Isms Convergence and the End of the World

In this article, I want to discuss some of the hidden implications of what I previously called the unfolding of the world.

A True Prophecy from False Prophets

Whether or not we care much about it, we are all familiar with communism’s famous claim that capitalist society is destined to perish: the blind expansion of capital produces economic crises; economic crises produce revolution and the dissolution of the old society.

Communists have always been remarkably correct about capitalism’s ability to turn around and take control of human beings. Capitalists have no personality of their own; the personality of a capitalist is simply the personality of capital. Everyone becomes part of capital’s movement to expand itself—that is, everyone becomes alienated—and the conflict between this movement and human nature becomes a source of modern human misery.

If you remember our earlier discussion of God’s will, you may notice a subtle structural resemblance. The difference is that capitalism, in the eyes of its critics, is a historical force and therefore one that can be overcome. Out of the critique emerges something very much like a prophet’s declaration: humanity may now be trapped in suffering of its own creation, but it will eventually bring capitalism to an end and liberate itself from that suffering.

I disagree with parts of the reasoning behind this prophecy, as I will explain in the next section. The amusing part is that my disagreement still leads to a conclusion almost identical to the prophecy itself. The difference is mostly rhetorical.

Note: in the Abrahamic traditions, an accusation of being a “false prophet” generally does not accept “I sincerely believed I had received divine revelation” as a defense.

Do Communists Dream of Efficient Markets?

Let me begin with an example from a real mechanism used in betting markets.

Imagine a market taking bets on whether Event A will occur. Until the outcome is known, participants may continue betting, and the live odds are determined by the amount of money currently placed on each side. For simplicity, we will ignore the bookmaker’s commission.

Suppose that at some moment, $100 has been bet on Event A occurring, while $900 has been bet on it not occurring. If Event A does occur, the $100 on the first side receives $900 in winnings, giving odds of 900 ÷ 100 = 9. Likewise, if Event A does not occur, the $900 on the other side receives $100 in winnings, giving odds of 100 ÷ 900 = 1/9.

Now consider the actual probability of Event A occurring at that moment:

• If the probability is 10%, then the expected return from betting that A occurs is 900 × 10% − 100 × 90% = 0; the expected return from betting that A does not occur is likewise 100 × 90% − 900 × 10% = 0.

• If the probability of A occurring is greater than 10%, then the expected return from betting on A becomes positive, while the expected return from betting against A becomes negative.

• If the probability is less than 10%, then the reverse is true.

The interesting thing about this setup is that nobody can know the real-time probability of Event A with certainty, but everyone in the market would very much like to know it, because it would tell them which side offers a positive expected return. Once there are enough participants and the market is sufficiently large, something rather magical happens: the live odds themselves begin to reflect the probability of the event. Any gap between the odds and the true probability represents free profit, and a sufficiently sensitive market will do whatever it takes to eat that profit away.

An attentive reader may notice how closely this resembles the observation that “capitalists have no personality.” A good gambler does not care whether Event A ultimately happens. He cares about the odds. One minute he may bet on A because the current odds are too generous; the next minute he may bet against A because those same odds have become too stingy. Communism enthusiasts like to smirk at the supposed fantasy that “markets regulate themselves.” The irony is that what they are mocking is precisely what they have sworn to destroy: the evil of capital comes from the damage its self-regulating movement inflicts on human beings.

The betting example rather neatly demonstrates that, inside a sufficiently simple sandbox, a market really can regulate itself with great sensitivity. Nor does the example become irrelevant merely because it is simple. On betting exchanges everywhere—wherever they are legal—the same game is being played continuously, ensuring that each amateur wager has an expected return very close to zero. The house, naturally, still takes its cut.

Now return to the claim that capitalism must destroy itself. What I want to suggest is that the cycle of “blind expansion of capital → economic crisis” does not necessarily have to continue forever. Popping the bubbles created by blind expansion—that is, shorting them—is itself profitable. The existence of a bubble is, in fact, evidence that the market is not yet efficient or sensitive enough.

A perceptive communism enthusiast may grind his teeth at this sentence, since I appear to be mischievously borrowing the defense sometimes offered for communism’s failures in certain countries: “it failed because they never practiced real communism.” But I am being sincere.

If we accept that the market’s appetite for profit pushes it toward ever greater efficiency and sensitivity, then what kind of world would it ultimately produce? We can imagine a market of extreme efficiency, capable of flattening and diluting every newly created profit in an instant, and puncturing every new bubble just as quickly. The rate of profit on every action approaches zero.

At that point, the market no longer generates the forces that would destroy itself. This seems to me one possible way for the world to end.

I would like to invite the reader to look carefully at what a “zero-profit world” would actually imply:

• Private property dissolves, because accumulating wealth no longer has much point:

  1. it cannot produce compound returns;
  2. expropriating the rich and redistributing their property would itself become another source of profit, which we might as well call Revolution as a Service (RaaS).

• Class, nation, and state disappear, because any persistent inequality represents an opportunity from which profit can be extracted.

• Everyone becomes free to develop as they wish and choose what kind of work to do, rather than being forced toward whatever work they are sufficiently good at or efficient at—because whatever they choose, the rate of profit is zero.

The ultimate picture produced by a capitalist market begins to look remarkably similar to the world imagined by communists: a paradise, made possible by technological progress—by the development of the productive forces—in which everyone achieves equality and liberation.

This resemblance seems to reveal a certain poverty behind our isms: different blind men touching different parts of the same possible unfolding of the world. The distinction between the two descriptions is largely rhetorical. Its purpose is to remind the spectators not to forget certain things that happened—and to make sure they forget certain other things that happened.

Where We Are Going

Following the possible end-state described above, I want to turn to the question of human happiness. Would human beings in such a world actually be happier than we are now?

This is not an easy question. We can barely answer whether people today are happier than people thirty years ago.

To give “happiness” a working definition, I need to introduce morality. To avoid creating several more metaphysical problems than we solve, I will not ask what morality really is. I will look at it only from the perspective of the person using it. For most people, morality is a standard for how the world ought to operate: what kinds of things should or should not happen. I would suggest that the more a person’s own circumstances, and the circumstances of those around them, conform to that person’s moral expectations, the happier that person will feel. The greater the mismatch, the less happiness and the more suffering.

Under this definition, we can concede that communists are partly right to mock morality. Morality is, to a considerable degree, historical; it is also a reflection of existing reality. Communists describe morality as a conspiratorial instrument of class oppression. But if we once again strip away the rhetoric, I would put it differently: morality is a shadow. It is humanity’s idealization of the world as it existed one moment ago. It is forced to keep moving toward reality, but can never catch up with reality’s next transformation.

This also explains why, throughout history, people have endlessly complained that morality is in decline. Violating yesterday’s moral boundaries is often necessary for increasing efficiency. So long as the world continues becoming more efficient, morality must continue deteriorating with it.

Once we remember that communists themselves seek a more efficient world, their dismantling of the old society’s morality no longer looks like an incidental intellectual pastime. It becomes necessary preparatory work. To be fair, the Protestant merchants of Western Europe did something similar to the Catholic society that preceded them. And it also becomes easier to understand why, after Marx criticized capitalism for atomizing society, Leninist states went on to impose even harsher forms of atomization themselves: they were pursuing the same destination.

So would humanity actually be happier when it reached that destination?

I think it would—though for a somewhat absurd reason. Once the world finally settles into a stable end-state, morality can at last catch up with reality and adjust itself until the two become identical. Marx believed that communism would bring about the “withering away of morality.”

Curiously, if we could look at the lives of those future humans, we would probably not regard them as happy at all, because morality would have deteriorated into something we could no longer recognize. Yet in order to serve the political program of communism, Marx still quietly smuggled a metaphysical idea of “eternal human nature” or “eternal morality” into the future. This allows people in the present to look forward with relief: although the dreamed-of world has abolished every class-bound morality, it will somehow stand closer than any previous age to the promise once made by a God who, according to the theory, had long since ceased to exist.