[Truth To Power]

Essentially the basis of capitalism is continuously expanding markets.

No it isn't. The basis of capitalism is private ownership of the means of production: land and capital goods.

This is the grounds for the division of labor.

No it isn't. The grounds for division of labor is that the differing capacities and education of different workers fit them for different work.

Expansion of markets is the historical impetus to the transition from local craftsmanship to industrialized production.

But the transition to mass production only requires better transportation, not perpetual growth.

This logic of perpetual growth is pervasive under capitalism.

Because capitalism makes growth possible, and people like getting better off.

It is the goal of every capitalist firm.

No it isn't. Profit is the goal.

It is the goal of every investor in capital markets.

No it isn't. Profit at low risk is the goal.

There is really no alternative to perpetual growth under capitalism, aside from economic depression.

False. Capitalist economies naturally become stagnant as they become devoted to the enrichment of parasitic rentiers at the expense of the productive.

This is when you have people lining up on the streets staring at empty houses in which they cannot live,

That happens because private property in land removes people's rights to liberty.

while farmers burn crops in the midst of mass hunger.

Which hasn't happened in living memory, AFAIK.

Capitalism has no potential for a steady state. Ever expanding demand against ever expanding supply is the fundamental root of capitalism. Means by which this is achieved (i.e. division of labor) are the products of necessity of capitalism.

OTC, capitalism has to evolve to a stagnant state because more and more of production goes to rentiers, and less and less to those who produce. It may of course go beyond that, and collapse as the rentiers try to take unsustainable fractions of production from the producers. But that is not inevitable.

[Crantag]

I must remark first off that there is what I consider a disturbing trend in academic economics. It is that critical thinking is no longer valued. What is valued is conformity to a pre-determined framework. This means that people are criticized not on the basis of their ideas, but on their degree of conformity to a mainstream framework. This also surely has much to do with the limitations that orthodox economists impose on themselves, which inhibit them from understanding arguments which do not conform to their narrow framework. For an undergraduate economics student, interdisciplinary study of say sociology, politics, biology even is not that much encouraged. All that is typically really strongly encouraged in the way of interdisciplinary study is mathematics.

Economic researchers are all too often no longer independent academics. They are in effect technicians. The thinking goes that all of the theory is already worked out, having been done so over the course of a couple centuries. So, all that there is now is to practice technique. In practice, this is also born of the need of conformity. As such, group think is absolutely pervasive in the field of academic economics.

There is also a great problem of conceptualization. If we are trying to discuss something but doing so without using the same conceptualization, or trying to understand one another's conceptualizations, we are in effect only spinning our wheels.

First of all, your claim was that perpetual growth is a necessity in a market economy, not capitalism; second, it was in the context of China, which you (incorrectly) claim is communist; and third, capitalism is a way of organizing ownership of the means of production (land and capital), and is certainly not dependent on perpetual growth, as the long-term stagnation of numerous capitalist economies in Africa and Latin America attests.

It was not in the context of China, which I--in my opinion quite rightly claim to be communist. The rest of your post displays quite readily your complete inability to understand at the abstract level anything I have been saying about the stagnation thesis. (For one, it applies to advanced capitalist countries. It doesn't apply to countries that are economically depressed, and economic depression born of underdevelopment has nothing whatsoever to do with the stagnation thesis.)

[Crantag]

But that's false. Like Marx, Sweezy just doesn't understand the role of land in the economy, and of "all-devouring" land rent in absorbing excess production.

Mainly by landowners and other rentiers.

But somehow, towering, astronomical land valuations happen without any additional return going to land....?

No, it is you who don't understand the arguments being presented here. I mentioned land (in my reference to David Harvey's descriptions of the production of urban space--which you needlessly ridicule below). Have you ever heard though of asset price bubbles?

You fail to understand the concept of economic surplus. Therefore, you cannot move beyond the superficial.

The arms industry is large, and there is a lot of rent seeking in it, but it pales beside landowning. The main sinks of production in modern, advanced capitalist economies are land rent, IP rents, interest on bankster-issued debt money, and monopoly-privileged labor, especially in the public service and the medical, legal, etc. fields.

Like I said: in the context of the book Monopoly Capital, military and imperialism is one of the typical fields by which surplus is absorbed. In the course of Sweezy and Baran's meticulous analysis, the arms manufacturing industry is used to demonstrate this. How this is so is quite beyond the scope of my comments here. The best that I can do is to refer you to the book.

No, it's mainly owing to the desire of banksters to get their hands on the real loot: land rent. The sub-prime mortgage crisis showed the lengths they will go to to do that.

I do not know if you are responding to financialization, which is a very complicated phenomenon which is almost impossible to explain with fine precision (I say this on the basis of sufficient review of literature, please don't purport that YOU hold all the answers). Anyway, the comment to which you responded was rather peripheral.

Or perhaps you are just commenting tangintally; in which case, you will get no disagreement from me.

"Production of urban space," is it?

Yes, you see, this is a technical concept from the field of geography. Notions of the production of relative and absolute space are attributable to Henri Lefebvre. As I was referencing David Harvey, I was borrowing some of his terminology.

Not that I would expect an ascriber to orthodox economics to have much knowledge of geography.

Anything to avoid knowing the fact that all production above subsistence goes to landowners according to the Law of Rent, and that any naive attempt to redress that injustice also goes to landowners, according to the Henry George Theorem.

And it is here that we quite plainly part company. But that's okay. I'm not going to ridicule you for not adhering to my theoretical framework. I'll leave that up to the orthodox to do.

[Crantag]

That is often also true under fascism, so your argument is not relevant.

Again, this could as easily be fascist.

No it isn't. Communism requires abolition of private property. China has never been close to abolishing private property, and now has private ownership of the bulk of capital goods, and is therefore no longer even socialist.

You don't seem to know that there is a difference between communism and fascism.

It most certainly is not. There is one and only one respect in which China is communist: its governing party (incorrectly and dishonestly) calls itself communist.

Now you mistake 'fascism' for 'totalitarianism' or 'authoritarianism', or something of the sort. It reminds me of George Orwell's remark in 'Politics and the English Language':

"The word Fascism has now no meaning except in so far as it signifies 'something not desirable.'"

I am interested in things like fascism, and I've spent some time studying it. I can't purport with utter confidence to be correct, but I have my own working definition of fascism. It is this:

"Fascism is a distopian political state in which absolute power is wrested in the hands of lifeless (e.g. immortal) corporations which command the institutions of government and which hence calculatedly determine and direct the course of political decision-making processes."

As such, there is a difference between absolute fascism (in the abstract) and instances of historical fascism. I'm off on a tangent, but my point is that China is not fascist, as I understand the concept (though I do question how well you understand the concept of fascism, based on your remarks).

And we are limited in what terms we have to describe things like political and economic systems. If you feel as though you can come up with a new concept which accurately depicts the concrete realities of Chinese politics, economics, and society, other than communism, be my guest. Do please note that before you could do so, you would be required to know about these concrete realities at a much more than superficial level.

[Crantag]

No it isn't. The basis of capitalism is private ownership of the means of production: land and capital goods.
This is the grounds for the division of labor.

Once again, you display your incapacity to follow my arguments at an abstract level.

As far as private enterprises, it is correct that they are the basic units of capitalism. More specifically, insofar as advanced capitalism, joint-stock companies are essentially the basic units. (This goes back to Rudolf Hilferding, by the way, who recognized it some 100 years ago.)

This does nothing to discredit what I have said.

No it isn't. The grounds for division of labor is that the differing capacities and eduation of different workers fit them for different work.

Somebody needs to re-read Adam Smith. (Or, somebody needs to read Adam Smith is, perhaps, more likely).

Because capitalism makes growth possible, and people like getting better off.

This is a thoughtless remark with no contents. More presciently, you still fail to understand my abstract logic.

No it isn't. Profit is the goal.

You must have never worked in an office before.

Name me a capitalist firm which is content with zero growth. It doesn't exist. Every firm aims to grow. This is business 101 level stuff. It's shocking that I should need to justify this.

No it isn't. Profit at low risk is the goal.

And how is profit attained in capital markets? The answer is through appreciation of the underlying equities, e.g. growth.

It is once more shocking that I should even need to justify this.

False. Capitalist economies naturally become stagnant as they become devoted to the enrichment of parasitic rentiers at the expense of the productive.

That is one argument. I have been devoting considerable space in this thread in pursuit of an alternative argument, which I find much more explanative.

Which hasn't happened in living memory, AFAIK.

You apparently don't follow the news much.

There is a residential crisis in many centers of global capitalism. There is mass homelessness amidst empty homes. It hasn't happened in living memory? It is happening, right now.

OTC, capitalism has to evolve to a stagnant state because more and more of production goes to rentiers, and less and less to those who produce. It may of course go beyond that, and collapse as the rentiers try to take unsustainable fractions of production from the producers. But that is not inevitable.

You are on this topic of rentiers, which I am not here to discredit, and which may be an interesting dynamic. But, I do find it rather tangential.

[Eran]

Paul Sweezy argues that there is a chronic overaccumulation (he doesn't use these words, but in essence) of fixed capital, so that new investment in fixed capital is not sufficient to capture all of the proceeds of industrial profit making.

I'm not sure I follow. Is his view that too much money is invested in physical capital (e.g. machinery)? Or that too much money (profits) is made available for investment, but insufficient quantity of attractive/appropriate investment channels are available, and, consequently, too much profit gets accumulated but not invested in fixed capital?

[Crantag]

I'm not sure I follow. Is his view that too much money is invested in physical capital (e.g. machinery)? Or that too much money (profits) is made available for investment, but insufficient quantity of attractive/appropriate investment channels are available, and, consequently, too much profit gets accumulated but not invested in fixed capital?

The latter is essentially accurate.

They use the term 'economic surplus' (which is similar to but distinct from surplus value). This basically refers, indeed, to the profits which accumulate, but which can't be readily invested in new physical capital, because of capital overaccumulation. Oligopolistic organization of modern industry exacerbates the situation.

[Eran]

Ok, I get that.

Apple Computers, for example, has accumulated huge amounts of profits which it cannot usefully invest as capital.

Such funds may be distributed as dividends, used to fund acquisitions, or merely maintained as cushion against potential future losses.

Where is the problem?

[Crantag]

Ok, I get that.

Apple Computers, for example, has accumulated huge amounts of profits which it cannot usefully invest as capital.

Such funds may be distributed as dividends, used to fund acquisitions, or merely maintained as cushion against potential future losses.

Where is the problem?

The level of analysis is not the firm, but the 'macro-economy'.

As the argument goes, you essentially have the accumulation of surplus in the hands of oligopolistic firms, which are indeed profitable, in spite of capacity underutilization and unemployment. So, you essentially have a deterioration of the working class on the one hand, and an accumulation of surplus on the side of capital, on the other. All the while, the rusting machinery, and indeed the unemployment, implies an inefficient use of resources. At the same time, the companies which accumulate the surplus--finding no ready outlet in the form of expanded reproduction--divert their profits to other means. From a business standpoint, having cash on hand is not a negative, up to a point (though no one really wants to hold excessive amounts of cash. This too is at least an indicator of inefficiency, in the means of finance). From a societal standpoint, massive advertising budgets in lieu of profitable investment is potentially problematic. And advertising is just one (the simplest) illustration.

So, it is not a case where firms having excess cash are damaged, by having excess cash. Actually, the firms make off pretty okay, typically. It has partly to do with the imbalances in the distribution of the surplus, and partially to do with the (at times perverse) effects thereof. $2 million office renovations which serve no feasible productive purpose might be one example of such a perverse result of the imbalance, merely for the purpose of illustration.

[velvet]

So, if I'm reading you correctly - because I'm not sure, it's a problem because the funds are not being invested in productive assets?

[Eran]

I don't see how the ills follow from the diagnosis.

Profit-maximising capitalists have no interest in waste. In fact, capitalism uniquely incentivises people to identify and reduce waste.

Rusting machinery would be replaced (if that can profitably be done) by its owners. If it cannot, it probably shouldn't be.

Unemployed workers would be offered jobs if their productivity exceeds their cost of employment. If it doesn't (as would be the case under excessive minimum wage, for example), they would stay unemployed. But due to government regulations, not the operations of the free market.

Excessive cash is indeed inefficient. From the macro-economical perspective, cash reserves are beneficial. They reduce the velocity of money, thereby contributing towards lower prices from which all benefit. From the perspective of the individual firm, that would be a waste. Firms ought to invest that excess cash. If they cannot profitably do so in their own operations, they can still invest through financial markets.

In today's government-dominated economy, the most attractive investment, unfortunately, is often in government bonds. Still, such investment by a firm is helpful in that it displaces the need for government to borrow from other sources, thus incrementally lowering interest rates.

As for firms being tempted to waste their excess cash on frivolous purposes such as office renovations or excessive advertising, this is a case of governance failure. The ultimate decision-makers are the share holders, and it isn't in their interests to see such waste. Investors will tend to invest in those companies which are more careful with their excess cash. Ultimately, of course, this is the share holder's problem. They could instruct management to pay them dividends. If they prefer (explicitly or implicitly) to see their money used to build a lavish office, that's their problem.


What does this supposed overaccumulation have to do with the "deterioration of the working class"?

Finally, profits in a free market are never guaranteed. Nor do they tend to last. If a given firm makes high profits, the free entry guaranteed by the free market will attract competitors to enter the market or to alter their offerings so as to capture some of those profits themselves.

[Crantag]

I don't see how the ills follow from the diagnosis.

Profit-maximising capitalists have no interest in waste. In fact, capitalism uniquely incentivises people to identify and reduce waste.

Rusting machinery would be replaced (if that can profitably be done) by its owners. If it cannot, it probably shouldn't be.

Unemployed workers would be offered jobs if their productivity exceeds their cost of employment. If it doesn't (as would be the case under excessive minimum wage, for example), they would stay unemployed. But due to government regulations, not the operations of the free market.

Excessive cash is indeed inefficient. From the macro-economical perspective, cash reserves are beneficial. They reduce the velocity of money, thereby contributing towards lower prices from which all benefit. From the perspective of the individual firm, that would be a waste. Firms ought to invest that excess cash. If they cannot profitably do so in their own operations, they can still invest through financial markets.

In today's government-dominated economy, the most attractive investment, unfortunately, is often in government bonds. Still, such investment by a firm is helpful in that it displaces the need for government to borrow from other sources, thus incrementally lowering interest rates.

As for firms being tempted to waste their excess cash on frivolous purposes such as office renovations or excessive advertising, this is a case of governance failure. The ultimate decision-makers are the share holders, and it isn't in their interests to see such waste. Investors will tend to invest in those companies which are more careful with their excess cash. Ultimately, of course, this is the share holder's problem. They could instruct management to pay them dividends. If they prefer (explicitly or implicitly) to see their money used to build a lavish office, that's their problem.


What does this supposed overaccumulation have to do with the "deterioration of the working class"?

Finally, profits in a free market are never guaranteed. Nor do they tend to last. If a given firm makes high profits, the free entry guaranteed by the free market will attract competitors to enter the market or to alter their offerings so as to capture some of those profits themselves.

These are indeed good questions and good points.

I'd like to try to answer in greater depth later, but I will say that the economic organization has changed. The book Monopoly Capital appeared in 1966, and much of the contents was based on ideas worked out in the 1930s, or based on the 1930s. So, it was a book about the industrial system, especially. The US economy has certainly changed significantly, and many points need to be reevaluated for the present-day context.

There are still, I think, a lot of insights which remain very pertinent. It is also a book which helps to understand some of the historical roots of the current time. But, things have certainly changed very much, since the 1960s. Changes in the way of financial organization are considerable.

[Truth To Power]

I must remark first off that there is what I consider a disturbing trend in academic economics. It is that critical thinking is no longer valued.

More than that, it is prohibited.

What is valued is conformity to a pre-determined framework. This means that people are criticized not on the basis of their ideas, but on their degree of conformity to a mainstream framework. This also surely has much to do with the limitations that orthodox economists impose on themselves, which inhibit them from understanding arguments which do not conform to their narrow framework. For an undergraduate economics student, interdisciplinary study of say sociology, politics, biology even is not that much encouraged. All that is typically really strongly encouraged in the way of interdisciplinary study is mathematics.

Because math does not have to contact reality at any point.

First of all, your claim was that perpetual growth is a necessity in a market economy, not capitalism; second, it was in the context of China, which you (incorrectly) claim is communist; and third, capitalism is a way of organizing ownership of the means of production (land and capital), and is certainly not dependent on perpetual growth, as the long-term stagnation of numerous capitalist economies in Africa and Latin America attests.

It was not in the context of China, which I--in my opinion quite rightly claim to be communist.

Yes, it was, and no, you don't.

The rest of your post displays quite readily your complete inability to understand at the abstract level anything I have been saying about the stagnation thesis. (For one, it applies to advanced capitalist countries. It doesn't apply to countries that are economically depressed, and economic depression born of underdevelopment has nothing whatsoever to do with the stagnation thesis.)

I understand it fine. It just isn't true.

[Truth To Power]

But that's false. Like Marx, Sweezy just doesn't understand the role of land in the economy, and of "all-devouring" land rent in absorbing excess production.
Mainly by landowners and other rentiers.
But somehow, towering, astronomical land valuations happen without any additional return going to land....?

No, it is you who don't understand the arguments being presented here. I mentioned land (in my reference to David Harvey's descriptions of the production of urban space--which you needlessly ridicule below).

I ridiculed it because it is ridiculous.

Have you ever heard though of asset price bubbles?

Land values are astronomically higher even after the bubbles pop.

You fail to understand the concept of economic surplus. Therefore, you cannot move beyond the superficial.

Content = 0.

The arms industry is large, and there is a lot of rent seeking in it, but it pales beside landowning. The main sinks of production in modern, advanced capitalist economies are land rent, IP rents, interest on bankster-issued debt money, and monopoly-privileged labor, especially in the public service and the medical, legal, etc. fields.

Like I said: in the context of the book Monopoly Capital, military and imperialism is one of the typical fields by which surplus is absorbed. In the course of Sweezy and Baran's meticulous analysis, the arms manufacturing industry is used to demonstrate this. How this is so is quite beyond the scope of my comments here. The best that I can do is to refer you to the book.

The "meticulous analysis" that somehow missed the Law of Rent...?

Classic.

"Production of urban space," is it?

Yes, you see, this is a technical concept from the field of geography. Notions of the production of relative and absolute space are attributable to Henri Lefebvre. As I was referencing David Harvey, I was borrowing some of his terminology.

Which is all designed to prevent anyone from thinking about land.

Not that I would expect an ascriber to orthodox economics to have much knowledge of geography.

Read some of my posts, and then try to figure out how much farther from orthodox I am than you.

Anything to avoid knowing the fact that all production above subsistence goes to landowners according to the Law of Rent, and that any naive attempt to redress that injustice also goes to landowners, according to the Henry George Theorem.

And it is here that we quite plainly part company.

Because I understand the economic role of land and you don't. Right.

[Crantag]

You should look into the land prices in Japan.

The land prices are still lower today than they were in the 1980s. The real estate bubble in Japan popped in 1990.

[Harmattan]

You should look into the land prices in Japan.

The land prices are still lower today than they were in the 1980s. The real estate bubble in Japan popped in 1990.

Yes, because the bubble destructed value, like wars did in the past. But this is very unique to Japan, even the real estate bubble from 2008 didn't really manage to deflate prices in the West, it merely created stagnation and, sometimes, somewhere, slight devaluation incomparable to the fast expansion that came before.

[Crantag]

Yes, because the bubble destructed value, like wars did in the past. But this is very unique to Japan, even the real estate bubble from 2008 didn't really manage to deflate prices in the West, it merely created stagnation and, sometimes, somewhere, slight devaluation incomparable to the fast expansion that came before.

The Japan case is somewhat unique, but it is still very worthy of consideration. Especially as Japan is a very modern economy.

I am not knowledgeable enough about the effects of real estate bubbles elsewhere, like in different parts of Europe, for instance.

Japan presents a somewhat extreme example, but it is a demonstrable example of the effects of surplus capital being poured into real estate, causing a massive asset price bubble, from which 25 years later, the country has never 'recovered'.

Additionally, Truth to Power is evidently very involved in looking into the effects of land rents, and suggests land as an absorber of surplus. I suggest he should look into Japan because it provides what I think may be a significant counter example (1), and also because it seems potentially relevant to the topic he is pursuing (2).

I am from the US, and I live in Japan, and these are the two economies I know most about. But, I do think the Japan case is very relevant to the discussion here.

[Crantag]

So, if I'm reading you correctly - because I'm not sure, it's a problem because the funds are not being invested in productive assets?

Yes, that is basically the central aspect. Maldistribution, and distorted incentives in the way of allocation of resources are among the consequent effects.

[Crantag]

I don't see how the ills follow from the diagnosis.

Profit-maximising capitalists have no interest in waste. In fact, capitalism uniquely incentivises people to identify and reduce waste.

These matters have to do with oligopolistic organization of modern industry. Under monopoly or oligopolist conditions, the rules of free competition no longer apply.

In effect, the stagnation thesis includes a thorough rejection of the efficient market hypothesis. Profit maximization under monopoly or oligopolistic conditions follows altogether separate impetus. If you reject the rejection of the efficient market hypothesis in the context of the organizational structure of modern industry, you reject the stagnation thesis, by extension. There's no two ways about it.

Rusting machinery would be replaced (if that can profitably be done) by its owners. If it cannot, it probably shouldn't be.

Unemployed workers would be offered jobs if their productivity exceeds their cost of employment. If it doesn't (as would be the case under excessive minimum wage, for example), they would stay unemployed. But due to government regulations, not the operations of the free market.

These are signs and symptoms of the misallocation of resources which pertains under the prevailing industrial organization. Under perfect competition, these things hold true. Under oligopolistic conditions, they no longer necessarily do so.

Excessive cash is indeed inefficient. From the macro-economical perspective, cash reserves are beneficial. They reduce the velocity of money, thereby contributing towards lower prices from which all benefit. From the perspective of the individual firm, that would be a waste. Firms ought to invest that excess cash. If they cannot profitably do so in their own operations, they can still invest through financial markets.

In today's government-dominated economy, the most attractive investment, unfortunately, is often in government bonds. Still, such investment by a firm is helpful in that it displaces the need for government to borrow from other sources, thus incrementally lowering interest rates.

Yes, this is perfectly true. As I said before, times have changed since the 1960s, and finance was hardly considered in the book 'Monopoly Capital'. Sweezy along with contributors to 'Monthly Review' have analyzed the explosion of finance within the context of the arguments laid out in 'Monopoly Capital', though (see the data and linked article on the first page, which includes a chart for FIRE). They make what I consider to be a compelling argument, that the tremendous rise in the allocation of capital to FIRE had to do with the lack of opportunities for investment in the real economy, owing to the conditions of stagnation. There is also considerable empirical evidence to this effect. For instance, a company such as Sears now earns more profits from financial investments than from business operation, according to an article which appeared several years back (I don't know if this has changed in the aftermath of the crisis, or not). There are many companies that now earn substantial returns from financial speculation, which has nothing whatsoever to do with their normal business. This is arguably at least in part a result of the excess cash with no sufficiently profitable outlet in real investment.

As for firms being tempted to waste their excess cash on frivolous purposes such as office renovations or excessive advertising, this is a case of governance failure. The ultimate decision-makers are the share holders, and it isn't in their interests to see such waste. Investors will tend to invest in those companies which are more careful with their excess cash. Ultimately, of course, this is the share holder's problem. They could instruct management to pay them dividends. If they prefer (explicitly or implicitly) to see their money used to build a lavish office, that's their problem.

That is a fair enough point.

What does this supposed overaccumulation have to do with the "deterioration of the working class"?

It's a problem of distribution, chiefly.

Finally, profits in a free market are never guaranteed. Nor do they tend to last. If a given firm makes high profits, the free entry guaranteed by the free market will attract competitors to enter the market or to alter their offerings so as to capture some of those profits themselves.

This again relates to oligopolistic organization. Firms do still fail, new frontiers still do open, and new players still are made. But under typical norms, barriers to entry are rather prohibitive in established industries.

[Eran]

In effect, the stagnation thesis includes a thorough rejection of the efficient market hypothesis. Profit maximization under monopoly or oligopolistic conditions follows altogether separate impetus. If you reject the rejection of the efficient market hypothesis in the context of the organizational structure of modern industry, you reject the stagnation thesis, by extension. There's no two ways about it.

I am a weak believer in the efficient market hypothesis. Specifically, I believe it is difficult, but not impossible, to "beat the market". The logic is simple. Easy opportunities to "beat the market" are likely to have already been exhausted. Markets become efficient through a process whereby entrepreneurs repeatedly attempt to take advantage of residual inefficiencies, thereby reducing said inefficiencies.

This holds in all free markets, both financial and non-financial.

As for the issue of monopoly/oligopoly, it is unclear what those terms mean. Specifically, are you merely referring to the number and/or concentration of market participants, or also to the presence or absence of legal, regulatory barriers to entry?

There are many companies that now earn substantial returns from financial speculation, which has nothing whatsoever to do with their normal business. This is arguably at least in part a result of the excess cash with no sufficiently profitable outlet in real investment.

I agree. The explanation I find compelling to this phenomenon is detailed in David Stockman's The Great Deformation - The Corruption of Capitalism on America and has to do with pernicious forms of government intervention in the financial system, through artificially low interest rates, heavy regulations and repeated bail-outs.

But under typical norms, barriers to entry are rather prohibitive in established industries.

Setting aside artificial barriers, the "barrier" picture is misleading. In most industries there is a continuum between many small players and a handful of very large ones. And while entry direct to the "major leagues" is indeed difficult, there is always a gradual route.