Money and the markets

Insatiable longing

Two new books probe the limits of capitalism

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Oh the frustration of seeing authors grope and grasp and reach for a conceptual underpinning of a succesful society through economics - and yet continue to provide unsatisfying and intellectually sparse fare.
To me: you need to approach the problem/goal with two views in mind: the large scale society-wide economy and also the individual persons who contribute (or refuse to or have insufficient opportunity to). The key is to see the link between them that enhances the other - for this will be the path that transitions our current society to the ideal one, economically and otherwise.
Let us outline ideal situations, and suspend disbelief that they are possible.
The big picture is an environmentally prosperous and healthy background with a post-scarcity society nestled within it. Let us leave these ideas vague and not judge their likelihood.
The individual picture is a productive and healthy human being doing tasks that both benefit society at large and the person's own sense of fulfillment. Also, let us leave this vague and refuse to pass judgment this early on plausibility.
Let us say that minimum success to every human being is having, at least, the same access to food, health, and shelter as the middle class western citizen. Now the harder one, let us say that every human being has access to a type of work that they can be productive, proficient, and enjoy, at some level, the majority of their working-age lives. This is crucial. Enabling enthusiastic and cutting edge productivity throughout the world is a tremendous act of organization and management - a level of organizational complexity likely far beyond all but the most advanced project management software. I would compare it to construction of a large city airport with 10s of thousands of workers to be managed individually, scaled up 1000x. And this is the key - a labour force at a high degree of choice, mobility, utilization, skill, and productivity. I would argue that having people contentedly employed would be one of the greatest sources of society-wide pacification, harmony, and self-satisfaction - if only one could be guaranteed a chance at their dream job in a setting unmolested by competitive colleagues or micro-managing bosses. To maximize the productive potential of every human being - better than any morale boosting government policy or corporate team-building scheme. But what percentage of jobs out there are considered desirable - 70, 50, 30? How to divide them up. How to choose. How to balance. To me a question of technology. I would argue that a competitive, market-driven society is generally not up to it. The urge to compete is the same urge to pull down your fellow individual, to reject hierarchy, to choose high pay over work enjoyment, etc. A planned society of qualified, merit-based choice would more likely be satisfying and productive. But how to motivate so that productivity would flourish and people push themselves? A dream job is one thing, but complacency is constantly stalking even the most contented, enthusiastic worker. Many business motivational techniques exist and can be enabled beyond the boundaries of a single company.
(part 1 of 2)


What about the very sound principle of live and let live! Don't put that in the face of the do-gooders who find problems few, if any, suspected existed. Perhaps the books reviewed DO deserve to be read but I suspect one's level of enlightenment will be the same if one doesn't get around to it. People with many agendas will look favorably on taxing and otherwise cajoling ordinary people to adopt better habits not for themselves ( no need to cajole there!) but for some supposed social betterment that they unfortunately don't understand!


This seems like an extreme position. I find the failures of modern economics not to be underlying philosophy of acquiring wealth but in the standard metrics we use to measure national success. GDP with respect to PPP is broken. This has to be clear.

PPP is supposed to be a measure of quality of life per dollar earned. Yet the United States ranks significantly higher that clearly have much more successful labor policies. The US does not have socialized medicine. The cost of health care for the average citizen per differential dollar earned is astronomically higher than nations it ranks higher in this metric. Ditto for higher education, quality of primary and secondary education (which forces many middle class and above American citizens to turn to private institutions for this service- an effective double tax). Debt to income ratio is massively high.

In the CIA handbook for PPP in 2011 ( the United States is the highest ranked major economy at 11th with an adjusted income of roughly 49K (the others being small nation-states). It ranks higher than small, highly socialized nations such as Sweden, Austria, Canada, Switzerland and the Netherlands.

The only other major economy in the top 30 is Germany at 26th with a 38.4k. The nominal GDP rankings list it with a 44k and the US with a 48k. Much closer in nominal GDP scores.

How is that the United States scores so much higher (and its score carries more weight) than a nation with far lower fundamental costs as health care and education? Especially when debt to income ratio is far lower in Germany? Check out this LA times article and then explain to me how the GDP by PPP metric (being one of the most standard economic metrics) is accurate?

Side Note: there is great deal of good information on other countries to back my argument, its just that the US-German comparison is the most black and white when considering size and types of economies

ah71 in reply to mb2bm55

Although not directly related to your post but since you have used Germany as an example you should understand that Germany has an exploitation economy. The reality of the so called German economic miracle is:

1) There is no minimum wage.

The Germans argue that they have collective negotiations with unions instead. Except that many people, particularly in lower paying jobs are not represented by unions. This year Der Spiegel (the German equivalent of Newsweek or Time) reported that 25% (in words Twenty-Five Percent) of the working population works for a subsistence wage (i.e. earns enough to cover rent, food, transportation and not much else). Virtually all menial jobs are done by foreigners (Africans, Arabs, Turks, Eastern Europeans) some (mostly women) of who, without exaggeration, earn €1 or €2 per hour.

2) There were no laws against discrimination in Germany until 2006. Shocking really, when you reflect on German history.

The Germans were forced to introduce laws against discrimination in 2006 by the European Union and certainly kicked up a fuss about it. The Germans however claim they do not want American style law suits so if you as an employee take a company to court you may win a settlement of around €10,000. Plus a bad reference which would make it very difficult for you to find a new job since the Germans put an absurd amount of importance on having written references for your entire employment history. Which of course makes it easy for employers to exploit their employees. And means that few people use the discrimination laws. Which allows the Germans to tell everyone that discrimination doesn't exist in Germany. It is all appearances.

If you introduced a no parking zone with fines of 0.05€ how much of a deterrent would that be for most people? That is essentially how German discrimination laws work. If there are no serious penalties for German companies, they will discriminate and exploit. And they do.

mb2bm55 in reply to ah71

And the American immigration and labor policies are any different?
This is exactly what the United States does with 'illegal' Latin and Asian immigration. The only difference is that the United States has set up an extensive 'anti-exploitation' legal framework (which backfires often in its own right. No one has found a system yet in which either employees or employers can not heavily exploit. Its a pick your poison situation). The result of this legal framework in the U.S. is that it forces American policy makers to look the other way concerning the border. Because illegal immigrants aren't nearly as subject to the protection of the law as legal ones and therefore can be exploited by the industries that depend on their cheap labor.

In short its naive to think any of the world's major leading economies is not going to have some system of exploitation- its a very sad situation but impossible for any of these economies to function w/o some level of very cheap labor domestically. Is it a good thing that the German economy has found a legally efficient method of exploitation? NO of course not. Is it ironic that even their methods of exploiting cheap domestic labor are more efficient than ours both politically and economically? Certainly

paulo freire in reply to mb2bm55

Note that those high costs in medicine and education are someone's gain - and must, therefore, be included positively in the GDP. I would venture that those very high costs alone justify the higher GDP per capita of the US relative to Europe.


The book reviews suggest that all authors did not use the same definition of "Economics" Comparisons of conclusions are thus impossible, vitiating general utility of perceptions.
Authors of "Economics" books waste my time by lumping the thousands of literate, educated persons capable of reading their words with the hundreds of millions of people who couldn't care less about their ideas-the Bolivian Aymara farmer, the Inner Mongolian shepherds and the Jivaro hunters in Peru, as well as the majority of the world’s unemployed pluus whatever wage earners they individually might envy.

If politicians with their powers to Tax the productive members of their countries cannot agree on any or all authors' definition of Economics, then all of these books are simply jewels in the dark unfathomed caves of Academe, with valuable messages muted by the traffic's loud hoarseness in the cities that harbor more than 50% of humanity.
HaminLimaApplied Anthropologist


The mindless accumulation of gadgets and other material goods by young people, even if their parents bought them, is as rooted in greed as financiers who are mindlessly focused on the maximization of profits at all costs. Money is useless without goods and services to purchase.

I doubled majored in political science and history in college, which I just graduated from. Unless they decide to go in to teaching, most political science and other social sciences, liberal arts, and humanities majors go to graduate school or law school. This is what I plan to do. I plan to go get my master's degree in national security affairs, international affairs,or
political science/government. Political science and other social sciences, liberal arts, and humanities majors aren't useless at all. The most common undergraduate major for law school students today is philosophy, which I'm guessing is usually pretty worthless without any postgraduate education.

A possible reason why there aren't more economics majors is if students had economics classes similar to that which I had in college. In my economics class, it was all about the mathematical formulas and not much about the real-world applications. It was the same thing with my statistics class, which was advertised as involving real-world applications but really wasn't.

rebels8 in reply to rebels8

This is in reply to a post by DrayNorton. I made some typos in my original reply and I tried to edit it. But the website didn't replace my original reply. It just added a new reply at the beginning of the comments.

AtlantisKing in reply to rebels8

Well, I took economics with plenty of maths as well as statistics and found both chock full of real-world applications. And this is not just a matter of opinion - it's no coincidence that the job market rewards those skills with high-paying jobs.

You probably don't have the aptitude for this kind of discipline. Don't feel bad: in my case, I've felt miserable in the few social sciences and humanities classes I took and found them, well, "without real-wordl applications". My brain was simply not wired for them.

Nan Mehta

Either extreme -accumulating more and more money is detrimental to the individual and the society just as is not having enough money to support a healthy, happy lifestyle; whether it be for oneself or for a family. Therefore striking the right balance is key where we have enough (to pay bills, save for retirement, travel and donate to charity) money to support a healthy, happy not a greedy/hoarding)lifestyle.
No one needs a bonus of millions of dollars. Instead, companies can take that same bonus and rather than giving it to just 1 individual; give a larger amount to the executive but then distribute the rest among the entire organization/department/team that contributed to accomplishing the goal. I'm sure that one person did not do it alone. This enables more people to make purchases and support the economy. Now, you are not just dependent on that 1 person's consumption but you have the support of hundreds of people consuming. This encourages "sharing the wealth" culture, which benefits the overall society.

A. Andros

Years ago the flamboyant black preacher, the Rev. "Ike" Eikerenkottoer, used to preach the Gospel of Wealth in packed Harlem Churches. The Rev. Ike him as they were too honest to begrudge their pastor what they panted after themselves.

Rev. Ike had one never-failing line with which to rouse the Faithful: "Money the root of all evil? Like hell! NOT having money is the root of all evil!" To countless hardworking, honest - and poor -- blacks and Hispanics that statement resonated like a hand-grenade in a shower stall.

Those who decry consumerism tend to fall into two camps. There are, first, the St. Francis of Assisi types of this world who practice what they preach and call people to austerity (listening Paul Krugman?) and self-sacrifice. Amazingly, a lot of people listen to them. Some become priests or nuns, others deliberately "simplify" their lives, others live more modestly than they might, but all keep in mind that the lilies of the field neither toil nor spin but Solomon in all his glory was not arrayed as one of them. These are very, very wise people.

The second group, however, consists of tut-tutting intellectuals and would-be moral savants who languidly condemn the mindless pursuit of a degree of wealth they would love to have but cannot because full professorships top out at about $100,000 and, anyway, most of their books end up being remaindered. What I have noticed about these social critics is that everyone of them lives in as big a house as he can afford.

Truth is, our greed for "stuff" is almost insatiable. And, unless one goes deeply and foolishly into debt, it does little harm. (And, it keeps share values high!)

There are a few who have gone into a sort of inner exile, though, and mostly live in their heads. They feel no need to drive a Mercedes, own a large-screen TV the size of a bed sheet, spend $50 a bottle for designer vodka or own the latest gadget that you can wear on your wrist and will tell you when it is high-tide in Hawaii while you're having sex. It doesn't matter how consumerist the rest of society is to this favored segment of humanity -- they will live simply and ponder morality and art, regardless of the kind of crap being lusted after at Best Buy by the hoi-poloi.

One other thing about this favored segment just referred to -- they usually already have a lot of money and can afford to be above it all!


Are we that far from Keynes' prophecy?

Take UK. A worker spends on average 1625 hours a year at work (OECD 2012). But only 63% of the population is active, and 8.1% of those are unemployed, so on average, that means 940 hours of work a year, or 18 hours a week, including everybody. Not far from Keynes' numbers. It just is spread unevenly.


The capitalism framework has two requisites which are in tension.

1. As investors, we will invest where returns are highest;
2. As consumers, we want to pay the least amount, other things being equal, for goods.

The consequences of 1 and 2 converge in the employment/livelihood arena.


Whatever happened to the joy of work? Ask an intelligent retiree whether he wouldn't be happier if he had something worthwhile to do instead of golf every day.
And I do like the value of my work to be monetized so that my employer values it. Otherwise I would be a volunteer doing some meaningless task. The pleasure does not come in the material goods but in the esteem of others in recognizing a contributing member of society. Which pretty much puts the overpaid bankers in the category of a plague on society. No wonder they need to be paid so much and buy such big houses and yachts.


Taxing consumption would be regressive. Taxing consumption and not taxing income would penailize those with low income and incentivize those in the higher income bracket to save more and reinvest, earning a greater return since income is not taxed. All of that would lead to a greater distribution of income which is typically associated with lower well-being.

YuryTheMan in reply to rebels8

I agree. However, people with lower incomes have much lower maginal propensity to save since most of their income is spent on basic needs; hence, they will always invest a smaller proportion of their income.


markets are inescapable....

its a fact of life.

as for this "love of money" idea, it is complete and utter bullshyt.

If the young generation loved money they wouldnt waste their lives away listening to music playing video games and generally doing NOTHING with their lives. If they loved money they wouldnt be working for non-profits in record numbers pushing political agendas they dont realize are unsustainable because they havent paid for anything there whole lives.

if anything what is occuring is that not enough people love money, therefore it accumulates among the few that do, and then they use that power to enslave everyone who is too busy using their "liesure time" and "enjoying" their lives to make money.

Just look at degrees people graduate with. political science, really? Are you F&@^ing serious? there is nothing scientific behind political science. in fact i would argue that ECONOMICS is the true political SCIENCE (in addition to being the TRUE business degree). why are the number of economics and engineering degrees staying constant while useless degrees numbers are going up?

Eveyrone should just take a second and think, if it wasnt for the RAT RACE our ancestors have been running in for hundreds of years, we would still be "living the good life" being "at one with the environment" in tribes being eaten by dinasaurs and sabre tooth tigers (that last part about the dinasaurs was a joke was a joke, but you get the idea :D). We are living on the backs of the countless generations before us that decided that INVESTMENT was better than CONSUMPTION (liesure).

But seriously, as people become more prosperous, they become more and more lazy.

rebels8 in reply to DrayNorton

The mindless accumulation of gadgets and other material goods by young people, even if their parents bough them, is as rooted in greed as financiers who are mindlessly focused on the maximization of profit at all costs. Money is useless without goods and services to purchases it with.




I disagree with your first paragraph. A third thing could explain why "the rich western economies have suffered malfunction".
More and more people are leaving what you called a "true malaise" : love of money. Western economies were built for the love of money. And because more people are looking for something else : artists, voluntary, ascetism, travel, having fun, etc, etc.. western economies are now in trouble.
People are looking for short-term pleasure, they are not in love with money anymore. To work is now a tool to satisfy your desire, people's goal is not professionnal success anymore. And when they have to choose their job they choose the one giving them the more pleasure.

m. brian

Better to just read Voltaire and Rousseau's views on capitalism instead.

another fencesitter in reply to m. brian

Exactly! - though Thoreau is more up my alley - and Eclessiates (sp?) and the gospels aren't far off either. The point is that these ideas were around long before Keynes, and have been expressed with much greater eloquence and subtlety than in these books (which just tend to make them banal, from the sound of this review).


Capitalism knows only two limits:
1. Technological development, and;
2. Availability of planet resources, either renewable or not (human factor included);

Rest assured, the concept of "capitalism" in itself, has become a finished product: people need only to grow up enough to find a "stable" job and a relatively "ensured" social position, constantly feed the great machine with the consumption of first-hand goods and financial services, and bring more people who will repeat the previous steps... For else, we can keep our illusions of "rule of laws", "democracy" and "freedom" (which of course, are optional, since capitalism can equally operate in repressive regimes as well) and live happily ever after!! ;)

BTW, I'm not capitalist, nor socialist, nor environmentalist... I'm barely realist, I love pacifism, and somehow I'm actively SATIRIST: the most dangerous kind of politician! ;D

Yes, for the case I agree with a quote I've heard and read several times: "All animals are equal, but some are more equal than others"...

In my very personal view, "capitalism" is the social-economic model which approaches more to the ordinary way of life of most animal beings: starting from their social organization: packs, hunting gangs, their families, etc., there you have some individuals which gather more resources than others, and individuals which are more 'powerful' and influential than the rest (alpha male/ omega male, the elder ones, etc.)...
[At least that's what my girlfriend has explained to me, as VetMD specialist who has studied animal behaviour in detail]

So... there's no such thing as "new man", as proposed by most communism/socialist idealists: "man" was, is, and will always be "man", and as such, we are 'rational' (supposedly) animals, but animals after all!

Bad Politician

The biggest problem I see with people consuming just enough to maximize happiness is "forced" consumption by the government. I work a blue collar job while studying for school, and 1/5th of that is taken away as taxes. Keep in mind that domestic spending (roads, education, etc.) make up only 15% of the federal budget. Most of my money is going towards programs that I either don't support, or could be amply substituted by the private sector. What's more, we are forced to buy car insurance, and will soon be forced to buy health insurance as well. Rather than letting my need determine what insurance I buy, it is now the insurance I buy that influences my actions.


Which of the following describes best my subscribing to the Economist?

a) Temptation to consume (information)
b) Pursuit of good life
c) Investment for future


Money is a wonderful tool. Everything we see around - the buildings, the airplanes, the bridges, the technology, even knowledge - has been facilitated by it.

But it also feeds our "base" instincts - greed, power which in turn bring out other attributes (unethical conduct, etc) leading us to qualities that layer-by-layer peel off our humanity.

When is it enough? One could look at it different ways.

One way I think about it is that the system we have in many countries is designed to devalue money by having inflation targets. So an inflation target of 2% would devalue money by approximately 40% over 25 years. Another, is one of the elements of our tax system - estate taxes that governments levy in theory reverting the money back to the community.

Having these elements in our system - although I am not knowledgable about what the underlying theory of having estate taxes, etc is - can give us recourse to controlling the negative effects; but alas as our lower attributes are released, after some point its hard to put that genie back in the bottle.

How can we change that? Through making sure that at a very young age, we give a proper perspective to our children. Education can if done correctly over one's growth year should have a role also.

I do like the idea of properly designed tax on expenditure and on wealth transfer.


How much is enough? The answer will be different for each individual in a free society.

There are those who are content to leave the rat race, so called, behind so as to lead a more leisurely life. And bully for them if they can make it work without living off others. Far more numerous, however, are people for whom such a life holds appeal but lack the courage of their convictions. This latter group wants to leave the rat race behind but only so long as others can be prevented from enjoying the fruits of greater labors (e.g., "luxury" and, especially, positional goods). Not content to merely 'live well among plenty,' they make it their aim to impose societal norms and restrictions on everyone or, at the very least, extract a pound of flesh from those more inclined towards production and/or consumption.

How long before taxes on commercial speech become outright bans and consumption taxes are raised to confiscatory levels in the name of reaching utopia? Not long, I think.



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