# Does capitalism work?

Discussion in 'Business & Economics' started by lixluke, Jul 12, 2006.

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## Does capitalism work?

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45 vote(s)
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Yes half a pound of sugar and nearly a pound of butter or lard each day is a lot for a family of four but they were, I think, the most calories they could buy with only $3.03 expended. - They needed those calories for 14 hour days of labor or they would die. As for the 1 quart of milk per week no one, not even child, drank a swallow of that.* It was needed for baking the week's bread** ($2.36 worth) probably in cast iron box on top of the coal stove. Perhaps a table spoon each day of milk and a little of the butter was added to the $1.19 of potatoes eaten each week. ------------------ *Neither did the cat, if they had one, drink milk. It was lucky if allowed to keep the mice it caught. These people are not eating much and what they do eat is mainly starch, yet they were "skin and bones." The one half of one portion of cheap meat for four people each week was to add some flavor to their mainly starch diet. **Sour dough bread by the end of the week as they could not afford ice for an icebox (or the icebox). Dinosaur's rose colored view of how capitalists improved their life circa 1800 would make you laugh, if you were not crying because you know the truth. WWI killed off the surplus of unemployed hungry workers plus Henry Ford's enlighten view ended the subsistence (or lower) wages the capitalist paid prior to WWI. Last edited by a moderator: Oct 4, 2010 2. ### Google AdSenseGuest Advertisement to hide all adverts. 3. ### DinosaurRational SkepticValued Senior Member Messages: 4,856 Billy T: See if you can find a Sears Catalogue from the 1890-1910 era. It provides a better idea of what a typical worker could afford. Those mail order catalogs were for the average wage owner. Following are some items from the ones I obtained from Amazon & ebay. I also have some other mail order catalogues from that era (Mongomery Ward & Bloomingdales). • 1897 catalogue: 100 piece set of dinner dishes for 8.95 to 20.00; 100 piece Haviland set for 33.95 1909 Fall catalogue: 100 piece sets of dinner dishes (5-6 times as many choices than 1897); 3.98 to 8.70; three 100 piece Haviland sets for 19.98 to 27.50 • 1897 catalogue: Large selection of violins from$2.85 to 46.95 (Mention of a $0.44 violin that they would not sell due inferior quality). Guitars & banjos at similar prices. Regina Music Players (look this up. It is a fascinating gadget): 8.70 to 78.85; Graphophone$35.00; Pianos & Parlor organs for 38.95 to 200.00 (parlor organs cheaper)

1909 Fall catalogue: Violins from 1.95 to 22.45; No Regina devices listed; Graphophones & talking machines for 7.70 to 45.00; Parlor organs & pianos for 24.35 to 138.00

• 1897 catalogue: Mens suits 2.98 to 22.00 (casimere for 7.00). 2.98 Suits were bad mouthed as poor quality in response to competition; 4.98 was suggested as start of quality suits. Could not find shirts.

1909 Fall catalogue: Mens suits for 6.98 to 12.25; Shirts for 0.38 to 1.85 (4.25 to 21.00 per dozen).

• The above is a small selection from thousands of items. The 1897 catalog has about 750+ pages of items.
Prices were generally less in 1909. My 1909 Fall catalog is only a partial reprint: I assume that the full data was not available. It is interesting to note that by 1909, there was more than one catalogue per year.

BTW: My father was born circa 1875 & I was born when he was in his 50's. He went to college in the 1920's after becoming somewhat affluent.

When I was a teenager, my father showed me an original Sears catalogue from circa 1900. He considered it to be support for his view that the typical wage earner was not a down trodden impoverished wage slave as described by my history & sociology teachers/professors.

He was a bit more affluent than his peers, starting out as an apprentice tool & die maker, then becoming an engineer, & in the early 1920's a small scale entrepreneur.

It was a different era. Men could become doctors, lawyers, engineers by apprenticing to an established professional. Those from affluent families went to college My father was an engineer who did not go to college until circa 1925, long after having a succesful career.

When my father showed me the Sears catalogue, he mentioned wages had been static during most of the 1800's, but prices came down, increasing the standard of living. The decrease in prices from 1897 to 1909 seem to support the price drop part of his view.

Our family lived in Philadelpha, PA. My father told me that circa 1900 (prior to autos), it was common for a family to ride bicycles to Atlantic City, NJ (about 60 miles away) for the weekend. The wage earner of that era was not overworked to the point that he could not ride 60 miles on a bicycle for a weekend at the seashore.

The so called robber barons were guilty of abusing & underpaying workers, but it was not the normal mode of operation in the 1800's. Wages from that era seem to be compared with 20th century wages without regard for the low prices & low productivity prior to modern times.

In the mid-20th century, a factory worker running a modern upset forging machine could produce 50-100 high quality items per hour. Induction heating was used for hot forging & higher quality items were cold forged.

In the late 1700's & early 1800's a black smith used open dies, an open furnace, a hammer, & an anvil to make forged products. The work was hot & dirty. He produced perhaps 10-20 items per day (this is a SWAG).

If his employer ran a non-profit business, he could not afford to pay much more than 1-3 dollars per day. There was hardly any way to avoid the heat & demands of the job, & bad working conditions. Comparison of his wages & working conditions with his 20th century counter part, makes the employer look very bad. It is an unfair comparison.

Similarly, the 20th century assembly line worker was far more productive than his counter part from 1700's to 1800's.

The wages, working conditions, & standard of living of the 20th century is almost entirely due to increased productivity. Labor unions & government regulations/laws have had a minimal impact. Furthermore, the employer of the 1700's & 1800's was not paying wages out of line with the value received from the worker. He was not paying 2.00 per day when he could afford 5 or 10 per day (or per hour).

Capitalism & the robber barons were given an undeserved bad rap. The Sears catalogues paint a more accurate picture of the era prior to the 20th century. There might have been a million or more of those catalogues published. They indicate what the wage earner could afford to buy & suggest a decent standard of living circa turnover to the 20th century. They certainly indicate a huge surge in standard of living when compared to the feudal era, which the industrial revolution & capitalism replaced.

The wage earner of circa 1900 had items not available to the most affluent from the Feudal era. This was due to a century or so of laissez faire capitalism.

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There's a large difference between the "captialism" of Adam Smith, and what we call "capitalism" of today, especially at the corporate level, and governments' intercourse -- often incestuous -- with corporate level business and politics. Adam Smith was very much against corporate abuse of society, even way back then, and sought to remedy that and democratize work and working by making energy more readily available and make money move more easily, which multiplies both its use, supply and ease of getting by people and small enterprises.

Churchill is often misquoted, in speaking about "democracy", people too often replace the term with "capitalism":

The arguements for or against any form of government or economy are often processed, by many of us in the Western world, in a bipolar contentiousness, as if there must be a battle, it must be contradictory, and one must vanquish the other. People are so limited and contentious in that bipolar methodology that they become beasts at even the mention of a word or at being given the latitude -- more often by people more morally mature than themselves -- to consider variety and magnanimity in the breadth of possibilities, especially in the realm of mutual responsibility and expressive of the nature of human excellence.

When it comes to experimentation, and results, the perimeters of one's mind are often too myopic to consider what often surrounds us and subtly shouts the conspicuous answer as to the most efficient and beneficient form of economy: Nature. It wouldn't be here if it wasn't so successful. Yet, how do we express the continuities so successful in Nature, in the continuities of how we do business? For mature adults only, do a search for "PROUT shows it", to learn more: http://bit.ly/PROUT-Shows-It.

Last edited: Oct 4, 2010

7. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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No, it tells what was offered for sale across the entire USA. Many people lived on farms or small villages near them. They did not have any means to go to a large urban store. Just because items are offered for sale nationally (the only practical way back then was via a catalogue) does NOT mean more than a few percent of the population could afford to order items from the catalogue. Have you not heard the still used phrase: "For the carriage trade." That was what the sears catalogue was for.

To even suggest (not prove) your undocumented claim with your “catalogue approach” you need to take the total annual sales by sears and divide that by the population - That would tell how much the average American bought but still does not support your POV as most of that buying was by the top 10 or so percent of the population. - The carriage trade. I doubt the lower half could even afford the shipment fee.

My post shows what the average salary was ($16/ week for father of a family) and what the family ate (mainly cheap starch, high-calorie foods) and spent ($18.50 for just the bare WEEKLY essentials - no shoes, no medicine, no clothing, no school book or paper, no haircuts, no dental care, etc. was included in that $18.5 - nothing included in their WEEKLY cost budget which is not consumed ever week). That post 897 gives a factual picture of fact that the average person was living at the subsistence level even working 12 to 14 hours each day. Your logic that because items are widely advertized for sale does not implies most can buy them. Mercedes advertizes$100,000+ cars globally, but that does not imply the average human can buy them.

The Sears (and Ward) catalogues only show what the well off of the era could buy. You have not established the lower half of the population bought anything from them. Most of the urban population could not even afford healthy food, ever go see a doctor, etc. They were living at the subsistence level as my document post 897 shows.

Last edited by a moderator: Oct 5, 2010
8. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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Yes. I often think of this when I see the billions being spent of photo-voltaic and solar-thermal systems, often with government tax breaks.

Sugarcane grows wild. It is a grass. It can (and does in Brazil) capture AND STORE solar energy, which can be (and is in Brazil) efficiently converted into a liquid fuel using modest refinement of 10,000 year old technology. When cultivated the economics are much better, but a field of this grass is much cheaper to make than field of PV cells.

Man made solar electric system need additional systems* to store the captured solar energy and do not produce the needed liquid fuel as peak oil nears. Solar thermal's " additional systems" is usually a phase change salt but can be just hot mass but that is not as efficient as temperature drops as energy is removed.

-------------------

One way to make your point is expressed as: "When you have a hammer, everything looks like a nail."

While working at very high tech APL a grant was given to make some way the blind could be sure they were at one of the open doors of the subway cars. Of course the APL solution had an RF or laser beam coming from top center of every car's doors and a light weight directional receiver the blind could carry.

When I first came to Brazil and used the subway I noticed the slightly raised floor dots where the car's doors automatically stop and saw a blind person use his cane to find them. Then when the car arrived and stopped, he used his ears to confirm the door was open in front of him.

I know of nothing that Nature has not done, better and cheaper than man and that includes run a controlled fission reactor on earth, long ago! When man can do what an ant does with same mass and energy expenditure, then I will be impressed with man's abilities.

Last edited by a moderator: Oct 5, 2010

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Part of that problem of investing much money into less efficient systems may have to viable future infrastructure, Billy T, though other times it may also be cronyism and mutual analingus between vested interests. What makes people corrupt? Besides intent, the lack of moral relevance to our species, vanities of birth, and other bigotries, another has to do with architecture of circumstances. Ideologies must change acknowledging the factors of time, place and persons. There are no ideologies, other than what generated and maintains the Universe, unless there are people to animate them, regardless of however impractical such an ideology may be. For the socio-economic factors that can generate a more ethical and viable ideology making corruption far more difficult and far less likely, a vitally dynamic consideration includes PROUT, the Progressive Utilization Theory, http://bit.ly/PROUT-Shows-It

10. ### CarcanoValued Senior Member

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Hey, what happened to your video Mystic?

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Got to rework the website, the host delinked all video links by all users. I'm moving the site to a new venue in a few days.

12. ### CarcanoValued Senior Member

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Have you ever read the work of Dr. David R. Hawkins???

13. ### DinosaurRational SkepticValued Senior Member

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Billy T: The URL you provided resulted in the following for me.
The URL you provided did find the data shown in your Post 897. Might there be another source of this data, which looks suspicious to me?

The site is actually a cook book recipe site. I wonder why the cost of living break down was provided at a cookbook site. Did the author of that site have an agenda? Might you have cherry picked the results of your search? I had hoped to resolve this doubt by using your search key, which resulted in no hits. Might you have used a slightly different Key?

The comparison makes it look bleak for a family circa 1800 if there was only one wage earner, which I doubt. If my memory of history is correct, extended families lived together. Many (perhaps most) of the old farm houses from 150 to 300+ years ago were multi-family homes with obvious later additions to older basic homes. When my family moved out of Philadelphia we had a property with such a home: The two sections shared a wall & to go from one to the other section, you had to go outside, a common layout for extended family dwellings in the rural area to which we moved.

Assuming some validity to the above cost of living analysis, it relates to circa 1800, not circa 1890-1910, the era of the Sears catalogues. The thrust of my posts (if you paid attention) was that by circa 1900, the industrial revolution & laissez faire capitalism greatly improved the life of a typical wage earner (do you doubt this?). An analysis of 1800 cost of living does nothing to negate my claim relating to circa 1900. You have not really addressed any of the cogent arguments I posted.

Your following comment is not worthy of you (whom I generally respect).
The latter part of the above is down right silly. Mercedes does not produce millions of mail order catalogues to advertise their cars. The mail order catalogues of circa 1900 were not directed at the more affluent from that era (Id est: Those comparable to modern owners of mercedes).

BTW: How much tought did you put into the above? You mention 1800 & then WW1 saving the unemplyed. Are you implying vast umnemployment from 1800 to WW1? Also, as mentioned elsewhere, I have been claiming that laissez faire capitalism did a lot for the typical person by 1900, not by 1800.

The first part of the above quote from your post is an insulting sound bite, stating an opinion with no supporting argument (other than a typical fallacy, namely if you did not know the truth.). You seem to be implying that vast numbers of people were unemployed & living in poverty from circa 1900 to WW1. What gives you that idea? First hand knowledge? something your grandfather told you? Something some liberal history professor told you? Merely something that everybody knows (another fallacious argument)?

I am not sure that I can provide the proof requested by you in the following
I do have a life outside SciForums & the research is likely to take some time. I have not noticed you providing any such level of proof for your views on this subject. The circa 1800 cost of living reference is not relevant to circa 1900 Furthermore it does even claim that a single wage earner supported a family circa 1800, which is an important issue if there is a claim that the typical family was living below subsistence level, which I doubt. As presented that cost of living analysis is flawed and does not supoort the implication that a typcial family was below subsistience income. Your remark about getting free blankets was another sound bite, rather than a cogent supporting argument.

BTW: I do not remember any accounts of wide spread poverty & starvation in the USA circa 1800, which would surely be the case if the implications of that cost of living analysis was valid.

To mention a minor cogent argument for my Sears catalog analysis: Consider the prices in those catalogs. They imply a lot (likely more than millions) of sales to support a nation wide mail order business sending out millions of catalogues. While some of the items might have been sold to the more affluent, I do not think that 45 cent shirts were such items.

You should try to obtain the reprints of the 1897 & 1909 Sears catalogues. Even if they do not convince you that the typical wage earner was doing okay, you might gain some insight into a very different era in our history. For example, all sorts of hand guns, rifles, et cetera as well as ammunition could be ordered & delivered via the US Post Office. Most people today have no idea of items such as the Regina Music player which used large metal disks as records (about 18-24 inches in diameter).

Also: Old World Almanacs are interesting. I have one from 1929. The income tax tables are interesting, as are some of the advertisements which I think paid much of the publication costs. My later Almanacs (1950 is the next oldest) have no ads. History books & statistics do not provide insight into day to day living, while advertisements aimed at a wide audience do.

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Hello Carcano, I have heard of him though haven't read any of his books, have just seen a few videos of him on youtube. What are your thoughts about what he has to say?

15. ### CarcanoValued Senior Member

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I think he sounds like you!

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Well, I hope that's a good thing, Carcano.

17. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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Strange it still works for me, but now my document is the second, not first hit. A post in this thread is the first hit!
Yes it is a reprint in the web now of an old cookbook (more on that soon). I can’t speak to the internet re-publisher’s (not the author’s) agenda but even if highly biased, he cannot change the historical facts published in that old cookbook. No, NO cherry picking. I told you it was the first (now the second) hit of a google search with “wages circa 1800” entered in the search box.
I have no idea why you don’t get the hit.
If “Key” means what is entered in the Google search box, I told you in first post and again above what I entered. I cannot tell if you entered the same, but if you did not that could explain why you got no hits. (There are many hits listed for me, but the first (now second) was exactly the information needed, from a historical source, not someone's modern opinion.

I too was initially surprised that reprint of an old cookbook would be the best source of economic data concerning how well (or poorly) the typical factory worker’s family lived circa 1800, but when you think about that is very reasonable. A source that told the average wage was 5 or 10 or 15 or 20 dollars per week is useless for us today as we have no idea what that would buy back then. We could search for some reconstructed CPI circa 1800, but how that was reconstructed would add additional uncertainity. I bet any such reconstructed CPI would NOT reflect the cost of living for the factory workers, but more for the better off as they did almost all of the buying.

Even today’s CPI does not apply to all groups. For example us older guys. We tend not to have college expenses for kids (or self). We tend to have an owned home. We tend to spend less on entertainment, eating out, clothes buying, etc. There have been several studies that show correction our Social Security by the CPI is significantly too generous as the expense of the older, who are not sick, are rising more slowly than the CPI.

The hard data in my link will easily let you construct a change in the purchasing power of the dollar for the factory worker buying the bare essential of life (food, rent, heat for a week). I don’t live in US so do not know what 3.5Lbs of sugar cost now, but circa 1800 it cost (from my link) $1.05 and the 4Lbs of butter cost$1.60 for a combined total of $2.64. Please someone who lives in big city (as that family did) tell what 3.5Lbs of sugar + 4Lbs of butter costs now. Once we have this change in the dollar value factor for buying the bare essentials we can multiply the average income ($16/ week) by that factor to see what the food, rent, and heating buying income of that family of four would be today. Just to illustrate what I am suggesting: Assume that that today’s cost of those purchases is 10 times higher now. Then that family of four would have $26.40 to live on each week. I think even if the factor were 100, you would need to concede that a family of four trying to live on$264 per week would be “living at the subsistence level.” To put even that 100 factor decrease in the dollar's value into more familiar annual terms, that is an annual income of $13,728 and of course if the correct factor for change in dollar value is 10 that is only$1,372.80 a year to live on.

Again: . Please someone who lives in big city (as that family did) tell what 3.5Lbs of sugar + 4Lbs of butter costs now.
Yes the family of four fell $2.50 short each week just trying to buy the weekly essential of life and they did need to buy shoes, warm coats, etc too, so I agree. They may have taken in a boarder or two and charged each a dollar a week. (If two boarders paid that then the net rent dropped to only$2/week.)

But consider the driver of the horse drawn trolley earning only $10.50/ week for his 14 to 16 hour days of labor. He might have been one of their boarders, but certainly could not afford a family, rent a separate house, etc. I.e. even many government workers lived at the subsistence level and were happy to have a job. Yes. Certainly the greater productivity of the industrial revolution lifted many from the subsistence level and a few enlightened industrialist, like H. Ford helped too by braking with the laissez faire capitalism that proceeded 1900 by paying several times a subsistence wage. Yes it does as you basic claim is that laissez faire capitalism lifted the masses for a subsistence existence. There was, according to you, laissez faire capitalism at least from 1700 until early 1900s: Yet ONLY with WWI providing jobs for the jobless (or killing off surplus jobless workers in trench warfare), and a few enlighten capitalists like Ford realizing they could make more if the masses were not living at the subsistence level did the welfare of the masses significantly improve. Laissez faire capitalism allowed the payment of subsistence wages and for more than 200 years, chained children to looms, etc. Thus I have a low opinion of it (which the lack of adequate regulation by SEC etc, under GWB greatly strengthened). Thing began to get better for the masses when unions formed to collectively bargain. That labor movement got a lot of strength when laissez faire capitalism burned to death a few hundred women in NYC by locking them in the garment factory. You only made one and that was to note that about the time technology was starting to lift the masses from subsistence living, unions were forming, etc. Sear published a Catalogue, offering for sale many items. That, as pointed out earlier, is not a “cogent” argument for your claim because there is no reason to think that anything was being bought by the lower economy strata – the ones that were living on subsistence wages a decade or two earlier. The catalogue was directed at the “carriage trade” and farmer that could afford to buy from it. I have never seen one but am sure there is a lot of productive equipment for farmers in it. –Things like churns for making butter, harnesses for the horse drawn plow, even new plow designs etc. Again, just because a national catalogue is distributed does not mean many people buy from it. For example, there are dozens for them for very limited groups - everything from crochet patterns, pipe and stamp collectors to Burppies seed catalogue. With prior Mercedes example I was only trying to show that a lot is spent on advertizing even if the target market was very small percentage of the population - like buyers with$100,000 they did not need for essentials.
Prove that. I am certain there was little buying from them by those just emerging from subsistence living. I would bet that 90% of Sear's sales went to the top 10% of the population, but I can't prove that either.
“Vast” no, but enough that every worker knew there were others glad to take his job if he complained about the subsistence wages or his 12 to 14 hours of daily labor. As the industrial revolution made same output with less workers possible and the work force grew, I do think the rate of unemployment probably did increase as 1900 was approached.
Yes, you have been giving the credit to laissez faire capitalism without explaining why the improvement did not happen with the start of laissez faire capitalism in the 1700s. To give any creditability to your claim that laissez faire capitalism was responsible for the improvement in the living standards of the mass, you MUST explain why that only happen 200 years after laissez faire capitalism began.

Fact is you neglect the true causes of the up lift of many from subsistence living, which were:
(1) industrialization improved productivity; i.e. steam and diesel power replacing water power, standardization of parts which made assembly lines possible, etc.
(2) labor unions making collective bargaining,
(3) political action in laws that stopped the chaining of children to looms (popular with the laissez faire capitalists earlier) and
(4) for the final surge, WWI creating war jobs and sent many unemployed to the trenches of Europe. – Making a labor shortage and that always raises wages. It modern terms it be came possible for the exploited worker to say to the boss: "Take this crappy job and shove it." without the prior fear his family would starve he had under laissez faire capitalism for 200 years.

Restoration of week laissez faire capitalism did occur under GWB and of course many abuses like Madoff , lowering of average real wage, and banking 30 to 1 leverage of toxic trash, etc. did occur in the reduced regulation enviroment (a move back towards laissez faire capitalism) of GWB era.
Nor did I make such a claim about starvation. What I said was that many could not afford “adequate food” but had to get their calories mostly from cheap, high-calorie, starchy items like sugar, flour, butter and lard.
I do think “poverty” was wide spread in 1900 era. But it does not show so much for people living on small family farms, which many would lose in the “dust bowl” described well in Grapes of Wrath. Then their poverty clearly showed when the bank took "their" farm - much like currently existing poverty only shows when family's home is foreclosed and they now live in cheap rental unit, a trailer or even in a tent. (Do you know that now more than half of all the real estate wealth in homes is owned by the banks? - Many are poor but just don't know it yet, like the dust bowl farmers when they still farmed.)

SUMMARY: I strongly object to you giving the credit to laissez faire capitalism. Fortunately the US has had little of it in the last 100 years so, unexploited by laissez faire capitalism, the masses prospered. History shows that when it is strong, the people are poor and abused. The recent step back towards more laissez faire capitalism under GWB has shown what it does in fact produce – declining living standards for the masses and greater concentration of wealth for the few. -You may give it credit for that and I will not object !!

Last edited by a moderator: Oct 6, 2010
18. ### iceauraValued Senior Member

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27,416
In the sources I have run across throughout my life, most recently Gladwell's book "Outliers", French serfs in the era before the Industrial Revolution worked about one thousand hours per year, mostly during the fairly brief (France is fairly northern) growing season.

The only pre-industrial people who worked more than about 2 thousand hours a year at food production, all subsidiary workd included, were wet-rice farmers in S and SE Asia. Most people worked much less.

Yes it did. Everything from patent law and other legal/financial infrastructure to to the subsidiary enabling of education and ordinary people's access to resources was contributed by government. These innovations in governance were of critical importance. People have been inventive for thousands of years - it wasn't human nture that had changed, in the late 1800s in the US.
The wages of US workers did not rise fast enough to keep up with their productivity gains. American workers were underpaid, relative to world standards of productivity, in the 20th century - and it was the export of machinery and other productivity aids by capitalists who did not have to pay for the use of it (untaxed overseas establishments got it for the marginal cost of its manufacture, wihout defraying the overhead of public schools, roads, etc) - that cut back the productivity advantage to the point that any survivable wage in, say, China, could compete with US labor's output.

The only labor cost that has risen at any rate comparable with the rise in the cost of executive position and capital, has been health care. And that's due to the ridiculously inefficient US setup, which was imposed on the unions against their efforts.
Nonsense. In my ancestral culture, for example, women owned all household wealth (the house and the land), and daughters inherited from their mothers. Men owned their weapons and clothing, and could be divorced and evicted from their wife's house at her discretion. Sons inherited no household wealth. In many NA red nations similar circumstances applied, under stone age circumstances.
Those definitions are peculiar to authoritarian assumptions about the State. The early Christians and many later sects were communist, featured community ownership of most means of production etc, but not State ownership or control. On the other hand, feudalism features individual ownership and control of almost everything, but is hardly capitalism. These definitions are misleading at best, simply wrong in many cases.

In fostering the presumption that allowing unfettered individual control over all property, means of production, etc, one somehow necessarily encourages a greater degree of personal liberty and freedom among the general citizenry, without further governmental structure or political effort, such definitions are dangerous.

Last edited: Oct 5, 2010
19. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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It is not just me that points to the reduction of regulation under GWB as being a disaster. That small step back towards laissez faire capitalism produced exactly what one can expect laissez faire capitalism to produce.

"... Alan Greenspan blundered by reducing oversight of financial firms when he led the Federal Reserve, the U.S. Treasury Department’s restructuring chief said. “Regulators fell down on their jobs, overcome by the belief in the power of markets to self-regulate,” Jim Millstein said at a conference today in Dallas.
“That attitude was epitomized by former chairman of the Federal Reserve Alan Greenspan’s belief that the management of the big banks had so much of their equity at risk that they could be counted on to be prudent,***” Millstein said. “And therefore he relaxed prudential risk management and oversight among the regulators. And, as we now know, that was a complete mistake.”

From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=akxz.25S6SgM&pos=5

Fortunately it was only a small step back, so no children were chained to looms or workers locked inside the factories that burned as when laissez faire capitalism was completely unrestrained by government regulations.

*** Actually what unregulated banks can be counted on to do is what they did: Make ever more risky loans, with higher and higher leverage and then package them together for "diversification" to get high credit ratings so they could sell their "toxic trash" to others who would be hurt - thus prudently getting that trash off the bank's books.

Last edited by a moderator: Oct 8, 2010
20. ### CarcanoValued Senior Member

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6,865
Remember that the Glass-Steagal Act was repealed by Bill Clinton on November 12 1999.

The single most important de-regulation of the financial sector in decades.

21. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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I agree that was a big mistake. As I recall GS was repealed in the last hours of that congress, in a rush to get home. For political reasons,* Bill signed it but he should not have. The president really needs a "line item veto."

What I was referring to as relaxed regulations is more accurately described as a lack of enforcement of existing regulation. During the congressional investigations of the Madoff scandal, the head of the SEC, trying to shift blame, no doubt, testified that GWB's administration keep the SEC "On a tight leash." as to what it could investigate and regulate. Back then almost all Republicans believed that the best government was the one that interfered with private enterprise the least - many still do, as they are "slow learners."

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*Repeal was just too popular for Bill to not sign - that would be viewed as Anti-American as repeal was understood (falsely) by almost all as a way to make US financial system able to compete with others not so restrained.

Here is who voted for and against it by party and a few words from one who did oppose its repeal in a NYT article on the 10th aniversity of the repeal:

"... 10 years ago, the revocation of Glass-Steagall drew few critics. In the House, 155 Democrats and 207 Republicans voted for the measure, while 51 Democrats, 5 Republicans and 1 independent opposed it. Fifteen members did not vote.

One of the leading voices of dissent was Senator Byron L. Dorgan, Democrat of North Dakota. He warned that reversing Glass-Steagall and implementing the Republican-backed Gramm-Leach-Bliley Act was a mistake whose repercussions would be felt in the future.

“I think we will look back in 10 years’ time and say we should not have done this, but we did because we forgot the lessons of the past, and that that which is true in the 1930s is true in 2010,” Mr. Dorgan said 10 years ago. “We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.”

Mr. Dorgan still feels the same way. “I thought reversing Glass-Steagall would set us up for dramatic failure and that is exactly what has happened,” the senator told Deal Book on Thursday. “To fuse together the investment banking function with the F.D.I.C. banking function has proven to be a profound mistake.”

Senator Richard Shelby of Alabama, now the ranking Republican on the Senate Banking Committee, was the only Republican in the Senate to oppose the repeal of Glass-Steagall, his office noted on Thursday afternoon. ..."

Quote: http://dealbook.blogs.nytimes.com/2009/11/12/10-years-later-looking-at-repeal-of-glass-steagall/

Note also repeal was part of a "package deal" with the Republican written Gramm-Leach-Bliley Act which did increase the financial protection and rights of the private citizen. Often in politics one must compromise to get along.

Last edited by a moderator: Oct 9, 2010
22. ### Terry GiblinBannedBanned

Messages:
111
Don't mention the Glass-Steagal Act, do you want everyone to know the truth.

Anyway the real credit, should go to Alan Greenspan.

Light in, Light out.

23. ### Terry GiblinBannedBanned

Messages:
111
Robert Peston the BBC Business Editor, who 'single handedly', in my personal option, caused the crash of Northern Rock. Which almost brought down the rest of the banking sector, in England.

Clearly states in his report, that the worlds most powerful central banker, Alan Greenspan, after 9/11, cut the interests rates, to their lowest for over 40 years, which eventual lead to the current crisis.

Robert Peston The Greed Game.

Light in, Light out.