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20140725 RACE-Troublesome Inheritance

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The differentiation of human into races is not skin deep and mainly defined not exclusively by culture, but rather by genetics that has significant impact on social behavior, society and its culture. These genetic differences occurred due to different evolutionary paths that led to formation of different races over period of 50K years after humans moved out of Africa. This is a scientifically provable fact and it should be taken into account, however it in no way, shape, or form should impact equality of races and equality of opportunity for all individuals.


Decoding of human genome at the end of XX century opened new options for research not only about human individuals, but also about human society. The new knowledge developed from genetics demonstrates that human biological evolution did not stop with advance of more or less efficient society about 200k ago, but rather has been recent, copious, and regional. The new knowledge also encountered strong cultural and psychological barriers created after racist horrors of XX century.

These barriers designed to established once and for all that all human beings are similar enough so no racial differences exists. Whatever difference could not be denied is just insignificant. However the simple facts discovered by genetics demonstrate that all humans, while coming from the same source in Africa, moved elsewhere around the globe and in processes developed via continuing evolution, somewhat different genetic ability to adjust to different environments. Examples provided are:
• Lactose tolerance in people of North European origin
• Tolerance to low oxygen in air in Tibetans
• Multiple genetic-medical parameters with statistically significant variation between races.
Overall evaluation provided that about 14% of genetic variance in humans is due to evolution occurring after human exit from Africa.

The other area where contradictions developed is the area of social sciences where denial of any significant genetic impact on human behavior and believe that it is completely defined by culture in which individual is raised is culturally required.

The author reviews differences between individuals coming from different races and cultures in various areas of societal activities and testing such as IQ tests, proficiency variation in sports, music, social behavior, economic disparities, and such.

This chapter is a review of racial theories of the XIX and first half of XX centuries. It is pretty clear from this review that these theories where based on external characteristics of human beings and that empirical confirmation of their validity failed.

Moreover since all this was highly politicized despite failing to produce scientific prove of such differences, it winded up creating pseudo-science with practical actions leading to catastrophic consequences for humanity. Even in cases when empirical science could be more or less validated such as inheritance of features like individual height or blond hair, the approach to humans as cattle that could and should be subject of selective breading did not do any good to societies that tried to implement it.

This chapter compares chimpanzees’ and human society and reviews genetic differences between individuals who comprise societies and their evolution. One of the most interesting findings is that key difference between chimps and humans is genetically deep-seated ability of humans to cooperate and complete genetic inability of chimps for cooperation. This genetic ability to cooperate led to creation of family with male human cooperating with female greatly increasing chances for survival of the next generation.

The case is even made that invention of weapons greatly downgraded value of individual physical strength leading to increase in procreative chances of smaller and weaker males, who were smart enough to compensate it with superior weapon handling and tactical skills.

After that chapter goes into review of biological foundation of behavior such as oxytocin and MAO-A gene that was linked to individual ability to control aggression. The point is made based on research that genetics make significant impact on individuals’ inclination to cooperation and aggression, while these genetics are significantly and consistently different between races and even different groups within races.

The final point is made that society and its environment drive genetic evolution of individual belonging to this society so the trait such as lactose tolerance and aggressive behavior helped individual to survive in pastoral society where herd could be easily stolen and should be constantly defended, while impeding or being irrelevant for survival in agricultural society where harvest could not be easily stolen and compliance to the leader of big group defending territory is rewarded much better then undisciplined aggression.

This chapter is am attempt to answer question if races exists. One group of intellectuals is firmly rejecting the idea of different races claiming that differences are insignificant. Another group is accepting that races exist, but claims insignificance of this fact. There is an interesting difference between anthropologists. Among physical anthropologists (dealing with bones and bodies) 50% believe that races exist while among social anthropologists (dealing with people and cultures) only 29% believe that races exists. However the neutral evidence: ability of police departments correctly identify race of skull with 80% correctness indicate that it does exists.

The review of genetic evidence of human development over the last 50K years with different evolutionary pressures in different regions lead to conclusion that there are five races that developed in process of several divisions of population:
• First division separated Africans from the group who moved out of Africa to Europe
• The Second division separated Europeans from East Asians
• The next two separations were linked with population of two remote continents America and Australia which were reached relatively soon after exit from Africa about 46K years ago, but then where separated giving space to development of this group into separate races Australian Aborigines and American Indians.
Finally the races when they connected via landmass usually have a connection areas populated by individuals produced by continuing mixes of close by racial groups.

This chapter is a bit more detailed technical review of genetic variance by race. It provides a nice Venn diagram showing distribution of about 400 genetic clusters with high level of variation developed by evolutionary pressures in 3 major different races: African, Asian, and Europeans. Interestingly, these 400 clusters are different for different races with only relatively small overlaps. Every group has about 120-140 clusters that were under selection exclusively for this group.

This follows by review of genetic mixes and how such mixes depend on separate portions of genome inherited from father or mother with different racial components. The second part of chapter dedicated to review of arguments against existence of human races and reasons to reject these arguments. The most important argument is that variation between individuals is higher the average variation between races. The response if that while it is correct, nevertheless the variation between races is significant enough to treat races as different entities.

This chapter explores possibility of interconnection between genetic differences and cultural outcomes between different societies. As example development of religion reviewed with inference that it must be genetic predisposal for religion views in all human genomes since various religions were developed in all known human societies. Then human history reviewed with special consideration for impact on human genome of different evolutionary pressures created by transitions from hunter-gatherer to agriculture in both forms: settled and pastoral with different parameters for aggression, cooperation, and submission being most advantageous in different societies leading to diversity of races.

This chapter reviews changes that occurred in human natures due to changing environment. The most important changes were decrease in propensity for violence and increase in literacy. As result individuals with beneficial traits obtain higher level of income leaving more children and pushing out from genetic pool early dying violent and ineffective people. In short in more recent societies being eaten by tiger was substituted by being poor and not able to feed ones children. The “long arc of domestication” is reviewed in details for various societies. At the end hypothesis of correlation between hereditary intelligence, as measured by IQ, and achieved level of wealth. There are plenty of correlations, but no causation was ever proved. The final section dedicated to review of institutions of different nation and their impact on prosperity or lack thereof.

It seems to be impossible to talk about genetic intelligence, IQ, and wealth without bringing in Jews, their achievements, and history. This chapter is doing just that in process stressing evolutionary pressure on Jews’ intelligence due to requirements to accommodate to hostile environment in which Jewish history occurred and nature of professions open to Jews in Europe.

This chapter brings an interesting and unusual angle to the question why Europe prospered, while other parts of the world did not. Example used of telescope, which in Europe caused dramatic changes in understanding Astronomy, world, and seagoing navigation, but, while demoed to Chinese and Muslims, generated no real interest. The point is made that European openness and acceptance of change and innovation has genetic component because all other conceivable explanations of differences seems to be failing. A special attention allocated to Jared Diamond’s ideas of Geographical determination and thesis that “societies are different due to different geo conditions not due to the different genetics of people.

The conventional denial of genetic differences between races is implausible because of:
• Precise mix of genetics is not possible to identify and surmise that genetic component of 0 is not realistic
• All-culture position formulated as ideological position directed against racism. Ideology, even a decent one, does not provide for a scientific explanation of anything
• All-culture also fails to explain difficulties encountered in attempts to change cultures of third world in order to bring them into age of prosperity
• Supporters of all-culture failed to maintain this position by including newest research in genetics and culture.

This book attempts to include genetic component into analysis of differences between people with history viewed not as purely cultural development, but rather as combination of evolutionary genetic development with cultural evolution.

The important part of understanding is that while individuals of all races are very similar, the societies they created are very different and part of this difference could be explained by genetic evolution of part of genome that controls social behavior and eventually lead to specifics of society created.


I am fully agreeing with position that genetics of different races justify existence of this notion of race. However I do not agree that this difference is important and that social behavior of people defined by genes is strong enough to provide significant impact on characteristics of society.

The most important part of my disagreement is not with this book, but with whole tendency to assign to groups characteristics that are specific to individuals. For example the statistical distribution of IQ while moved to the right for Jews up to 110 points average IQ does not make any particular Jew any smarter then he/she is, but culture of learning and great encouragement of intellectual achievement, which is undeniably cultural phenomenon, makes every Jew try his/her best to be smart and educated or at least look as such. The resulted overachievement is more of the product of this culture then genetics.

Another consideration that make me think that genetic component while exist and pretty strong, is not that important, are ease with which people with the same genetic background accept superior culture if given chance either at individual level as immigrants from third world to the first world or even as societies as exemplified by Korea (South and North) and Germany (West and East).

My final reason for why genetics is not that relevant, is that in contemporary world people are intermixing at huge rate and with increasing speed so the fact that one’s grandparents include representatives of 4 different races is much more important then the fact that they all carry evolutionary differences developed over previous 50K years.

20140719 The DIM Hypothesis.

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The main idea of this book is that Western civilization produced 5 and only 5 philosophical frameworks or modes which define condition of society at any given moment and dynamics of its development.

These modes are:
D – Philosophy of Disintegration based on Kant’s ideas, which comes in two forms:
D1 (Knowing Skeptics): Unity through natural world grasped in unrelated chunks
D2 (Kant): Unity is impossible, both percepts and concepts are detached from reality
I – Philosophy of Integration based on Aristotle ideas: Unity through natural world grasped through concepts derived from percepts
M – Philosophy of Misintegration based on Plato’s ideas, which also comes in two forms:
M1 (Worldly Supernaturalists): Unity through transcended world, but natural world is real and concepts must be applicable to percepts.
M2 (Plato): Unity through transcended world grasped by concepts independent of percepts.

These definitions allow analyzing Western history as process of modal progression with change in mode defining all areas of culture including art, science, and politics. Contemporary United States is currently representing mix of multiple modes with author expecting one mode M2 in form of religious totalitarianism to become dominant with the exclusion of all other modes.

There is a small chance to avoid it due to combination of current expansion of Objectivism as pure philosophical representation of I (Integration) mode and predisposition of American culture to I mode as it was expressed in Enlightenment and ideas of country’s founding fathers; but this chance is as small as probability of 300 Spartans stopping Persian army (which did really happened).


1. Integration

The Western civilization became different from all others when Greek philosopher Thales came up with idea of new method of thinking – integration. Now we seems to be observe process of switching from this method to method of disintegration that threatens destruction of Western civilization. The DIM theory is an attempt to analyze current processes and provide prognosis of future development.

The process of integration per philosophy of Objectivism contains integration from perception to concepts as integration of percepts; then from concepts to generalizations, then from generalizations to principles and finally to integrated unity of knowledge.

Integration could be valid that is based on perceptions of real world as in science and invalid, that is unrelated to perceptions of the real world. The only alternative to these two methods is non-integration when part of the whole product brought in randomly like in abstract art. Examples of all three are: Galileo vs. Nostradamus vs. Pollock

2.The Three Archetypes
The three archetypes of integration represented by three philosophers and their ides:
• Plato: Everything is integrated and combined in the one Supreme Being not related to natural world and not accessible to sensual perception. His metaphysics is supernaturalism meaning that reality is non-natural phenomenon. His epistemology is rationalism meaning that concepts are primary and independent from percepts. This is invalid integration.

• Aristotle: Reality is Nature and there is nothing else. There is no matter without form and no form without matter. His epistemology is derived from perceptual reality: human percepts create concepts in the mind and concepts are aggregated into reason. This is valid integration

• Kant: Logic and causality are baseless; they cannot be derived neither from percepts nor validated by reason. Everything comes from 12 innately existing mind concepts. Reality does not exist, but rather just a product of human mind and is generated from preset concepts. Since reality does not exist there is no absolute truth and everything is whatever humans want it to be. This is not integration, but disintegration.

All three philosophies are internally consistent and logical, even if writings of all three authors include quite a few contradictions.

3.The Two Mixtures
Philosophies of Plato and Kant spawn two additional mixtures:
• Worldly Supernaturalism. This is concept of duality of real (supernatural) and unknowable god and worldly nature knowable via empiric research and scientific method. This was direction of ideas developed by Descartes, Spinoza, and Stoics. This mixture represents mutation of rationalism.

• Knowing Skepticism is the mixture that represents mutation of empiricism under influence of Kant. It accepts that the reality is unknowable, but allows knowledge of specific limited facts making universe into stream of human experiences. Comte and John Stuart Mill father developed these ideas. Interesting outgrowth of this came in area of ethics where it produced Comte’s religion of humanity and Bentham’s Utilitarianism.

4.DIM and the Hypothesis
D – Disintegration
Kant: Unity is impossible, both percepts and concepts are detached from reality.
D2 – Many without One
Knowing Skeptics: Unity through natural world grasped in unrelated chunks
D1 – Ones in the Many

I – Integration
Aristotle: Unity through natural world grasped through concepts derived from percepts
One in the Many

M – Misintegration
Plato: Unity through transcended world grasped by concepts independent of percepts.
M2- One without the Many
Worldly Supernaturalists: Unity through transcended world, but natural world is real and concepts must be applicable to percepts.
M1: Many from the One

DIM Hypothesis contains to related theses:
1. Western philosophy produced 5 products defined by their mode of integration, which describe totality of all alternatives.
2. Western Culture historically went through several changes of these modes with these changes occurring not by chance, but in accordance with logic of mode progression. Understanding of this logic provides for ability of rational prediction of future development of the West

Part two is review and analysis of modern history of changing mode expressions in 4 areas of culture:

5. Literature
Classicism: Various versions of M1 mode – Worldly Supernaturalism.
Romanticism: I mode – One in the Many, Aristotle’s mode
Naturalism: D1 mode Ones in The Many
Modernism: D2 mode Many without a One
Socialist Realism: M2 mode One without the Many

6. Physics
Newton: This is variation of integration mode. One is real, but only as One in the Many (I).

Positivism: Representative Erich Mach. This is Comte’s epistemological approach-reality exists and is knowable, but only as a bunch of percepts somewhat interconnected, but not integrated: Ones in the Many (D1)

Einstein: This one accepts reality of the world, but puts first mathematical ideas and esthetics of equations to explain it and use percepts only to confirm correctness of concepts. The mode is the Many from the One (M1)

Quantum Mechanics: This is juxtaposition of percepts, equations, and probabilities. The mode is the Many without a One (D2)

String Theory: In this approach the physical world is not exactly real, but derived from conceptual realm of mathematics. From unified Theory of Everything or One flows unreal and non-perceptual Many (M2)

7. Education
Classical Education: based on studying ancient texts and logic of ancient languages. It was however based on religious doctrine with Many (school goals, curriculum, and methods derived from supernatural One = M1 mode)

Progressivism: it was rejection of raw accumulation of texts and facts with downgrading the very notion of knowledge and move to perceptual level exercises and processes. It was mode of Many without One D2.

Pluralism (In Schools): This is D1 mode – Ones in the Many with multiple instances of percepts and concepts presented chaotically with consistent rejection of integration as impossibility.

Totalitarian Education: This form of education is fully designed to indoctrinate individuals into whatever ideology rules a given totalitarian society. It has always a few unalienable characteristics: It is always collectivist, it has always clearly defined enemy either bourgeois class, or Jews, or whatever. Observed facts had to be subverted to comply with a priory concept of ruling ideology. It is M2 mode– One without many.

I Approach: There are no clear examples of I approach in contemporary educational systems. Author only provides a speculation based on his experience as processor. The crux of the matter should be integration of high level philosophical concepts with lower level concepts derived from clearly identified percepts. It should also include extensive horizontal integration between various areas of knowledge. It should be One in Many mode – I.

8. Politics.
Absolute Monarchy: In this form it is Many from One mode when king is the One. M1 mode.

Capitalism: This form of society is integration of Many individuals interacting through market into One prosperous society where everybody is trying to make living by doing something that other people need: I mode.

Pluralism (In Government): This is form of contemporary western societies when basic principles disconnected from reality of everyday concerns and actions. It is D1 mode where Many interspersed by unconnected Ones.

Totalitarianism: This form popular in the middle of XX century is deifying collective and diminish individuals all the way to annihilation. It is One without Many – M2 mode.

Egalitarianism: This form was never really implemented and will never be implemented because its promoters always exclude themselves insisting on being more equal then others. It is more of a method of obtaining electoral support in democratic society for bureaucratic machinery of state. Ideologically it is Many without One – D2 mode.

This part is a pretty detailed review of pre-modern cultures from point of view of DIM hypothesis assigning specific mode sequences to different areas of these cultures. So here are the assignments:

9. Greece: Literature – mode I; Science – I; Education – I; and Politics – I.
It is quite interesting that author assigns the best and fully objectivist mode to all areas of Greek culture, but does not concentrate on reasons why this breakthrough eventually did not held. There is mention of incomplete development of ideas and institutions and small scale and populations of Greek societies that prevented them from making their I-mode dominant in following Western societies.

10. Rome: Literature-M1 mode; Physics-M2; Education-M1; and Politics-M1

11. The Middle Ages: Literature – M2 mode; Science – M2; Education – M2; and Politics – M2.

Overall it seems that Western civilization got it right starting with Greeks who were mainly I mode culture then went to M1 mode in Rome, and then to M2 in Middle Ages. However contemporary cultures are jumping all over the place between all 5 modes everywhere with probable exception of education, which somehow never got a proper I-mode established. Could it be that it is source of our many troubles?

12.Identifying a Culture’s Essence

Philosophy and Cultural Products: Philosophy that dominates society is not obvious on foreground for all to see. It is rather in background nearly invisible, defining thoughts and actions of individuals representing intellectual forces of society. Even if these individuals not clearly formulate or even understand philosophy they adhere to, they insert it in all cultural products that they generate. Author believes that he proves important generalization: Cultural Works are transmitters to a society of philosophical fundamentals.

Some Problems of Non-DIM Analysis: Non-DIM analysis does not provide a standard for analysis of cultural product. DIM does it by selecting product’s structural features, essential characteristics, and relationships between them without which it could not be considered whole.

The Two Philosophical Issues Underlying Mode: Metaphysical issue is the status of this world. Epistemological Issue is the status of concepts. The first one defines what to integrate and the second defines how to integrate.

13.The West’s Modal Progression
The mode is a way of thinking and it lasts for a long period of time until some triggering event makes people to conclude that this mode is not working any more and they change to another mode of thinking considered more effective in achieving their goals. Author believes that DIM allows evaluate the status of current mode based on relevant events that may or may not undermine or strengthen current mode and available alternative modes that are represented in minds of population and, as result, produce not only valid explanation of previous mode changes, but also prediction of future change.

West modal progression went through 2 phases for each mode: one ancient and another contemporary. So here they are:
I (Integrations)- Ancient Greece and Enlightenment of XVIII century;
M1 (Misintegration of Worldly Supernaturalists) – Ancient Rome and Renaissance and Age of Reason of XVII century;
M2 (Platonic Misintegration of the One)- Middle Ages and Contemporary Totalitarians Marxism and Nazism with the One being Führer;

Author sees the M modes as dominant with I and D modes just as temporary interruptions. However even during these interruptions M is always in background waiting to show up as response to whatever crisis to occur.

Here is Mode change algorithm:
1. Instability of mixed mode
2. Inability of establishment to defend its mode due to philosophical deficiency
3. Modal rebellion by intellectuals
4. Modal rebellion by the public
5. Knowledge of acceptable alternative mode
6. Triggers

14.Secular Modes in the United States Today
Secular modes are those that at minimum deny exclusive reality of supernatural: D1, D2, M1, and I. Currently there are multiple modes in play in the USA with D1 mainly being philosophy of educated (soft BA) elite. Based on number of college graduates about 15 mil or 5% of population. D2 is much smaller not more the 1-2 mil, but it includes elite of art, science, education, and politics, making it disproportionally influential. I mode supporters are unusually strong in America as evidenced by consistent split between American common-sense public (I) and intellectuals (D). However at the same time population continuously moving away from I mode accepting more and more growth in government. At this point author finds it impossible to define strength and potential of American subconscious adherence to I mode and predict either it will wither away over time or suddenly explode to the surface moving country as whole to tradition of founding fathers. M1 mode of significant part of population combines reality of supernatural with reality of natural world as represented by adherence of many Americans to both science and religion. It is philosophy of established traditional churches and it seems to be on its way out.

15. The Anti-Secular Rebellion
Author expects rebellion against contemporary D mode of elite and even M1 mode of philosophically peaceful coexistence between supernatural and natural. He believes that Christianity as M2 mode is on the raise being supported by significant forces in middle bureaucracy, military, and business. He also considers it a possibility of merge between Christianity and Environmentalism resulting in very robust M2 movement.

16. What’s Next?
In the best traditions of American doom and gloom future author believes that M2 is unstoppable and will result in totalitarian religious regime based on Christianity with property rights retained more as cultural tradition, than actual individual control over resources, pretty much as it was in Nazi Germany. It would also include high level of nationalism and external aggression. The time frame for all this is defined as next 50 years.

This prognosis is not presented as inevitable, but rather as high probability outcome. However there are some trends that could prevent such theocracy – small, but growing objectivist movement among intellectuals. Interestingly enough he finds a solace in the story of 300 Spartans who stopped huge Persian army in the battle of Thermopylae preventing annihilation of Western civilization in its cradle.


It is a very interesting philosophical interpretation of the history of Western civilization and prognosis of its future development, but in my opinion it is way too limited to be correct. The problem is that humans are not really philosophical creatures who think and act consistently with philosophical concepts they consciously or unconsciously developed in their minds. Humans are self-directing creatures who act mainly with the purpose to survive in a given environment and pass on to the next generation genes that were instrumental in their survival. As such creatures, humans develop conceptions about environment, their place in it, and actions they need and want to conduct on multiple levels with two main objectives: individual survival and group survival. Even at this level of simplification the two objectives they have are often contradictory when group’s survival may require individual sacrifices and vice versa. The point is I do not believe that humans could conceivably have non-contradictory, logically consistent philosophy and act on it. Moreover in addition to philosophical contradictions within one human head at one point of time there are many more contradictions between different incarnations of owner of this head over time. Just try a simple mental experiment: pick up an issue and try to imagine discussion between yourself as you are now and yourself-10 years, yourself-20 years, and so on. Now multiply it by about 300,000,000 times and you’ll get nearly infinite variation of philosophical views and concepts about reality or lack thereof at the same time in one society. In short humanity is way too complicated to predict its future development based on philosophical concepts simplified to 5 modes.

This brings me to the reason why I think that prediction of future theocratic totalitarism in America is way off the mark. The culture of this country combines tremendous practicality of people who were formed both genetically and culturally by their immigrant ancestors who carried in their minds ability to be comfortable with purely I mode approach to environment at the level of direct interaction with this environment and multiple variations and combinations of all modes in their minds at the level not related to such interactions. The second (ideological) level is mainly used to support group cohesiveness and pretty much nothing else, so it is not really important. What is important is American tolerance to this ideological level diversity formed by necessity to cooperate with neighbor who has different genetic, cultural, religious, and you name it background. This combination make it highly probable that Americans turn away from current trend of big government due to its inefficiency and impracticality and will do it within relatively short period of time because tolerance prevents big government from shutting down dissent. In my opinion all this makes theocratic totalitarian future unrealistic, but libertarian future with “I” mode dominant at the practical level and usual mess of all 5 modes at philosophical level will continue as usual with currently prominent collectivistic intelligentsia being destroyed by failure to produce promised governmental paradise.

20140712 Anatomy of the State

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The State power is power of banditry and robbery, which is supported by ideology and bribery and depends on these methods for its maintenance. It is in constant struggle with Social power of productive people who generate all resources available to humans. This struggle usually ends with victory of the state, at least until robbery suppresses Social power to such extent that States fall either to external conquest or to revolution. So far no method was identified to permanently remove or at least limit evils of the state.


1. What the State Is Not
The State is often regarded as social services organization, which it is not. It is also often characterized as “WE” that is completely incorrect because quite often especially in totalitarian regimes of XX century government killed quite a few citizens either Jews in Nazi Germany or Kulaks in Soviet Russia. If government is “WE”, then these people who where a part of “WE” committed suicide, which they did not.

2. What the State Is
The State is organization of political means that is means of violent transfer of resources from one group of individuals to another. In other words it is systematization of predatory process on given territory.

3. How the State Preserves Itself
The State maintains itself by combination of violence, bribery, and ideology. Correspondingly there is army and police to inflict violence, there are intellectuals who develop and promote ideology to support state in some combination of religion, philosophy, and culture, and there is also a part of population that benefits from wealth transfer to them from other people.

4. How the State Transcends Its Limits
The people continuously try to impose limits on the state, but even if they succeed from time to time like in America with its constitution and Bill of Rights, eventually State always breach through these limits and expand. This chapter documents how it happened in America in XX century.

5. What the State Fears
The State is always under the threat of two potential killers: external conquest and/or internal revolution. The reason often cited for state existence is defense of population. However any analysis of any state shows that much higher priority is defense of the state itself.

6. How States Relate to One Another
This chapter analyzes different ways of competition between states, mainly as military competition in Europe demonstrating historic process of substitution of states competition as fight between gangs with fight between populations. During the phase of States being just gangs the winners just get ability to rob population that mainly indifferent to which specific gang robs them. The more advanced State is characterized by success of ideology that makes population self-identify with the state allowing the state completely take over control of all aspects of population’s live. This advancement greatly increases efficiency of robbery at the same time making out of victims of robbery its supporters at least for a time being.

7. History as a Race Between State Power and Social Power
This essay started with statement that there are only two ways to humans to obtain resources: by work exercising power over nature and converting its product to their own use; and by robbery exercising power over other people and taking their resources for robber’s use. The former method is Social power and the later method is State power. The history of humanity is a continuing struggle between powers with State power mainly succeeding in removing any limitations that representatives of Social power able to put in place from time to time.


This is one of very few texts that I am completely and fully agree with. The only addition that I want to make is that it seems to be missing full understanding that the state is not thinking and acting entity, but just a hierarchical group of individuals capable to suppress other individuals in a given society to such extent that they do not resist to being robbed. I believe that the way out of this conundrum is to establish real and clear benefit for each individual from participating in voluntary exchange and cooperation system (free market), and demonstrate to them as clear as possible how individuals directly and/or indirectly included into hierarchy of state benefit at his/her expense. The establishment of unalienable, equal, and marketable right on natural resources could achieve this objective relegating coercive organization of state to minimal supporting role in society.

20140705 Capital in XXI Century

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This book contains a few simple ideas illustrated by significant amount of graphs and contemplations that all ends with on big and fearless recommendation.

The simple ideas are:
• Inequality of private wealth is very bad for society and could lead to cataclysm.
• This inequality is huge and constantly growing because there is the “first law of capitalism: return on capital if growing faster then rate of economic growth.”
• The mechanism of inequality growth includes inheritance, that is playing bigger and bigger role in the level of capital available to individuals, and unequal returns on labor when top earners make disproportionally higher compensation then regular people.
• However despite all these elements of ugly capitalism there is no real alternative to maintain viable economy without necessary evil of private property and unequal returns.

The suggestions therefore are limited and do not included such decisive measures, actually implemented by Marxists of the past, as complete confiscation of private property and physical elimination of capitalists and high earners. It is just mild global tax of 80% with objective not to raise revenues, but rather limit inequalities and assure stability of society.


Part One: Income and Capital

1. Income and Output
It starts with the story of bloodily suppressed strike of South African miners with statement that cause was not that much low pay of miners, as extremely high pay to top managers. From this point author rejects idea of market provided division of income between labor, capital, and management as being optimal without any attempt to provide some logic why it is not, and presents a question of how it should be divided in ideal society.

Then it goes to contemplate a pretty obvious fact that split between labor and capital is not stable and tend to change over long period of time with capital getting higher share in peaceful time while labor getting higher share as result of wars, revolutions, and massive government intervention into economy.

A number of economic definitions follow with very important for this book caveat that capital is defined as the same as wealth and excludes human capital, which brings us back to XIX century Marxist understanding of economy. Also everything “national” is defined as “national”=”public”+ “private” whether it is income or wealth or whatever.

The final statement defined as fundamental law of capitalism is that national income = capital * rate of return on capital or a=b*r.

After that there is a historic review of development of national accounts and changes in distribution of population and production by continents over last 3 centuries starting with Asia decline and raise of Europe in 17xx and Europe decline and raise of Asia in 20xx. There is an interesting statement at the end about inequality of global income distribution in relation to output.

Then comes review of idea of convergence with inference that an optimistic idea of growing convergence of rich and poor areas is not fully realistic because it assumes free movement of capital and labor which could not be a case with poor countries alternating between periods of confiscation of foreign capital and protecting private property.

Finally the chapter ends with very interesting statement for guy who excluded human capital from his analysis: the conversion occurs and continues to be possible most of all via knowledge transfer from rich countries to poor.

2. Growth: Illusions and Realities
The main point here is expectation of low growth for foreseeable future. This includes both population growth and economic growth. The review of demographic growth and its trends comes up with conclusion that it will stop or even turn negative everywhere except Africa. From point of view of equality, the demographic growth is considered as positive because it divides wealth of rich between many children. After this author moves to economic growth demonstrating that it was huge in western world with industrialization. Author provides trivial, if somewhat unusual insight that purchasing power grew in such highly diverse way for different goods and services, with many new goods and services created, that any attempt to compare current and past are deeply flowed.

After analyzing demographic growth, author moves to the main point: slowed growth would lead to major social change by increasing value of inheritance and diminishing opportunities for self-starters. There are a few graphs with various projections all of them showing a slow growth. At the end of chapter author goes into discussion of monetary issues tracing money from stability of gold standard of XIX century to fiat money and correspondent inflation of XX century. The note about disappearance of specific money sums cited in fiction literature used as prove of inflation is somewhat touching.
Part Two: The Dynamics of the Capital/Income Ratio

3. The Metamorphoses of Capital
This chapter is about change in capital structure overtime from mainly land + residential to mainly residential + other. Interestingly enough, author does not go into details of what is this “other”. Quite a bit of space dedicated to foreign capital investment with inference that it did not play such a significant role in development of western countries. It follows by review of relationship between public and private debt and capital in Britain and France. The interesting side effect of government taking over money supply in XX century was annihilation of rentier – the guy who financed public debt with his savings. At the end author makes a point that despite change in capital structure its total amount in relation to income did not change.

4. From Old Europe to the New World
At first author provides similar analysis of capital change for Germany and then goes to changes of capital/income ratio history for Western Europe, which decreased from about 7/1 to 3/1 during WWI to WWII and came back only after return to peace in 1950 achieving ratio 5/1 to 6/1 by now. Nothing like this happened in America, however he is going back to XIX century to find big drop in capital/income ratio for America after civil war when slaves stop being counted as capital stock.

5. The Capital/Income Ratio over the Long Run
This chapter continues capital/income ratio analysis over long run of 150 years. Interesting point is that ratio of public capital remains approximately the same while ratio of private capital going up and down. After that the second law of capitalism stated as: ” Capital/Income = Savings rate / Growth rate. There is a bunch of qualifiers for this law that make it not really applicable in many cases. Author reviews relationship between private and public capital with overall inference that public capital is staying at the same level, while private capital is growing as ratio of capital/income in all developed countries. At the end of chapter author predicts that with rate of growth going down from 3% to 1.5%, savings rate assumed to be constant at 10%, the ratio capital/income will grow to 7/1 by the end of XXI century.

6. The Capital-Labor Split in the Twenty-First Century
This is analysis of relations between labor and capital in production. The main points are:
• Split of returns is changing to benefit capital because return is the same, but ratio of capital/income is growing
• Returns on capital increases for big corporations due to economy of scale
• Counter trend is decrease of marginal return on capital if there is more capital then could be used productively.
• The split also changes for capital because elasticity is more then one – additional capital could substitute labor to the extent defined by technology.
• The value of human capital should be discounted because material capital still remains there.
The most important lesson author believes he provided is that there is no natural force decreasing capital’s importance and flow of income it provides.
Part Three: The Structure of inequality

7. Inequality and Concentration: Preliminary Bearings
This chapter is about distribution at individual level and its inequality. Author divides it into inequality in income from labor, inequality from returns on capital, and interaction between those two.
It starts with reference to classic French literature of XIX century to pose the question: What is the best way to obtain wealth in a given society: Labor or Inheritance. The obvious answer in France XIX century is inheritance (Vautrin’s lesson). After brief reference to decrease in value of inheritance during period of wars and revolutions in the first half of XX century the author goes back to statement that inheritance again becoming superior to labor.
Author is trying to make case that capital is more unequally distributed than labor. To support this idea distribution tables are provided that show top 10% of labor providers get 25%-45% of all returns while top 10% of capital owners get 50%-90% of all returns on capital. The interesting note in relation to progress is what author calls “Patrimonial Middle Class” – people who own capital, but also get income from labor. For some reason he calls it “A Major Innovation” even if it is no innovation for America where farmers mainly owned their own land since the beginning of the country.

8. Two Worlds
This chapter is a comparison of dynamics of inequality in France and USA over XX century. The France went from society of rentiers to society of managers and capitalists. The top income obtained moved from rentiers who derived income from rent on capital invested in government securities to individuals selling high-end labor (managers) or investing in business enterprises. It also went down dramatically from top 10% receiving 45% of income to something around 30% and staying at the same level as result of wars and strength of socialist movement in this country. Similar path was taken by USA when New Deal cut share of top income, but in 1980s USA moved back to a little bit more of capitalism resulting in inequality going back to levels of early XX century. Author also reviews significant change in source of top income that become much more salary related and also obtained not only by men, but also by their spouses practically doubling return on highly marketable abilities. Interestingly enough according to graphs in this chapter income from returns on capital is breaking even with income from labor only at the 99.9 percentile level in USA.

9. Inequality of Labor Income
In this chapter author concentrates specifically on income from labor and its inequality. The point he makes is that income from labor, even very high quality labor, did not grow that much but for the very top individuals in control of big companies who basically write their own checks. He identifies it as mainly Anglo-Saxon phenomenon where share of top 1% grew up dramatically more then in Europe or Japan. Author specifically rejects theory of unlimited growth of marginal productivity due to technology as explanation of this growth. He quite reasonably suggests that there is no way to define marginal contribution of top manager to corporation’s profit, so the only reasonable explanation of this growth is political power of top manger within corporation.

10. Inequality of Capital Ownership
Here it is turn of Capital ownership to be analyzed as source of income. Author goes through history of capital ownership in France and USA with specific attention to appearance of middle class with significant capital ownership. Overall the top 10% in France went down from 90% of all capital to 60% during wars and revolutions and then slightly rose at the end of century to about 65%. USA the dynamic was much milder from 80% down to 65% and then up to 75%. The reason for this author sees in the fact that rate of return on capital exceeds rate of economic growth constantly increasing share of capital in overall income distribution. The attempt to explain this discrepancy seems to come down to analysis of dynamic change of rates. Author adds to this a reference to time preference in savings that gives advantage to owners of capital because they can reinvest higher share of returns. This follows by quasi-historical analysis based on literature and legal arrangements for inheritances. At the end of chapter author analyses reason why inequality did not return so far to the levels of XIX century and expresses fear that it will achieve or even exceed this level in XXI century

11. Merit and Inheritance in the Long Run
This chapter is about dynamics of wealth acquisition: inheritance vs. labor. Author believes that increase of rate of return on capital over growth rate inevitably leads to increase in role of inheritance. However provided graphs show that even if share of inherited wealth grew over late XX century as percentage of national income it is still way lower then it was at the beginning of this century. Moreover living standards of top 1% rich by birth are undistinguished from the living standards of top 1% of self-made people.

12. Global Inequality of Wealth in the Twenty-First Century
This starts with analysis of inequality of returns on capital stating that there is significant economy of scale based on investment size. This results in continuing growth in wealth size of top 400 richest people and correspondingly in their share of global wealth. From there author switches to global distribution of wealth. He finds an interesting statistical anomaly that if calculate total wealth by country and summarize it, the result will be the negative financial position of the world where both rich and poor countries have a negative position. Another interesting point made in this chapter is about moral hierarchy of wealth with entrepreneurial wealth being at the top and generally considered a positive phenomenon. Author believes that it does not justify inequality and consider it as a sample of Euro-centric approach. Somehow he is trying to support this attitude by referring to dirty wealth obtained by oligarchs of third world countries and references to fiction describing criminal creation of wealth. Finally significant attention is paid to rise of China, India, and sovereign funds of oil producing countries. In addition to billionaires these owners of capital may try to own the world meaning to extract rent income from everybody else, especially western people. Amazingly he shows some common sense in this respect by coming to conclusion that it would probably not going to happen without political push back.

Part Four: Regulating Capital in the Twenty-First Century

13. A Social State for the Twenty-First Century
This chapter starts with author expressing believe that global tax on wealth is needed to avoid “inequality spiral” and regain control over wealth accumulation. This is based on believe in supremacy of “general interest” over “private interest”. After that he reviews recession of 2008, expressing hope that it facilitates “return to the state” followed quite convincing remonstration that the state never really go away and grew nearly exponentially until 1980s. There is interesting discussion about contradictory understanding of rights between USA and France. USA rights are about “pursuit of happiness” and freedom from oppression, while France it extends to social equality meaning that “ social distinction can be based only on common utility”. This follows by call to modernize contemporary social state (welfare state) with specific review of education and retirement financing functions with inference that they are pretty much too complicated to reform. There is also a short review of social safety net in poor countries.

14. Rethinking the Progressive Income Tax
This is review of various taxes with detailed analysis of history progressive taxes in France and USA. The case is made for oversized executive salaries being result of tax arrangements, specifically dramatic decrease in marginal tax rates in 1980s. Author considers this development dangerous for society moving it from democracy to oligarchy and proposes 80% tax on high income. He seems to be understands that it would not generate that much revenues, but believes that it is necessary for the sake of society.

15. A Global Tax on Capital
This chapter discusses a global tax on capital. Author seems to understand that it is impossible, but he likes to dream. He does not see global tax as source of revenue, but rather as method of regulation of capitalism. He expands his tax all the way down to middle class just to make sure that everybody get robbed, even if just a little bit. I guess it is just a reminder to people not to get rich. There is quite a bit of technicalities of how to tax, how insure transparency, and so on, but it is beyond the point. The point is that author sees the world as global polity and believes that some equalizing power should control this polity and redistribute wealth the way author sees fit not only from rich to poor, but also from rich countries to poor countries. He also sees immigration as another form of wealth redistribution only instead of wealth it is people who are moving.

16. The Question of the Public Debt
The last chapter is dedicated mainly to discussion of public debt and ways to eliminate it through increase in taxes and inflation. Also in this charter author provided an interesting discussion on Euro and European unification. The Euro being not under control of any specific government seems to provide a relatively stable money supply by limiting governments ability for counterfeiting. However it does not help when one government wants to increase money supply to liquidate debt, while another government in the same monetary union has significant number of this debt holders who do not really want to see their money disappear.

Here author formulates what he sees as central contradiction of capitalism: return on capital is growing faster than rate of economic growth, which leads to the growth inequality between owner of capital and provider of labor. It becomes more and more dangerous for stability of society, especially because owners of capital even if it created by entrepreneurial labor tend to turn into parasitic rentiers completely separated from people who live by labor and see diminishing returns on their effort. Contrary to previous Marxist thinkers he is not calling for revolution or looking forward for day when immoral and unequal capitalist society will be destroyed, but is rather scared that it could happen. The global tax for him is something needed to avoid upheaval with all its cruelties, blood, and totalitarianism that could come from such upheaval.


Majority of reviewers of this bestselling book point out problems in author’s economic analysis and I think in many instances they are correct. However I see it as an honest attempt to prevent over-boiling of envy that proved to be able to destroy wellbeing of millions for long periods of time.

The problem is that author completely missing another source of envy that is caused by much more dramatic inequality between individual in control of “public wealth” and individuals who are in control of only their own wealth. For example if some capitalist is rich enough to fly a small plane to Hawaii at cost of $20,000 while regular person had to fly economy class at cost $200, it is awful, but if high level “public servant” uses 2 huge wide body planes and hundreds of people for weekend golf outing on Hawaii at cost $20,000,000 it is just fine according to author because it is in “public interest” to pamper “public servant”. Somehow consumption ratio of 100/1 seems to author awfully unequal if based on private property, while consumption ratio of 100,000/1 seems to be just fine as long as high-end consumer uses “public wealth” for his consumption. The history shows that this “public” wealth control inequality arrangement is as dangerous as private wealth inequality and could lead to similar cataclysm.

Another problem is not with analysis, but with suggestion of high global property tax remedy. It remains unclear what makes author think that high earners who really deserve extremely high returns will continue to apply effort to produce at the top of their ability. I think it is save to assume that these people are not idiots, so if there is some ceiling of what they can make, they would apply some ceiling on what they produce. Again, history shows that red banner of top producer (big reward in Soviet Union) does not really provide incentive for best effort.

My own suggestion to resolve issue of inequality is to establish equal, unalienable, and marketable property rights on natural resources so individual who use more then average would buy rights to use these resources from individuals who use less then average.

As for the inequality of returns division between employees of profitable private corporations, I agree that it is often result of ability of individuals in control of corporation to write their own checks. However the solution should not be robbery of their property via tax, but rather legislative limitation their ability to write checks to themselves and assignment of this ability to individual shareholders, obviously in proportion to share of corporation owned. If combined with legal requirement to distribute 100% of profit to individual owners even if it is required to go through multiple layers of mutual funds this measure could have significant positive impact on economic growth because it would reward really good producers of wealth rather then really good business office politicians who managed to get control over other people wealth.