The billionaire who wants to reform capitalism

April 6, 2019 (1214 words) :: Hedge fund manager Ray Dalio thinks that capitalism needs to be reformed. Who cares.
Tags: inequality

This post is day 96 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.


Have you heard of Ray Dalio? Hedge fund manager, investor, philanthropist, and one of the top 100 wealthiest people in the world according to Forbes? It’s fine if you haven’t - he’s not especially well-known outside of finance/business/philanthropy circles, but his name been dominating the airwaves for the last two days, following a controversial essay he posted to LinkedIn (lol) titled Why and How Capitalism Needs to Be Reformed.

Now, to be clear, the essay is not especially scandalous, but nor it is very insightful. The analysis is nothing you haven’t heard before from any neoliberal apologist (capitalism is better than socialism cus efficiency, didn’t you know), and the reforms he proposes are extremely mild, along the lines of what basically any Democratic politician would propose. As Erik Schatzker for Bloomberg reports:

The solution, he argues, lies in better leadership at the “top of the country;” treating the wealth and income gap as a national emergency; a bipartisan commission to re-engineer the economic system; more accountability, presumably for elected officials; minimum standards for health care and education; some redistributive taxes on the wealthy; and more coordination of monetary and fiscal policy to stimulate growth.

Pretty much your typical smorgasboard of neoliberal policy proposals. I’m not saying this in a purely negative way - there is something notable in a billionaire recognising that the economic system which served them so well is actually terrible for almost everybody else. Nick Hanauer, another investor & billionaire, wrote an op-ed for Politico half a decade ago titled The Pitchforks Are Coming… For Us Plutocrats. It’s similarly disappointing in its analysis of capitalism, but at least he recognises that increasing inequality is a problem, even if the problem, as he describes it, is less “people are suffering” and more “we will face consequences for thriving while others suffer”.

But still: good for them! Congrats to these billionaires who realised that there is a problem. Toss them some cookies. They are miles better than the billionaires who complain about anti-billionaire sentiment, like Howard Schultz saying we should use the term “people of wealth” instead, or Tom Perkins (founding member of famous Silicon Valley VC firm KPCB) who compared the “demonisation of the rich” to Kristallnacht.

Dalio’s memo got a pretty scathing review in Vanity Fair, with journalist Bess Levin writing:

Bridgewater Associates founder Ray Dalio lives a pretty comfortable life, on account of the $16.9 billion to his name. But there’s something keeping him up at night, and it’s not the nagging sense that, at 69, he doesn’t have nearly enough time on earth left to spend that giant chunk of change. It‘s that there’s about to be an uprising in America, spurred by the widening wealth gap, and we all know who tends to fare the worst when the pitchforks come out.

It’s a fun short article, peppered with parentheticals about Dalio owning a 185-foot yacht and his views on firing people. But I think there’s a larger point to be made here, going beyond the (perhaps) hypocrisy of any one billionaire. After all, systemic critique is necessarily synonymous with personal moral code; even the most rapacious capitalist can think the system is bad, but may simply feel like they have no choice but to act that way. Conversely, refusing to behave rapaciously will not in itself bring down the system (although you should probably still try to behave as ethically as possible, if only for the sake of your own soul). Dalio has every right to critique capitalism even if he is doing well enough by it to own a 185-foot yacht.

What’s annoying about this whole memo incident is the way his memo is getting signalboosted as if it’s actually worth reading. Kind of like when Howard Schultz ran for president despite having nothing of substance to say, and the media was tripping over itself trying to cover him simply because he’s rich. Being rich might not necessarily invalidate your critiques of inequality, but it sure as hell doesn’t mean they’re worth listening to.

If you’re a billionaire, whether that wealth is inherited or stolen from the labour of workers, then you’ve basically been playing capitalism on easy mode. The economic struggles that others have to deal with simply to survive are just not in your purview. Instead, you can focus your time on growing your wealth, or even doing things outside the world of capital accumulation (like philanthropy) because you have enough economic freedom.

Does this mean that people who don’t personally experience the brunt of capitalism cannot have informed views on it? Not exactly - they definitely can, if they put in the time and effort to seek out others’ stories, and are able to form a coherent analytical framework to explain how everything works. Even people who own yachts could theoretically have left-wing politics. It’s just that - at the risk of saying something obvious - they usually don’t, because they probably quite enjoy being wealthy, and the people they surround themselves with are unlikely to encourage their interest in Marxism. Material factors are not wholly determinative of political views, sure, but at the extremes of the spectrum, they do go a long way.

What I’m trying to say is that we shouldn’t treat Ray Dalio with contempt for trying to reform capitalism, even if it comes in the form of a mind-numbingly boring technocratic essay posted to LinkedIn, of all places. He is probably doing the best we can. We should listen, nod, smile politely, pat him on the head, and say “good for you - you’re one of the good ones”.

Then we should go right back to ignoring him, because who gives a shit what he thinks, anyway? The very existence of billionaires is a symptom of the problem, and we don’t need their advice on how to solve it. You don’t need to ask the raccoon currently going through your trash how to keep raccoons out of your trash; they have limited ability to understand what you are trying to ask them, and anyway you should be suspicious of anything they say on the matter.

Similarly, billionaires should not be our guide when it comes to strategies for reforming capitalism. Their question is, “how do I make the world slightly fairer so as to avoid being guillotined in the near future, while also demonstrating thought leadership on LinkedIn?” The left’s goal, on the other hand, is to transform society so that billionaires don’t exist, much less receive undue attention for their unwanted (if well-meaning) opinions on reducing inequality, and whether or not the current crop of billionaires supports this goal is pretty much incidental to that. As the history of labour organising (and other social movements) has shown, you can challenge power structures even without the support of those on top.

So if Ray Dalio feels guilty about being so financially comfortable when so many others are suffering, then great! He can donate all his money to left causes. Should we take his recommendations on reforming capitalism seriously? Probably not, because there are billions of non-billionaires out there, and some of them are actively organising against the inequality that Dalio decries. You won’t hear much about that on LinkedIn, though.


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