The ever-sharpening crisis of capitalism

By Lorenzo

I like graphs.  A good graph can be very revealing. Such as this graph on US per capita income from the 2012 US Federal Budget (via).

The impact of the Great Depression is very obvious.  But so is the remarkable stability of economic growth in the US over the last 120 years.

This is also the Saturday chit-chat post.


  1. John H.
    Posted October 27, 2012 at 9:55 am | Permalink

    Society Without God – Phil Zuckerman(Review)

    The Age of Empathy – Frans De Waal(Review)

    The Mankind Project: Modern Man Mythologised

  2. kvd
    Posted October 27, 2012 at 10:17 am | Permalink

    I like graphs. A good graph can be very revealing.

    Warning: graphic imagery 😉

  3. Posted October 27, 2012 at 11:49 am | Permalink

    Voting today for council – going Green – not top of the ticket with the policy of “better public transport” (like, yeah, can do that from council, but their number 2, activist lawyer with the policy of “Welcoming people. Attractive, safe, streets that are full of life – where people look forward to shopping, dining catching up for coffee.”
    Vote for more coffee and nibblies? Yep!

  4. John H.
    Posted October 27, 2012 at 12:00 pm | Permalink

    I have grave doubts about organisations such as the one you describe.

    Thanks. They are dangerous LE, that’s why I went after them. And my friend is still under psychiatric treatment. His troubles began a couple of months after he attended the Warrior Training Camp. I find it staggering that in this day people still entertain archetypes. Yeah sure, like evolution implanted myths in our brains. Culture does that. Even Jung stated: I am not a Jungian! He was explorer, trying to open up the exploration, not close it down.

    BTW, regarding earlier discussion. I wouldn’t bother with CBT for your child, I reckon parents and grandparents can do far more to help her along. At some point she is probably going to realise that she is very different from the rest. That in itself can induce melancholy which is why I sometimes think there is nothing wrong with a “healthy arrogance”.

    CBT is currently trendy and psychologists fall into trendy stuff too much. There have been so many therapies that have come and gone.

  5. Mel
    Posted October 27, 2012 at 12:23 pm | Permalink


    Lorenzo, in the West we have mixed economies not capitalism. If you want to see capitalism without the mixed economy, try Somalia.

    The graph also ignores the fact that much of the US working class hasn’t had a per capita increase in income since the 1970s whilst the wealthiest Americans now have so much money that they could commit suicide by jumping off their wallets.

  6. John H.
    Posted October 27, 2012 at 1:52 pm | Permalink

    I’ve just started reading a book by Timothy Wilson which explores very psychological therapies. He also has a big go at the self help movement.


    As long noted, trauma counselling is not advisable, studies show it makes things worse because it reinforces memories. I could never understand trauma counselling precisely because of the reinforcement problem.

    2. This is hilarious, it is about The Secret, another load of bollocks made very popular partially through Oprah. He is having some fun.

    “My positive thought frequencies zoom out of my head and into the showroom, and because they are magnetic the TV moves closer to me. But wait a minute – does it actually inch closer each day? Won’t the store personnel be a little suspicious when they arrive in the morning and find that the TV has moved to the loading dock? And how exactly does the TV get into my living room? Does it sweep down the chimney like Santa delivering presents on Christmas Eve? Aren’t there are few unresolved questions here?”

  7. Posted October 27, 2012 at 1:59 pm | Permalink

    [email protected] (1) The US economy was a lot less “mixed” in 1890 than in 2010, yet the trend economic growth has been remarkably stable. Perhaps how “mixed” the economy is does not matter so much for economic growth.

    (2) The only definition of capitalism that makes much sense is one where capital is largely privately owned and traded in markets. That makes the US a capitalist society. Indeed, any attempt to define capitalism so the US does not count as “capitalist” is deeply silly.

    The US is therefore more capitalist than Somalia because there is far more capital per capita and far more private trading of it. Now, that stable institutions mean this can happen does mean — shocking I know — that government and capitalism are not opposites.

    (3) There has been no increase in average wages since the 1970s; that is not the same as “the US working class hasn’t had a per capita increase in income” since there are far more double-income households and more non-wage income. Of course,reasons for the flat wage growth include:
    (1) rising female participation
    (2) immigration
    (3) more economic opportunities for folk in the developing world.

    As each of these represent net gains to those involved, I think we can probably live with them.

    Yes, if US public policy worked better, they could probably do better in the wage growth area, but people tend to underestimate how difficult it is to manage public policy for a country of 300m people scattered across most of a continent with a wide range of climates, geographical areas and local attitudes.

  8. John H.
    Posted October 27, 2012 at 3:27 pm | Permalink

    One very telling Peanuts strip has little Sally playing in the backyard when all of a sudden she bursts into tears.

    ‘Why are you crying, Sally?’ Linus anxiously asks.

    ‘I don’t know,’ she replies. ‘I was jumping rope… everything was all right when… I don’t know… suddenly it all seemed so futile!’

  9. Mel
    Posted October 27, 2012 at 3:39 pm | Permalink

    John H.

    Peanuts was great but kind of melancholy. In some ways it swum against the tide of mainstream US culture, like the naive optimism and confident individualism.

  10. Holden Caulfield
    Posted October 27, 2012 at 4:56 pm | Permalink

    A similar graph for Australia from 1850 to 2012 is very telling. In 1880, Australia had the highest median GDP on the planet. But for a century after that, our relative economic performance plummeted. By 1980, Australia was languishing around 30. Coincidentally, it was only from the 1880s that more and more of the Australian economy was directed by government. Socialism was only completely abandoned in the 1980s. In 2012, Australia once more has the highest median GDP on the planet. That century in the doldrums is strongly suggestive of the corrosive effects of handing over economic power to government.

  11. John H.
    Posted October 27, 2012 at 6:37 pm | Permalink

    Another thing I find a bit disturbing about that stuff is the focus on material wealth – as if that is the main key to happiness.

    “We could not be happy without setting ourselves goals.”
    “Prod any happy person and you will find a project.”
    (Happiness: Lessons from a New Science.)

    The book I am reading by Timothy Wilson also states that a man who was found to be the most happiest in the USA was wealthy but didn’t own the trinkets, he was though involved in many social projects and charities.

    I’ve been discussing altruism on a science forum recently and realised that contrary to the view that there is this competition between altruism and selfishness it is rather that both are intrinsic to evolutionary processes. Not the place to explain it here but put simply: altruistic\co-operative behavior is not some emergent property from evolutionary processes it is intrinsic, it doesn’t require culture or even consciousness, it is even evidenced in single celled organisms. This highlights a huge error in the thinking of people like Dawkins, Rand and to a lesser extent economics. They are relying on an essentially 19th century view of evolution to guide our thinking about behavior, something even Darwin rejected.

  12. Mel
    Posted October 28, 2012 at 6:14 am | Permalink

    L @8:

    “(3) more economic opportunities for folk in the developing world.”

    That is indeed a very good thing.

    My point is that greater income transfers from the top to the bottom would be good.

  13. Posted October 28, 2012 at 6:27 am | Permalink

    [email protected] Depends greatly on how you do it. There is a real issue about financial incomes, but government agencies undermining prudence and creating great moral hazard in the financial system had a great deal to do with inflated financial sector incomes which have a great deal to do with surge in incomes inequality at top end.

    Also, the US federal income tax system is already highly progressive while welfare systems are beginning to get old enough to create intergenerational effects which are increasing relevant forms of inequality.

  14. Posted October 28, 2012 at 6:29 am | Permalink

    [email protected] I would say rather that the Deakinite system suppressed agency risk and responsiveness to risk in ways that actually made the Oz economy more vulnerable to economic shocks and focused undue effort on extracting regulatory rents.

    That is not “socialism” particularly.

  15. Holden Caulfield
    Posted October 28, 2012 at 8:22 am | Permalink

    Point taken Lorenzo. Perhaps I should have said “the attractions/romance of Socialism”.

  16. Nigel Davies
    Posted October 28, 2012 at 10:53 am | Permalink

    Dear [email protected]

    The concept that economics suffers from a foolish reliance on Darwinianism is a fair point. The ‘survival of the fittest’ bit is taken too far by too many modern ‘economists’, and not nearly enough attention is paid to the fundamental fact that what lifts human society above animals is increased co-operation.

    In fact understanding that Co-operation against Darwinian principles is vital to comprehending modern economies, is a point that most sensible people can probably grasp…

    (But because I can’t resist…)

    Of course for the dim Dawkinites and other atheist/agnostic elements, I will point out that most modern research also suggest that human co-operation is almost certainly founded in religion…

    In fact as Christopher Hitchins once said “I would like to imagine we could have developed ethics without religion, but I can’t see how…”

    So those who can overcome their prejudices/education to see the obvious in economics, might want to look at their pre-conceptions in other areas…

  17. John H.
    Posted October 28, 2012 at 12:02 pm | Permalink


    Co-operation is ubiquitous in many mammalian species and there is no evidence of religion in those species. Co-operation in human societies arises because it has a selection advantage. If religion drives co-operation then all religions do so, which makes the competing claims of religions as to which is right and true not true.

    The approach I am exploring these days has nothing to do with morals it is about understanding how evolutionary dynamics gives rises to behavior independent of consciousness. It may be trivially obvious as to what drives behavior and that is precisely the problem, we rely too much on what we think drives our behavior and ignore the well substantiated findings that our behavior is driven by a great many factors apart from any conscious reasoning; the latter itself being a behavior, as is religion. Using behaviors to explain behaviors is common in folk psychology, it is also the wrong level of analysis.

    In Society Without God the author demonstrates that one does have to be religious to be co-operative. Atheists can be just as altruistic as religious people. Co-operation is not a choice or just a culturally driven behavior, it is intrinsic to Life writ large.

  18. Holden Caulfield
    Posted October 28, 2012 at 12:14 pm | Permalink

    I would hypothesize that cooperation is the natural state of human societies, and that religion only arose as one device to cope with those exceptional periods when, for whatever reason, cooperation broke down to such an extent that the group’s entire existence was threatened.

  19. Posted October 28, 2012 at 12:22 pm | Permalink


    The state was very involved in the pre-Deakinite economy because it sold land and mineral and other rights which it had “found” by settlement. A lot of the wealth of (white) Australia (and relative wealth) was founded on this [ex/ap]propriation.

  20. Holden Caulfield
    Posted October 28, 2012 at 12:29 pm | Permalink

    marcellous actually most of that wealth was created by individual entrepreneurs settling the land and using it economically without giving for a figure for the state. In fact, they did so in defiance of the state. Ultimately, the settlers won. If the colony had remained in control of the state, there would be no settlement beyond Penrith, and we’d all be market gardeners.

  21. Holden Caulfield
    Posted October 28, 2012 at 12:31 pm | Permalink

    And the wealth wasn’t “found”. It had to be created, requiring a great deal of grit, imagination, and chutzpah. In 1788, Australia was the poorest, most god forsaken place on earth. 100 years later, Australia was the richest place on earth.

  22. Posted October 28, 2012 at 1:19 pm | Permalink


    The wealth was “founded,” as your response makes clear, on somebody getting the land for free. Not totally, of course – there were labour and capital inputs as well – but cheap land either from the state or by squatting was a big help.

    Even when settlement spread beyond official bounds, the state provided a backup and only very limited constraints.

    Land sales were an important part of especially early colonial state revenue.

    The state in Australia also asserted rights to all minerals (not just gold and silver as in England).

    The high water mark of Australia’s relative world prosperity, at around federation, owes much these initial advantages, as well as any plucky determination and grit etc with which further advantage was taken of them.

    I’m not saying the state’s involvement was socialism – more like Imperialism, of the settler-colony variety.

  23. Posted October 28, 2012 at 1:21 pm | Permalink


    In fact “cheap land either for or from the state or by squatting”

  24. Posted October 28, 2012 at 3:49 pm | Permalink

    [email protected] Cheap land and lots of land-based resources spread among a small population was important. As important were good institutions. Alas, poor public policy degraded both advantages, though only to a limited degree (we did not end up as Argentina, which also had cheap land and lots of land-based resources among a small population — the institutions were worse, though).

  25. kvd
    Posted October 30, 2012 at 1:55 pm | Permalink

    Interesting article by A E Pritchard being re-quoted heavily. Interesting fact therein that in the first 6 months of this year the US produced 81% of its energy requirements.

    One corollary might be that the Middle East becomes Europe’s problem…

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