|Homework #16- “What is Capitalism?”
What are property interests and why do they not remain in control? It is a percentage of ownership, time of ownership, right of survivorship, and rights to transfer property. Andrew Jackson thought it to be a "monster." Later he was elected president. Explain: “. . . the goals of the economy have been set by the democratic philosophy rather than by the theory of capitalism.” The fact that the masters of capital have never been in full control means that they have never been able to set the goals of the American economy. What does the word “democratic” refer to in the question immediately above? It means that it was set by the idea of the people ruling the government. Access to wealth is the only economic policy the American people insist on. Explain this. They have not sought the elimination of inefficient or marginal producers, which is one of the presumed merits of free competition, but have often gone to the aid of marginal producers, especially in agriculture. In what way are corporations like people? Corporations have all the safeguards, which the constitution gave to the property and rights of real persons, human beings.
Explain David Ricardo's iron law. You cannot gain a strong profit if you have your wages too high. It condemned the workers to live at the level of bare subsistence. Compare Ricardo's law with the wage practices of modern US employers like Wal-Mart. Very similar. They tend to start workers at the bare minimum wage. This allows them to gain a profit. Why does he say “The American economy today (1960) is . . . . Far from Ricardo . . . It has been based, from the beginning upon a rejection of their ideas that the exploitation of labor was inevitable.” In a century and a half, man has broken all the old barriers, which limited his productivity and has revolutionized the proportion of goods to population. When he did this, he could for the first time regard cold and raggedness and hunger not as part of man's sad lot on earth, but as the result of wholly unnecessary social failure. According to Potter, the US “. . . economy can support a large proportion of the population, namely, those younger than twenty or those older than 65, in nonproductive activities.” What does this prove? Our completely realistic expectation that we shall have more leisure and more goods, our respect for spending and our contempt for frugality, and our steadily expanding conception of what constitutes the necessities of life.
Compare Potter's diffusion of benefits to Adam Smith's Invisible-Hand. They complement each other. It remains true that the bulk of the American population shared in the good things of the economy. No one man benefitted. What is the traditional American way of solving economic problems? By increasing total wealth rather than by redistributing existing wealth. By having proportions of wealth going to various brackets is also a way of solving economic problems. How does the distribution of wealth in 2012 compare that of 1929, 1940 and 1948? Today, in 2012, there is a greater class of poor people than in 1929, 1940, and 1948. Though they have certain welfare benefits, they are no longer numerous enough to have much political influence. How did the US standard of living compare to other countries in 1950? Today? It took 98 minutes to get a dozen eggs, pound of flour, bread, butter, cheese, potatoes, lard, and sugar. Everywhere it was something less than 200 minutes. Americans had a higher level of material comfort at which they lived. Why does Potter say that capitalism hardly fits as a good description of the US economy? The American economy of abundance and of wide diffusion of wealth is very different from the capitalism of labor-exploitation and extremes of poverty.