History UsefulNotes / Capitalism

14th Mar '17 1:27:45 PM system
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14th Mar '17 1:11:45 PM scipio22
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-->--'''Deirdre N. McCloskey'''

to:

-->--'''Deirdre N. McCloskey'''
Mccloskey'''
14th Mar '17 12:10:03 PM scipio22
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->''"The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours the future."'''
-->--'''Thomas Piketty'''

to:

->''"The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours ->''"Nor during the future.Age of Innovation have the poor gotten poorer, as people are always saying. On the contrary, the poor have been the chief beneficiaries of modern capitalism. It is an irrefutable historical finding, obscured by the logical truth that the profits from innovation go in the first act mostly to the bourgeois rich."'''
-->--'''Thomas Piketty'''
-->--'''Deirdre N. McCloskey'''



The word "capitalism" was coined in 1854 by the novelist [[Literature/VanityFair William Thackeray]]. Wiktionary holds that the word was a "[[https://en.wiktionary.org/wiki/capitalism Borrowing from French capitalisme ‎(“the condition of one who is rich”); equivalent to capital +‎ -ism.]]" From the 1970s onward, the extent to which the word drew unwanted attention to role of the rich lead to it being rebranded in the English-speaking world in general and northern America in particular:

->''"Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes-indeed, deletes-the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity.''

->''But most of the people who use the new designation-economists, in particular- are innocent as to the effect. They see nothing wrong with their bland, descriptive terminology. They pay no attention to the important question: Whether money- wealth-accords a special power. (It does.)"''
-->-- '''[[https://en.wikiquote.org/wiki/John_Kenneth_Galbraith John Kenneth Galbraith]]''', "[[http://www.thirdworldtraveler.com/Economics/FreeMarketFraudGalbraith.html Free Market Fraud]]", ''The Progressive'' (January 1999)

'''The Central Contradiction: r > g'''

Capitalism kills its hosts.

It does this by exponentially increasing wealth concentration/inequality, which creates socio-economic conditions that promote political rebellion. This is what Thomas Piketty meant by "the past [devouring] the future".

The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes from labour '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals spend relatively little of their income on consumption. Instead, they invest it in growing their wealth. As more and more of the total income of a capitalist market-society is invested in the acquisition of capital, and not spent upon consumption, less and less economic activity takes place until economic stagnation and finally decline result. This delivers a stagnant or declining standard of living for people whose income comes solely or mostly from working.

Over time, this gives the majority strong and growing incentives to rebel and restructure the system in their own interests - particularly when they cannot survive their present standard of living. The capitalist class is also incentivised to translate their economic power into overt political power and become ''de jure'' rulers in their own right.

Peasant and Noble rebellions resulting from the long-term trend of ''r > g'' and short-term shocks caused by natural disasters and wars were major causes for the disintegration of notable empires including [[UsefulNotes/DynastiesFromShanToQing The Ming]] and [[UsefulNotes/TheRomanEmpire Western Rome]]. TheCycleOfEmpires is a related trope, albeit with a greater focus on the politics than the economics of the rise and fall of civilisations. Interestingly, UsefulNotes/{{Socialism}} contends that the growing integration of the world economy and the inability of the democratic process to check capitalist wealth-power accumulation means that the inequality and unrest caused by r > g will eventually kill ''[[HoistByHisOwnPetard Capitalism itself]]''.

Failure to create adequate laws will prevent a market from arising, and failure to enforce existing laws will eventually result in CriticalExistenceFailure. This results from the accumulation of too much capital in the hands of the capitalist class, which occurs whenever the market's laws governing property-contracts-bankruptcy-monopolies and taxation policy do not specifically prevent it or are reformed to curb it.

Karl Marx famously asserted that the world's capitalist class would block attempts to correct the wealth concentration of the capitalist system, and that this would make violent world revolution to destroy the capitalist system and replace it with {{UsefulNotes/Socialism}} inevitable. So far this prediction has proven pessimistic, as even the US government was willing and able to disrupt the development of wealth inequality in the period c.1940-1975.


to:

The word "capitalism" was coined in 1854 by the novelist [[Literature/VanityFair William Thackeray]]. Wiktionary holds that the word was a "[[https://en.wiktionary.org/wiki/capitalism Borrowing from French capitalisme ‎(“the condition of one who is rich”); equivalent to capital +‎ -ism.]]" From the 1970s onward, the extent to which the word drew unwanted attention to role of the rich lead to it being rebranded in the English-speaking world in general and northern America in particular:

->''"Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes-indeed, deletes-the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity.''

->''But most of the people who use the new designation-economists, in particular- are innocent as to the effect. They see nothing wrong with their bland, descriptive terminology. They pay no attention to the important question: Whether money- wealth-accords a special power. (It does.)"''
-->-- '''[[https://en.wikiquote.org/wiki/John_Kenneth_Galbraith John Kenneth Galbraith]]''', "[[http://www.thirdworldtraveler.com/Economics/FreeMarketFraudGalbraith.html Free Market Fraud]]", ''The Progressive'' (January 1999)

'''The Central Contradiction: r > g'''

Capitalism kills its hosts.

It does this by exponentially increasing wealth concentration/inequality, which creates socio-economic conditions that promote political rebellion. This is what Thomas Piketty meant by "the past [devouring] the future".

The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes from labour '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals spend relatively little of their income on consumption. Instead, they invest it in growing their wealth. As more and more of the total income of a capitalist market-society is invested in the acquisition of capital, and not spent upon consumption, less and less economic activity takes place until economic stagnation and finally decline result. This delivers a stagnant or declining standard of living for people whose income comes solely or mostly from working.

Over time, this gives the majority strong and growing incentives to rebel and restructure the system in their own interests - particularly when they cannot survive their present standard of living. The capitalist class is also incentivised to translate their economic power into overt political power and become ''de jure'' rulers in their own right.

Peasant and Noble rebellions resulting from the long-term trend of ''r > g'' and short-term shocks caused by natural disasters and wars were major causes for the disintegration of notable empires including [[UsefulNotes/DynastiesFromShanToQing The Ming]] and [[UsefulNotes/TheRomanEmpire Western Rome]]. TheCycleOfEmpires is a related trope, albeit with a greater focus on the politics than the economics of the rise and fall of civilisations. Interestingly, UsefulNotes/{{Socialism}} contends that the growing integration of the world economy and the inability of the democratic process to check capitalist wealth-power accumulation means that the inequality and unrest caused by r > g will eventually kill ''[[HoistByHisOwnPetard Capitalism itself]]''.

Failure to create adequate laws will prevent a market from arising, and failure to enforce existing laws will eventually result in CriticalExistenceFailure. This results from the accumulation of too much capital in the hands of the capitalist class, which occurs whenever the market's laws governing property-contracts-bankruptcy-monopolies and taxation policy do not specifically prevent it or are reformed to curb it.

Karl Marx famously asserted that the world's capitalist class would block attempts to correct the wealth concentration of the capitalist system, and that this would make violent world revolution to destroy the capitalist system and replace it with {{UsefulNotes/Socialism}} inevitable. So far this prediction has proven pessimistic, as even the US government was willing and able to disrupt the development of wealth inequality in the period c.1940-1975.

Thackeray]].




* ''Regulating Monopolies and Oligopolies'': The law of diminishing returns means that companies make the greatest possible profits by selling their products at the highest prices at which consumers can afford to pay for them. Monopolies and Oligopolies don't have to lower prices below this level in order to compete with others, so they naturally charge very high prices. Government can be made to let this to happen in order to maximise corporate profits, or it can be made to benefit the masses: governments can nationalise monopolies and run them free of charge or at a minimal cost to consumers, can break up monopolies to artificially create competition which drives down prices, or allow the for-profit monopolies to continue existing but set acceptable prices and levels of profit. The problem with oligopolies is that they reduces the likelihood that individual suppliers will renege on a deal to keep total supply in the economy as low as possible. The government can regulate these in a similar manner. "Evidence-based" ("Keynesian" and "Behavioural") economists agree that it is extremely important that sectors with so-called "Natural Monopolies" (it is extremely hard to foster competition when actual land control is involved, e.g. road or rail networks) should only contain government-owned or (extremely) heavily regulated monopolies to minimise wasteful "rent-seeking"/wealth-extraction activity.
** As usual, Neoclassical and Austrian School ("theory-based") economists believe that mono/oligopolies should be allowed to operate unhindered to maximise the wealth accumulation of the rich, even though all other Schools believe that they should be nationalised/broken up/heavily regulated to benefit the poor. This is because they insist that whatever the practical benefits of empirical real-world policies which have successfully maximised economic efficiency by nationalising/breaking up/regulating monopolies, ''in theory'' doing this is economically inefficient and should be harming the economy.

to:

* ''Regulating Monopolies and Oligopolies'': The law of diminishing returns means that companies make the greatest possible profits by selling their products at the highest prices at which consumers can afford to pay for them. Monopolies and Oligopolies don't have to lower prices below this level in order to compete with others, so they naturally charge very high prices. Government can be made to let this to happen in order to maximise maximize corporate profits, or it can be made to benefit the masses: governments can nationalise nationalize monopolies and run them free of charge or at a minimal cost to consumers, can break up monopolies to artificially create competition which drives down prices, or allow the for-profit monopolies to continue existing but set acceptable prices and levels of profit. The problem with oligopolies is that they reduces the likelihood that individual suppliers will renege on a deal to keep total supply in the economy as low as possible. The government can regulate these in a similar manner. "Evidence-based" ("Keynesian" and "Behavioural") economists agree that it is extremely important that sectors with so-called "Natural Monopolies" (it is extremely hard to foster competition when actual land control is involved, e.g. road or rail networks) should only contain government-owned or (extremely) heavily regulated monopolies to minimise minimize wasteful "rent-seeking"/wealth-extraction activity.
** As usual, Neoclassical In the view of Classical Liberals and Austrian School ("theory-based") economists believe Economists, monopolistic power is only possible through government power, through special privileges enabled by he government like special contracts, IP laws, regulations and even tax laws. And that mono/oligopolies should be allowed to operate unhindered to maximise without these privileges the wealth accumulation competitiveness of the rich, even though all other Schools believe that they should be nationalised/broken up/heavily regulated market place would diffuse any possible monopoly from developing. Experts point to benefit the poor. This is because they insist that whatever history of energy companies in the practical benefits of empirical real-world policies early 20th Century before the government stepped in which have successfully maximised economic efficiency by nationalising/breaking up/regulating monopolies, ''in theory'' doing this is economically inefficient and should be harming the economy.were numerous enough to ensure competitive prices.



Here are the laconic versions of various types of Capitalism. There is a fundamental disagreement over whether or not capitalism is an iniquitous and self-destructive system. The flame wars that erupt over the proper role of the state in creating, maintaining, and guiding/not guiding the market and society are not worth getting into here. It's enough to know that there are deep conflicts between different schools of thought and that at times it seems they can't cooperate on anything bar opposition to total public ownership of the means of production.

* '''Oligarchic-Monopolistic/'Free Market'''': a strain which believes that government should structure the market to maximise the powers and profits of the capitalist class, it holds that all market actors almost always acquire wealth which matches their objective value and efforts. Advocates long-term/lifetime or even eternal copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and even democracy. All other strains fervently disagree on both counts.
* '''Classic Liberal/Libertarian/'Free Market'''': a strain which believes that government should structure the market to prevent the capitalist class from acquiring wealth through inheritance or acquiring too much market power (e.g. monopolies), it holds that market actors usually acquire wealth which roughly matches their objective value and efforts. Advocates long/lifetime copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and democracy. Some strains disagree on the latter count.

to:

Here are the laconic versions of various types of Capitalism. There is a fundamental disagreement over whether or not capitalism is an iniquitous and self-destructive system.system or the system responsible for uplifting the majority of the world's population out of poverty. The flame wars that erupt over the proper role of the state in creating, maintaining, and guiding/not guiding the market and society are not worth getting into here. It's enough to know that there are deep conflicts between different schools of thought and that at times it seems they can't cooperate on anything bar opposition to total public ownership of the means of production.

* '''Oligarchic-Monopolistic/'Free ''''Government-Regulated, Republican-style Free Market'''': a strain which believes that government should structure the market to maximise maximize the powers and profits of the capitalist class, it holds that all market actors almost always acquire wealth which matches their objective value and efforts. Advocates long-term/lifetime or even eternal copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and even democracy. All other strains fervently disagree on both counts.democracy..
* '''Classic Liberal/Libertarian/'Free Market'''': a strain which believes that government should structure limit its involvement in the market to prevent ensure a more even playing field, less regulation/barriers into the capitalist class from acquiring wealth through inheritance or acquiring too much market and therefore less concentrated market power (e.g. monopolies), it holds that market actors usually acquire wealth which roughly matches their objective value and efforts. Advocates long/lifetime copyright-patent ownership.no IP or copyright laws to ensure a highly competitive market where the consumer benefits. Adherents believe that this strain is compatible with meritocracy and democracy. Some strains disagree on the latter count.



Actual human behaviour departs so far and so inconsistently from that which is predicted by the ''Rational Consumer'' model that the 'macroeconomic' models which use it are incapable of describing or predicting how the economy works in reality. Still, it is hard to contradict the assertion that Classical Economics ''could'' perfectly model the capitalist economy [[WhyCouldntYouBeDifferent if only people acted like Rational Consumers]] [[ShapedLikeItself and not like, well, people]].

Recently, 'Behavioural Economics' has produced microeconomic models capable of accurately predicting human behaviour by using psychological studies of real people's actual consumption habits (which are logically inconsistent, impulsive, and mood-dependent). It is hoped that this discipline can be resolved with the macroeconomic models capable of accurately describing and predicting how the economy works in reality, which have been produced by using statistics collected from the real world.

to:

Actual human behaviour departs so far The notion of said "Rationality" economists define is different for many schools, the Misesian idea of rationality is defined as choosing the appropriate means for the desired end. What Austrians and so inconsistently from their fellow free market advocates argue is that it’s not the rationality of market participants that matters, but the institutional context within which they act. In other words, rationality is predicted by not a feature of the ''Rational Consumer'' model that individual choosers but of the 'macroeconomic' models which use it are incapable of describing or predicting how the economy works in reality. Still, it is hard to contradict the assertion that Classical Economics ''could'' perfectly model the capitalist economy [[WhyCouldntYouBeDifferent market as a whole. Even if only people acted like Rational Consumers]] [[ShapedLikeItself and make “mistakes” by not like, well, people]].

Recently, 'Behavioural Economics' has produced microeconomic models capable of accurately predicting human behaviour by using psychological studies of real people's actual consumption habits (which are logically inconsistent, impulsive, and mood-dependent). It is hoped that this discipline can be resolved with
acting as the macroeconomic models capable of accurately describing and predicting how the economy works in reality, which have been produced by using statistics collected strict model would suggest, they will receive feedback from the real world.competitive marketplace that will demonstrate their errors and give them the incentive and knowledge to correct them.



Finally, in the wider economy there is a natural tendency towards the formation of monopolies (one party is the sole producer of a good) and cartels (all producers of a good cooperate to set production and prices). The first cause is the drive towards profit: cooperation or merger with rival producers is more profitable than competition. Secondly, larger operations are more efficient. Efficiency begets efficiency until ultimately, the most efficient form of production - monopoly - results. Both monopolies and cartels give sellers the power to dictate prices independently of demand, which the desire for profit encourages them to exercise. Utility companies, which have enormous fixed costs in plants and machinery, are the typical natural monopoly.

Marxists, Socialists and Social Liberals, and Neo-Liberals disagree on what constitutes a market failure. Marxists see them everywhere, considering them damning indictments of the entire Capitalist system and definitive proof of the need for a government-directed economy. Socialists and Social Liberals see many, believing there is much room for government intervention to smooth over the obvious flaws in Capitalism. Neo-Liberals see few or none, holding that Capitalism is a (near-)perfect system which is being failed by present-day human values and society.

Lately, realisations of the true extent of market failures have caused the existence of the invisible hand to become debated by capitalists and anti-capitalists alike.

to:

to:

Finally, in the wider economy there is a natural tendency towards the formation of monopolies (one party is the sole producer of a good) and cartels (all producers of a good cooperate to set production and prices). The first cause is the drive towards profit: cooperation or merger with rival producers is more profitable than competition. Secondly, larger operations are more efficient. Efficiency begets efficiency until ultimately, the most efficient form of production - monopoly - results. Both monopolies and cartels give sellers the power to dictate prices independently of demand, which the desire for profit encourages them to exercise. Utility companies, which have enormous fixed costs in plants and machinery, are the typical natural monopoly.

Marxists, Socialists and Social Liberals, and Neo-Liberals disagree on what constitutes a market failure. Marxists see them everywhere, considering them damning indictments of the entire Capitalist system and definitive proof of the need for a government-directed economy. Socialists and Social Liberals see many, believing there is much room for government intervention to smooth over the obvious flaws in Capitalism. Neo-Liberals see few or none, holding that Capitalism is a (near-)perfect the best imperfect system which is being failed by present-day human values and society.society and the intervention of government force.

Lately, realisations of the true extent of market failures have caused the existence of the invisible hand to become debated by capitalists and anti-capitalists alike.

to:



* John Maynard Keynes: Keynes was the most important economist of the 20th century, and was the first to develop Macro-Economic policies capable of flattening out the boom-and-bust cycle. He did more than most, if not all, to get the world out of TheGreatDepression. The first capitalist thinker to seriously propose extensive government intervention in the economy, or at least, the first with a serious following (see the Keynesian schools below). Nearly all major world leaders of capitalist countries, whether on the right or the left, use macroeconomic policies that are, to varying degrees, influenced by Keynes' books. Despite his reputation in some circles as a leftist, he was [[CriticalResearchFailure definitely not]] a socialist. Whereas economists before Keynes were more focused on keeping inflation low, Keynes was [[TheGreatDepression obviously more focused on promoting general economic activity]]. He proposed that deficit spending by government could be used as direct economic stimulus to help get economies out of recessions, and believed that regulation should be used to surgically remove and prevent the market failures which caused the last recession. What Smith is to the basic free-market model, and microeconomics, Keynes is to the basic mixed-market model, and macroeconomics. His most important work is ''The General Theory of Employment, Interest, and Money'' (shortened: ''The General Theory'') in 1936. Unfortunately, in the 1950s-70s it transpired that Keynes had underappreciated the role of money in an economy, which brings us to...

* Milton Friedman: Probably the second most important economist of the 20th century. Friedman's ideas have contributed more than anyone else's to the massive stock-market bubbles which resulted in The Great Recession of 2008. Friedman started from the position that government intervention in the economy was an immoral infringement upon the freedom of its citizens, and developed theories which reflected and supported that view. Keynes had determined that the financial sector had to be regulated and restricted in order to prevent it from distorting and screwing up the 'real' economy, but Friedman hypothesized that the financial sector could be harnessed to drive spectacular growth. Friedman believed that if banks were not prevented from making risky loans, then enough of these would pay off that an economic boom financed by debt would result. Once this became or threatened to become a crisis, the government would then loan massive amounts of money to the banks so that the real value of the debts would be wiped out and the cycle could begin again. Friedman was an economic adviser to UsefulNotes/RonaldReagan, and he also highly influenced MargaretThatcher and other Neo-Liberal leaders. Basically, he is to Neo-Liberals what Keynes is to Social Liberals and Socialists. Among his most important contributions to economic theory are his "natural rate of unemployment" and what would eventually be called stagflation. [[note]] an economic period of high inflation and rising unemployment, leading to lower growth), saying that trying to prevent one of them will eventually cause ''both'' of them to rise [[/note]] Crucially, he argued that the only tool governments needed to promote growth and prevent depressions was an extremely aggressive use of the money supply ('Monetarist' policy). Though he disagreed with Keynes' methods, he claimed to have been influenced by Keynesian economics and called Keynes' ''The General Theory'' "a great book." He argued that government regulation of the financial sector constituted tyranny and an infringement of 'basic liberties', assuming it didn't outright lead to Commmunism, so he's really popular with Libertarians. He also led to the USA having a solely volunteer military.

to:

* John Maynard Keynes: Keynes was the most important economist of the 20th century, and was the first to develop Macro-Economic policies capable of flattening out the boom-and-bust cycle. He did more than most, if not all, most to get the world out of TheGreatDepression. TheGreatDepression( or as many free-market thinkers believe, he was the primary force responsible for putting us in it).
The first capitalist thinker to seriously propose extensive government intervention in the economy, or at least, the first with a serious following (see the Keynesian schools below). Nearly all major world leaders of capitalist countries, whether on the right or the left, use macroeconomic policies that are, to varying degrees, influenced by Keynes' books. Despite his reputation in some circles as a leftist, he was [[CriticalResearchFailure definitely not]] a socialist. Whereas economists before Keynes were more focused on keeping inflation low, Keynes was [[TheGreatDepression obviously more focused on promoting general economic activity]]. He proposed that deficit spending by government could be used as direct economic stimulus to help get economies out of recessions, and believed that regulation should be used to surgically remove and prevent the market failures which caused the last recession. What Smith is to the basic free-market model, and microeconomics, Keynes is to the basic mixed-market model, and macroeconomics. His most important work is ''The General Theory of Employment, Interest, and Money'' (shortened: ''The General Theory'') in 1936. Unfortunately, in the 1950s-70s it transpired that Keynes had underappreciated the role of money in an economy, which brings us to...\n\n

* Milton Friedman: Probably the second most important economist of the 20th century. Friedman's ideas have contributed more than anyone else's to the massive stock-market bubbles which resulted in The Great Recession of 2008. Friedman started from the position believed that government intervention in the economy was an immoral infringement upon the freedom of its citizens, citizens and developed theories which reflected and supported that view. Keynes had determined that the financial sector had to be regulated and restricted in order to prevent it from distorting and screwing up the 'real' economy, but Friedman hypothesized theorized that the financial sector could be harnessed to drive spectacular growth. Friedman believed that if banks were not prevented from making risky loans, then enough of these would pay off that an economic boom financed by debt would result. Once this became or threatened to become a crisis, the government would then loan massive amounts of money to the banks so that the real value of the debts would be wiped out and the cycle could begin again. Friedman was an economic adviser to UsefulNotes/RonaldReagan, and he also highly influenced MargaretThatcher and other Neo-Liberal Liberal leaders. Basically, he is to Neo-Liberals Classical Liberals what Keynes is to Social Liberals and Socialists.Socialists( though there is a growing debate between Monetarists and Classical Liberals over his ideas on monetary policy) . Among his most important contributions to economic theory are his "natural rate of unemployment" and what would eventually be called stagflation. [[note]] an economic period of high inflation and rising unemployment, leading to lower growth), saying that trying to prevent one of them will eventually cause ''both'' of them to rise [[/note]] Crucially, he argued that the only tool governments needed to promote growth and prevent depressions was an extremely aggressive use of the money supply ('Monetarist' policy). Though he disagreed with Keynes' methods, he claimed to have been influenced by Keynesian economics and called Keynes' ''The General Theory'' "a great book." He argued that government regulation of the financial sector constituted tyranny and an infringement of 'basic liberties', assuming it didn't outright liberties' and lead to Commmunism, so he's really popular with Libertarians.bubbles that would eventually burst, leading to bigger and longer-lasting depressions. He also led to the USA having a solely volunteer military.



* Thomas Piketty: Best known for his book ''Capital in the Twenty-First Century'' which has become #1 on the New York Times Non-Fiction bestseller list. Upon publication it was lauded as the most important book on economic theory and capitalist in the 21st Century by the likes of Paul Krugman, Emmannuel Todd, Paul Mason and several others. Piketty pointed out that inequality is a consequence of capitalism and can be checked and contained by state intervention and wealth redistribution, chiefly a global progressive income tax and restrictions on inherited wealth. Piketty pointed out that over time, when the rate of return on capital (r) is greater than the rate of economic growth (g) the result is concentration of wealth, and rather than trickling down, it merely increases the wealth gap if left unchecked and this leads to political and economic instability. While the title alludes to Creator/KarlMarx and makes countless references to the man in the book, Piketty is firmly in the tradition of classical and Keynesian economics and he argues by means of classical data collection and information tools, chiefly the statistical tools of Kuznets and detailed investigation of the tax records published by the state authorities of France and the United States among others. This makes it the first real case for radical wealth redistribution in the classical-Keynesian tradition, and it is the first to be backed by such a wealth of hard data and achieve such universal academic recognition.[[note]] Most critics of every flavour of Capitalist and Socialist economic school did not understand the book in its entirety. This is readily apparent in many Neoliberal/Libertarian critiques, which accuse the book of being a Marxist tome. The closest anyone has come to a credible critique of Piketty and his argument has been Chris Giles of the Financial Times, whose 'critique' has consisted of pointing out minor (and inconsequential) errors in Piketty's data before presenting his own (very questionable, given that it disproportionately undervalues income for the extremely wealthy) data which claims that the historical growth of wealth inequality was not ''quite'' as bad as Piketty had calculated. However, even this was very far from an actual rebuttal of Piketty's data or conclusions [[/note]] However, academically credible doubts have been raised over whether his self-admittedly utopian solution (a worldwide 'wealth tax' of 2% on all wealth over a certain value) would adequately check r > g even if it could be implemented.


to:

* Thomas Piketty: Best known for his book ''Capital in the Twenty-First Century'' which has become #1 on the New York Times Non-Fiction bestseller list. Upon publication it was lauded as the most important book on economic theory and capitalist in the 21st Century by the likes of Paul Krugman, Emmannuel Todd, Paul Mason and several others. Piketty pointed out that inequality is a consequence of capitalism and can be checked and contained by state intervention and wealth redistribution, chiefly a global progressive income tax and restrictions on inherited wealth. Piketty pointed out that over time, when the rate of return on capital (r) is greater than the rate of economic growth (g) the result is concentration of wealth, and rather than trickling down, it merely increases the wealth gap if left unchecked and this leads to political and economic instability. While the title alludes to Creator/KarlMarx and makes countless references to the man in the book, Piketty is firmly in the tradition of classical and Keynesian economics and he argues by means of classical data collection and information tools, chiefly the statistical tools of Kuznets and detailed investigation of the tax records published by the state authorities of France and the United States among others. This makes it the first real case for radical wealth redistribution in the classical-Keynesian tradition, and it is the first to be backed by such a wealth of hard data and achieve such universal academic recognition.[[note]] Most critics of every flavour of Capitalist and Socialist economic school did not understand the book in its entirety. This is readily apparent in many Neoliberal/Libertarian critiques, which accuse the book of being a Marxist tome. The closest anyone has come to a credible critique of Piketty and his argument has been Chris Giles of the Financial Times, whose 'critique' has consisted of pointing out minor (and inconsequential) errors in Piketty's data before presenting his own (very questionable, given that it disproportionately undervalues income for the extremely wealthy) data which claims that the historical growth of wealth inequality was not ''quite'' as bad as Piketty had calculated. However, even this was very far from an actual rebuttal of Piketty's data or conclusions [[/note]] However, academically credible doubts have been raised over whether his self-admittedly utopian solution (a worldwide 'wealth tax' of 2% on all wealth over a certain value) would adequately check r > g even if it could be implemented.

14th Mar '17 8:22:52 AM JulianLapostat
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->''"Nor during the Age of Innovation have the poor gotten poorer, as people are always saying. On the contrary, the poor have been the chief beneficiaries of modern capitalism. It is an irrefutable historical finding, obscured by the logical truth that the profits from innovation go in the first act mostly to the bourgeois rich."'''
-->--'''Deirdre N. McCloskey'''

to:

->''"Nor during ->''"The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours the Age of Innovation have the poor gotten poorer, as people are always saying. On the contrary, the poor have been the chief beneficiaries of modern capitalism. It is an irrefutable historical finding, obscured by the logical truth that the profits from innovation go in the first act mostly to the bourgeois rich.future."'''
-->--'''Deirdre N. McCloskey'''
-->--'''Thomas Piketty'''
14th Mar '17 8:22:16 AM JulianLapostat
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The word "capitalism" was coined in 1854 by the novelist [[Literature/VanityFair William Thackeray]].


to:

The word "capitalism" was coined in 1854 by the novelist [[Literature/VanityFair William Thackeray]].

Thackeray]]. Wiktionary holds that the word was a "[[https://en.wiktionary.org/wiki/capitalism Borrowing from French capitalisme ‎(“the condition of one who is rich”); equivalent to capital +‎ -ism.]]" From the 1970s onward, the extent to which the word drew unwanted attention to role of the rich lead to it being rebranded in the English-speaking world in general and northern America in particular:

->''"Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes-indeed, deletes-the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity.''

->''But most of the people who use the new designation-economists, in particular- are innocent as to the effect. They see nothing wrong with their bland, descriptive terminology. They pay no attention to the important question: Whether money- wealth-accords a special power. (It does.)"''
-->-- '''[[https://en.wikiquote.org/wiki/John_Kenneth_Galbraith John Kenneth Galbraith]]''', "[[http://www.thirdworldtraveler.com/Economics/FreeMarketFraudGalbraith.html Free Market Fraud]]", ''The Progressive'' (January 1999)

'''The Central Contradiction: r > g'''

Capitalism kills its hosts.

It does this by exponentially increasing wealth concentration/inequality, which creates socio-economic conditions that promote political rebellion. This is what Thomas Piketty meant by "the past [devouring] the future".

The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes from labour '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals spend relatively little of their income on consumption. Instead, they invest it in growing their wealth. As more and more of the total income of a capitalist market-society is invested in the acquisition of capital, and not spent upon consumption, less and less economic activity takes place until economic stagnation and finally decline result. This delivers a stagnant or declining standard of living for people whose income comes solely or mostly from working.

Over time, this gives the majority strong and growing incentives to rebel and restructure the system in their own interests - particularly when they cannot survive their present standard of living. The capitalist class is also incentivised to translate their economic power into overt political power and become ''de jure'' rulers in their own right.

Peasant and Noble rebellions resulting from the long-term trend of ''r > g'' and short-term shocks caused by natural disasters and wars were major causes for the disintegration of notable empires including [[UsefulNotes/DynastiesFromShanToQing The Ming]] and [[UsefulNotes/TheRomanEmpire Western Rome]]. TheCycleOfEmpires is a related trope, albeit with a greater focus on the politics than the economics of the rise and fall of civilisations. Interestingly, UsefulNotes/{{Socialism}} contends that the growing integration of the world economy and the inability of the democratic process to check capitalist wealth-power accumulation means that the inequality and unrest caused by r > g will eventually kill ''[[HoistByHisOwnPetard Capitalism itself]]''.

Failure to create adequate laws will prevent a market from arising, and failure to enforce existing laws will eventually result in CriticalExistenceFailure. This results from the accumulation of too much capital in the hands of the capitalist class, which occurs whenever the market's laws governing property-contracts-bankruptcy-monopolies and taxation policy do not specifically prevent it or are reformed to curb it.

Karl Marx famously asserted that the world's capitalist class would block attempts to correct the wealth concentration of the capitalist system, and that this would make violent world revolution to destroy the capitalist system and replace it with {{UsefulNotes/Socialism}} inevitable. So far this prediction has proven pessimistic, as even the US government was willing and able to disrupt the development of wealth inequality in the period c.1940-1975.




* ''Regulating Monopolies and Oligopolies'': The law of diminishing returns means that companies make the greatest possible profits by selling their products at the highest prices at which consumers can afford to pay for them. Monopolies and Oligopolies don't have to lower prices below this level in order to compete with others, so they naturally charge very high prices. Government can be made to let this to happen in order to maximize corporate profits, or it can be made to benefit the masses: governments can nationalize monopolies and run them free of charge or at a minimal cost to consumers, can break up monopolies to artificially create competition which drives down prices, or allow the for-profit monopolies to continue existing but set acceptable prices and levels of profit. The problem with oligopolies is that they reduces the likelihood that individual suppliers will renege on a deal to keep total supply in the economy as low as possible. The government can regulate these in a similar manner. "Evidence-based" ("Keynesian" and "Behavioural") economists agree that it is extremely important that sectors with so-called "Natural Monopolies" (it is extremely hard to foster competition when actual land control is involved, e.g. road or rail networks) should only contain government-owned or (extremely) heavily regulated monopolies to minimize wasteful "rent-seeking"/wealth-extraction activity.
** In the view of Classical Liberals and Austrian Economists, monopolistic power is only possible through government power, through special privileges enabled by he government like special contracts, IP laws, regulations and even tax laws. And that without these privileges the competitiveness of the market place would diffuse any possible monopoly from developing. Experts point to the history of energy companies in the early 20th Century before the government stepped in which were numerous enough to ensure competitive prices.

to:

* ''Regulating Monopolies and Oligopolies'': The law of diminishing returns means that companies make the greatest possible profits by selling their products at the highest prices at which consumers can afford to pay for them. Monopolies and Oligopolies don't have to lower prices below this level in order to compete with others, so they naturally charge very high prices. Government can be made to let this to happen in order to maximize maximise corporate profits, or it can be made to benefit the masses: governments can nationalize nationalise monopolies and run them free of charge or at a minimal cost to consumers, can break up monopolies to artificially create competition which drives down prices, or allow the for-profit monopolies to continue existing but set acceptable prices and levels of profit. The problem with oligopolies is that they reduces the likelihood that individual suppliers will renege on a deal to keep total supply in the economy as low as possible. The government can regulate these in a similar manner. "Evidence-based" ("Keynesian" and "Behavioural") economists agree that it is extremely important that sectors with so-called "Natural Monopolies" (it is extremely hard to foster competition when actual land control is involved, e.g. road or rail networks) should only contain government-owned or (extremely) heavily regulated monopolies to minimize minimise wasteful "rent-seeking"/wealth-extraction activity.
** In the view of Classical Liberals As usual, Neoclassical and Austrian Economists, monopolistic power is only possible through government power, through special privileges enabled by he government like special contracts, IP laws, regulations and even tax laws. And School ("theory-based") economists believe that without these privileges mono/oligopolies should be allowed to operate unhindered to maximise the competitiveness wealth accumulation of the market place would diffuse any possible monopoly from developing. Experts point rich, even though all other Schools believe that they should be nationalised/broken up/heavily regulated to benefit the history of energy companies in poor. This is because they insist that whatever the early 20th Century before the government stepped in practical benefits of empirical real-world policies which were numerous enough to ensure competitive prices. have successfully maximised economic efficiency by nationalising/breaking up/regulating monopolies, ''in theory'' doing this is economically inefficient and should be harming the economy.



Here are the laconic versions of various types of Capitalism. There is a fundamental disagreement over whether capitalism is an iniquitous and self-destructive system or the system responsible for uplifting the majority of the world's population out of poverty. The flame wars that erupt over the proper role of the state in creating, maintaining, and guiding/not guiding the market and society are not worth getting into here. It's enough to know that there are deep conflicts between different schools of thought and that at times it seems they can't cooperate on anything bar opposition to total public ownership of the means of production.

* ''''Government-Regulated, Republican-style Free Market'''': a strain which believes that government should structure the market to maximize the powers and profits of the capitalist class, it holds that all market actors almost always acquire wealth which matches their objective value and efforts. Advocates long-term/lifetime or even eternal copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and even democracy..
* '''Classic Liberal/Libertarian/'Free Market'''': a strain which believes that government should limit its involvement in the market to ensure a more even playing field, less regulation/barriers into the market and therefore less concentrated market power (e.g. monopolies), it holds that market actors usually acquire wealth which roughly matches their objective value and efforts. Advocates no IP or copyright laws to ensure a highly competitive market where the consumer benefits. Adherents believe that this strain is compatible with meritocracy and democracy.

to:

Here are the laconic versions of various types of Capitalism. There is a fundamental disagreement over whether or not capitalism is an iniquitous and self-destructive system or the system responsible for uplifting the majority of the world's population out of poverty.system. The flame wars that erupt over the proper role of the state in creating, maintaining, and guiding/not guiding the market and society are not worth getting into here. It's enough to know that there are deep conflicts between different schools of thought and that at times it seems they can't cooperate on anything bar opposition to total public ownership of the means of production.

* ''''Government-Regulated, Republican-style Free '''Oligarchic-Monopolistic/'Free Market'''': a strain which believes that government should structure the market to maximize maximise the powers and profits of the capitalist class, it holds that all market actors almost always acquire wealth which matches their objective value and efforts. Advocates long-term/lifetime or even eternal copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and even democracy..democracy. All other strains fervently disagree on both counts.
* '''Classic Liberal/Libertarian/'Free Market'''': a strain which believes that government should limit its involvement in structure the market to ensure a more even playing field, less regulation/barriers into prevent the market and therefore less concentrated capitalist class from acquiring wealth through inheritance or acquiring too much market power (e.g. monopolies), it holds that market actors usually acquire wealth which roughly matches their objective value and efforts. Advocates no IP or copyright laws to ensure a highly competitive market where the consumer benefits.long/lifetime copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and democracy. Some strains disagree on the latter count.



The notion of said "Rationality" economists define is different for many schools, the Misesian idea of rationality is defined as choosing the appropriate means for the desired end. What Austrians and their fellow free market advocates argue is that it’s not the rationality of market participants that matters, but the institutional context within which they act. In other words, rationality is not a feature of the individual choosers but of the market as a whole. Even if people make “mistakes” by not acting as the strict model would suggest, they will receive feedback from the competitive marketplace that will demonstrate their errors and give them the incentive and knowledge to correct them.

to:

The notion of said "Rationality" economists define is different for many schools, the Misesian idea of rationality is defined as choosing the appropriate means for the desired end. What Austrians Actual human behaviour departs so far and their fellow free market advocates argue is so inconsistently from that it’s not the rationality of market participants that matters, but the institutional context within which they act. In other words, rationality is not a feature of predicted by the individual choosers but of ''Rational Consumer'' model that the market as a whole. Even 'macroeconomic' models which use it are incapable of describing or predicting how the economy works in reality. Still, it is hard to contradict the assertion that Classical Economics ''could'' perfectly model the capitalist economy [[WhyCouldntYouBeDifferent if only people make “mistakes” by acted like Rational Consumers]] [[ShapedLikeItself and not acting as like, well, people]].

Recently, 'Behavioural Economics' has produced microeconomic models capable of accurately predicting human behaviour by using psychological studies of real people's actual consumption habits (which are logically inconsistent, impulsive, and mood-dependent). It is hoped that this discipline can be resolved with
the strict model would suggest, they will receive feedback macroeconomic models capable of accurately describing and predicting how the economy works in reality, which have been produced by using statistics collected from the competitive marketplace that will demonstrate their errors and give them the incentive and knowledge to correct them.real world.



Marxists, Socialists and Social Liberals, and Neo-Liberals disagree on what constitutes a market failure. Marxists see them everywhere, considering them damning indictments of the entire Capitalist system and definitive proof of the need for a government-directed economy. Socialists and Social Liberals see many, believing there is much room for government intervention to smooth over the obvious flaws in Capitalism. Neo-Liberals see few or none, holding that Capitalism is the best imperfect system which is being failed by present-day human values and society and the intervention of government force.


to:

Finally, in the wider economy there is a natural tendency towards the formation of monopolies (one party is the sole producer of a good) and cartels (all producers of a good cooperate to set production and prices). The first cause is the drive towards profit: cooperation or merger with rival producers is more profitable than competition. Secondly, larger operations are more efficient. Efficiency begets efficiency until ultimately, the most efficient form of production - monopoly - results. Both monopolies and cartels give sellers the power to dictate prices independently of demand, which the desire for profit encourages them to exercise. Utility companies, which have enormous fixed costs in plants and machinery, are the typical natural monopoly.

Marxists, Socialists and Social Liberals, and Neo-Liberals disagree on what constitutes a market failure. Marxists see them everywhere, considering them damning indictments of the entire Capitalist system and definitive proof of the need for a government-directed economy. Socialists and Social Liberals see many, believing there is much room for government intervention to smooth over the obvious flaws in Capitalism. Neo-Liberals see few or none, holding that Capitalism is the best imperfect a (near-)perfect system which is being failed by present-day human values and society and the intervention of government force.society.

Lately, realisations of the true extent of market failures have caused the existence of the invisible hand to become debated by capitalists and anti-capitalists alike.

to:



* John Maynard Keynes: Keynes was the most important economist of the 20th century, and was the first to develop Macro-Economic policies capable of flattening out the boom-and-bust cycle. He did more than most to get the world out of TheGreatDepression( or as many free-market thinkers believe, he was the primary force responsible for putting us in it).
The first capitalist thinker to seriously propose extensive government intervention in the economy, or at least, the first with a serious following (see the Keynesian schools below). Nearly all major world leaders of capitalist countries, whether on the right or the left, use macroeconomic policies that are, to varying degrees, influenced by Keynes' books. Despite his reputation in some circles as a leftist, he was [[CriticalResearchFailure definitely not]] a socialist. Whereas economists before Keynes were more focused on keeping inflation low, Keynes was [[TheGreatDepression obviously more focused on promoting general economic activity]]. He proposed that deficit spending by government could be used as direct economic stimulus to help get economies out of recessions, and believed that regulation should be used to surgically remove and prevent the market failures which caused the last recession. What Smith is to the basic free-market model, and microeconomics, Keynes is to the basic mixed-market model, and macroeconomics. His most important work is ''The General Theory of Employment, Interest, and Money'' (shortened: ''The General Theory'') in 1936.

* Milton Friedman: Probably the second most important economist of the 20th century. Friedman believed that government intervention in the economy was an immoral infringement upon the freedom of its citizens and theorized that the financial sector could be harnessed to drive spectacular growth. Friedman was an economic adviser to UsefulNotes/RonaldReagan, and he also highly influenced MargaretThatcher and other Liberal leaders. Basically, he is to Classical Liberals what Keynes is to Social Liberals and Socialists( though there is a growing debate between Monetarists and Classical Liberals over his ideas on monetary policy) . Among his most important contributions to economic theory are his "natural rate of unemployment" and what would eventually be called stagflation. [[note]] an economic period of high inflation and rising unemployment, leading to lower growth), saying that trying to prevent one of them will eventually cause ''both'' of them to rise [[/note]] Crucially, he argued that the only tool governments needed to promote growth and prevent depressions was an extremely aggressive use of the money supply ('Monetarist' policy). Though he disagreed with Keynes' methods, he claimed to have been influenced by Keynesian economics and called Keynes' ''The General Theory'' "a great book." He argued that government regulation of the financial sector constituted tyranny and an infringement of 'basic liberties' and lead to bubbles that would eventually burst, leading to bigger and longer-lasting depressions. He also led to the USA having a solely volunteer military.

to:

* John Maynard Keynes: Keynes was the most important economist of the 20th century, and was the first to develop Macro-Economic policies capable of flattening out the boom-and-bust cycle. He did more than most most, if not all, to get the world out of TheGreatDepression( or as many free-market thinkers believe, he was the primary force responsible for putting us in it).
TheGreatDepression. The first capitalist thinker to seriously propose extensive government intervention in the economy, or at least, the first with a serious following (see the Keynesian schools below). Nearly all major world leaders of capitalist countries, whether on the right or the left, use macroeconomic policies that are, to varying degrees, influenced by Keynes' books. Despite his reputation in some circles as a leftist, he was [[CriticalResearchFailure definitely not]] a socialist. Whereas economists before Keynes were more focused on keeping inflation low, Keynes was [[TheGreatDepression obviously more focused on promoting general economic activity]]. He proposed that deficit spending by government could be used as direct economic stimulus to help get economies out of recessions, and believed that regulation should be used to surgically remove and prevent the market failures which caused the last recession. What Smith is to the basic free-market model, and microeconomics, Keynes is to the basic mixed-market model, and macroeconomics. His most important work is ''The General Theory of Employment, Interest, and Money'' (shortened: ''The General Theory'') in 1936. \n\n Unfortunately, in the 1950s-70s it transpired that Keynes had underappreciated the role of money in an economy, which brings us to...

* Milton Friedman: Probably the second most important economist of the 20th century. Friedman's ideas have contributed more than anyone else's to the massive stock-market bubbles which resulted in The Great Recession of 2008. Friedman believed started from the position that government intervention in the economy was an immoral infringement upon the freedom of its citizens citizens, and theorized developed theories which reflected and supported that view. Keynes had determined that the financial sector had to be regulated and restricted in order to prevent it from distorting and screwing up the 'real' economy, but Friedman hypothesized that the financial sector could be harnessed to drive spectacular growth. Friedman believed that if banks were not prevented from making risky loans, then enough of these would pay off that an economic boom financed by debt would result. Once this became or threatened to become a crisis, the government would then loan massive amounts of money to the banks so that the real value of the debts would be wiped out and the cycle could begin again. Friedman was an economic adviser to UsefulNotes/RonaldReagan, and he also highly influenced MargaretThatcher and other Liberal Neo-Liberal leaders. Basically, he is to Classical Liberals Neo-Liberals what Keynes is to Social Liberals and Socialists( though there is a growing debate between Monetarists and Classical Liberals over his ideas on monetary policy) .Socialists. Among his most important contributions to economic theory are his "natural rate of unemployment" and what would eventually be called stagflation. [[note]] an economic period of high inflation and rising unemployment, leading to lower growth), saying that trying to prevent one of them will eventually cause ''both'' of them to rise [[/note]] Crucially, he argued that the only tool governments needed to promote growth and prevent depressions was an extremely aggressive use of the money supply ('Monetarist' policy). Though he disagreed with Keynes' methods, he claimed to have been influenced by Keynesian economics and called Keynes' ''The General Theory'' "a great book." He argued that government regulation of the financial sector constituted tyranny and an infringement of 'basic liberties' and liberties', assuming it didn't outright lead to bubbles that would eventually burst, leading to bigger and longer-lasting depressions.Commmunism, so he's really popular with Libertarians. He also led to the USA having a solely volunteer military.




to:

* Thomas Piketty: Best known for his book ''Capital in the Twenty-First Century'' which has become #1 on the New York Times Non-Fiction bestseller list. Upon publication it was lauded as the most important book on economic theory and capitalist in the 21st Century by the likes of Paul Krugman, Emmannuel Todd, Paul Mason and several others. Piketty pointed out that inequality is a consequence of capitalism and can be checked and contained by state intervention and wealth redistribution, chiefly a global progressive income tax and restrictions on inherited wealth. Piketty pointed out that over time, when the rate of return on capital (r) is greater than the rate of economic growth (g) the result is concentration of wealth, and rather than trickling down, it merely increases the wealth gap if left unchecked and this leads to political and economic instability. While the title alludes to Creator/KarlMarx and makes countless references to the man in the book, Piketty is firmly in the tradition of classical and Keynesian economics and he argues by means of classical data collection and information tools, chiefly the statistical tools of Kuznets and detailed investigation of the tax records published by the state authorities of France and the United States among others. This makes it the first real case for radical wealth redistribution in the classical-Keynesian tradition, and it is the first to be backed by such a wealth of hard data and achieve such universal academic recognition.[[note]] Most critics of every flavour of Capitalist and Socialist economic school did not understand the book in its entirety. This is readily apparent in many Neoliberal/Libertarian critiques, which accuse the book of being a Marxist tome. The closest anyone has come to a credible critique of Piketty and his argument has been Chris Giles of the Financial Times, whose 'critique' has consisted of pointing out minor (and inconsequential) errors in Piketty's data before presenting his own (very questionable, given that it disproportionately undervalues income for the extremely wealthy) data which claims that the historical growth of wealth inequality was not ''quite'' as bad as Piketty had calculated. However, even this was very far from an actual rebuttal of Piketty's data or conclusions [[/note]] However, academically credible doubts have been raised over whether his self-admittedly utopian solution (a worldwide 'wealth tax' of 2% on all wealth over a certain value) would adequately check r > g even if it could be implemented.

14th Mar '17 6:01:54 AM scipio22
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14th Mar '17 6:01:22 AM scipio22
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->''"The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours the future."'''
-->--'''Thomas Piketty'''

to:

->''"The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labour. Once constituted, capital reproduces itself faster than output increases. The past devours ->''"Nor during the future.Age of Innovation have the poor gotten poorer, as people are always saying. On the contrary, the poor have been the chief beneficiaries of modern capitalism. It is an irrefutable historical finding, obscured by the logical truth that the profits from innovation go in the first act mostly to the bourgeois rich."'''
-->--'''Thomas Piketty'''
-->--'''Deirdre N. McCloskey'''



The word "capitalism" was coined in 1854 by the novelist [[Literature/VanityFair William Thackeray]]. Wiktionary holds that the word was a "[[https://en.wiktionary.org/wiki/capitalism Borrowing from French capitalisme ‎(“the condition of one who is rich”); equivalent to capital +‎ -ism.]]" From the 1970s onward, the extent to which the word drew unwanted attention to role of the rich lead to it being rebranded in the English-speaking world in general and northern America in particular:

->''"Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes-indeed, deletes-the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity.''

->''But most of the people who use the new designation-economists, in particular- are innocent as to the effect. They see nothing wrong with their bland, descriptive terminology. They pay no attention to the important question: Whether money- wealth-accords a special power. (It does.)"''
-->-- '''[[https://en.wikiquote.org/wiki/John_Kenneth_Galbraith John Kenneth Galbraith]]''', "[[http://www.thirdworldtraveler.com/Economics/FreeMarketFraudGalbraith.html Free Market Fraud]]", ''The Progressive'' (January 1999)

'''The Central Contradiction: r > g'''

Capitalism kills its hosts.

It does this by exponentially increasing wealth concentration/inequality, which creates socio-economic conditions that promote political rebellion. This is what Thomas Piketty meant by "the past [devouring] the future".

The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes from labour '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals spend relatively little of their income on consumption. Instead, they invest it in growing their wealth. As more and more of the total income of a capitalist market-society is invested in the acquisition of capital, and not spent upon consumption, less and less economic activity takes place until economic stagnation and finally decline result. This delivers a stagnant or declining standard of living for people whose income comes solely or mostly from working.

Over time, this gives the majority strong and growing incentives to rebel and restructure the system in their own interests - particularly when they cannot survive their present standard of living. The capitalist class is also incentivised to translate their economic power into overt political power and become ''de jure'' rulers in their own right.

Peasant and Noble rebellions resulting from the long-term trend of ''r > g'' and short-term shocks caused by natural disasters and wars were major causes for the disintegration of notable empires including [[UsefulNotes/DynastiesFromShanToQing The Ming]] and [[UsefulNotes/TheRomanEmpire Western Rome]]. TheCycleOfEmpires is a related trope, albeit with a greater focus on the politics than the economics of the rise and fall of civilisations. Interestingly, UsefulNotes/{{Socialism}} contends that the growing integration of the world economy and the inability of the democratic process to check capitalist wealth-power accumulation means that the inequality and unrest caused by r > g will eventually kill ''[[HoistByHisOwnPetard Capitalism itself]]''.

to:

The word "capitalism" was coined in 1854 by the novelist [[Literature/VanityFair William Thackeray]]. Wiktionary holds that the word was a "[[https://en.wiktionary.org/wiki/capitalism Borrowing from French capitalisme ‎(“the condition of one who is rich”); equivalent to capital +‎ -ism.]]" From the 1970s onward, the extent to which the word drew unwanted attention to role of the rich lead to it being rebranded in the English-speaking world in general and northern America in particular:

->''"Let's begin with capitalism, a word that has gone largely out of fashion. The approved reference now is to the market system. This shift minimizes-indeed, deletes-the role of wealth in the economic and social system. And it sheds the adverse connotation going back to Marx. Instead of the owners of capital or their attendants in control, we have the admirably impersonal role of market forces. It would be hard to think of a change in terminology more in the interest of those to whom money accords power. They have now a functional anonymity.''

->''But most of the people who use the new designation-economists, in particular- are innocent as to the effect. They see nothing wrong with their bland, descriptive terminology. They pay no attention to the important question: Whether money- wealth-accords a special power. (It does.)"''
-->-- '''[[https://en.wikiquote.org/wiki/John_Kenneth_Galbraith John Kenneth Galbraith]]''', "[[http://www.thirdworldtraveler.com/Economics/FreeMarketFraudGalbraith.html Free Market Fraud]]", ''The Progressive'' (January 1999)

'''The Central Contradiction: r > g'''

Capitalism kills its hosts.

It does this by exponentially increasing wealth concentration/inequality, which creates socio-economic conditions that promote political rebellion. This is what Thomas Piketty meant by "the past [devouring] the future".

The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes from labour '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals spend relatively little of their income on consumption. Instead, they invest it in growing their wealth. As more and more of the total income of a capitalist market-society is invested in the acquisition of capital, and not spent upon consumption, less and less economic activity takes place until economic stagnation and finally decline result. This delivers a stagnant or declining standard of living for people whose income comes solely or mostly from working.

Over time, this gives the majority strong and growing incentives to rebel and restructure the system in their own interests - particularly when they cannot survive their present standard of living. The capitalist class is also incentivised to translate their economic power into overt political power and become ''de jure'' rulers in their own right.

Peasant and Noble rebellions resulting from the long-term trend of ''r > g'' and short-term shocks caused by natural disasters and wars were major causes for the disintegration of notable empires including [[UsefulNotes/DynastiesFromShanToQing The Ming]] and [[UsefulNotes/TheRomanEmpire Western Rome]]. TheCycleOfEmpires is a related trope, albeit with a greater focus on the politics than the economics of the rise and fall of civilisations. Interestingly, UsefulNotes/{{Socialism}} contends that the growing integration of the world economy and the inability of the democratic process to check capitalist wealth-power accumulation means that the inequality and unrest caused by r > g will eventually kill ''[[HoistByHisOwnPetard Capitalism itself]]''.
Thackeray]].




Failure to create adequate laws will prevent a market from arising, and failure to enforce existing laws will eventually result in CriticalExistenceFailure. This results from the accumulation of too much capital in the hands of the capitalist class, which occurs whenever the market's laws governing property-contracts-bankruptcy-monopolies and taxation policy do not specifically prevent it or are reformed to curb it.

Karl Marx famously asserted that the world's capitalist class would block attempts to correct the wealth concentration of the capitalist system, and that this would make violent world revolution to destroy the capitalist system and replace it with {{UsefulNotes/Socialism}} inevitable. So far this prediction has proven pessimistic, as even the US government was willing and able to disrupt the development of wealth inequality in the period c.1940-1975.



*** There is even some debate as to what someone can actually own, such as intellectual property. Supporters say that as it was made by someone, the idea belongs to the creator. If creators did not own their own ideas other people could steal them and use someone else's ideas to make a lot of money at the expense of the creator. For example, if Alice were a small businesswoman who discovered a way to manufacture cars more efficiently, Bob, who already has a big business and thus all of the infrastructure in place, could take Alice's idea and apply it to his own plants. Now Alice has payed the R&D costs for the research but Bob is the one making the money on her idea. Opponents say that the reason we have property in the first place is to manage finite resources and define property as "something one person owns to the exclusion of other people owning it." For example, if Alice owned a pencil Bob could not use that pencil without first taking it from Alice. Ideas, on the other hand, are infinite, that is one person can have it and someone else can use it without diminishing the first person's 'ownership' of it. For example, if Alice owned a book and Bob copied it onto his own paper, both of them can still enjoy the book. It has also been studied multiple times as to whether or IP laws help innovation, with most studies actually showing neutral or negative effect.

to:

*** There is even some debate as to what someone can actually own, such as intellectual property. Supporters say that as it was made by someone, the idea belongs to the creator. If creators did not own their own ideas other people could steal them and use someone else's ideas to make a lot of money at the expense of the creator. For example, if Alice were a small businesswoman who discovered a way to manufacture cars more efficiently, Bob, who already has a big business and thus all of the infrastructure in place, could take Alice's idea and apply it to his own plants. Now Alice has payed the R&D costs for the research but Bob is the one making the money on her idea. Opponents say that the reason we have property in the first place is to manage finite resources and define property as "something one person owns to the exclusion of other people owning it." For example, if Alice owned a pencil Bob could not use that pencil without first taking it from Alice. Ideas, on the other hand, are infinite, that is one person can have it and someone else can use it without diminishing the first person's 'ownership' of it. For example, if Alice owned a book and Bob copied it onto his own paper, both of them can still enjoy the book. It has also been studied multiple times as to whether or not IP laws help innovation, with most studies actually showing neutral or negative effect.



* ''Regulating Monopolies and Oligopolies'': The law of diminishing returns means that companies make the greatest possible profits by selling their products at the highest prices at which consumers can afford to pay for them. Monopolies and Oligopolies don't have to lower prices below this level in order to compete with others, so they naturally charge very high prices. Government can be made to let this to happen in order to maximise corporate profits, or it can be made to benefit the masses: governments can nationalise monopolies and run them free of charge or at a minimal cost to consumers, can break up monopolies to artificially create competition which drives down prices, or allow the for-profit monopolies to continue existing but set acceptable prices and levels of profit. The problem with oligopolies is that they reduces the likelihood that individual suppliers will renege on a deal to keep total supply in the economy as low as possible. The government can regulate these in a similar manner. "Evidence-based" ("Keynesian" and "Behavioural") economists agree that it is extremely important that sectors with so-called "Natural Monopolies" (it is extremely hard to foster competition when actual land control is involved, e.g. road or rail networks) should only contain government-owned or (extremely) heavily regulated monopolies to minimise wasteful "rent-seeking"/wealth-extraction activity.
** As usual, Neoclassical and Austrian School ("theory-based") economists believe that mono/oligopolies should be allowed to operate unhindered to maximise the wealth accumulation of the rich, even though all other Schools believe that they should be nationalised/broken up/heavily regulated to benefit the poor. This is because they insist that whatever the practical benefits of empirical real-world policies which have successfully maximised economic efficiency by nationalising/breaking up/regulating monopolies, ''in theory'' doing this is economically inefficient and should be harming the economy.

to:

* ''Regulating Monopolies and Oligopolies'': The law of diminishing returns means that companies make the greatest possible profits by selling their products at the highest prices at which consumers can afford to pay for them. Monopolies and Oligopolies don't have to lower prices below this level in order to compete with others, so they naturally charge very high prices. Government can be made to let this to happen in order to maximise maximize corporate profits, or it can be made to benefit the masses: governments can nationalise nationalize monopolies and run them free of charge or at a minimal cost to consumers, can break up monopolies to artificially create competition which drives down prices, or allow the for-profit monopolies to continue existing but set acceptable prices and levels of profit. The problem with oligopolies is that they reduces the likelihood that individual suppliers will renege on a deal to keep total supply in the economy as low as possible. The government can regulate these in a similar manner. "Evidence-based" ("Keynesian" and "Behavioural") economists agree that it is extremely important that sectors with so-called "Natural Monopolies" (it is extremely hard to foster competition when actual land control is involved, e.g. road or rail networks) should only contain government-owned or (extremely) heavily regulated monopolies to minimise minimize wasteful "rent-seeking"/wealth-extraction activity.
** As usual, Neoclassical In the view of Classical Liberals and Austrian School ("theory-based") economists believe Economists, monopolistic power is only possible through government power, through special privileges enabled by he government like special contracts, IP laws, regulations and even tax laws. And that mono/oligopolies should be allowed to operate unhindered to maximise without these privileges the wealth accumulation competitiveness of the rich, even though all other Schools believe that they should be nationalised/broken up/heavily regulated market place would diffuse any possible monopoly from developing. Experts point to benefit the poor. This is because they insist that whatever history of energy companies in the practical benefits of empirical real-world policies early 20th Century before the government stepped in which have successfully maximised economic efficiency by nationalising/breaking up/regulating monopolies, ''in theory'' doing this is economically inefficient and should be harming the economy.were numerous enough to ensure competitive prices.



Here are the laconic versions of various types of Capitalism. There is a fundamental disagreement over whether or not capitalism is an iniquitous and self-destructive system. The flame wars that erupt over the proper role of the state in creating, maintaining, and guiding/not guiding the market and society are not worth getting into here. It's enough to know that there are deep conflicts between different schools of thought and that at times it seems they can't cooperate on anything bar opposition to total public ownership of the means of production.

* '''Oligarchic-Monopolistic/'Free Market'''': a strain which believes that government should structure the market to maximise the powers and profits of the capitalist class, it holds that all market actors almost always acquire wealth which matches their objective value and efforts. Advocates long-term/lifetime or even eternal copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and even democracy. All other strains fervently disagree on both counts.
* '''Classic Liberal/Libertarian/'Free Market'''': a strain which believes that government should structure the market to prevent the capitalist class from acquiring wealth through inheritance or acquiring too much market power (e.g. monopolies), it holds that market actors usually acquire wealth which roughly matches their objective value and efforts. Advocates long/lifetime copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and democracy. Some strains disagree on the latter count.

to:

Here are the laconic versions of various types of Capitalism. There is a fundamental disagreement over whether or not capitalism is an iniquitous and self-destructive system.system or the system responsible for uplifting the majority of the world's population out of poverty. The flame wars that erupt over the proper role of the state in creating, maintaining, and guiding/not guiding the market and society are not worth getting into here. It's enough to know that there are deep conflicts between different schools of thought and that at times it seems they can't cooperate on anything bar opposition to total public ownership of the means of production.

* '''Oligarchic-Monopolistic/'Free ''''Government-Regulated, Republican-style Free Market'''': a strain which believes that government should structure the market to maximise maximize the powers and profits of the capitalist class, it holds that all market actors almost always acquire wealth which matches their objective value and efforts. Advocates long-term/lifetime or even eternal copyright-patent ownership. Adherents believe that this strain is compatible with meritocracy and even democracy. All other strains fervently disagree on both counts.democracy..
* '''Classic Liberal/Libertarian/'Free Market'''': a strain which believes that government should structure limit its involvement in the market to prevent ensure a more even playing field, less regulation/barriers into the capitalist class from acquiring wealth through inheritance or acquiring too much market and therefore less concentrated market power (e.g. monopolies), it holds that market actors usually acquire wealth which roughly matches their objective value and efforts. Advocates long/lifetime copyright-patent ownership.no IP or copyright laws to ensure a highly competitive market where the consumer benefits. Adherents believe that this strain is compatible with meritocracy and democracy. Some strains disagree on the latter count.



Actual human behaviour departs so far and so inconsistently from that which is predicted by the ''Rational Consumer'' model that the 'macroeconomic' models which use it are incapable of describing or predicting how the economy works in reality. Still, it is hard to contradict the assertion that Classical Economics ''could'' perfectly model the capitalist economy [[WhyCouldntYouBeDifferent if only people acted like Rational Consumers]] [[ShapedLikeItself and not like, well, people]].

Recently, 'Behavioural Economics' has produced microeconomic models capable of accurately predicting human behaviour by using psychological studies of real people's actual consumption habits (which are logically inconsistent, impulsive, and mood-dependent). It is hoped that this discipline can be resolved with the macroeconomic models capable of accurately describing and predicting how the economy works in reality, which have been produced by using statistics collected from the real world.

to:

Actual human behaviour departs so far The notion of said "Rationality" economists define is different for many schools, the Misesian idea of rationality is defined as choosing the appropriate means for the desired end. What Austrians and so inconsistently from their fellow free market advocates argue is that it’s not the rationality of market participants that matters, but the institutional context within which they act. In other words, rationality is predicted by not a feature of the ''Rational Consumer'' model that individual choosers but of the 'macroeconomic' models which use it are incapable of describing or predicting how the economy works in reality. Still, it is hard to contradict the assertion that Classical Economics ''could'' perfectly model the capitalist economy [[WhyCouldntYouBeDifferent market as a whole. Even if only people acted like Rational Consumers]] [[ShapedLikeItself and make “mistakes” by not like, well, people]].

Recently, 'Behavioural Economics' has produced microeconomic models capable of accurately predicting human behaviour by using psychological studies of real people's actual consumption habits (which are logically inconsistent, impulsive, and mood-dependent). It is hoped that this discipline can be resolved with
acting as the macroeconomic models capable of accurately describing and predicting how the economy works in reality, which have been produced by using statistics collected strict model would suggest, they will receive feedback from the real world.competitive marketplace that will demonstrate their errors and give them the incentive and knowledge to correct them.



Finally, in the wider economy there is a natural tendency towards the formation of monopolies (one party is the sole producer of a good) and cartels (all producers of a good cooperate to set production and prices). The first cause is the drive towards profit: cooperation or merger with rival producers is more profitable than competition. Secondly, larger operations are more efficient. Efficiency begets efficiency until ultimately, the most efficient form of production - monopoly - results. Both monopolies and cartels give sellers the power to dictate prices independently of demand, which the desire for profit encourages them to exercise. Utility companies, which have enormous fixed costs in plants and machinery, are the typical natural monopoly.

Marxists, Socialists and Social Liberals, and Neo-Liberals disagree on what constitutes a market failure. Marxists see them everywhere, considering them damning indictments of the entire Capitalist system and definitive proof of the need for a government-directed economy. Socialists and Social Liberals see many, believing there is much room for government intervention to smooth over the obvious flaws in Capitalism. Neo-Liberals see few or none, holding that Capitalism is a (near-)perfect system which is being failed by present-day human values and society.

Lately, realisations of the true extent of market failures have caused the existence of the invisible hand to become debated by capitalists and anti-capitalists alike.

to:

Finally, in the wider economy there is a natural tendency towards the formation of monopolies (one party is the sole producer of a good) and cartels (all producers of a good cooperate to set production and prices). The first cause is the drive towards profit: cooperation or merger with rival producers is more profitable than competition. Secondly, larger operations are more efficient. Efficiency begets efficiency until ultimately, the most efficient form of production - monopoly - results. Both monopolies and cartels give sellers the power to dictate prices independently of demand, which the desire for profit encourages them to exercise. Utility companies, which have enormous fixed costs in plants and machinery, are the typical natural monopoly.

Marxists, Socialists and Social Liberals, and Neo-Liberals disagree on what constitutes a market failure. Marxists see them everywhere, considering them damning indictments of the entire Capitalist system and definitive proof of the need for a government-directed economy. Socialists and Social Liberals see many, believing there is much room for government intervention to smooth over the obvious flaws in Capitalism. Neo-Liberals see few or none, holding that Capitalism is a (near-)perfect the best imperfect system which is being failed by present-day human values and society.society and the intervention of government force.

Lately, realisations of the true extent of market failures have caused the existence of the invisible hand to become debated by capitalists and anti-capitalists alike.



* Thorsten Veblen: Veblen's work focuses mostly on studying the relationship between individuals and social institutions in terms of economics. His most famous work is ''The Theory of the Leisure Class: An Economic Study of Institutions'' (shortened as ''The Theory of the Leisure Class'').
* John Maynard Keynes: Keynes was the most important economist of the 20th century, and was the first to develop Macro-Economic policies capable of flattening out the boom-and-bust cycle. He did more than most, if not all, to get the world out of TheGreatDepression. The first capitalist thinker to seriously propose extensive government intervention in the economy, or at least, the first with a serious following (see the Keynesian schools below). Nearly all major world leaders of capitalist countries, whether on the right or the left, use macroeconomic policies that are, to varying degrees, influenced by Keynes' books. Despite his reputation in some circles as a leftist, he was [[CriticalResearchFailure definitely not]] a socialist. Whereas economists before Keynes were more focused on keeping inflation low, Keynes was [[TheGreatDepression obviously more focused on promoting general economic activity]]. He proposed that deficit spending by government could be used as direct economic stimulus to help get economies out of recessions, and believed that regulation should be used to surgically remove and prevent the market failures which caused the last recession. What Smith is to the basic free-market model, and microeconomics, Keynes is to the basic mixed-market model, and macroeconomics. His most important work is ''The General Theory of Employment, Interest, and Money'' (shortened: ''The General Theory'') in 1936. Unfortunately, in the 1950s-70s it transpired that Keynes had underappreciated the role of money in an economy, which brings us to...
* Milton Friedman: Probably the second most important economist of the 20th century. Friedman's ideas have contributed more than anyone else's to the massive stock-market bubbles which resulted in The Great Recession of 2008. Friedman started from the position that government intervention in the economy was an immoral infringement upon the freedom of its citizens, and developed theories which reflected and supported that view. Keynes had determined that the financial sector had to be regulated and restricted in order to prevent it from distorting and screwing up the 'real' economy, but Friedman hypothesized that the financial sector could be harnessed to drive spectacular growth. Friedman believed that if banks were not prevented from making risky loans, then enough of these would pay off that an economic boom financed by debt would result. Once this became or threatened to become a crisis, the government would then loan massive amounts of money to the banks so that the real value of the debts would be wiped out and the cycle could begin again. Friedman was an economic adviser to UsefulNotes/RonaldReagan, and he also highly influenced MargaretThatcher and other Neo-Liberal leaders. Basically, he is to Neo-Liberals what Keynes is to Social Liberals and Socialists. Among his most important contributions to economic theory are his "natural rate of unemployment" and what would eventually be called stagflation. [[note]] an economic period of high inflation and rising unemployment, leading to lower growth), saying that trying to prevent one of them will eventually cause ''both'' of them to rise [[/note]] Crucially, he argued that the only tool governments needed to promote growth and prevent depressions was an extremely aggressive use of the money supply ('Monetarist' policy). Though he disagreed with Keynes' methods, he claimed to have been influenced by Keynesian economics and called Keynes' ''The General Theory'' "a great book." He argued that government regulation of the financial sector constituted tyranny and an infringement of 'basic liberties', assuming it didn't outright lead to Commmunism, so he's really popular with Libertarians. He also led to the USA having a solely volunteer military.

to:

* Thorsten Thorstein Veblen: Veblen's work focuses mostly on studying the relationship between individuals and social institutions in terms of economics. His most famous work is ''The Theory of the Leisure Class: An Economic Study of Institutions'' (shortened as ''The Theory of the Leisure Class'').
* John Maynard Keynes: Keynes was the most important economist of the 20th century, and was the first to develop Macro-Economic policies capable of flattening out the boom-and-bust cycle. He did more than most, if not all, most to get the world out of TheGreatDepression. TheGreatDepression( or as many free-market thinkers believe, he was the primary force responsible for putting us in it).
The first capitalist thinker to seriously propose extensive government intervention in the economy, or at least, the first with a serious following (see the Keynesian schools below). Nearly all major world leaders of capitalist countries, whether on the right or the left, use macroeconomic policies that are, to varying degrees, influenced by Keynes' books. Despite his reputation in some circles as a leftist, he was [[CriticalResearchFailure definitely not]] a socialist. Whereas economists before Keynes were more focused on keeping inflation low, Keynes was [[TheGreatDepression obviously more focused on promoting general economic activity]]. He proposed that deficit spending by government could be used as direct economic stimulus to help get economies out of recessions, and believed that regulation should be used to surgically remove and prevent the market failures which caused the last recession. What Smith is to the basic free-market model, and microeconomics, Keynes is to the basic mixed-market model, and macroeconomics. His most important work is ''The General Theory of Employment, Interest, and Money'' (shortened: ''The General Theory'') in 1936. Unfortunately, in the 1950s-70s it transpired that Keynes had underappreciated the role of money in an economy, which brings us to...\n

* Milton Friedman: Probably the second most important economist of the 20th century. Friedman's ideas have contributed more than anyone else's to the massive stock-market bubbles which resulted in The Great Recession of 2008. Friedman started from the position believed that government intervention in the economy was an immoral infringement upon the freedom of its citizens, citizens and developed theories which reflected and supported that view. Keynes had determined that the financial sector had to be regulated and restricted in order to prevent it from distorting and screwing up the 'real' economy, but Friedman hypothesized theorized that the financial sector could be harnessed to drive spectacular growth. Friedman believed that if banks were not prevented from making risky loans, then enough of these would pay off that an economic boom financed by debt would result. Once this became or threatened to become a crisis, the government would then loan massive amounts of money to the banks so that the real value of the debts would be wiped out and the cycle could begin again. Friedman was an economic adviser to UsefulNotes/RonaldReagan, and he also highly influenced MargaretThatcher and other Neo-Liberal Liberal leaders. Basically, he is to Neo-Liberals Classical Liberals what Keynes is to Social Liberals and Socialists.Socialists( though there is a growing debate between Monetarists and Classical Liberals over his ideas on monetary policy) . Among his most important contributions to economic theory are his "natural rate of unemployment" and what would eventually be called stagflation. [[note]] an economic period of high inflation and rising unemployment, leading to lower growth), saying that trying to prevent one of them will eventually cause ''both'' of them to rise [[/note]] Crucially, he argued that the only tool governments needed to promote growth and prevent depressions was an extremely aggressive use of the money supply ('Monetarist' policy). Though he disagreed with Keynes' methods, he claimed to have been influenced by Keynesian economics and called Keynes' ''The General Theory'' "a great book." He argued that government regulation of the financial sector constituted tyranny and an infringement of 'basic liberties', assuming it didn't outright liberties' and lead to Commmunism, so he's really popular with Libertarians.bubbles that would eventually burst, leading to bigger and longer-lasting depressions. He also led to the USA having a solely volunteer military.



* Thomas Piketty: Best known for his book ''Capital in the Twenty-First Century'' which has become #1 on the New York Times Non-Fiction bestseller list. Upon publication it was lauded as the most important book on economic theory and capitalist in the 21st Century by the likes of Paul Krugman, Emmannuel Todd, Paul Mason and several others. Piketty pointed out that inequality is a consequence of capitalism and can be checked and contained by state intervention and wealth redistribution, chiefly a global progressive income tax and restrictions on inherited wealth. Piketty pointed out that over time, when the rate of return on capital (r) is greater than the rate of economic growth (g) the result is concentration of wealth, and rather than trickling down, it merely increases the wealth gap if left unchecked and this leads to political and economic instability. While the title alludes to Creator/KarlMarx and makes countless references to the man in the book, Piketty is firmly in the tradition of classical and Keynesian economics and he argues by means of classical data collection and information tools, chiefly the statistical tools of Kuznets and detailed investigation of the tax records published by the state authorities of France and the United States among others. This makes it the first real case for radical wealth redistribution in the classical-Keynesian tradition, and it is the first to be backed by such a wealth of hard data and achieve such universal academic recognition.[[note]] Most critics of every flavour of Capitalist and Socialist economic school did not understand the book in its entirety. This is readily apparent in many Neoliberal/Libertarian critiques, which accuse the book of being a Marxist tome. The closest anyone has come to a credible critique of Piketty and his argument has been Chris Giles of the Financial Times, whose 'critique' has consisted of pointing out minor (and inconsequential) errors in Piketty's data before presenting his own (very questionable, given that it disproportionately undervalues income for the extremely wealthy) data which claims that the historical growth of wealth inequality was not ''quite'' as bad as Piketty had calculated. However, even this was very far from an actual rebuttal of Piketty's data or conclusions [[/note]] However, academically credible doubts have been raised over whether his self-admittedly utopian solution (a worldwide 'wealth tax' of 2% on all wealth over a certain value) would adequately check r > g even if it could be implemented.

to:

* Thomas Piketty: Best known for his book ''Capital in the Twenty-First Century'' which has become #1 on the New York Times Non-Fiction bestseller list. Upon publication it was lauded as the most important book on economic theory and capitalist in the 21st Century by the likes of Paul Krugman, Emmannuel Todd, Paul Mason and several others. Piketty pointed out that inequality is a consequence of capitalism and can be checked and contained by state intervention and wealth redistribution, chiefly a global progressive income tax and restrictions on inherited wealth. Piketty pointed out that over time, when the rate of return on capital (r) is greater than the rate of economic growth (g) the result is concentration of wealth, and rather than trickling down, it merely increases the wealth gap if left unchecked and this leads to political and economic instability. While the title alludes to Creator/KarlMarx and makes countless references to the man in the book, Piketty is firmly in the tradition of classical and Keynesian economics and he argues by means of classical data collection and information tools, chiefly the statistical tools of Kuznets and detailed investigation of the tax records published by the state authorities of France and the United States among others. This makes it the first real case for radical wealth redistribution in the classical-Keynesian tradition, and it is the first to be backed by such a wealth of hard data and achieve such universal academic recognition.[[note]] Most critics of every flavour of Capitalist and Socialist economic school did not understand the book in its entirety. This is readily apparent in many Neoliberal/Libertarian critiques, which accuse the book of being a Marxist tome. The closest anyone has come to a credible critique of Piketty and his argument has been Chris Giles of the Financial Times, whose 'critique' has consisted of pointing out minor (and inconsequential) errors in Piketty's data before presenting his own (very questionable, given that it disproportionately undervalues income for the extremely wealthy) data which claims that the historical growth of wealth inequality was not ''quite'' as bad as Piketty had calculated. However, even this was very far from an actual rebuttal of Piketty's data or conclusions [[/note]] However, academically credible doubts have been raised over whether his self-admittedly utopian solution (a worldwide 'wealth tax' of 2% on all wealth over a certain value) would adequately check r > g even if it could be implemented.



\\
Although out of fashion for much of the 80s and 90s, when monetarism was in full swing, these days Keynesianism is arguably making something of a comeback thanks to the ongoing financial crisis which began in 2008. Many economists have been making the argument that the recession was caused by a lack of government oversight and deregulation (their opponents vehemently deny this and claim government intervention was the root of the problem) and have supported strong regulation and deficit spending as a response. Ben Bernanke, head of the US Federal Reserve, was a prominent supporter of this view, as is Paul Krugman today.
12th Feb '17 1:25:08 AM MAI742
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The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals do not spend the bulk of their wealth on consumption. Instead, they invest it in growing their wealth. As more and more of the total wealth in a capitalist market-society is invested and not spent upon consumption, less and less economic activity takes place. In turn, economic stagnation delivers a stagnant and then declining standard of living for the majority of the population.

Over time this gives the majority strong and growing incentives to rebel and restructure the system in their own interests, particularly when they cannot survive their present standard of living. The capitalist class is also incentivised to translate their economic power into overt political power and become ''de jure'' rulers in their own right.

to:

The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes from labour '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals do not spend the bulk relatively little of their wealth income on consumption. Instead, they invest it in growing their wealth. As more and more of the total wealth in income of a capitalist market-society is invested in the acquisition of capital, and not spent upon consumption, less and less economic activity takes place. In turn, place until economic stagnation and finally decline result. This delivers a stagnant and then or declining standard of living for the majority of the population.people whose income comes solely or mostly from working.

Over time time, this gives the majority strong and growing incentives to rebel and restructure the system in their own interests, interests - particularly when they cannot survive their present standard of living. The capitalist class is also incentivised to translate their economic power into overt political power and become ''de jure'' rulers in their own right.
12th Feb '17 1:02:52 AM MAI742
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Wiktionary holds that the word was a "[[https://en.wiktionary.org/wiki/capitalism Borrowing from French capitalisme ‎(“the condition of one who is rich”); equivalent to capital +‎ -ism.]]" From the 1970s onward, the extent to which the word drew unwanted attention to role of the rich lead to it being rebranded in the English-speaking world in general and northern America in particular:

to:

The word "capitalism" was coined in 1854 by the novelist [[Literature/VanityFair William Thackeray]]. Wiktionary holds that the word was a "[[https://en.wiktionary.org/wiki/capitalism Borrowing from French capitalisme ‎(“the condition of one who is rich”); equivalent to capital +‎ -ism.]]" From the 1970s onward, the extent to which the word drew unwanted attention to role of the rich lead to it being rebranded in the English-speaking world in general and northern America in particular:
28th Jan '17 9:47:22 AM MAI742
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The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation. Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals do not spend the bulk of their wealth on consumption. Instead, they invest it in growing their wealth. As more and more of the total wealth in a capitalist market-society is invested and not spent upon consumption, less and less economic activity takes place. In turn, economic stagnation delivers a stagnant and then declining standard of living for the majority of the population.

to:

The reason why wealth concentration/inequality increases exponentially is that the average returns to the owership of capital - the increase in the value of property including companies, shares & bonds, land, factory plant, money, etc - '''(r)''' have always exceeded the average growth of incomes '''(g)'''. When it is allowed to happen by government inaction, or is accelerated by "regressive" (extracting wealth from the poor to give to the rich) policies, this process eventually produces economic stagnation.

Economic stagnation is the inevitable result of growing wealth inequality because economic activity is driven by consumption, and sufficiently wealthy individuals do not spend the bulk of their wealth on consumption. Instead, they invest it in growing their wealth. As more and more of the total wealth in a capitalist market-society is invested and not spent upon consumption, less and less economic activity takes place. In turn, economic stagnation delivers a stagnant and then declining standard of living for the majority of the population.
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