them to cook for you or to run a convenience store or more complex things like tech repair or accounting or barber or any given service can be learned by a person and provided to someone. And then if the public doesn't like it, they won't make money and they shut down. So when you go to third world countries and yeah, go ahead, you'll consistently see this theme where when you're in Egypt, you'll see these local stalls run by families or you know, they didn't pass a test or they just bribed an officer not to look at them. And it works. They consistently provide services and it makes you realize how much, how much the regime uses fear to control us. And another thing is that part of the reason that northwest Europe had this, had this capitalist revolution is that Germanic culture creates strong emphases on individualism and strength and truth. So Germanic societies due to their cultural forms had a society that viewed over reliance on institutions as not masculine, that forced field to be responsible for their own behavior. And also had cultures that saw Germanic cultures have had long standing sort of bias, have had long standing revulsion against lying, where that goes in the pagan tradition. Lying and deceit is one of the worst things in Germanic culture. And so that cultural form took very well to a capitalist society, which was not the intention. And then other societies that don't have that, once they get money, then another element of the Germanic warrior culture where if the elites want to take money from the public, the public will fight back, which is not how most cultures are. But in most cultures once the money shows up, the elites feel the compulsion to take it. So it's this two sided pressure of growth happens due to deregulation, elites regulate it to take it and then it stops and decays. And this has been a wide standing social issue where the great struggle of capitalism is not stealing others stuff is actually profoundly difficult. It requires a tremendous amount of fortitude and honesty and morality for a ruling class to not predate off the population. And it also requires a population that will fight back. And so this is why capitalism and the Industrial revolution only flowered in the early modern, in medieval and early modern Europe, because some of these conditions were met, but then they got predated on too quickly to have the industrial revolution.
- [39:11]
C
Yes, and you mentioned truth and some of the associated values, which brings it back to an important point that Christianity being under attack and having an inverse correlation with the rise of government because it's tied to the western and values of freedom, that a lot of the protections against the growth of bureaucracy and in terms of the developing world thing, basically, you know, it's like it's legal to be a polymath still over there like Ben Franklin, Thomas Jefferson, all these guys that were into these different industries and interests. You're not even legally allowed to do that. It's like a 10 year, one track hyper special, artificial, hyper specialization. And then the, in terms of Asia, like the legal system is still important, the ability to punish fraud, the ability to punish externalities through the, the legal system is important. And some of those Asian countries are lacking a strong legal system like which, which for us was developed over a long period of refinement of common law. And you know, they can, they have, you know, various quality in terms of their legal system. And when you don't have as strong of legal protections, it gives you even more justification to create a bureaucracy. So that layer is also important.
- [40:33]
B
A lot of the cultural assumptions we bring into this are very molded by our sort of cultural frame where there's this thing and this is sort of a sign of how degenerate sort of economists can be at times, where there's a metric called efficient corruption. And you can see it in China where until recently, if you bribed the correct official, they let you build the factory. And so economists call this efficient corruption. And then inefficient corruption is in, let's say the Congo. You bribe the official and then your factory still gets robbed. And, and so they're like this corruption is a way to sort of ease the greases on growth. And they'll say this is a good kind of corruption. And I'll think, nice try guys, try harder next time. It's just you see people, you see the ruling class constantly trying to rationalize the worst things. And it was like, no, no, we're not setting this as precedent because if they say that's going to work in China, going to try it in New Jersey next. But the cultural context matters here. Where I was reading Ibn Khaldun, who is this Moroccan nobleman from the 14th century, and that book is staggeringly genius. It's really interesting to see someone in a different cultural frame talk about things I intuitively know to be true. And it's really funny reading this high medieval Islamic philosopher where he's hyper laissez faire capitalism. Ibn Khaldun says all of these things in the 14th century that I would expect a libertarian pundit to say now, where he would say the state is evil. And he'd say that you must lower taxes as much as possible and the state should be as small as possible and it needs to create a distinct sphere where it doesn't cooperate with its subjects. And he said that whenever societies allow sort of any violation of property rights, they become poor and collapse. And reading Ibn Khaldun is really sad because you can sort of pick up from the way he talks about the world that it's a highly sort of cynical entire society. Because the Prophet Muhammad emerged 700 years earlier. Islam conquered the entire oikumene, or the known world, from Portugal to India. But then that empire fractured and they had civil wars. Then the Franks took back the Mediterranean and the Mongols killed half the Muslim world. And so Ibn Khaldun, who, by the way, both of his parents died of the Black Death and he lived most of his life in horrifying medical pain. So he's writing about the gradual decline of the Muslim world and he says it's widely known that property rights are necessary and that you need to uphold these to have a wealthy society. But all of the governments of our era are so oppressive that we can't actually maintain that. So I'm seeing my entire world get poorer and decline in real time. Where Ibn Khaldun would write about all of the regimes are hyper corrupt, they're all morally degenerate. And I just have to watch my world gradually decline. And that's really sad and it allows me to sort of transition into the earlier systems of failed capitalism. But do you have a point before I go there?
- [44:02]
C
Yes, two. One was just we underestimate how militantly free market people were. And like the 1700s or Victorian Britain, it wasn't just like a political view, it was like very integrated as theft. If you violate a lot of those principles and it was considered like unthinkable for someone who just like bombed a port down to like, you know, for some free market thing to be violated, like institute a price control on them, like. What do you mean a price control? Bomb them. But that's terrible. We would never do that. So it's like very culturally ingrained on a value basis. And then in terms of the third world, the thing that people get most confused about is they see that, they go to the third world, they see that a standard for something in terms of quality is lower, and then they assume that that's because they don't have a regulation stopping them from doing that. What they misunderstand there is that quality is, is not determined by regulations, it's determined by the proliferation of technology and knowledge within the market. And so if, for example, you set a US farming regulation on pesticide use onto Thailand, then would wipe out 80% of their market. So you can't.
- [45:20]
B
And with. You made a point in the Victorian Britain video a while back that I think about that they saw the free market as Just objectively true in that society. And, and that was something where they saw regressing against that as unimaginable. And that helped create the wealth of the Industrial Revolution. And our comparison to that society is they'd see us like the movie Idiocracy. They would just be horrified at our level of cultural and intellectual development. And we very much degenerated. But they also were aware of this because they had studied the Greco Roman classical precedent and from that they knew how the decline of societies occurred. And Rudyard Kipling even wrote a poem about. I think it's set in the year, in the 21st century in a Britain that had become a declining society. And in that world. It's been a while since I read this. I think the Pacific becomes the core of the world and Europe becomes this backwater. But the other thing is the socialists have very much won the last century. And they won it so hard that we lost all of these intellectual framings that would be highly useful to us. And the socialists have designed this so that capitalism is innately bad. And what they're doing is they're creating a mythological alternative that does not exist. And because most people do not actually want independence, most people want to be taken care of, they want to work a job, they don't think too much and support their family. I look at this where, I mean, most people do not want to be self employed. And so they end up in larger structures where they sort of follow orders to the operate in these larger social structures because they feel more comfortable doing that. And this is how things always happen and people look for protection. And this will either be through the feudal lord, the capitalist employer, or the socialist government. There's more societal differences, but those are the three common ones in European history. And of these three, the capitalist is by far the best because he's the only one that allows free choice. And the socialist is the worst because the feudal lord has all of these encumbering variables like tradition or religion, or he's in charge of you for generations, so he won't be that exploitive because he knows he has to maintain this for his children's children. And the socialist government is the worst because it has every incentive to exploit you completely. Because there's no generational incentive, there's no moral standards they're held against. And it always results in degenerating the population into slavery. And that sounds like a conspiracy, but all of the totalitarian states were functional slave states. They forced you to work, your money wasn't worth anything. And you had in the Soviet Union, Nazi Germany, you were not allowed to strike, in many cases, you weren't allowed to change your employer or things like that. And so what the socialists did is they're comparing their false fantasy to the actual issues of capitalism. But that paints such a delusional picture. And Europe has actively become poorer over the course of decades. If you look at Britain, the average young British person today has a worse quality of life than they did at the start of World War I. And that sounds dramatic. Maybe not World War I, World War II, start of World War II, but back then, if you worked hard as a postman, you'd have a house and a lower class job, like a postman or working in a factory, you'd have a house, you'd be married, you'd have extra money to spend. And that's not something young British people today have. And so the socialist state has degraded all of the social norms. And the big thing that socialism offers that the classical liberals have failed at is meaning and mythology, where the socialists have this all encompassing worldview and people will cause themselves physical pain to avoid the void of meaninglessness, where the socialists put themselves in so much pain to have an illusion of meaning which in fact does not exist. No one who has spent decades in socialism has attained spiritual solace or sort of ground themselves in the eternal or any of those things. And this is something like classical liberals aren't very good at spotting because they're thinking on a very rational basis, where they don't seem to realize that from all the studies, 90% of people are not rational. And so with the older system of feudalism that ultimately lost due to its lack of mobility and its lack of fluidity, then the capitalists lost because the social shifts they produced created a meaning crisis they couldn't deal with, which the socialists took and then did not fix.
- [51:05]
C
Yeah, so this is a really interesting point. It's like, why did it fail? Why did classical liberalism fail to prevent socialism? And then it gets into the, the value basis and, and rationality, which is interesting because you can also tie classical liberalism to Christianity, which is not, you know, operating on a purely rationalist paradigm. And then you have also the natural incentives, like you said, this is kind of the process where you get freedom in new industries and then there's a huge incentive to jump on that and control that. And people can use information asymmetry and take advantage of destabilization to advance their goals. And then there's the other layer of the founders themselves, which predicted the Republic would Fail. Like, it's kind of. This idea is. There's kind of an idea that a lot of the. It can go too far into a rejection of the kind of revolutionary nature of the revolution and that it's separated from fundamental Hobbesian theory and that you could have a successful polity without a monarchy. And then people point to its failure 300 years later as like a validation of that original Hobbesian argument. But the founders themselves knew that it was going to fail. They predicted it would fail. They. So they made the best system they could, understanding the incentives that would lead to the Republic falling, and they put in a bunch of protections that they knew wouldn't work. So then the question is, okay, if they knew it was going to fail, why did they do it anyways?
- [52:57]
B
Yeah.
- [52:57]
C
Oh, wait. Because it resulted in a lot of good stuff. Just because you can't perfect history in one go doesn't mean that you shouldn't do things or that it's not an improvement or that the answers don't lie. And actually, people kind of reject a return to some of those values because they say then it failed the first time. It didn't fail. It was wildly successful.
- [53:19]
B
Yeah.
- [53:20]
C
And was unable to be maintained.
- [53:22]
B
Yes. I'm glad you said that, because that sort of mutual understanding I know you and I have, but it's something I forgot to articulate where, I mean, as I like to say, you're going to die anyway. So it's better to die rich than poor. And that's how societies are. I mean, if the Founding Fathers did not make America into the system it was, we still would experience social decay 250 years later, because that's how these generational cycles work. We just never would have expanded west of the Mississippi River. And imagine if one of the things my father likes to say is, imagine if you switched Bolivar and George Washington, where if George Washington was Bolivar, he would have seized power, installed himself as king. America would have fallen apart into distinct states that would have all made themselves countries. Because the Americans are so intrepid as a people, we would have used this intrepidness to murder each other. And we never expand west of the Great Plains. So you compare that timeline to the one where we reached Japan and the Moon and Afghanistan, and that would seem utterly unbelievable. But what happened was that we made the correct decisions. And when you make correct decisions, good things can happen. And. And they're. One of the things I really love about this sort of thing, is that when you set up these incentives correctly, you reach something that is transcendent from what it was before the modern world transcended to a higher level than the ones before it, where imagine if you, if, let's say we time traveled back to an older society and we said the issue our culture has is that we, we became so wealthy that we all degenerated into mouse utopia. And we're seeing social collapse and birth rate collapse because we're so wealthy and the world's population is 10 times what it was 200 years ago. And they'd be like, first of all, I think a lot of their wisest philosophers would laugh at us, like, ha, ha, ha. It's funny that this is your issue. And they'd get it better than we do because they had a more complicated, complex understanding of the human condition and morality and that stuff. And they'd say, like, you guys should find God again. And they'd say that we were satanically possessed. But I mean, I like to say you're always going to have problems in your life. It's better to have more interesting problems rather than less interesting problems. Because you can either have the problem of working out as a janitor trying to make ends meet, or you could have the problem of placating your model wife who is annoying as you run your transnational company. And you both have problems. One of them is a more interesting problem than the other.
- [56:13]
C
Right. We're trampling on the fruit of their tree and complaining about how they planted it.
- [56:17]
B
There's a, there's a staggering lack of gratitude. And I think that's one of the worst traits to have. I can accept a lot of bad personality traits, but when you're utterly ungrateful, it's just, it's, it's bad on multiple levels.
- [56:30]
C
It's also funny that the Hobbesian, often kind of more monarchist fans are the ones who kind of degrade the American Revolution as a failure. Because, you know, who knew the American Revolution would work? King George. Yeah, he literally talked about how we can't let this happen because they're going to be really successful and we're going to be screwed. And this brings up an important point that a lot of these elites, they put out this propaganda that maintains their oligarchy. But a lot of them know they know what would work and what doesn't. Some of them justify it under ideology. Others are like King George. They don't care that it would lead to a revolution in governance that drastically improved productivity in people's lives or made them a powerhouse. Yeah, they're like, oh, I'm just focused on my thing when from the outside, you assume it's because they must not know. Because if you knew that, nothing could be more important than that. But that's not how people work.
- [57:31]
B
Yeah, this is why I say this time period is very complex where as an example, you're using the framing there that George Washington, sorry, George iii, was part of this old monarchical tradition. And yes, that's true, but 18th century Britain was a significantly freer society than modern Britain because they had de facto freedom of speech. They had a de facto. They had a complete free market, they had freedom of association. The government barely existed. And it's really remarkable that we'd look back on them and think that they're an autocratic society. Well, we in fact are much more so. And I like to say that real capitalism has been tried and billions have been lifted out of poverty. Where you compare as a sort of test case, the end of the Cold War. Sorry, I don't. The sun's coming down and it's annoying. It's annoying. It's annoying me, but I had to close my thing. The window thing.
- [58:39]
C
Blinds.
- [58:40]
B
Blinds, yeah. And you look at the end of the Cold War, compare West and East Germany, north and South Korea. These are two countries that have completely artificial distinctions in them. But the capitalist side was vastly wealthier than the communist side by any conceivable metric. And then when they flipped, you saw them, the parts that became capitalist become wealthy and the parts that stayed Marxist stay poor. So at the end of the Cold War, we have all of these perfect examples and the areas of the former Iron Curtain bloc that didn't become capitalist, or like Russia or Ukraine, which had a form of crony capitalism where the oligarchs divided up the economy amongst their people, they stayed poor. But if you compare Ukraine and Poland, two societies which have a lot in common, Ukraine's. Sorry, Ukraine is vastly poorer than Poland by an enormous margin. I forgot the numbers. I think Poland might be like four times as wealthy.
- [59:42]
C
Ukraine was three times poorer than Syria per capita before their respective wars.
- [59:47]
B
It's crazy. And you look at the end of the Cold war where the 20th century is really a lesson that hold on tight, because at the start of the century, European colonies were everywhere and it was not cool to not have a colony. By the middle of the century, the European countries were throwing away their colonies because they were socially unacceptable. And you look at the history of capitalism where there was a point in around 1970 when less than a dozen countries around the world were capitalist democracies Even Portugal and Spain were fascist corporatism. And the capitalist countries that were left, like France or England or even America, they were heavily socialist, where Britain had a 95% tax rate, America had a 90% tax rate. And then with the end of the Cold War, you saw the global eruption of capitalism, where the capitalist institutions that survived in America brought about the tech and the economic revolutions. And you saw the spread of capitalism across the third world, where once you've seen the stats, you start to think it's a moral crime. We don't talk about this. You look at Africa. Africa's population, I think, has quadrupled since 1950. And surprisingly, they are better fed and wealthier than they were before due to the rise of capitalism across Africa. And capitalism and democracy are often intertwined because they share the thread of the merchant class is like both. And they both involve entrenching responsibility in the population. And so in 1970, capitalist liberal democracy was on a socialist defensive footing in Northwest Europe and America. Then 2000, liberal capitalist democracy had spread across the vast majority of Latin America. It spread across Asia to China and India, into Eastern Europe, Africa and Southeast Asia. So now places like Indonesia or Bangladesh or Brazil or Poland, we're seeing the growth in factories, people voting in elections for their own candidates with electorally competitive systems. And so it shows that within a 10 to 20 year period, the global calculus on something can totally change. And if you compare the world before and after, the world of 2000 was a staggeringly wealthier place than the world of 1970. And it was mostly concentrated outside the west, where I cannot overstate the scale of wealth in population, growth in quality of life, which occurred from 1970 to like 2010 outside the Western world.
- [62:42]
C
It's absolutely insane. It's hard to visualize the amount of stuff that's happened in the last 30, 40 years. Because one, a lot of the technology already existed, so it was much easier to like go through the process faster. You didn't have to go from the wagon wheel to figuring out that you could use a wagon brink to make an elevator be safe, more than three floors to get to this, this step, to that step there. I mean, they're just popping stuff up. Like it in the 90s or not that long ago, they were using elephants for construction in Bangkok. And the size of that city now in the skyscrapers, just like many of the cities in Asia is bigger than anything you'd see in the, a lot of the stuff you see in the Western hemisphere, the amount of change is staggering. And then that's when we get into also some like, definitional and semantic conclusions because it gets into the graph go up stuff. And then also just conceptualizing our economies as capitalist in general or capitalist liberal economies, when it in reality, this makes capitalism more impressive that this incredible growth is largely driven off momentum of a more free past because it just completely changed the technological landscape of what was possible. And what happened after World War II is big state programs, fascism, socialism, everything that was associated with Hitler, Mussolini and Stalin suddenly became out of vogue after, like rising in popularity throughout the Progressive Era. So there was a pivot. And this is like the most accurate definition or origin of neoliberalism, which also ties into like Stephen Pinker's treatment of the graph later was that, okay, we are not like statist. We're not first like state control. We're. We're market economies, but we're going to have welfare systems and sensible regulations. We'll take care of our poor and the regulations and that. But that's like our, you know, mixed economy neoliberalism. And what happens, as Misa said, is interventions create disturbances which lead to justifications for further interventions. And so since adopting that doctrine has just been a slow march back up to the point where we have more government spending and bureaucracy than we could have even envisioned in the 30s when, you know, Hitler was on Times Magazine.
- [65:24]
B
Yeah, it's two distinct trends. Gustave Le Bon says modernity is divided between the sort of immense growth of capitalism and science, which stems from small groups of people working together on new ideas, and then the rise of socialism. And he said, centuries from now, people will see these things as highly discordant. And it will be unclear how they exist in the same world at the same time, because they're in opposition. But the propaganda is that they're the same thing. And Star Trek is kind of the culmination of our society's fantasy of integrating science with socialism. But I don't want to go down that rabbit hole. It would take too long and involve too many.
- [66:07]
C
To sum it up, it creates a framing where. It creates this frame where there has to be a middle ground between capitalism and socialism. And. And that middle ground is more socialism.
- [66:19]
B
The middle. I mean, that was just forever. People literally called fascism the third way between socialism and capitalism.
- [66:27]
C
Exactly.
- [66:28]
B
And it's also remarkable that these things happen in rhythmic patterns. So World War II saw a mass constriction of capitalism, especially in Europe, due to the rise of these industrial enormous governments that had to fight the war. One of my favorite historians McNeil says the era of Western dominance occurred between the Crusades and World War I, when the market was more powerful than the governments. Because in that time period, if a government nest with the economy in the same way that Spain regulated themselves around these state monopolies and then hyperinflated. The currency is that Spain went from a global spanning empire with colonies on every continent to. To an utter joke in a century because it fought against capitalism. And in that thousand year period the European countries that won were the ones that worked with capitalism. And McNeil writing in the 60s, said World War I was the end of that process in Europe where the states got enough power that they could artificially control the currencies. And it made it difficult for the capitalist system to compete inside Europe because all of the European economies became part of the socialist frame. And some countries like Britain tried to step out with that with Thatcher. But what happened with Thatcher's revolution is she basically empowered the city of London's finance industry and England became the city state of London with deindustrialization attached to. And then that created the social issues of Brexit because that city was highly. It's literally called the City of London, the financial district. It was highly cosmopolitan and did not represent the culture or the interests of the British people. Sorry, I'm not going to say the British people because that's not true. The English and the Scots, whatever. And so Britain's currently seeing this divide and the city of. And not going to get into that. It's too many things. A lot of the left right dispute in Britain hinges on that with the globalist sort of City of London elite trying to crush the rest of the country so that they don't have to listen to them. And so you see these multiple forces and it's truly remarkable that you've seen this enormous breakthrough around the world where the average person on earth no longer lives in miserable poverty as a peasant. They live. They're a city dweller who works a kind of crappy job, but they've moved out of sort of living in the dirt. And I think that is a profound accomplishment.
- [69:12]
C
Yeah. And we should contextualize that. Sorry to interrupt you, but just to contextualize that people romanticize this pre industrial.
- [69:22]
B
Yeah.
- [69:22]
C
Farming life. But the statistics on it are for, for those kind of societies you get dearth every five years, which is extreme shortage of food, malnutrition and your kids born, then big problems and then you get deadly famine every 20 years.
- [69:39]
B
Yeah.
- [69:40]
C
These are things that really affect you and are things that are nice to be able to transcend.
- [69:48]
B
Yeah, I'm ethnically Irish and so my ancestors lived in staggering poverty. You'll hear stories about 19th century or 18th century Ireland and it's just absolutely horrible. People living off one acre of land, only eating potatoes, entire families living in the same shack. And all of our ancestors lived in their own, in dirt, in their own filth. And capitalism is the force that allowed us to escape that. And it's truly remarkable that after these global growths, first of all, the left says that capitalism has been exploitive to third World societies. Well, it's been the exact opposite. Socialism kept the third World in poverty from the independence period until the neoliberal sort of globalist wave of the last 30 years or 40 years. And the staggering absence of gratitude by the population where the trend of pushing back against capitalism is not purely in the West. You can see it in a lot of Latin American countries where Colombia, Mexico, Peru, Brazil have elected socialist governments, frequently ones who are practically just Marxist. You see this in Asia with the growth of bureaucracies or the government trying to destroy the economy in China, various places in Southeast Asia or the Middle east where it really speaks to most of the population not being rational and the death of the meaning crisis that the reaction to this incredible growth in quality of life and technology and all of these things which occurred around the world has been met with the desire to destroy the mechanism that did it. And that's either because the psychological issues created by this outweigh the material benefits, or people lack the legitimate wisdom to know what they're doing.
- [71:41]
C
Which gets into an important point about fairness and what people are complaining about. Because it, this misunderstanding creates, contributes to the rejection of some of these awesome developments. Because even if you're wealthy, if you don't have opportunity, or if the inequality is perceived to be a result of unfairness, or if it's like artificially accelerated due to unfairness, then it's going to be a problem. And you talk about Gini coefficient and things like this and you can debate, you know, what's an acceptable level of inequality. And it often really ties back to what's perceived as fair. And then other metrics like, well, is mate formation still possible? Yeah, because if you can't pursue the opportunity to find a wife, then that, that's indicative of society breaking down. And then this gets. And then people say, but no, no, but things are great because the graph's going up and people are like, well actually that's. Things are not going great. So now I Hate capitalism. When in reality those problems are the result of guild like structures shutting you out, education that's making you useless and propagandizing you and delaying your life and all these other restrictions and manipulations of the system.
- [73:03]
B
Yeah, Gustav Le Bon had a very good point in the 19th century where he said most people do not desire freedom, they desire safety and stability. But those things are illusions. And whenever you trade for the appearance of those things, you will not actually get them because the only security lies in strength. And whenever you offset your security to someone else, they will always end up exploiting you. It's just a question of in the short or the long term.
- [73:32]
C
And yes, slavery versus freedom.
- [73:34]
B
When you take people who evolved or have for thousands of years lived in these intact village communities with highly structured religions with everyone does the same thing forever and you put them in a capitalist economy where the structure of society changes every 20 years, where it's constant innovation and if you lose your job, you can't rely on your village network or your family, you're just going to go broke. Is that people start to freak out and demand the socialist state fulfill the role that the village community and the religion did 500 years ago. And so they're seeing the socialist state as their ally and for some reason they can't perceive that it has its own interests and it is in fact more brutal than the other power interests. And it's going to turn you into a slave in the long term. And I think there's two sort of disjoints about this, one of which is I'd say the meaning of critique and the feminine critique, where the meaning critique is that people, the left or the socialists have established all of the frames around capitalism. So this is one of the episodes where a lot of it is just debunking our current understanding of the topic so that we can actually see it for what it is. So the socialists have made highly deceptive frames in one, one of those frames is alienation is capitalist. But alienation stems from the effects of the Industrial revolution. These vast depersonalized systems where you don't have a lot of agency or ability to interface with other humans because everything is this huge impersonal system. But ironically, capitalism is the best tool to fight against it. It because the way we would give the most Americans agency is to deregulate so that they can start family businesses like what you'd see in the third world. And we would. The number one thing policymakers could do to increase the general well being of society would be to find ways for family businesses to do as well as possible. Because once you make it in the Germans with their middle stone economy is that when you've established family businesses, you have a multi generational incentive towards cooperation. They become pillars of the local societies and they lessen atomization. And so in earlier iterations of capitalism, you had economies where everyone was self employed, even poor people, they were their own renting farmers. Or you had your own like let's say carpentry business. But with the industrial revolution you have this mass depersonalization which the managerial state exploited to keep their oligarchic friends in power. Then you will blame that in capitalism. And the feminine critique is what I support was what I just explained before, that capitalism creates enormous amounts of chaos which creates people to psychologically panic. And so I think these are the core psychological disturbances which make people go against capitalism. But the answer to it is you have to get people to sort of embrace their own strength because you have to in the way to do that, you have to make a system where people's own agency actually does matter for their life. And it does in our society it's just heavily suppressed by 10 things. But once you have a society where people can have agency, you have to tell them that it's your duty to hold your own iron bar. And you have to build a society where people can feel can deal with the constant chaos of modernity as a challenge.
- [77:33]
C
Yes. So I have a perfect example of how the socialism contributes to the anxiety of capitalism or characterizes. So this anxiety is consistent with base capitalism. But I'm explaining how it's accelerated. Right. Because you're really afraid of having to choose a new job to have that rug pulled out from under you, to have to adapt without necessarily having the full community. And that's exacerbated when a huge percent of these jobs are at these massive corporations, Corporations which are very fragile. And Nassim Taleb broke down jobs according to fragile, anti fragile and you know, robust in his book. And if and everything society tells you to do, they, they encourage you to get these really fragile corporate jobs which if that role changes.
- [78:37]
B
Yeah.
- [78:37]
C
Or if you're then, or if that company goes under or if it gets consolidated and your role gets eliminated, then you often have zero ability to adapt. You have no other skills. You're like hyper qualified for a very specific environment. And so a lot of people are artificially being pushed into extremely fragile career options where there is no alternative, that there's no short term alternative that can make up for their Loss of this other opportunity. And this gets back to the. There's a lot of points like this about how people say capitalism destroys the family. They say it destroys beauty, they say it destroys health, like with the food. And what you're missing there is that, for example, yes, during the Industrial revolution, capitalism created the ability for more standardized production, which produced a lot of stuff at a much cheaper price. And people actually liked the standardization from a quality control thing. But then we romanticized, like crafts and homemade things, but when those things were around, almost nobody had anything. And then. And then. So you think, oh, well, now we have to have all ugly standardization. But no, now we're getting to the point where we have enough surplus wealth that you can afford to employ artisans again, like, if. If we get much wealthier artisans and handcrafts are going to explode. Same with building, right? When your concern is just starving, you want to just create a structure that protects you from the environment and where you have some space. When you get. Once you get to that baseline, you can start iterating towards preferring beauty, assuming that the whole economy wasn't compromised. That's the way that we would be developing increasingly. And it's the same for food where people say, oh, it makes you fat, blah, blah, it's bad quality. Well, okay, when you're starving, your first thing to do is get like this surplus of calories. And then you're going to be like, okay, well, I have a bunch of calories. What I want is better stuff. And then you start integrating that demand. So we kind of miss that process and misunderstand how close we are to achieving all of those things we really want.
- [81:13]
B
You can't go back. I mean, and growth for its own sake is good. Where we should be grateful that the capitalist breakthrough of the last few centuries has occurred, but also we have to accept the current issues. And the only way to defeat something is to go through it. You have to grab it by its tongue. And the problems that exist now, we can both be grateful for what we have and then also defeat the problems. These are two distinct things. And when people. Another element I want to throw in here is that our society is also fairly cruel to women. Because the number one sort of trait you'll pick up when you talk to women is they don't like direct Darwinistic competition. They don't like systems with overt sort of dominance games and aggression in them, where they have their own forms of aggression, but exists in female spaces. But it's different than direct forms of capitalist aggression. And so when you build systems like this, you have lots of complexities that still stem from integrating the two sexes together in a capitalist system that can neither really play to either side strengths. You either end up lessening the direct competition to please the women or build you put women in a system that is not psychologically designed for them. But I have a few other points I want to talk about. Where when people complain about capitalism, they'll talk about modern things. But when you're thinking of the issues in capitalism, you should point. Was this an issue in the 19th century where we are not capitalist by the 19th century standards? Where in most of the western world the government is like half of the economy or a little less than that? And in the 19th century, as I said before, it was like 1 to 5%, 1 to 10% by World War I and in the 19th century you had beauty, you had culture, social traditions, all of those things. So that signifies independent businesses growth. So that signifies these are not issues with capitalism, these are issues with modernity. And the frame is to shove all the issues of this society into being blamed by capitalism, not by modernity. And to go back. Go ahead.
- [83:48]
C
A good example of that also is the family. Because we kind of framed it as like capitalism breaks down community. But there was strong family and there was strong community. And even like you can correlate this to the black marriage rate before welfare and after. Like what. What are these other things that degrade community? Like does the Fed inflating the currency and disincentivize savings? Does that hurt? Like your ability to develop positive culture if you have a welfare incentive that allows the woman to be married to the government, how does that impact the family? Right. It's if when you we get down to brass tacks, those are the main drivers. And also there is some positives to be able to being able to form more intentional community or to move to a network of expertise and do all sorts of cool stuff.
- [84:47]
B
The death of free association has really done an enormous damage to American society. Where before the World wars you had very strong laws about free association. You could hire whoever you want, want, you could build your communities with whoever you wanted. You could build new towns how you liked. But the death of that killed all of America's passive culture because you couldn't form corporations with distinct sort of cultural identities. You couldn't form towns that had their distinct identities because those things require sort of vetting. But due to a lot of the discrimination laws, you can't vet people. Because if you're going to vet people around like this is really npc. If you're going to say I want an organization that only has synthetic thinkers, people who can look at an equation and then add it up together in a way that is not understood from beforehand. Psych. If you do that, it's going to be heavily white men. And so you can leave, say it's discrimination, although you're actually just filtering for a trait. And that's why we've lost so many haute couture traits from the old society. Because in the old culture you could have sort of filtering mechanisms like that or sort of social organization and then not get judged for it. If the Puritans wanted to make a new colony today based around their own people, the government would not allow them to do that. They tried to make an old style cobblestone neighborhood in upstate New York and then the government shut it down because there weren't enough parking spots. Just lots of stuff like that. And I'm going to take a step back to go through the narrative of history where the first two capitalist systems were the modern Western one. The first one was the ancient system. And by the time we get to the Bronze Age collapse with the end of civilizational cycle one, there was a fairly advanced capitalist system in the broader Middle Eastern region. Egypt had a state sanctioned economy where for the, for the early, the old and the middle kingdoms in ancient Egypt the government did all the trades. They'd send government expeditions up to Lebanon to get at cedar woods or down to Kush in like Kenya where they'd get all of these exotic luxuries. And Mesopotamia and Syria had capitalist economies that were quite advanced. They had multiple types of, they had globalized, sort of commercialized cities where it was said that you could get anything you wanted in Babylon. And the Phoenicians were some of the best merchants ever. They sailed out to Britain, they probably sailed around the entirety of Africa. And the Phoenicians even, even went out to India. So you did have this capitalist system in the ancient world. And Egypt was ultimately pulled into that system whereby the new kingdom, they had to move from this almost Stalinist state controlled economy to a pluralist capitalist economic system. And that was part of what killed ancient Egyptian culture. They couldn't adjust to that. So you saw the growth of nihilism and atheism which killed the central religious ties. The Bronze Age collapse nuked that. But the Greeks and the Phoenicians grew out of it. They made another capitalist economy. And then when the Greeks conquered the known world under Alexander, they imported capitalism onto the Persians who were very anti capitalist. The Persians tried to suppress capitalism whenever it happened.
- [88:37]
C
Oriental despots, you may say.
- [88:38]
B
Yes. And the Greeks with their conquest of the region, they first of all they imported slavery, which the Persians had banned, which was a commercialization of human labor. But the Greek conquest of the Middle east was very comparable to European colonialism where you imported capitalism or science or logic onto these societies which didn't have concepts of that before. And there's this long standing debate about how complex the Greco Roman classical world was economically. The data I lead to suggests that it was more than we think. Whereas an example, Christ was middle class, he was a carpenter's son, but he definitely knew how to read. And that suggests a society where lots of authors think that a lot of the classical world had like 30% literacy, which was really high in the pre modern world. I think like 18th century France had 20% literacy. I think even the wealthier areas of classical world, I don't know, this might have had like 50% literacy. So the classical world had a highly complex economic system that was interdependent. Where for example, Athens was dependent on grain from Ukraine, or the whole Mediterranean system was interconnected. North Africa and Egypt produced grain. Italy was a big manufacturing center until that went to France and Anatolia. And this classical economic system died with the fall of Rome. And parts of it survived in the later Arabic. Where in the Arab world you saw an advanced capitalist system that was connected across all of Asia. Where in the later parts of this ancient economic system the Romans connected with the Chinese and you saw the unification of the Silk Road system that brought the great four Eurasian civilizations together. And the Arabs were the western edge of that. And they actually had VC capital, they had a stock market market, they had mass commercialized agriculture, highly complex trade systems where the Europeans got most of their capitalist institutions from the Muslims through the Italians. Because the Italians started out and became quite wealthy through trading with the Muslim world. Then they incorporated those institutions. And there's a great book called, I think it's the 13th century world system by Jeannette Abu Lugod. And it talks about the capitalism of the 13th century, where you start in the Champagne affairs and then end in Hangzhou, where in the Champagne affairs, where in Western Europe you saw these fairs emerge regularly. And in Champagne it's a sort of Crux region where the Rhone, the Rhine, the Moselle, the Loire and the Seine, or all of these rivers of Western Europe sort of roughly congregate around Champagne, same thing as the Alpine passes. So I believe every summer you did this fair emerge. All of these merchants from around Europe would show up, congregate there at that time, and then go back on their own trade routes. This was the center of 13th century European capitalism. Then it would go down to the merchants of Italy, who then traded with the Muslim world. Then you go across the Mongol Empire through either sailing across the Indian Ocean or walking across the Silk Road to reach China. So Asia had this interconnected trade system in the medieval period that was widely known as the Silk Road. And that gradually died for reasons we've discussed in other videos, with the Asian societies becoming more autocratic after the Black Death, where Islam, India and China all became more socially conservative and more controlling. And so by the time we get to the early 16th century, when the Europeans finally entered the Indian Ocean region, the Europeans glorified the Orient, but they were able to take it pretty quickly. And you could argue that India or the Spice island were the wealthiest and most powerful trade system in the late medieval period. The scale of trade in this region was enormous. Between shipping just enormous fleets of horses from Arabia to India, or frankincense and myrrh going from Oman to China. But ultimately this trade system did not survive. And it became dependent on the European capitalist system, which emerged in the high medieval period in the West European core. And then it created this enormous amount of dynamism that changed the world forever. Where you had these earlier two capitalist systems, but both of them gradually died out due to cultural and legislative entropy. And the European system was the one that dominated the world.
- [93:59]
C
Yes, and couple of points going back through that is we should probably deconfuse the definitions of capitalism. Oh yeah, because there's the basically the Marxist definition, which is just basically the use of currency like trade that is abstracted from barter, which he says makes it then depersonalized. And there's a bunch of things that go off of that implication, which pretty much like is just an easy way to characterize all trade as capitalism. Which gets into the point about slavery, which I'll just clarify real quick, as a violation of individual rights. So you can get these narratives where it's like, because it was commercial and then it's capital, the trade exchange of capital, then as capitalism, when in reality that tradition of individual rights that eliminated slavery is directly tied into capital. And it's one of the reasons why American slavery was uniquely racial, because in order to get around our own value, values of individual rights don't. We had to create a loophole where black people were not considered human. Because if, if you make them animals, then you're not actually violating individual rights.
- [95:21]
B
Yeah.
- [95:23]
C
And so we figured that out eventually. And then going back to. I like to. I'm glad we brought it back to the. To the origin. And this kind of can. This is also me kind of confusing those definitions a little bit when I say this because there's a two layers. There's the institutions that enable more trade and then there's trade itself. And trade has always been important. And you can show this by all our oldest written documents. All our oldest archaeological written documents are bills of sale, basically.
- [95:53]
B
Yeah.
- [95:53]
C
And complaints about debt or, you know, pay me back for this. Or this is an account of how much copper, which is kind of interesting to think about. And then a point of cap. Political list or market history is the Salamanca monks in the 1400s because they had a huge philosophical innovation where they explained that interest is not theft because it. There are costs associated with their opportunity, cost associated with lending money, and there is risk associated with lending money. And those are inherent costs that are basically not owed to people. And this was an important transition throughout the Renaissance and like and throughout the justifications for expanding these institutions. Because previously, before the rise of merchants, almost all of the money was controlled by the nobility. So if you were going to get a loan, you were going to get it from someone who owned your land and taxed you, and that was the source of all their money. So if all. If the money has. If the king is like taxing you and then charging you interest or like a ton of interest for the use of your own money, or if they control the money, they're the only source of a loan, then it can get. And then it rubs people more the wrong way and it fits into the more negative definitions of usury. But the idea of legalizing interest itself was very important. And since then, Muslim countries and Orthodox Jews have been forced to copy us and also legalize interest through. Through semantic arrangements that treat it as an investment or something like that. So that was kind of like pioneered through Christianity. And the rest of the religions were forced to copy us, even though they don't acknowledge their. That it's through semantic loopholes.
- [98:05]
B
Firstly, I want to thank you for saying that. And I have to get this off my chest to get out of my system. It's been stuck in my. My mind for like half an hour. But I read French and so I have enough interactions with French intellectualism from the last century. And whenever I see something approximate to it, I start to have a PTSD esque reaction where when I hear, like, these are the different definitions of capitalism and how they relate to social atomization. My mind starts spiraling back to, like, French academia in the last century and just like, burn it all, because if you know enough of that topic, you know, it's this constant sort of webs of definitions and intellectual masturbation and just making stuff up and using your incredibly high IQ to rationalize the destruction of society. Because ever since I knew first learned about these things, I thought part of this feels gross. Where a lot of the French postmodernist thinkers, they openly wrote later saying, yeah, I don't believe in any of that stuff. I was just seeing through could if I could trick you. And I think there's something sort of morally evil about that we don't have an idea for. Because when you look at all of those ideas those thinkers developed, they killed their society for a sort of transitory sense of smug intelligence. I think that's one of those things that hundreds of years in the future, they're going to see that as a serious moral evil. But we don't have the concept for that in our society because we haven't had sort of powerful intellectuals long enough to develop tools of what abusing their power looks like.
- [99:41]
C
Well, I did this exact same thing as a child where my mom would call me out for a specific behavior that I had clearly done using a specific word. And then I would semantically twist that word to justify why I hadn't done that behavior. Like, no go. Like being annoying means this, not, not this. I wasn't being annoying. And then she. And then she would cut through all that, my mom, by saying, I don't care what you call it. I only care what it is.
- [100:14]
B
Yeah.
- [100:15]
C
And then so it's like, she's like, that thing you did, that's what I don't like. And I'm like, well, how do I define my way out of this? So maybe the way to cut through the Marxist stuff is like, I don't care if you call it. And this is why I'm not that sensitive about using the word capitalism, even though it's kind of like a Marxist term. I use capitalism, markets, whatever. Yeah, I don't. I'm not going to get too attached to the semantics because my point is like, I don't care what you call it. I'm describing this phenomenon. That's what I'm talking about.
- [100:46]
B
Yeah, my parents did the same thing. And that whenever I tried that as a kid, they just call my bluff a mean immediately and they'll Just say you're saying words like you're just saying things and. And my mom would just laugh at my face directly when I do it as a kid. And so capitalism versus market economy. Market economies are like I will give you my mug in exchange for this skull where it's just a transaction. And most societies are market economies to a certain degree. Capitalism is once you get these large financial houses that can dictate large amounts of capital. So once capital grows to a scale that's large enough, it becomes a sort of energetic principle in its own right. Capital follows its own rules. And James Burnham likes to say the petty investor sees the market as this God you placate and you just give it offerings and hope it works. And then the high skill investor sees it as a strange sort of animal where you learn its tricks to take its milk as much as possible. And I think that's true. And capital follows its own rules. And you have to be careful about in your given society that you let capital allow human flourishing rather than operating out of just short term extractive principles. And you see this in the Dutch Empire versus the English empire where the Dutch colonies were significantly poorer and less populous than the English ones. Even in comparable societies like the English colonies in North America versus the Dutch colonies or Indonesia versus India because the English nobility had a more long term generational understanding understanding of society which England had a split ruling class between the capitalists and the nobility. And the Dutch were just pure sort of market stockholder investors who just wanted a return in the next few years but weren't thinking that the generational survival of that society.
- [103:01]
C
And you know, publicly traded companies have a much lower. Sorry or higher time preference than private companies, which can think much longer in the future where publicly traded companies are a lot. Under a lot more short term pressure and that our oligarchy has all. And regulatory system and bureaucracy has also contributed to artificially increasing the number of publicly traded companies. Which relates to your point about family owned businesses.
- [103:30]
B
Yes, that's all true. And so capitalism is once these financial sort of houses develop which use capital as its own, right, Apart from just singular transactions. And the Marxists have also obfuscated the definition. So if someone in the comments says Rudyard, I have a slightly different definition or a different definition that's exp. That's expected. I mean when you've spent centuries obfuscating topics you do end up with definitional issues. But it's also one of those things like let's not say words, let's say things, let's Talk about actual reality rather than definitional arguments. And capitalism did exist in the ancient world. You saw these large banking houses in Babylon, in Greece, in Rome, in the Islamic world and China. And interestingly, and you touch on this, capitalism very frequently is made by religious organizations. And this is one of the paradoxical things where if you push too hard to get one outcome, you're going to get the opposite. Because these religious houses that say we just believe in God and values this makes you very trustworthy. So people give you money, money to safeguard it, which makes you rich, which creates the temptation to no longer like follow God. It's one of those paradoxical principles where in Asia, their growth in the high medieval period in either Southeast Asia or China was championed by the Buddhist monasteries who became banking houses. And it's funny, Buddhism is a religion about disattachment. But the Buddhists became quite wealthy in a lot of cases. Same thing as Japan. In Babylon the temples became the first bankers. And interestingly, Babylon had weird like sex rituals where they'd have spiritual prostitution and then the temples would run these sort of industrial grade brothels attached to banking establishments. I'm sure a lot of people on Wall street would like those today. But the classical civilization, it wouldn't surprise me if they're the same thing, but they had their own financial institutions that developed which were these very wealthy families because the clan structure in classical civilization was quite powerful. And in each case over the course of time, the ruling elites pulled the rug out from under these sort of long lasting institutions. Where in China, in Islam, in the classical world, the government always succumbed to the temptation to predate off these financial houses. And this has been a consistent thread, you can see with middlemen, minorities like the Jews or the Armenians, who are quite wealthy. But then that makes them, that makes them easy targets because they have the money but no way to protect themselves. And so over the course of history there's been this consistent temptation for often governments to ally either with the nobility or the common people against the capitalists. Because the capitalists can't defend themselves and they have a lot of money. Well, for the landed nobility they have their own provinces with men in private armies. And it's one of the socialist framing things. Well there they will see the capitalists as the oppressors. But it's very, very rare that the capitalists are able to be oppressors. And even when they try, they still, you can still quit. And if you're in a society where the capitalists can hold you as serf labor, it's no longer capitalism. And the socialists set this frame all across the rest of history. The two great dangers to capitalism have either been entrenched governments or Caesarists using the populace against the capitalists. And if you want to look at medieval Europe, West Europe kicked out almost all the Jews in the early 14th century for this reason. And it's why the king of France destroyed the Knights Templars because they were instrumental in making the European banking system. System where the check in medieval Europe stems from how when crusaders would go to the Middle east, they'd need a way to transport gold across the continent without having the threat of being robbed. So the Templars back in France would write a check, you'd bring it to Jerusalem and you'd cash out gold. And because the Templars got so wealthy off this, the French king said they were practicing heresy and satanic rituals, burned the Templars, took their profits. All of West Europe did the same with the Jews at the time. And you also saw these monastic associations be the main engines of capitalism in West Europe between the Cistercians or the Dominicans where they'd go out into the forest and most of Europe was forest at this point. Clear it out, build these wealthy institutions. And a point I want to emphasize is that although the Jews and the Templars and the monks made capitalism in Western Europe, it percolated to the general public pretty fast. Firstly the Italians where London or Philadelphia have Lombard street because the north Italians were the big merchant house where they dominated banking and the early 14th century. And the English king going bankrupt in the Hundred Years War killed almost all of the banks in north Italy because you can't force a king to pay you back. But then it percolated through the general public. And part of the reason the West Europeans felt comfortable evicting the Jews by the 14th century was there was nothing the Jews could do that the French or the Germans or the Italians or the English could couldn't do by that point, because capitalism had permeated their economies enough where the Black Death was the turning point. And the Black Death in Western Europe was the point where due to the growth of capitalism, the feudal lords could not keep the peasants on the land and they had to deal with market competition. So serfdom ended in West Europe to be replaced by a fully money economy. And that was a general principle that had gone back a while where in both Japan and in Europe, who are feudal societies where feudalism establishes the precedent for capitalism. And Reynolds in his book Europe Emerges overlays the areas that were feudal in the medieval period to the areas that were capitalist later. And they're the exact same regions. Even inside Spain, the regions that had feudalism were the ones that became capitalist and even inside Germany. And the reasoning for that was that feudalism was based on all of these legal obligation relationships, nobleman to peasant, nobleman to king. And these legal relationships established very rapid precedents for financial relationships. And so in both Japan and in Europe, you saw the formation of this archetype of the nobleman who still had his land, but he was hopelessly indebted to the merchants. Where Even in the 13th century, capitalism was strong enough that the nobility were constantly having to sell off their privileges and their lands to the merchant class.
- [111:27]
C
And the nobility could not believe this, as they say in sharp, is that the officer Wellington raised from the ranks. My God, you know, they don't like raising from the ranks, they don't like competition, they don't like those challenges. That's existentially terrifying and just absolutely humiliating for the nobility. And this is, these are themes consistent throughout the Renaissance too. So it's kind of poetic that after thousands of years of fighting, the kings and the peasantry teamed up to stop progress.
- [111:57]
B
Exactly.
- [111:58]
C
It's really beautiful. And the, the, this, this framework that we're discussing about is incredibly relatable to modern times because we understand it through the middle class talking points and that the left wants to squeeze the middle class, Marx wants to deny the middle class. Whether the middle class is growing or shrinking is tied to whether we view capitalism or successful as successful or not.
- [112:26]
B
Yeah.
- [112:27]
C
So it's very, very consistent themes.
- [112:29]
B
I'm going to articulate this point, go through the chronology once again, and then close out the episode if there's not anything else you're thinking of. So the capitalism gradually grew over the medieval period until the early modern when due to gunpowder, governments had the opportunity to basically crush capitalism once again. Because in the battle of the nobleman who was indebted to the merchant, the nobleman had the weapons. And so over the early modern period, you saw, you would call it Catholic baroque absolutism emerge where in the 17th century, in that general time frame, Spain, France, Italy and Catholic Europe, that nobleman worked with the government to crush the merchant classes. And the government supported this because they could rely on the nobleman on a multi generational period while the merchants would push for things like democracy or deregulation. And that turns Mediterranean Europe from one of the wealthiest places on earth to a backwater compared to northwestern Europe. And that's really what slowed down Catholic Europe. And there's Something sort of insidious to that Catholic baroque form of despotism, because it's passively nice enough that you don't really see it as a despotism, but it did a lot of damage to those societies because it had enough things like avenues for the human soul or for intrepid people to genuine genuinely move ahead, or intellectualism or family connections, where it's one of those despotisms that's like pleasant enough, you're not going to fight it, but it does destroy your society. Over the course of centuries, East Europe went into serfdom, which was its own thing over the early modern period. Eastern Europe in the medieval period was a free society and they gradually devolved into slavery with the help of the governments and the nobilities. And then in northwest Europe, especially Britain and the Netherlands, due to their merchant classes winning civil wars in establishing parliaments, you saw the rise of the capitalist regimes that later allowed the modern world. And it rippled out from there. So certain sub regions of Germany became capitalist before other regions. Scandinavia went through a pro market famous phase in like the 18th and 19th centuries and France was a capitalist society with the managerial class on top trying to like siphon off it. And this imperfect capitalist system in northwest Europe did all of these things, this one sub region and then it rippled out. And it's interesting to talk about these three variables of the lostial regime, monarchy, the capitalist liberals and the socialists, because they all interplay together. Where in France and Spain, for example, the old monarchical system made socialism very easy because they were using the exact same social technologies. And there's just so much sort of richness to European history because you can look at a map of this continent and inside that map you would not know all of these layers of complexity that are going on. And inside a country, like just to use an example, there's this whole debate about if old money are good for society or not. Where in Europe, as an example, the old money has teamed up with the socialist government to kill off capitalism. And this is what a lot of the best historians like Quigley say killed the British Empire, where the aristocracy in the old money allied with the socialist labor unions to shut off competition so that the workers got good conditions and the employers had good profit margins. But this killed Britain's global competitivity. And so Britain degraded versus the rest of the world. And now the average young British person lives in what's legitimately poverty. And that process occurred across Europe. But. But then you'll have conservative libertarian authors like Bertrand de Juvenal talk about how the nobility have this generational interest in the quality of the country. And it is true that the nobility have been one of the most stalwart defenders of freedom in Europe. Once you remove the nobility in Europe, you will lose two standard deviations of freedom. But it's also interesting to see old money having the same effect.
- [117:13]
C
Effect.
- [117:14]
B
And it demonstrates just the complex nature of this entire situation.
- [117:22]
C
Yeah, the, the thing you mentioned earlier about west, west and southwestern Europe having kind of a more comfortable, not comfortable, but yeah, comfortable tyranny kind of reminded me of an early version of a brave new world threat which can really just be related to the concept of stabilizing bureaucracy at as per China. And then yeah, it's kind of ironic how they talk about capitalism emerging from feudalism as a way to paint capitalism as feudalistic when their solution is basically to return to feudalism or more surf like arrangement, which is kind of ironic. And then I'm trying to think of how to comment on your last no nobility point and all that stuff. I was, I just keep thinking of like the show Sharp. I'll let that one sit for a second. But I'll keep you here for a little bit because I want to go over. We covered the general trends, we covered Europe, then we went back into his ancient history and got back to the beginning of medieval Europe. So I just want to comment on like the main basically frames and myths through which you're taught about capitalism in school. So the first one is snake oil salesman, where in school you're taught about how we needed regulations because there was a lot of basically crazy stuff going on where people were doing stuff like selling people snake oil as a medical cure, even though, you know, now we say like snake oil doesn't work or something. And in reality, the snake oil case was not about selling snake oil, which was viewed as totally acceptable and a good treatment by a lot of people. And even if it just works as a placebo, it's not harmful. Harmful. You can debate on that topic. What the case was about was someone was selling an oil other than snake oil, a cheap oil, and passing it off on snake oil. So it was criminalized under fraud throughout the existing legal system. But it's used as a justification to create bureaucracy. So it's a good example that you confuse that distinction between legal system and bureaucracy. The other big talking point is monopoly. So the classic example for this is Standard Oil, where it's basically the narrative is that Standard Oil was getting too big, Rockefeller was controlling the whole market and he was doing price gouging, which means basically you're raising the prices. And because there's no competition, because he bought it up by cutting the prices, then he can raise them as much as they want as he wants, because he has a monopoly. The problem with this is Standard Oil never raised prices, they never raised them. And what happened was, so what happens is you have two types of monopoly. You have, you have artificial monopoly, which is like a regulatory capture and then you have natural monopoly. Natural monopolies only happen in new industries where it's a new technology. And so what Standard Oil did was they invented a new way of processing gas. It was, it was much more efficient. It totally destroyed the rest of the industry. And they got all the way up to 90% market share. And all those legacy companies were having a lot of trouble because they had a ton of investment sunk into their outdated infrastructure. So the people who are going to be competing with Standard Oil were not these legacy companies. It was new capital, new investments which were starting to form companies from the ground up that were utilizing these most more efficient technologies and didn't have the liability of this old investment and outdated infrastructure. So the legacy companies had not only lost most of their market share by Standard Oil, but they were starting to get completely replaced by new people. Now Standard Oil was at the peak of his market share. So he was starting to get challenged by new investors. So Rockefeller also knew that he was going to be losing market share. And the deal to, for the government to break up to the monopoly was actually a deal to buy him out. So they, the government bought Standard Oil at well above the existing stock price. They broke that up into eight companies which is then consolidated or like 16, which is consolidated back into the four. So today, and all those companies existed on a, under a new regulatory framework that prevented new investors. So they took Standard Oil's infrastructure under the those and split it up and then they created regulations that prevent shut out new investors. And the oil industry has actually been way less competitive since that. And it's how, it's partly how Rockefeller got so rich because he sold his company at the peak at above market price to the government when there could have been no other buyer that could have done that. So I'm very familiar with the cases around trust busting. And, and they almost all come with a rewrite of the regulatory landscape that enforces the existing players. So a regulated oligopoly is much less competitive than a temporary natural monopoly. And right now the thing is we have all the legacy industries are heavily regulatory Captured. And the only industries that aren't so they're monopolies. And the only industries that aren't regulatory captured are, are new industries. So they're also monopolies, but they're natural monopolies. So you have these giant tech companies and new spaces, then newer, less regulated spaces and then you have legacy companies that are also monopolies. But in, in a market monopoly occurs. It's impossible getting a total monopoly. And it occurs around new industries. So that's like important context. And then I think that was kind of like some of the main historical points I wanted to cover. Oh yeah, the origin of the FDA for example. It's taught, you're taught in school that it's. You had F. Scott Sinclair who ignited the public imagination. And then there was an outcry. And then we the politicians, you know, passed some legislation to protect us from rats going into our ground beef. And what had actually happened was you had these, the two or three major food packer companies, including Philip Armor, which was the largest company. And again companies didn't used to have such large market share back then. The largest company in the early 1900s for shipping and packing was about like 5% of the market. And they were ahead of the curve on cold storage because they had the investment. And so they were able to handle like inspection requirements better. And so they basically had been trying for 30 years to force the government to add a mandated inspection layer. And they also talked about exports as a way of justifying this, just like the guilds, et cetera. And what happened was when they got that within 10 years their market share went from 5 to 10% and another 10 years it went up to like 20%. And we're told that the major companies were fighting against the, the creation, expansion of these regulations when in reality the top three companies testified in Congress in favor of them. And so our, our. And they had this legislation pre written and they were pushing it for 30 years. Once the Jungle came out, that was their ability to pass it. So it was something that the major industry lobbyists were already pushing for years. And that's Scott Sinclair who wrote the Jungle. It was a fictional book and he was a socialist. So it's another example of the oligarchs and the socialists literally teaming up to create these bureaucracies. And the other misunderstanding is okay, well cold storage and inspectors sound. Sound nice, right? Like, and then you think, oh, why should people be cutting costs on that? Cold storage did not ad costs. It was an extremely. It just required an investment. These things actually Improve the efficiency and cost of your operation and enable you to like store way more produce and have better sales and quality and dominate the market, etc. So they do refrigerated cars on, on trains. So this is the way the rest of the industry is going. It's not like without that regulation we would have never had refrigerated cars and the other companies, all it did was guarantee that now the market is dominated by Cargill and Land O Lakes and all the major processors. So some. And that ties back to the Asian point about the development being tied to the. The growth of the market rather than just the mandate because they can't invent. You look at this with, okay, so then you look at trans for water, like clean water and rivers that air quality, soil health quality and all these things are on consistent positive trends that are unaffected by the creation of agencies like the EPA and, and things like that. Because these, these basically these externalities can be managed, if not through property rights, through local or municipal bodies. And I finally lost my train of thought.
- [127:38]
B
You made several good points I want to touch on. Firstly is that the progressives made a very good mythology about the rise of the regulatory state in the early 20th century where 19th century America was nearly purely capitalist. We did not have the Federal Reserve. We were on the gold standard. We had practically no regulations, no bureaucracy. And those institutions emerged in the early 20th century. And this has been written up as a good thinking reaction to the brutality of industrial capitalism at the time. But a few parts of the framing are wrong. And you touched on some of these. Firstly is that it was less the integration of these regulatory systems. Then capitalism itself became more mature and technologically advanced because as the technology improved, you moved from a system where people would work 14 hours a day in these horrible shacks and then live in these tenements with 10 other people, to systems where factory workers lived fairly good middle class quality of life. And it was fairly sanitary and it was good quality of life. Partly that was a technological innovation thing. This was the era of the most rapid technological innovation ever. But another variable they'll never get you to say is that from Peter Churchill's statistics, quality of life for middle. The lower half of the economic totem pole went down from the Civil War to World War I. So for that industrial phase, the upper and the middle classes did better, while the lower classes did worse. It was uneven economic growth. And the thing that turned that around was actually the cutoff of immigration. If you look at American history, the periods where quality of life is Very good. Or those with no immigration. And then immigration lowers quality of life. So when we were importing the Italian and Jewish and German immigrants around the start of the 20th century, quality of life got worse. You have the Immigration act of 1921 which nearly totally cuts off immigration. Then you see mid 20th century suburbia where everyone has a car and a yard and lives in prosperity. And they'll never say that it was cutting off immigration. They'll always say it was these regulatory states which never increased productivity. That was the first point. Second thing is you must be profoundly naive to trust the authorities to give you the correct treatments. The idea that you can trust the authorities is just so silly because like my father had mercury poisoning and none of the medical establishment could heal it. But then he went to an alternative healer who cleaned up the issue with me. For ptsd, none of the original treatments would work. The things that worked were either emdr, which was a, it's been recognized by the Veterans association in the mainstream, but that was a multi decade process where it was seen as suspicious. In other various sort of alternative treatments have worked vastly better for me than the traditional Freudian psychoanalysis. This because in most sort of therapy circles they go to the Freudian psychoanalysis school which ultimately believes that everyone sort of wants to kill their father and have sex with their mom and that if you just talk about your problems for long enough, you'll solve them. And so the mainstream has all of these sort of assessments that you can't really trust in. The ability to open up the playing field so that you can try these things yourself and then figure out what things work is so much more valuable than having a social authority tell it to you. And people are just profoundly sort of anti fragile if you have that mindset. Because also you could just look it up or talk to people to figure out which of these work. And it speaks to a very particular era of history after the destruction of traditional village communities communities and before the Internet, where in the 18th and 19th centuries you had issues where all of these rural people moved into the cities and bakers would put like sawdust into the bread or they'd have droppings in the milk supply. And so the panic from this particular transitory phase in history, after you knew the village baker and the village dairy guy and before the rise of the Internet created regulations. But as I frequently say, as I frequently say, the Internet kills our Internet and AI kills our need for regulatory bodies. We don't need this stuff anymore. And I, I normally cut these videos like I Want to cut these video like two and a half hours. I think the two hours to two and a half hours is a reasonable feel thing. So do you have a final point before I finish up the chronology?
- [132:44]
C
Yes, and it's specifically on your, your point which is perfect, like why did it ties to the why did capitalism fail point or why did classical liberalism fail? And we often talk about the disturbances of industrialization and the simultaneous populist, agrarian and urban movements. But a big part of that, of what accelerated that big beyond what we could handle was the massive influx of Europores without western values. And we associate they did Italians or westerners. Sorry, sorry. British, you know, American. Some, some differences. Right. And we received a massive amount of. Of Europores who, who were actually leaving much, much worse, much poorer environments. And Germany had like nationalized healthcare in the late 1800s. So these are not that like that those were the failed systems that they were leaving from. And then often voting, you know, then you get the whole Tammany hall thing. You get like the troops used in the Civil War were a lot of immigrants like, and then they contribute negatively to the growth of some of these institutions. And even today a lot of the people descended from those wave of immigrants tend to lean in more socialist directions. But at least they're like also some of the groups most against the current immigration. So there's kind of like a lack of self awareness there. But also some. Thank you for finally having a positive contribution not to be too harsh on everybody. And then the point about, okay, what leads to improvements like the technology versus the regulation. A perfect way to demonstrate that is mining deaths. Right. If you look at like a graph of mining deaths over time, it'll be like something like this. Right. And this will be electrical lighting and invented.
- [134:53]
B
Yeah.
- [134:54]
C
And this will be when OSHA was created.
- [134:56]
B
Yeah, right.
- [134:57]
C
Like that's how it all works. That's how it works in every category.
- [135:00]
B
I write incursive too. Most people my age don't know how to.
- [135:04]
C
I usually use a fountain pen. I can actually only my handwriting is better than this, but I can only write with a fountain pen because that's how I learned in France.
- [135:11]
B
You have good, you have good handwriting. Don't worry about it. The So I looked at the ethnic background of America's socialist leaders and this was before noticing was a thing. This was five years ago. And there I could not find a single British American in the records of socialists in America.
- [135:35]
C
Am Irish Catholics.
- [135:36]
B
No, no Irish Catholics either.
- [135:38]
C
Oh yeah, you're right. It's More Germans.
- [135:40]
B
It was either Italians, Sicilians or South Italians. It was Eastern European Jews who were not a majority. Or it was Germans.
- [135:52]
C
Yeah.
- [135:52]
B
Or it was like a handful of Hungarians or whatever thrown in there. And what it just got me thinking is, wait, America is getting the baggage for these genuinely authoritarian, highly aristocratic, oppressive regimes where Paul Johnson, who's a pro Jewish author, so don't construe it in this way, he said that the Western world has paid for the sins of how anti Semitic the czarist government was because it revved up a lot of these Jews by how oppressive the czars genuinely were to the Jews. Those people migrate to the west and they have all of these social traditions and this built up resentment in a society which does not have the same degree of oppressiveness.
- [136:36]
C
Um, just like Ireland hating capitalism because of associating it with England.
- [136:42]
B
The Irish. I don't think the Irish hate capitalism.
- [136:45]
C
They used. They used to. And also Scotland, like they found the patterns we've spoken about before, which is if. If it. They. You got colonized by what's perceived as a capitalist country, then you can tend to the Irish.
- [136:58]
B
We've been pro capitalism. It's just the IRA. The IRA who are communists, but like the IRA's communism because they care about, but it's not part of the brand. Like if you went to an IRA event in the 20th century and you were not a communist, that was not what it was about. It was about retaking the North. And like the Irish political bosses in the Northeast were not. They believed in making money, they were just using it. They were using socialism cynically to sort of paddle their tribal coalitions where just like Philadelphia where corrupt Irish political bosses took over power, they were sort of using these regulations to get their buddies money. It was not a hatred of capitalism. It was just corruption. And so to go to the narrative of capital. Sorry, the narrative of capitalism, you had ancient capitalism, which emerged in civilizational cycle one in the Bronze Age. It reached its apogee in Greco Roman civilization that interconnected into a broader Asian Silk Road system. The ancient system died up at the time of the fall of Rome, while the Silk Road system gradually declined due to the growth of authoritarianism and social conservatism across Asia. Western Europe developed the most dynamic branch of capitalism in the high medieval period, which was able to flower there in a way that it wasn't elsewhere previously in history. This West European system generated an enormous amount of cultural charge which let Western Europe take over the entirety of the global system and have a variety of innovations. But it was stuck in this two sided trap. First fighting against the pre established nobilities and then fighting against socialist governments which emerged due to the enormous changes brought about by European capitalism. Europe gradually lost its capitalist streak. But it survived enough in the Anglosphere that there was another burst of capitalism in the late 20th century as a reaction to the totalizing state forces of the world war wars. And that exploded across the earth on every continent. I'm sure there are capitalists somewhere in Antarctica and that created the most rapid growth in technology and innovation and wealth that's ever occurred in human history. But now we're seeing an additional anti capitalist wave. So capitalism increases the charge of the earth and the scale of the importance of these things. But then the more capitalism grows, the more its enemies grow because the wealthier capitalism becomes the incentive to predate upon. It grows where it's like the ring of power that the closer you get to Mount Doom, the greater the urges to steal it. And yes, I realize it's a more complex story than I thought.
- [140:13]
C
And touches on a lot of things it does.
- [140:17]
B
So that was a good episode. And next episode is the history of the Catholic Church.
- [140:23]
C
Catholic Church. Okay, and then I'm just gonna like real quick final statements. Basically it, like you said, it's grown into this crazy thing. It's. There's a lot of trends against it. It's too complicated to deconstruct. If we do, we'll end up with a giant Malthusian trap with billions of people, which will get nasty. So we need to break the regulatory cartel and create a race to the bottom, as the socialists say, which in reality is a race to the top. Such a race to the top that will end up on the moon.
- [140:59]
B
People don't understand how bad poverty is. Like there's no respect for how you actually want to live in a place with plumbing and clean water and you can eat and yes you should. I mean it's just, you have to grab it by its tongue. We're already here. You can't stop the process once the genie is out of the bottle. You have to talk to the genie.
- [141:29]
C
The only way out is through.
- [141:31]
B
Exactly. So this sounds good to me and I'll catch you next time.
- [141:36]
C
Awesome. See you guys. Peace.
- [141:38]
B
Make money in the time between. Bye bye.
- [141:40]
C
Hell yeah.
- [141:42]
A
History 102 by Rudyard lynch and Eric Thornberg is a podcast from Turpentine, the network behind Moment of Zen, live players and econ102. If you like the episode, subscribe, follow on YouTube. Forward to a friend and let us know what else you want us to cover. Thank you for listening.