Root causes of crises & bailout under capitalism

1. An economy is an information network.

2. Capitalism is the system that maximizes free flow of information (capital) through this network.

3. Networks built by the free action of humans always result in heavy-head, long-tail distributions. (I'd say power law but C. Shalizi would smack me.)

4. Thus it is inevitable that massive economic power ends up concentrated in the hands of centralized actors who lack the capacity to manage this power efficiently.

5. When these entities inevitably fail, their centrality to the network generates irresistible political pressure to bail them out using the instruments of coercion (i.e. the government).

6. Thus capitalism contains within its nature the very seeds of its undoing.

Discuss.

(Composed on Muni 38 from downtown to J-town using my G1.)

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