Capitalism is good. Let me explain.

Is capitalism the reason the world is going to hell in a hand basket? Or is it going to save us? What is capitalism anyway? How does money work and when do free markets fail? This video is a brief summary of a dip I did into microeconomics literature in a dark hour of my life.

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00:00 Intro
00:24 Money
03:17 Capitalism
08:26 Microeconomics
10:33 Externalities
12:35 Consumers and the Social Cost of Carbon
14:10 Summary
14:36 Learn Science with Brilliant

#quizwithit

[SabineHossenfelder]

A lot of people here confuse capitalism with deregulation. I did not anticipate this point to be so widely misunderstood. If I had, I would have stressed it more. I am sorry in case I caused confusion.

[Edmonddantes]

As an economist myself, I have to say, I really like your physics videos. Maybe keep making those

[m.e.]

I remember my economics professor saying that most people think that the job of economists is to advise governments, when instead it is more common for governments to hire economists to justify their policies.

[MagicAndReason]

One of the often unstated problems of free markets is that every agent in that free market is trying to make it as un-free as possible for the other agents.

[TuckerHolt]

Basically just “ capitalism is good.. except for all the bad things, but that’s a different story”

[tonykaze]

This video was a shock. I watch every video Sabine releases. This is the first time I've seen her do many things... such as:
1) abandon topics she actually knows about
2) make a video without doing any relevant research
3) blindly spew an almost religious level of dogmatic propaganda
4) just be so blatantly wrong on virtually every asserted fact, both historical and present-day.

Feels a lot more like a PragerU disinformation course than a Sabine video. Is it April fools or something?

[franciscobarrosvito]

One of the great examples of survivorship bias is: We praise companies performing investigations, but we never know what investigations are never published because of inconvenient results. Like Coca Cola and nutrition papers.

[vylbird]

Your example is penicillin? I think you might be a bit off on your history there: The mass-production research was done by two groups. One in the UK, one in the US. Neither of which was done using investor money in expectation of a return. It was 1940-1943 when this happened, and a drug that would stop soldiers dying in field hospitals was of obvious application - both groups were government funded, in the belief that the research would be of value to the military.

[andre-vm]

Here's a list of all the parts in which she says "but that's another story":
2:35 - Fiat money / cryptocurrencies
7:23 - Marx
8:01 - Different ways of governing a capitalist state
9:37 - Microeconomics shortcomings
11:46 - Water pollution (here she used “different” story, rather than “another" story)
13:50 - Social cost of carbon

[flotsamMM]

I can identify a couple sections where a modicum of additional nuance could have led to very different conclusions, but that's another story

[SuperMrMuh]

Just some two cents from a physicist turned economist. You did a fairly solid summary of the textbook version of capitalism, but "the devil is in the detail". The (understandable) backlash in the comments section stems from the fact that most people don't believe this simple picture to be close to reality (and of course, as you explained, market failures are a part of it). And I have to agree with them. While the simple microeconomic description works for goods with little specialization required, like apples, bread and Döner, the model quickly breaks down for most of the products relevant in modern economies.
Economists often fail to validate the assumptions on which their models build, and thus apply this simple model in all kinds of ways which are not valid. Thus they implicitly assume that markets always tend towards a (unique) equilibrium. Real markets can get stuck in suboptimal equilibria, or equilibria might be unstable (hint: financial markets). Real markets overwhelmingly tend to converge to oligopolies or monopolies (e.g. the whole tech sector), so the static picture of many competing companies is the exception than the rule. Capital allocation does not favor the common good, but is driven by highest profit opportunities (no, they are not equal, even though assumed in the models). Planned obsolescence, advertising, etc...
One might argue that the problems can be fixed just by the right regulations. And arguably, some of them can be. But some are side-effects of the system's dynamics themselves, i.e. they will always show up one way or another, and even regulation frenzies won't stop these underlying dynamics from showing up again.
The matter is of course not helped by the ideological debate. Especially the economics profession tends to deflect criticism on the realism of their models and thus closes itself off to innovation in their own science. Which of course heats up the debate even more.

[seangraham]

"That's why we have laws against that" is doing a Herculean amount of work here lol

[VolkerHett]

As somebody who studied economics (micro and macro) and business administration, I should now make a video about loop quantum gravity.

[Moiteru]

Important part that is missing from this point of view is the corporate lobbying of governments. We cannot talk about setting rules that will benefit majority, if a minority can just buy access to politicians. Without that we can single out kids in headlines for not ‘getting it’ but we can do as little as them about the issue.

[santicruz]

I remember when Dr Sabine scolded and other scientists for stepping out of their expertise and talked nonsense.

[meierandre]

One major problem is the huge political influence (directly and via media) of very rich people and companies. This leads to laws that benefit the rich but not the people.

[mrt_]

"This is why we have laws against that"
... and the people avoiding those laws are either paying the people enforcing the laws, or optimizing how close to the sun they can fly before they fall, some can do it, some fall, and some get away with flying too close.

[frogstarian]

I remember my Econ professor saying that economic models are "oversimplified and based on bad assumptions". And he was absolutely right.

[ghahate]

I like how in her view capitalism is trusted and cant be corrupted because its illegal

[BrennanYoung]

Big corporations *love* regulation when it works in their favour. (e.g. extending copyrights on IP)