In unregulated capitalism, so much money ends up in the hands of sellers that buyers no longer have enough money to buy what you are selling.
We don’t have anything close to unregulated capitalism. In capitalism, the money does flow upstream until a tipping point is reached. In the post-industrial revolution economy, that tipping point was reached at a comfortable level that created an unprecedented economic phenomenon: A large, thriving middle class.
As soon as the US economy began to be exposed to global markets, that phenomenon started to reverse itself, a reversion to the more typical historical condition where there exists a small number of rich and a much larger number of poor; another way of looking that this is that globalism shifted the “tipping point” to support a larger percentage of poor, a smaller percentage of middle class and a richer “rich” group. The information revolution has moved that tipping point still again, to now where we’re starting to look a bit like the 1880’s economy of the Rockefellers, Carniegies, etc.; instead, the names today are Bezos, Zuckerberg, etc.
75% of the wealth belongs to 10% of people, and that proportion increases every year. How long until there are not enough people to be buyers?
No telling. Globalism and the info revolution do two things: at the same time they are increasing inequality by making the rich richer (they do not make the poor poorer, in absolute terms, it should be pointed out) they are driving down costs for the buyers. You don’t reach that “tipping point” until the deflation of commonly used items bottoms out, I wouldn’t think.
Before the Depression and Roosevelt Era regulation, the economy regularly exploded and collapsed every 15 years. 2008 was a romp in comparison.
Hm. I’d have to see the data on that. I suspect that the amplitude of growth and recession in the pre-Depression period was higher, but the frequency of the recession events was the same. Regulation doesn’t change the frequency, to my knowledge; what it does is lower the highs and lows and extends the duration of recovery.
Capitalists will be the cause of socialism the way they always are. They get arrogant. They get reckless. And people react. Venezuela didn’t happen for no reason, and neither did Cuba or the USSR. Capitalists made it happen.They decided the buyer didn’t count.
Well, without going back and revisiting the history of each of those events (which were very different), there may indeed be a cycle where people become convinced that:
- Capitalism is the cause of all their problems, so they….
- Look to additional regulation and/or socialism to solve those problems, wherein they…..
- Realize that additional regulation and/or socialism just make things worse, after which they…..
- Decide that government is the cause of all their problems, so they…..
- Deregulate and privitize.
Wash, rinse, repeat.