Interview with the author on PBS:
As far as I'm concerned, Welch turned GE from an industrial behemoth that more than lived up to its name, to a pale shadow of itself that has sold off almost everything. "Outsource Everything" has been an absolute disaster for our economy that will take decades to dig out of, if we even have the will to try.
At the risk of a serious tangent, the bots here have become so out of control that there is also a major anti-bot pattern that downvotes anything that remotely looks like a bot.
I know we aren't supposed to ever say HN is in decline, but LLMs really do look like they've killed it.
Sounds like Trump, for better or for worse
Regardless I say that to say it bewilders me how easily we, well mostly Americans, fell into this trap of believing that most humans are unnecessary and all that matters is skill at amassing capital. After a certain point not only does the economy of scale break down the whole system collapses in on itself. I’m sure they’ll have a great time pontificating and self aggrandizing in the Gulch while everyone else is doing the real work of rebuilding.
Post WW2, we had gradually managed to build a less violent society, and at some point, some CEOs decided: "You know, the Ludlow massacre and the Bisbee deportation were not that bad". And now, we get the pushback, where some employees think that murdering a CEO in the middle of Manhattan is fair game.
Rules didn't disappear. But people are more willing to go to conflict about them.
What many free market advocates don’t seem to understand is that free markets aren’t actually a default but require the right environment with certain government regulation and societal norms.
Folks like Jack Welch and Milton Friedman helped diminish those conditions. Now after 4 decades we’re seeing the results.
If we accept the premise that Welch sold the goose that laid the golden egg for short-term "number go up" and immediate shareholder satisfaction, another question arises. Are there other non-market forces (such as easy money policies from the central bank, or an unfriendly domestic regulatory environment) which created this equilibrium? If so, then laying blame at the feet of "capitalist greed" or the trope of monocled Monopoly men in stovepipe hats, may be misplaced.
That said, I'm not sure that, "Jack Welch, the Man Who Optimized For the Corporatist Mixed-Economy" would resonate as well with audiences.
Agreed, Welch didn’t invent shareholder primacy, but he industrialized it. What makes him so consequential isn’t that he played the game better, but that he normalized a playbook that treated human capital as expendable
I suppose in hindsight they have a point. So much human effort is merely discovery that, if perfect information existed, really would have been pointless and unnecessary. Those who land into the right information, even if only by dumb luck, end up amassing capital as a natural consequence, so to the outside observer such people appear to be the "chosen ones" who have it all figured out.
This doesn't end with economics. In general, those who are deemed to not have the right information tend to be ostracized. To be wrong is the greatest sin a person, at least an American person, can make. This was particularly apparent during the high tensions of the COVID pandemic, where great friendships were lost when the parties involved couldn't agree on who had the right information.
The flaw in all that, of course, is that perfect information doesn't exist. I suspect the idea that it does was fuelled heavily by the college marketing campaigns of a several decades ago — that which also brought us the idea if you don't get a degree, you'll be forever stricken to flipping burgers at McDonald's — selling the idea that perfect information is available if only you choose to accept it. But, before you get your panties in a knot, let it be emphasized that my suspicions could be wrong and that's okay. Perfect information doesn't exist.
Basically, the same with some global corporations, which literally suck society dry (infrastructure, resources, education, labour, health system) and give almost nothing back (except for a few workers and too few taxes). I think the American dream is over. It's an empty shell that's all about making a nice life for yourself at the expense of others.
This feels like a whitewashing of a lot of post WWII history. That “less violent society” included the Korean and Vietnam wars, multiple assassinations, civil rights riots, the Kent State massacre and the Cold War.
Was it that society was less violent or that we became more diverse in our ability to commit violence?
Welch exploited a combination of events when a lot of those limitations (especially legal) ended, acting in extremely capitalist ways.
At which point in history was it not about exactly that?
Once we reach the end of the road for further invention and improvements (even if that is in the form of our own capacity and theoretically there's more), that's when capitalism becomes zero sum. Until than point, capitalism is a way of distributing more resources to people who are better at finding those improvements.
The definition of Communism per the west, is something that always fails by default. The way Chinese define communism is doing whatever it takes to win.
When you remove all the abstract words behind this game, a simple philosophy is if you do the right things you win. You can call it capitalism, communism or whatever you want.
It never came due in Jack's time and he looked like an absolute genius. His successor should have been able to defuse the debt bomb over time, but because of the expectations of success that Jack left behind (and some glaring failures of the new CEO) the bomb was left in place and debt continued to pile up.
Of course the bomb went off eventually and the rest is history, GE is not a company anymore.
Aside from the moral issues of Jack's approach (layoffs etc) the true sin is the over financialization of everything in America which I think Jack really set the tone for.
I would highly recommend the book Power Failure with William Cohan. https://www.amazon.ca/Power-Failure-Rise-Fall-American/dp/05...
What he was good at was exploiting the system for personal gain.
I don't think this is an accurate assessment. More of the violence was swept under the rug, but it was still there.
Post WW2 the US did well because a lot of old incumbent industries were disrupted by the war and swift technological advancements in many areas that opened up a lot of opportunities for scrappy startups. Also, the baby boom meant the workforce was skewed young and entitlements were not a major factor in the economy. Finally, the US had a federal government that was willing to tax the rich and not yet fully infiltrated by moneyed interests as well as an independent news media. Well, more independent than today's news media at least.
The primary problem with capitalism is that once you accumulate enough money it is easy to create a feedback loop where that money creates more money with little to no input on your part. This causes money to accumulate at the top where it has nothing to do but make more money. The primary advantage of capitalistic economies is that the power is pushed down to the edges closer to where the information is, but when allowed to run unchecked that advantage is lost as the power accumulates at the top, just like a command economy. This is why it is so important to tax the rich and to avoid creating billionaires, they can't efficient spend the money they have for the same reason communism doesn't scale well: the information bottleneck.
I'm saying prior to WW2, sending the army (or just any hired goons) to shoot at workers was a common way to handle a strike in western countries. I'm saying at the turn of 20th century, people in colonies had their hands cut for not meeting rubber quota. etc.
You are right to point out that things weren't (and aren't) perfect, but you'd be a fool to think that there was no improvement.
Squeezing people is an easier source of investment gains. In theory, competition keeps this in check, but competition is for the little guy. If you listen to business pitches or investor relations or take business classes you know the real game is all about avoiding fair competition by hook or by crook, and the biggest companies are the ones who have done this successfully. Two-sided markets, network effects, platform effects, last-mile dynamics, etc, etc, and yes, at the bottom of the the list of anticompetitive forces we have the runt red-headed stepchild of regulatory capture, which is real, but tends to be overstated by people who want blanket deregulation and reverse-engineer their complaints to get what they want.
> Are there other non-market forces which created this equilibrium?
Haha, and here we see the reverse-engineering process in action. Capitalism is never responsible for its own messes! Every mess MUST have come from a market distortion! Deregulation is always the answer!
Also let us not forget other tools that have significantly helped capitalist nations: Slavery, Colonialism, Imperialism, Sanctions, Wars, Coup d'etat's... these have all contributed to what capitalism is today. So yes Capitalism in the grand scheme of things is entirely zero sum.
The entire foundational assumption of (Smith's) capitalism is the idea that people who are better at making a profit are exactly who should be given more money to work with, and that this benefits all of society — and while I will agree that the phrase "trickle down economics" doesn't fit reality of the behaviour of billionaires (who act more like aristocrats), that's where that phrase comes from, and it seems to often work up to deca-millionaires at least.
The flaw with this (even in the case of millionaires) is it presumes no parasites. As it happens, both Smith and Marx noticed this, but as history shows, the proponents extolling the virtues of each were not very effective at preventing economic parasites.
I grew up in a "GE town" and watched it fall into severe neglect as GE's stock price rose. Watched my mother get laid off and pushed into a service company that she and many others referred to as "the bastard child of GE."
I always felt that there was a lot of smoke-and-mirrors behind Welch & the stock price. And I felt that Welch would depart before the check came due. Immelt got hammered, in part, because of Jack's sins--I don't know if Immelt deserved it because I stopped paying attention to GE in the early 2000s.
My opinion of GE was / is not based on some detailed and thorough analysis. It came from observing the disconnect between what happened to my hometown and the stock price.
There is just not any real accountability to the next generation of stock holders its classic optimizing toward the local minimum and is why some many private equity firms annihilate companies and sell them for parts. We use to have unions than Regan eliminate tons of union power and bars the governments union's from arguing. We have structural barriers in existing laws against sector wide unions, so the remaining unions have no incentive to build competitive sectors just competitive wages without respect to economics.
I think companies have just pushed and pushed for labor laws that favor larger companies and players. That hollowing of the rule set has dropped a bomb in companies optimization functions. You cannot choose not to do stock buy backs now because the stock holders complain and leave for a someone more willing to inflate assets. If you want the clearest picture look at Intel they spent tremendously on stock buy backs because it was good for investors and let there RnD budget cratered when compared to its competitors. They basically aren't a respectable company anymore but those stock investors aren't destroyed they moved to Nvidia and Apple.
Think Warren Buffett style billionaire versus Elon Musk style.
If I read an article that titled "this NGO is distributing food and medical aid to the refugees of the conflict" and then on the body of the article I find out that a single guy got all the supplies and the rest got nothing, I would consider the title very misleading.
Welch wasn't a problem until what he feared, backlash from people who had been around for the last cycle of cruelty precipitated by his ideas, sufficiently died/attritioned out.
Give Going Postal: Rage, Murder, and Rebellion: From Reagan's Workplaces to Clinton's Columbine and Beyond by Mark Ames a read.
He does an excellent job at laying out the pedigree of thought from slave/plantation management to modern American management theory, and charting out the trends and consequences that arise from political shifts in the equilibrium between capital and labor.
https://www.amazon.com/Going-Postal-Rebellion-Workplaces-Col...
I'd count that as a sorites problem: https://en.wikipedia.org/wiki/Sorites_paradox
But the distribution for wealth under capitalism isn't "one" person, and capitalism wouldn't work if it was, because nobody else could buy anything with the money, and therefore everyone else would invent a new currency or barter, and then all the money which that one person has would be worthless.
Did I miss where he was pushing for the robots to take over?
The data from the Fed show great inequality which can be expected from a zero-sum game. Another example check how under develop DR Congo is in the electronic age, while hardware (and to an extend software) companies are some of the most valuable companies, they all source raw materials from Congo.
https://www.oxfam.org/en/press-releases/richest-1-bag-nearly...
Curtis has done a good job of getting people to forget his white nationalism, though he insists he isn't one, but he's quite comfortable with it.
> It should be obvious that, although I am not a white nationalist, I am not exactly allergic to the stuff.
And though he later wrote articles saying "I'm not a white nationalist", they were largely sympathetic to the "cause" and then just said "but I'm not one."
Capitalism isn't zero sum because at its core principle are transactions, which are inherently non-zero-sum.
what a man! Sorry, but while I claim no great ethical or moral standing myself I do dislike anything that smacks of applauding their absence in others.
A Man Who Broke Capitalism – Did Jack Welch Destroy Corporate America? - https://news.ycombinator.com/item?id=33416436 - Nov 2022 (20 comments)
A Man Who Broke Capitalism: How Jack Welch Gutted the Heartland - https://news.ycombinator.com/item?id=40838966 - June 2024 (3 comments)
But again… a lot of these images American prosperity of the 80s were caused by marketing, and corporate structures like Jack Welch’s, which were ultimately unsustainable (per the whole conversation here).
Basically: Soviet citizens saw we could have bananas year round. But they never saw the conditions of people living in banana republics, or really even of the American poor of the time.
I also wouldn't read to heavily into the USSR collapsing because they saw rich American's they saw that for the entire history of USSR. USSR is complex it honestly worked for people for a little bit during the war (the ones that lived but they did live) but when the pressure of WW2 dropped the optimization functions all went haywire, the same way they were haywire before the war see Ukraine famine 1933. War is a strong optimization function for economies because the cruff is drained but not a constraint you want to live under long term. I am not trying to cheerlead the USSR but I think this is just not really a good metaphor for comparing economies and needs much fine examination to really get into.
Can someone summarize how companies were behaving in this golden age, or what characterized them?
And that's Moscow. Most of the country could be summarized by a riddle - long, green, smells like sausages/groceries, what is it? An intercity train departing Moscow.
The Soviet citizens wanted American lifestyle because Soviet lifestyle sucked. The only poor who might be worse off in the US are the completely dysfunctional ones like alcoholics or whatever. At least in the USSR it was hard to sell your flat and drink away the money. But, to me that's not even a tradeoff, it's an additional benefit.
Is that what you perceive the mainstream dogma to be? When I observe use of the word "capitalism", it is usually in regards to rationalizations for interventions or other socialist policies. Whereas proponents generally use specific language, like market, market-based or laissez-faire. Opponents are can be observed using language like, neoliberal, deregulation, greed and capitalism.
The Sad Decline Of The Word "Capitalism"
https://www.forbes.com/sites/alejandrochafuen/2013/05/01/the...
>Although Karl Marx did not create the word, it was after his work “Das Kapital” (1867) when the term “capitalism” began to be widely used to describe an economic system based on private property as the means of production. Marx remains the great labeler: “capital,” “the capitalist” and “the capitalist system of production” appear repeatedly in his writings.
...
>Should we care if we lose the term capitalism? Assessing its popularity, or lack thereof, I recently reviewed the mission of 25 leading market oriented think tanks around the globe. I could not find a single one using the term. “Free enterprise,” “free-markets” “free-economy” and better yet “free society” will continue to crowd out “capitalism,” if not as a system, at least as a word.
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
Looking over HN comments, I observe that uses of the term generally contain anti-market critiques.
https://hn.algolia.com/?q=capitalism
Popular stories also seem to use it in a generally negative way, or with a modifier to "improve" it.
I'm not convinced that the mainstream dogma is positive. To the contrary, I would regard use of the word as symptomatic of anti-market sentiment.
Personally (as I am not any kind of educated expert nor an oracle) I would say that a lot of "free enterprise", "free economy", "free society", even "market-based" terms are very much orthogonal to capitalism and behaviours described by it, but some of them push for conditions that enable said behaviours (deregulation - which I often encounter as positive term thrown around - or "laissez-faire". Or even absolute focus on "free" in "free market" to detriment of said market as bigger players destroy competition)
It was fairly real up until about the 1970s: every generation had it better than the one before it. After the 1980s, Gen-X and everyone after them started having a tougher time.
> At which point in history was it not about exactly that?
Up until (at least) the 1960s. In the mid-twentieth century corporate management's focus was more broad:
> This view was shared not only by scholars but, surprisingly, by many corporate executives. In 1949 General Foods’ president Clarence Francis told Congress that he had a “three-way responsibility to the American consumer, to our associates in this business, and to the 68,000 [stockholders in General Foods]. We . . . would serve (the company’s) interests badly by shifting the fruits of the enterprise too heavily toward any one of those groups.” Two years later, the president of Standard Oil of New Jersey claimed that managers needed “to conduct the affairs of the enterprise in such a way as to maintain an equitable and working balance among the claims of the various directly interested groups—stockholders, employees, customers, and the public at large.” So widespread were such views that, in 1959, one writer in the Harvard Business Review complained that it was no longer “fashionable for the corporation to take gleeful pride in making money.” Instead, he complained, it was typical “for the corporation to show that it is a great innovator; more specifically, a great public benefactor; and, very particularly, that it exists ‘to serve the public’.”
> Even the law bent, at least a bit, toward this “social” view of corporate purpose. When the New Jersey Supreme Court upheld corporate charitable donations in its 1956 A.P. Smith Manufacturing Co. decision, it rested its judgment less on any benefit that would accrue to the company than on the belief that corporations had responsibilities beyond those owed to shareholders; corporations needed, the court held, to “acknowledge and discharge social as well as private responsibilities as members of the communities within which they operate.”
* https://www2.law.temple.edu/10q/purpose-corporation-brief-hi...