Jack's greatest sin was transforming a manufacturing company into a financial institute. Similar to a family that takes on debt to appear wealthy it looks good in the short term but the debt always comes due eventually.
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 see some parallels to Curtis Yarvin and the Boys that follow his philosophy. The funny part, with all this boys is, that they do not recognise, that there utopia e.g. new society/state, does not work without the current society that sponsors them.
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.
It got real, only because a - at the time seemingly viable alternative reared its head. So, ironically, the system that won the system-competition we call the cold war, only works- when under stress in systemic competition.
I think we are mixing up timelines here the rent seeking and financializing happens in 1981 onward not starting at 1991 when the USSR dissolves
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.
But why did the USSR dissolve? A lot of it had to do with citizens’ dissatisfaction with what was available in the Soviet economy, compared to media images of what was available in the 80s-early 90s American economy. And, well, the fact that their government was, in fact, quite democratic, reflecting the wishes of the people.
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.
Yeah I'd argue Jack Welch didn't create that value rather he found a way to extract from the corporate mines and give to shareholders and himself very effectively. It has caused the collapse of some but not all those corporate mines. GE is a good example that maximized shareholder value until the shareholders left and there was nothing left for the company.
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.
As someone who grew up in 5th percentile or higher of Soviet citizens (Moscow, 2 engineer parents) I can tell you that American poor live much better. Think 700sqft flat considered good for a family with 2 kids, not really being able to afford a car, grandma constantly reminding us to not throw away any glass jars - containers to preserve vegetables for the winter were hard to come by.
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.
I feel like that makes sense actually. One core tenet of the "free market" is the need for competition, otherwise complacency and rent seeking happen and things get bad. If that apply for corporations, why not economic systems too?
The market of markets must be free, or the idea of a free market is a myth. Which it is. Capitalism cannot simply be removed, it must be outcompeted by a superior usurper.
Even then, it wasn’t an easy life, they just had different challenges. That’s why we have the right to pursue happiness, and not happiness itself. One can always pursue it, regardless of circumstance. Some would argue that the pursuit is where the happiness is actually found; it’s not a destination.
> Curtis Yarvin and the Boys that follow his philosophy
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."
The amount of effusive hagiography devoted to Welch in the late 1990s and early 2000s was stupefying.
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.
Maybe we’re at that moment in a pendulum's arc where it pauses and starts to begin its trajectory back in the other direction. I hope we're there because we need to reset.
He really had some of the worst ideas for longevity of a company. Valuing short term profits over long term plans and goals for the company is the biggest one. The other is probably his adversarial relationship with his employees. He didn't see them as anything other than "the help" and was constantly talking down to them, assumed they were lazy and looking for the easy path in life, in everything I ever read from him.
This is an important book with kots of parallels to The Jungle by Upton Sinclair, both good and bad. Ultimately, I think Welch-ian thinking is a dramatic abandonment of following first principles.
Um, why was someone's perfectly reasonable take downvoted to oblivion? Too much of a newcomer? Too many Welch devotees here?
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.
It is easy to look at Globalization in retrospect and conclude that it was a failure but you will miss all the advances it brought with it. Globalization has its place and time, it was the logical next step after the USA industrialization peaked the next step to squeeze out even more from the economy.
I'm not really sure how globalization could have been stopped after the invention of the shipping container, which was ""the internet for physical objects"". Especially after the closed Soviet economies failed. I suppose some Americans would have preferred a situation where China stayed Communist or collapsed.
>>I suppose some Americans would have preferred a situation where China stayed Communist or collapsed.
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.
We could have had exactly the same and possibly more if it weren’t for people like Welch. They were a hindrance to how globalization could have brought a lot more of shared wealth and less inequality
Falsified by the global economic growth in the period between Adam Smith and Karl Marx.
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.
"Distributing" doesn't require "evenly". Amazon has distribution centres, they don't send stuff to all customers equally regardless of what is ordered.
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.
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.
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.
The more capital you have, the more purchasing power you have relative to the other players in the capitalist game. There is a fixed amount of purchasing power (the total sum of capital). Increasing currency in circulation does not increase the number of things that can be purchased with that currency, it just changes the distribution of purchasing power.
The US Federal Reserve data indicates that the top 10% of households own about 67% of the nation's wealth, while the bottom 50% hold less than 4%
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.
Nothing of what you said has anything to do with the concept of "zero sum". It has to do with if the resources in a system are fixed or if they are changing.
"zero sum: relating to or denoting a situation in which whatever is gained by one side is lost by the other."
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.
Its like chess in that white has an advantage because they get to play first. The rich get richer because you need capital to efficiently participate in capitalism and it has a compounding effect. It than becomes a zero-sum game where the poor are trying to play catch up with the rich. For example if you start an innovative company the rich can simply buy it or start a competing company that is hard to compete against because of their resources.
In that regard, Welch optimized for short-term metrics. Most of the diehard adherents to laissez-faire ideology speak at length about time preference. Willingness to forgo present consumption is the underlying source of investment gains.
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.
> Willingness to forgo present consumption is the underlying source of investment gains.
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!
The title resonates well with mainstream dogma of capitalism being objectively good, ignoring that it was just one aspect of what made "the good years" and was in fact quite limited by both physical and legal constraints, and sometimes pure ideological bent of some behemoths of industry (i.e. messrs Hewlett and Packard, impact of US military spending, etc).
Welch exploited a combination of events when a lot of those limitations (especially legal) ended, acting in extremely capitalist ways.
>mainstream dogma of capitalism being objectively good
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.
>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.
A lot of the terms you recall are terms also coined by people who would be considered anti-capitalists today. That said, specific word use depends a lot on one's specific bubble. A lot of my personal contacts consider it implicitly bad, some with better understanding of why some not, but I do try to get out and see a lot of praise if not actually under the word capitalism, then under what was described yes by Marx as capitalism.
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)
> Um, why was someone's perfectly reasonable take downvoted to oblivion? Too much of a newcomer? Too many Welch devotees here?
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.
The rate is what is scaring me, honestly. I was expecting that the web would move even more to closed silos because of bots, but I was not expecting it to happen so soon. Maybe I'm too old for the rate of change of internet trends.
the culture on this site is a combination of reddit tech bro and linkedIn ceo-poster. Everyone here thinks they are the next great founder. You will toe the line of capital expansion over all or get downvoted.
I remember being downvoted for pointing out Musk's narcissism years ago when he was a saint on this site. The HN hive mind has it's own panoply of topics that are taboo to the tribe. On the plus side, I have noticed fewer unfair downvotes in the past few years. I rarely have to vouch for someone who makes a reasoned statement that offends the local snowflakes.
I get downvoted every time I point out that generative AI is at this point mostly a bad faith tech used by scammers and over confident CEO's desperate to lay people off.
By his logic, he would replace most humans w machines and ai. Can you see a world of ‘bezos,musks,trumps’ types protected and provided with their machines while they despoil the flora and fauna of the earth. Economies of scale fail when scale becomes very large.
As a typical American teenage boy I had a bout of libertarianism in high school. Atypically however it ended with my reading of Atlas Shrugged. Somehow my take away from the book was that clearly there are limits to selfishness and there’s a point at which everyone is dependent upon the systems they live in. Real selfishness is largely selfless. It just felt so much like a childish fantasy that I took away something I suspect Rand would be upset about.
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.
> 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
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.
How did Trump get lumped in with Bezos and Musk? Trump was arguing to keep coal plants open for the jobs, and before politics was mostly in the luxury service industry where a robot server would be rejected outright.
Did I miss where he was pushing for the robots to take over?
> The book covers 80 years—from the moments right after World War II and the way companies were behaving back then. This was the “golden age of capitalism” all the way to the highly unequal society we live in today.
Can someone summarize how companies were behaving in this golden age, or what characterized them?
"The book demonstrates how this shareholder maximizing version of capitalism has led to the greatest socioeconomic inequality since the Great Depression and harmed many of the very companies that have embraced it." That's got some zip.
The fundamental problem I have with this analysis is that it won’t consider a simple assumption: Jack Welch was just better at the capitalism game than others. He didn’t rewrite the written rules, he just didn’t care about the ethic-based unwritten ones.
With the decline of historical ideologies, hyper-individualism took over. Welch was just very good at understanding that some invisible boundaries didn’t apply anymore, and that the zeitgeist was shifting in that direction.
The invisible boundaries did apply, and they still do. The story isn't that he saw that some rules no longer applied, it's that he was willing to go to war about it.
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.
> Post WW2, we had gradually managed to build a less violent society
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?
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.
> Post WW2, we had gradually managed to build a less violent society,
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.
Also smoking ensured there were relatively few old people. The "end" of smoking shouldn't be underestimated as a factor creating our present day economic problems.
Welch in his early career was kept in check in part by Oldtimers who were alive for the experience of the time of the Robber Barons, and the heyday of the American Labor Union. These times were characterized by men willing to do violence to break strikers and likewise to coordinate to make it nigh impossible for the more narcissistic to ascend to power due to actual class solidarity.
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.
Jack Welch destroyed GE. He wasn't good at capitalism, he was perniciously bad at it. He destroyed hundreds of billions of dollars worth of capital in return for hundreds of millions worth of personal gain.
What he was good at was exploiting the system for personal gain.
> Welch was just very good at understanding that some invisible boundaries didn’t apply anymore, and that the zeitgeist was shifting in that direction
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
The ethic based unwritten rules are actually required to make capitalism sustainable long term. If you don’t have those foundations capitalism will turn into oligarchy and eventually feudalism.
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.
I've said it before on here, but in the 1980s even a coked out corporate raider couldn't say the things the 2025 pro-technocapitalists routinely say without being ostracized from society for being a psychopath. People used to see other people as actual people, not disposable work units.
Think Warren Buffett style billionaire versus Elon Musk style.
>he just didn’t care about the ethic-based unwritten ones.
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.
Today's CEOs have moved on to what's important: future metrics. The benefit of future metrics is that they can be plucked out of thin air and recycled, like the amount of years until your cars will drive themselves or the projected revenue from A(G)I.
I agree with your point, but it's kind of ironic that you are answering a post made by a bot. From all the bullshit projections that tech CEOs made, the internet becoming full of bots is not the one that I expected to happen so fast.
I did, at this point 20 years ago it was already said that more than 90% of e-mail traffic was spam, and around that time a lot of anti-spam measures were already set up in things like comment sections and forums and the like. The battle hasn't stopped since then.
Jack's greatest sin was transforming a manufacturing company into a financial institute. Similar to a family that takes on debt to appear wealthy it looks good in the short term but the debt always comes due eventually.
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...
Lights Out is another great book on the process of financialization that killed GE
I can't recommend enough *Jack Welch Is Why You Got Laid Off | Behind the Bastards* (https://www.youtube.com/watch?v=YZv7wc7USQE)
I see some parallels to Curtis Yarvin and the Boys that follow his philosophy. The funny part, with all this boys is, that they do not recognise, that there utopia e.g. new society/state, does not work without the current society that sponsors them.
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.
> I think the American dream is over.
“The reason they call it The American Dream is that you have to be asleep to believe it.”
—George Carlin (1937 - 2008)
It got real, only because a - at the time seemingly viable alternative reared its head. So, ironically, the system that won the system-competition we call the cold war, only works- when under stress in systemic competition.
I think we are mixing up timelines here the rent seeking and financializing happens in 1981 onward not starting at 1991 when the USSR dissolves
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.
But why did the USSR dissolve? A lot of it had to do with citizens’ dissatisfaction with what was available in the Soviet economy, compared to media images of what was available in the 80s-early 90s American economy. And, well, the fact that their government was, in fact, quite democratic, reflecting the wishes of the people.
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.
Yeah I'd argue Jack Welch didn't create that value rather he found a way to extract from the corporate mines and give to shareholders and himself very effectively. It has caused the collapse of some but not all those corporate mines. GE is a good example that maximized shareholder value until the shareholders left and there was nothing left for the company.
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.
As someone who grew up in 5th percentile or higher of Soviet citizens (Moscow, 2 engineer parents) I can tell you that American poor live much better. Think 700sqft flat considered good for a family with 2 kids, not really being able to afford a car, grandma constantly reminding us to not throw away any glass jars - containers to preserve vegetables for the winter were hard to come by.
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.
I feel like that makes sense actually. One core tenet of the "free market" is the need for competition, otherwise complacency and rent seeking happen and things get bad. If that apply for corporations, why not economic systems too?
The market of markets must be free, or the idea of a free market is a myth. Which it is. Capitalism cannot simply be removed, it must be outcompeted by a superior usurper.
> 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.
At which point in history was it not about exactly that?
I think 1960 NE (Nostalgic Era) was great.
Definitely...as long as you were a white Christian heterosexual man.
Probably the homesteading era. Although only if you don't count Native Americans...
Even then, it wasn’t an easy life, they just had different challenges. That’s why we have the right to pursue happiness, and not happiness itself. One can always pursue it, regardless of circumstance. Some would argue that the pursuit is where the happiness is actually found; it’s not a destination.
> Basically, the same with some global corporations, which literally suck society dry
Not that I found corporations great, but there is no indication that society was doing really well before global corporations existed.
Read more Graeber & Wengrow
> Curtis Yarvin and the Boys that follow his philosophy
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."
The amount of effusive hagiography devoted to Welch in the late 1990s and early 2000s was stupefying.
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.
So, this aged well:
Maybe we’re at that moment in a pendulum's arc where it pauses and starts to begin its trajectory back in the other direction. I hope we're there because we need to reset.
No way, HN is talking about equitable business? Is this a recession indicator?
Michael O. Church would just elicit nods of agreement on today's HN.
I am surprised to see, looking at his account just now, that his last post was ten years ago. I hadn't realized it'd been so long.
He really had some of the worst ideas for longevity of a company. Valuing short term profits over long term plans and goals for the company is the biggest one. The other is probably his adversarial relationship with his employees. He didn't see them as anything other than "the help" and was constantly talking down to them, assumed they were lazy and looking for the easy path in life, in everything I ever read from him.
This is an important book with kots of parallels to The Jungle by Upton Sinclair, both good and bad. Ultimately, I think Welch-ian thinking is a dramatic abandonment of following first principles.
Um, why was someone's perfectly reasonable take downvoted to oblivion? Too much of a newcomer? Too many Welch devotees here?
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.
It is easy to look at Globalization in retrospect and conclude that it was a failure but you will miss all the advances it brought with it. Globalization has its place and time, it was the logical next step after the USA industrialization peaked the next step to squeeze out even more from the economy.
I'm not really sure how globalization could have been stopped after the invention of the shipping container, which was ""the internet for physical objects"". Especially after the closed Soviet economies failed. I suppose some Americans would have preferred a situation where China stayed Communist or collapsed.
>>I suppose some Americans would have preferred a situation where China stayed Communist or collapsed.
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.
Market Daoism?
We could have had exactly the same and possibly more if it weren’t for people like Welch. They were a hindrance to how globalization could have brought a lot more of shared wealth and less inequality
> They were a hindrance to how globalization could have brought a lot more of shared wealth and less inequality
That is not how capitalism works.
Says who?
Capitalism is a zero sum game.
Falsified by the global economic growth in the period between Adam Smith and Karl Marx.
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.
It's doing the opposite of distributing. It's concentrating resources into a smaller and smaller selection of individuals.
"Distributing" doesn't require "evenly". Amazon has distribution centres, they don't send stuff to all customers equally regardless of what is ordered.
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 don't think I agree.
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.
A single guy?
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.
Depending on the size of the imaginary conflict, "a single guy" could very well be right.
https://www.oxfam.org/en/press-releases/richest-1-bag-nearly...
How on earth do you justify this claim?
The more capital you have, the more purchasing power you have relative to the other players in the capitalist game. There is a fixed amount of purchasing power (the total sum of capital). Increasing currency in circulation does not increase the number of things that can be purchased with that currency, it just changes the distribution of purchasing power.
The US Federal Reserve data indicates that the top 10% of households own about 67% of the nation's wealth, while the bottom 50% hold less than 4%
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.
Nothing of what you said has anything to do with the concept of "zero sum". It has to do with if the resources in a system are fixed or if they are changing.
"zero sum: relating to or denoting a situation in which whatever is gained by one side is lost by the other."
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.
Inequality is possible in a non-zero-sum game. It's just as possible to have an inequal non-zero-sum game as it is to have an equal zero-sum game.
Capitalism isn't zero sum because at its core principle are transactions, which are inherently non-zero-sum.
Its like chess in that white has an advantage because they get to play first. The rich get richer because you need capital to efficiently participate in capitalism and it has a compounding effect. It than becomes a zero-sum game where the poor are trying to play catch up with the rich. For example if you start an innovative company the rich can simply buy it or start a competing company that is hard to compete against because of their resources.
I'm sorry but what you are describing is not what a zero sum game is.
No
Yeah, which is my other point: Welch was just better than others at capitalism, bringing its fundamental and unethical tenets to the extreme.
In that regard, Welch optimized for short-term metrics. Most of the diehard adherents to laissez-faire ideology speak at length about time preference. Willingness to forgo present consumption is the underlying source of investment gains.
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.
> Willingness to forgo present consumption is the underlying source of investment gains.
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!
The title resonates well with mainstream dogma of capitalism being objectively good, ignoring that it was just one aspect of what made "the good years" and was in fact quite limited by both physical and legal constraints, and sometimes pure ideological bent of some behemoths of industry (i.e. messrs Hewlett and Packard, impact of US military spending, etc).
Welch exploited a combination of events when a lot of those limitations (especially legal) ended, acting in extremely capitalist ways.
>mainstream dogma of capitalism being objectively good
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.
A lot of the terms you recall are terms also coined by people who would be considered anti-capitalists today. That said, specific word use depends a lot on one's specific bubble. A lot of my personal contacts consider it implicitly bad, some with better understanding of why some not, but I do try to get out and see a lot of praise if not actually under the word capitalism, then under what was described yes by Marx as capitalism.
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)
> Um, why was someone's perfectly reasonable take downvoted to oblivion? Too much of a newcomer? Too many Welch devotees here?
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.
At the rate things are going, LLMs are going to kill the entire web. I'm starting to think that's by design.
The rate is what is scaring me, honestly. I was expecting that the web would move even more to closed silos because of bots, but I was not expecting it to happen so soon. Maybe I'm too old for the rate of change of internet trends.
the culture on this site is a combination of reddit tech bro and linkedIn ceo-poster. Everyone here thinks they are the next great founder. You will toe the line of capital expansion over all or get downvoted.
I remember being downvoted for pointing out Musk's narcissism years ago when he was a saint on this site. The HN hive mind has it's own panoply of topics that are taboo to the tribe. On the plus side, I have noticed fewer unfair downvotes in the past few years. I rarely have to vouch for someone who makes a reasoned statement that offends the local snowflakes.
I get downvoted every time I point out that generative AI is at this point mostly a bad faith tech used by scammers and over confident CEO's desperate to lay people off.
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https://archive.is/Lq7Bu
By his logic, he would replace most humans w machines and ai. Can you see a world of ‘bezos,musks,trumps’ types protected and provided with their machines while they despoil the flora and fauna of the earth. Economies of scale fail when scale becomes very large.
As a typical American teenage boy I had a bout of libertarianism in high school. Atypically however it ended with my reading of Atlas Shrugged. Somehow my take away from the book was that clearly there are limits to selfishness and there’s a point at which everyone is dependent upon the systems they live in. Real selfishness is largely selfless. It just felt so much like a childish fantasy that I took away something I suspect Rand would be upset about.
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.
> 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
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.
How did Trump get lumped in with Bezos and Musk? Trump was arguing to keep coal plants open for the jobs, and before politics was mostly in the luxury service industry where a robot server would be rejected outright.
Did I miss where he was pushing for the robots to take over?
I think you missed orange man bad, bad rich people all same bad, BAD!
> The book covers 80 years—from the moments right after World War II and the way companies were behaving back then. This was the “golden age of capitalism” all the way to the highly unequal society we live in today.
Can someone summarize how companies were behaving in this golden age, or what characterized them?
Related:
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)
Interview with the author on PBS:
* https://www.youtube.com/watch?v=FaCSbdNsLQk
"The book demonstrates how this shareholder maximizing version of capitalism has led to the greatest socioeconomic inequality since the Great Depression and harmed many of the very companies that have embraced it." That's got some zip.
The fundamental problem I have with this analysis is that it won’t consider a simple assumption: Jack Welch was just better at the capitalism game than others. He didn’t rewrite the written rules, he just didn’t care about the ethic-based unwritten ones. With the decline of historical ideologies, hyper-individualism took over. Welch was just very good at understanding that some invisible boundaries didn’t apply anymore, and that the zeitgeist was shifting in that direction.
The invisible boundaries did apply, and they still do. The story isn't that he saw that some rules no longer applied, it's that he was willing to go to war about it.
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.
> Post WW2, we had gradually managed to build a less violent society
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?
I'm not saying post-WW2 society was non-violent.
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.
> Post WW2, we had gradually managed to build a less violent society,
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.
Also smoking ensured there were relatively few old people. The "end" of smoking shouldn't be underestimated as a factor creating our present day economic problems.
Welch in his early career was kept in check in part by Oldtimers who were alive for the experience of the time of the Robber Barons, and the heyday of the American Labor Union. These times were characterized by men willing to do violence to break strikers and likewise to coordinate to make it nigh impossible for the more narcissistic to ascend to power due to actual class solidarity.
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...
Jack Welch destroyed GE. He wasn't good at capitalism, he was perniciously bad at it. He destroyed hundreds of billions of dollars worth of capital in return for hundreds of millions worth of personal gain.
What he was good at was exploiting the system for personal gain.
> Welch was just very good at understanding that some invisible boundaries didn’t apply anymore, and that the zeitgeist was shifting in that direction
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
The ethic based unwritten rules are actually required to make capitalism sustainable long term. If you don’t have those foundations capitalism will turn into oligarchy and eventually feudalism.
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.
Don’t forget Reaganomics
You are using too many words to say "psychopath".
I've said it before on here, but in the 1980s even a coked out corporate raider couldn't say the things the 2025 pro-technocapitalists routinely say without being ostracized from society for being a psychopath. People used to see other people as actual people, not disposable work units.
Think Warren Buffett style billionaire versus Elon Musk style.
>he just didn’t care about the ethic-based unwritten ones.
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.
Applauding? LOL who is doing that? A person like Welch should be in jail
> very good at understanding that some invisible boundaries didn’t apply anymore, and that the zeitgeist was shifting in that direction.
Sounds like Trump, for better or for worse
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Today's CEOs have moved on to what's important: future metrics. The benefit of future metrics is that they can be plucked out of thin air and recycled, like the amount of years until your cars will drive themselves or the projected revenue from A(G)I.
I agree with your point, but it's kind of ironic that you are answering a post made by a bot. From all the bullshit projections that tech CEOs made, the internet becoming full of bots is not the one that I expected to happen so fast.
Maybe a stupid question: how can you know this was a bot?
Account created very recently and the comment reads like a line in a USA Today article.
user: Stevemiller07 created: 1 day ago karma: 3 about: I am an agency owner, i have multiple clients needing ai agents
I did, at this point 20 years ago it was already said that more than 90% of e-mail traffic was spam, and around that time a lot of anti-spam measures were already set up in things like comment sections and forums and the like. The battle hasn't stopped since then.
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