Тег: Capital

The “Rich Pauper” Strategy: How to Cheat the State and Preserve Capital

Imagine two guys. The first drives a shiny Ferrari, wears a Brioni suit, and posts photos of oysters on Instagram. He has a mountain of debt, insomnia, and breaks into a cold sweat every time a letter from the tax office arrives. The second takes the subway in an inconspicuous logo-less hoodie, eats shawarma on the corner, and sighs during a conversation with a neighbor about how utilities have gone up again. But in his head is a seed phrase for a wallet containing hundreds of bitcoins. Which one of them is truly free? For any self-respecting agorist, the answer is obvious.

We are living in an era where the state has turned into a giant Tyrannosaurus Rex. And as we remember from “Jurassic Park,” a T-Rex’s vision is based on movement. In our reality, it is based on showing off. If you want to live freely, build your capital, and avoid attracting the attention of “comrade major,” the tax inspectorate, or simply criminal elements, you need to master the greatest art of the 21st century: being a “poor” rich person.

First and foremost, you should rent everything rather than owning it. Do you know what buying a luxury home or car in your own name is? It’s voluntarily pinning a huge target to your back that says: “I’m here! Milk me!”. It is the ideal asset for confiscation, seizure, or exorbitant taxes. Rent your housing and transport. Ideally, not even in your own name, but through trusted representatives, cooperatives, or anonymous companies, if the scale allows. You can live in a penthouse and drive a Bentley, but on paper, you are just a passerby.

It is also important to give up luxury: Rolexes, Birkin bags, Gucci belts—these are taxes on insecurity. In agorism, your clothing is camouflage. Dress neatly, but in a way that makes you impossible to remember. Steve Jobs and Mark Zuckerberg didn’t popularize basic t-shirts for no reason. When you have no labels, people (and officials) cannot “appraise” you. You blend into the crowd.

Of course, you must not talk about your assets! Friends will start asking for loans (and get offended if you refuse). Acquaintances might accidentally blurt out about your wealth in a bar where the wrong person is sitting. Money loves silence, and crypto loves graveyard silence. To everyone, you should be that guy who “does something on the internet, seems to have enough for food.”

It would be a good idea to learn how to professionally play poor. In our society, successful people are envied, while the poor are pitied and left alone. Complain about inflation, sigh when paying a bill at a cafe, always ask for discounts and promo codes, and haggle at markets. It’s not about the 5 dollars saved—it’s about creating an alibi. When you constantly demonstrate that you are counting pennies, no one will even think that you can be “de-kulakized.”

Another tip: delete Instagram to hell, or at least stop posting photos from business class. Social networks are an open database for tax collectors and scammers. Your profile should look as if you spend your vacation at your grandmother’s cottage, not in the Maldives.

Furthermore, invest your money in things that cannot be taken away. Instead of gold chains, invest in your health (best medicine, quality but simple food, biohacking) and in knowledge. And foreign passports and residency permits (which, of course, you will tell no one about) are the best insurance, invisible to neighbors.

And finally, use cash and P2P. If you pay for everything with a named bank card, your consumption profile is visible as clear as day. Pay for daily expenses in cash wherever possible, as paper money leaves no logs.

In conclusion, it should be said that agorism is not just a philosophy of the free market, but a daily spy game. The stationary bandit wants you to be transparent, predictable, and tied to a place. But you can live in such a way that you will only smile, watching the system try to grab you by the throat, while its fingers grasp emptiness. Because for the system, you simply will not exist; you will be a ghost. A very wealthy, free, and invulnerable ghost.

Voluntarist, Bitarch

Concentration of Capital in a Free Market

At first glance, free capitalism, unrestricted by the state, has one fundamental characteristic — the inevitable concentration of all capital in a few hands. This leads to a situation that is no better than “state capitalism” in the USSR (roughly speaking, if 1% owns 99% of the capital now, it is clear that over time 0.1% will own 99.9%, and so on). In other words, the absence of state intervention in the market leads to the emergence of such an omnipotent monopoly capitalist that the state would seem like the lesser evil.

Where can I read, if available,
1) A refutation (preferably empirical) of the thesis on the concentration of capital.
2) What can stop concentration, other than non-economic (read: state) intervention?

The question is accompanied by a donation in the amount of 0.00080000 BTC

Unfortunately, any attempts at empirical confirmation or refutation of the thesis on the inevitable concentration of capital under capitalism run into the distorting influence of the state. One can provide examples of how capital concentrates because large capitalists successfully lobby for their interests, and as a result, regulations are adopted by the state that benefit large businesses and disadvantage small ones. Meanwhile, the market reasons for capital concentration remain behind the scenes. One can demonstrate how state antitrust services hinder the notorious concentration of capital, while the purely market mechanisms that also oppose it remain behind the scenes. Therefore, I would like to focus specifically on the market mechanisms working in one direction or another.

Concentration of Capital

The main market reason for the concentration of capital is the positive effect of scale. A large company can afford to use a greater amount of capital goods that increase labor productivity, which allows it to generate more profit and reinvest it, again, into increasingly capital-intensive factors of production.

It is also worth noting that consumer goods are becoming more complex, and the production of many of them inevitably requires the involvement of significant capital. For example, a small shipyard cannot build a cruise liner, and a small studio cannot film a blockbuster.

Diffusion of Capital

Now let’s look at the reasons that contribute to the decrease in the concentration of capital.

First, besides the positive effect of scale, there is also a negative one. The larger the structure, the more costs are attributed to parasitic processes. Orders move through the chain of command more slowly than they would in its absence. An order in a chain of command is more likely to be distorted than in conditions where an individual entrepreneur sets tasks for themselves or directly for the executors. Employees in large structures are no longer motivated by the company’s profit, which they influence only very indirectly, but by artificial KPIs. As a result, they are more focused on achieving KPIs rather than on the interests of the business. All this reduces margins. At a certain size of the structure, the negative effect of scale becomes stronger than the positive one. A business that has grown beyond its optimal size begins to eat away at its capital, yielding market share to smaller competitors.

Second, it is small businesses that implement the lion’s share of innovations. Even in a large company, pilot production is relatively small in size and relies on a small number of scarce specialists. Sensing excess profit as a result of implementing their idea, such a specialist can quite easily leave the company and open their own startup, which then skims the cream off the market. Successful startups grow, and the share of old capital decreases.

Third, for the sake of reducing risks, a large entrepreneur will prefer not to put all their eggs in one basket and will invest money in several companies. This dilutes the ownership structure of companies; the owner can no longer closely monitor the development of their business, responsibility is shifted to management, and it is the top managers who become the primary beneficiaries of the process, while the relative income of investors falls.

Finally, the factor of capital dilution upon inheritance does not disappear. The larger the company, the greater the chances that a bunch of people, as well as various funds, will be mentioned in the will, whereas a small enterprise is more likely to go to a single heir.

And what does this tell us?

Nothing. The optimal size of a business for each industry, and often for each region, is different and constantly changing; it is determined by the level of technological development, which can contribute both to increasing the returns from centralization (for example, auto repair shops were quickly displaced by auto plants after the introduction of the assembly line) and to increasing the returns from decentralization (for instance, broadband internet sharply increased the number of content producers and decreased the average size of a newsroom).

The concentration of capital in the hands of a few may increase or decrease; in essence, this is not important. What is important is that in a free market, the welfare of the poorest grows even when the welfare of the richest grows even faster. And there are indeed many empirical studies on this topic (although, of course, one must remember here as well that empirics will inevitably be distorted by state intervention). You can read more about this in one of the chapters of David Friedman’s *Machinery of Freedom*, which I am translating, titled “The Rich Get Richer, and the Poor Get Richer”. The desired empirics are also present there.

… when the impoverishment of the working class just doesn’t seem to happen…