Very interesting piece, I'm interested in the debate as to whether firms are themselves really investing less or if it's also changed. There's a focus on capital investment, but other authors like Maher and Aquanno argue that R&D per GDP hasn't lowered per say. I am in the middle where, we have to explain why northern capitalism has stopped growing, but I don't think it's as simple as monoply + stagnation.
yeah agree- perhaps i've flattened this point a little here; the source of stagnation is itself complex and deserves its own piece to hash through some of the debates
Well written, I would note that prior to the post WW2 centralization that culminated in the advent of the so called Neoliberal Era we were also politically, economically, governmentally, financially, and scientifically decentralized system that proactively, at different levels of government made things the way they were and took proactive steps for hundreds of years, especially at the state and local levels, to prevent the financialization of the economy
Great piece! A few more fundamental questions come out for me though: What is a firm? Where are the constellation of investors and their interests? Wealth concentration likely affects investment (and *overinvestment*) patterns, not just a dimension of household consumption.
# American Capitalism: A Rebuttal to the Short-Termism Myth
For decades, the lament has persisted: American capitalism, once a beacon of innovation, has devolved into a short-termist machine, incapable of fostering true progress. This narrative, amplified in the 2010s amid the wreckage of the global financial crisis and the proclaimed "death of neoliberalism," has calcified into conventional wisdom. Yet, a closer examination reveals cracks in this orthodoxy—cracks wide enough to question its very foundation.
## The Scoreboard Doesn’t Lie
America’s economic track record stands as a formidable counterpoint. Far from lagging, the United States has outstripped every high-income peer—Europe’s social democracies and East Asia’s vaunted tigers like Japan, Korea, and Taiwan included. While commentators extol the supposed long-term focus of these regions, the reality is unambiguous: the S&P 500 reigns as the world’s most coveted index, a testament to a system that thrives on adaptability, not stagnation.
## The Fallacy of Long-Termism
I’ve always harbored doubts about the sanctimonious "long-termism" meme. The future is inherently uncertain; a long-term plan, all else equal, carries greater risk than its short-term counterpart. Companies exist to deliver risk-adjusted returns, not to chase utopian horizons. Critics—safely ensconced in the bleachers—love to decry firms for not taking bold, decades-spanning bets. But these spectators rarely wager their own capital. To them, the market is a stage: win or lose, they exit unscathed.
## Network Monopolies: Overblown and Underperforming
Some attribute the S&P 500’s dominance to the rise of network monopolies—digital giants that lock in users and stifle competition. This, too, is overstated. Take Uber: despite its textbook network effects, it has yet to post a net profit in its entire history. Switching costs for e-commerce and delivery apps remain negligible; consumers pivot effortlessly between platforms. The monopoly bogeyman, while compelling, lacks substance under scrutiny.
## Innovation Alive and Well
If American capitalism were truly innovation-starved, how do we account for Nvidia’s meteoric rise? A fabless company from the outset, it now claims the title of the world’s most valuable firm, driven by relentless technological breakthroughs. Or consider ARM, which, by outsourcing manufacturing to TSMC, has steadily eroded Intel’s PC market share. Intel, bogged down by its dual role in design and fabrication, is now forced to split those arms to survive. These are not tales of stagnation but of agility and ingenuity.
## Short-Termism? Look Again
The anti-neoliberal charge of short-termism falters further against historical evidence. Amazon famously operated without profit for its first decade—much of it as a public company—its investors patiently eyeing a distant payoff. The 2010s blitzscaling boom saw startups torch billions, backed by venture capital willing to stomach years of losses for a shot at enduring dominance. Stock prices, too, reflect this forward tilt, tethered not to current earnings but to future profits. The market, it seems, is far less myopic than its detractors claim.
## A Contrast in Corporate Culture
If American capitalism invites critique, cast your gaze to Asia’s family-run conglomerates. These dynasties—often controlling firms with less than 30% equity—screw minority shareholders while clinging to power. Hailed as long-termist exemplars, they’re anything but. Their hallmark is not vision but conservatism, a risk-averse inertia masquerading as strategy. America’s corporate ethos, for all its imperfections, remains far more dynamic.
## The Verdict
The short-termism narrative is not merely exaggerated—it’s a distraction. American capitalism’s flaws are real, but its capacity for reinvention endures. To those tolling its death knell, I offer a simple challenge: check the scoreboard.
Very interesting piece, I'm interested in the debate as to whether firms are themselves really investing less or if it's also changed. There's a focus on capital investment, but other authors like Maher and Aquanno argue that R&D per GDP hasn't lowered per say. I am in the middle where, we have to explain why northern capitalism has stopped growing, but I don't think it's as simple as monoply + stagnation.
yeah agree- perhaps i've flattened this point a little here; the source of stagnation is itself complex and deserves its own piece to hash through some of the debates
Well written, I would note that prior to the post WW2 centralization that culminated in the advent of the so called Neoliberal Era we were also politically, economically, governmentally, financially, and scientifically decentralized system that proactively, at different levels of government made things the way they were and took proactive steps for hundreds of years, especially at the state and local levels, to prevent the financialization of the economy
Great piece! A few more fundamental questions come out for me though: What is a firm? Where are the constellation of investors and their interests? Wealth concentration likely affects investment (and *overinvestment*) patterns, not just a dimension of household consumption.
what is a firm?! that really gets to the heart of it. Thanks Justin!
# American Capitalism: A Rebuttal to the Short-Termism Myth
For decades, the lament has persisted: American capitalism, once a beacon of innovation, has devolved into a short-termist machine, incapable of fostering true progress. This narrative, amplified in the 2010s amid the wreckage of the global financial crisis and the proclaimed "death of neoliberalism," has calcified into conventional wisdom. Yet, a closer examination reveals cracks in this orthodoxy—cracks wide enough to question its very foundation.
## The Scoreboard Doesn’t Lie
America’s economic track record stands as a formidable counterpoint. Far from lagging, the United States has outstripped every high-income peer—Europe’s social democracies and East Asia’s vaunted tigers like Japan, Korea, and Taiwan included. While commentators extol the supposed long-term focus of these regions, the reality is unambiguous: the S&P 500 reigns as the world’s most coveted index, a testament to a system that thrives on adaptability, not stagnation.
## The Fallacy of Long-Termism
I’ve always harbored doubts about the sanctimonious "long-termism" meme. The future is inherently uncertain; a long-term plan, all else equal, carries greater risk than its short-term counterpart. Companies exist to deliver risk-adjusted returns, not to chase utopian horizons. Critics—safely ensconced in the bleachers—love to decry firms for not taking bold, decades-spanning bets. But these spectators rarely wager their own capital. To them, the market is a stage: win or lose, they exit unscathed.
## Network Monopolies: Overblown and Underperforming
Some attribute the S&P 500’s dominance to the rise of network monopolies—digital giants that lock in users and stifle competition. This, too, is overstated. Take Uber: despite its textbook network effects, it has yet to post a net profit in its entire history. Switching costs for e-commerce and delivery apps remain negligible; consumers pivot effortlessly between platforms. The monopoly bogeyman, while compelling, lacks substance under scrutiny.
## Innovation Alive and Well
If American capitalism were truly innovation-starved, how do we account for Nvidia’s meteoric rise? A fabless company from the outset, it now claims the title of the world’s most valuable firm, driven by relentless technological breakthroughs. Or consider ARM, which, by outsourcing manufacturing to TSMC, has steadily eroded Intel’s PC market share. Intel, bogged down by its dual role in design and fabrication, is now forced to split those arms to survive. These are not tales of stagnation but of agility and ingenuity.
## Short-Termism? Look Again
The anti-neoliberal charge of short-termism falters further against historical evidence. Amazon famously operated without profit for its first decade—much of it as a public company—its investors patiently eyeing a distant payoff. The 2010s blitzscaling boom saw startups torch billions, backed by venture capital willing to stomach years of losses for a shot at enduring dominance. Stock prices, too, reflect this forward tilt, tethered not to current earnings but to future profits. The market, it seems, is far less myopic than its detractors claim.
## A Contrast in Corporate Culture
If American capitalism invites critique, cast your gaze to Asia’s family-run conglomerates. These dynasties—often controlling firms with less than 30% equity—screw minority shareholders while clinging to power. Hailed as long-termist exemplars, they’re anything but. Their hallmark is not vision but conservatism, a risk-averse inertia masquerading as strategy. America’s corporate ethos, for all its imperfections, remains far more dynamic.
## The Verdict
The short-termism narrative is not merely exaggerated—it’s a distraction. American capitalism’s flaws are real, but its capacity for reinvention endures. To those tolling its death knell, I offer a simple challenge: check the scoreboard.