WeWork and Counterfeit Capitalism

WeWork illustrates everything that’s wrong with the economy and with our capitalist system — and shows just how far that system has gone off the rails (Business Insider and my own newsletter BIG)

Today I’m going to continue on this theme, and discuss the increasingly common tendency of capital markets to finance loss-making companies, which is an important trend I call “Counterfeit Capitalism.” The most hilarious example is WeWork, because it’s just such an obvious example of self-dealing couched in New Age management consulting speak. Its CEO, Adam Neumann, was just forced to step down. Both Neumann’s rise, and his fall, have important lessons if we want to correct serious errors in our political economy philosophy as a society.

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The fraught debate about the nature of China

There’s potential for gigantic miscalculation between a rising power and a defensive hegemon (Financial Times)

This is a response by Matt Stoller to Ed Luce of the Financial Times.

Diligent Swampians might recall that in my last Swamp Notes I took up cudgels against those who compare China to Nazi Germany. Though I did not name the person who triggered my note, he requested the right of reply. He is Matt Stoller, a fellow at the Washington-based Open Markets Institute, and author of the forthcoming book, Goliath: The 100-Year War Between Monopoly Power and Democracy.

Here is Matt’s response:

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How Powerful Ideas Can Shape Society: Aaron Director and the Triumph of Nihilism

The rise of giants like Amazon and Facebook proves the long-lasting influence of Director’s approach. His intellectual and political legacy is the transition of legitimacy from democratic institutions as the locus of governing power to private monopolies. (ProMarket, the blog at the Stigler Center at the University of Chicago Booth School of Business)

This week is the 15th anniversary of the long and productive life of one of the most important men Americans have never heard of, the political philosopher and economist Aaron Director. Director is the key founder of what is now known as the Chicago School of law and economics, which reshaped the American approach to corporate power and political economy.

I didn’t know Director, but I know his work because of the world in which we live. His handiwork is in the air we breathe, the language we use, and the policies that we consider possible. It is in our markets, our banks, our corporations, the products we can buy and sell, and even the wars we may yet have to fight. So before evaluating his life, let us bow before this truly great man. Great not in a moral sense, but in a raw sense of impact.

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Boeing’s travails show what’s wrong with modern capitalism

Deregulation means a company once run by engineers is now in the thrall of financiers and its stock remains high even as its planes fall from the sky (The Guardian)

The plight of Boeing shows the perils of modern capitalism. The corporation is a wounded giant. Much of its productive capacity has been mothballed following two crashes in six months of the 737 Max, the firm’s flagship product: the result of safety problems Boeing hid from regulators.

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The great breakup of big tech is finally beginning

Google and Facebook are the subject of large antitrust investigations. This is good news for our democracy and a free press (The Guardian)

Last week, state attorneys general, led by Texas and New York, announced investigations into Google and Facebook for possible antitrust violations. This is a big deal. No society has ever centralized control of information as we have in big tech, and this is the first real American strike at the problem. As Scott Galloway frequently notes in his podcast with tech journalist Kara Swisher, the big tech breakup has finally begun.

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