Simple things made complex: things that don’t work

This is a series of posts in which I talk about simple things but extend my commentary on the simple things to several paragraphs, thus making them more complex.

It seems clear, I think, to most people, that when a thing does not work, it is not working. If your motorised trebuchet does not work then it is failing to throw rocks at the Palace of Westminster and we can all agree that it is not working as a motorised trebuchet should.

When people say that capitalism is not working – and I have heard various people say just this lately – the point tends to be more controversial. The reasons why it is controversial (besides the definition of capitalism) are interesting. Firstly, let’s complicate this further, since that is the task of these posts.

In my experience people tend to mean two quite different and separate things when they say ‘capitalism isn’t working’. They either mean (a) It isn’t working as it should right now or (b) It has never worked. The former gets more sympathy at the moment, because a lot of people in the UK are getting poorer right now.

So this statement (a) is clearly true on one level, in that we experience the lowered standard of living brought about, apparently, by some of the lynchpins of the capitalist system. But the implication of it is that the system can be fixed.

But let me put a third point of view. Let’s call it (c). This viewpoint says (c) capitalism is working just fine thanks, and we just have a few glitches to iron out. And here is the evidence for that point of view:

What this exposes for me is that the question of whether capitalism works is, unlike a motorised trebuchet, a matter of your point of view. That graph is from the US but last year in the UK wages for most people stayed flat or even fell, while CEOs picked up 30% pay rises – as they have been doing all through the credit crisis and recession (including the current recession they are pretending isn’t happening because certain growth figures don’t technically say it is yet). I also suspect that not shown on this graph is a 9% or so who have had rising incomes (though not as steep) either as owners of property and capital on a smaller scale or as high level managers of various types – managers and salesmen to those with the real money.

So now we see that statement (a) – capitalism isn’t working right now – is possibly largely from the point of view of people who have felt they have benefited from it in the past. Capitalism working ‘as it should’ means capitalism working for them.

Meanwhile statement (b) – capitalism has never worked – must come from another viewpoint once again. In my case it is usually from the viewpoint of the very large number of people in the world who live in poverty while we clearly have the technology and resources to prevent the situation. I feel a little bit unsympathetic to the people who claim (a), because they just got saddled with the kind of ‘austerity measures’ (corporate bonanza) that ‘we’ (our glorious leaders) used to force on poor countries. So now suddenly capitalism isn’t working. But there were other ways of looking at it all along, no?

Capitalism: not a motorised trebuchet.

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6 Responses to Simple things made complex: things that don’t work

  1. daz says:

    I would suggest that the framing could be “working very well” vs “not (appearing) to work as well as could be” – from the point of view of those who impose the laws, use the guns, and take the bread, this seems more accurate.

    That is, from the point of view of those who have been empowered to make the choices that have led us to such a system of socio-econo-political organisation, it has been rather a success. To say it’s not working well implies that choices were made, and they were made erroneously. Which I don’t think is the case. Indeed it makes more complicated the simplicity of the idea that it is a form of organised robbery.

  2. Tim says:

    capitalism works FSVO works

    I guess that is one of the problems with slogans; they don’t stand scrutiny.

    I think that graph is a bit problematic, as it could be a statistical aberration (circular logic, top income may be caused by fastest rising). Also because almost all of the numbers involved are relative it lacks scale. Could it be accompanied by another graph showing absolute wealth distribution over time? Do you have one?

  3. contact says:

    Tim, what are you saying about the cause-effect relationship? That the people getting the top income may be new entrants to the wealthy club? How does that make a difference.

    This graphical representation of wealth distribution in US is doing the rounds – unhelpfully I can’t find the figures it uses:

    • Tim says:

      Sorry, I wasn’t very clear. I’m not disputing the conclusion, just saying that the evidence in the graph is not /by-itself/ enough to support it.

      I am saying that technically it /might/ be a statistical aberration caused by the distribution of incomes getting less predictable.

      So, for example, if you have some people registering large amounts of income in a single year, but only doing that occasionally.

      Those people would qualify for the percentiles in this graph even though there actual income averaged over a number of years had not increased.

      So, there is an alternative explanation for the graph which is that people are now more likely to occasionally earn alot in a single year. But not earn much the rest of the time.

      A shift where more people start to do that (e.g. different working patterns, different bonus schemes in large banks, or changes to the taxation system, increasing self-employment, etc) /could/ lead to an apparent increase in top incomes. But if you looked at a different measure (like, lifetime income or income vs wealth) you would not see it.

      I am pretty convinced from my own research that actually, income inequality (and also wealth inequality) have been growing consistently. In the UK at least. And also that the long term trend is for the rate of inequality growth to increase – I’m just not sure that this graph shows that by itself (for the US).

  4. Pingback: What’s this liberal doing in my head? And why does it think I owe something to society? | consorting with the resistance

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