One way to look at it.

This death of capitalism thing. That the current difficulties require a fundamental rethink.

An IMF analysis predicts that the UK will be among the worst hit this year and the only major economy to contract in 2010.

It suggests that the global economy will shrink by 0.6% in 2009, compared with 3.8% in Britain. Japan\’s is the only major economy that will fare worse this year, contracting by 5%.

Growth across all G7 nations will be –3.2%, the same as the eurozone economies, while in the US it will be –2.6%.

Next year, the IMF expects the UK economy to shrink by another 0.2%, while the rest of the world returns to growth.

Now note that I\’m not saying that everything is just peachy. I would not try to argue that we cannot make things better. However, try thinking of things this way.

Capitalism of a vaguely liberal sort produces something that no other economic system has ever done. A general and sustained rise in general living  standards. Measured by GDP (as above) trend growth is 2.5 to 3%. That\’s each and every year and it\’s been going on for a century or two.

Within that general and sustained rise there have been hiccups, as we have now. We lose some 18 months of such growth every, around and about, 15 years or so. After such hiccups growth is usually above trend and within a few years the lost growth has been made up and we\’re back to our annual 2.5% to 3% improvement.

Yes, even the growth lost in the Great Depression was made up.

I agree that this is very partial indeed. It is most definitely not showing the whole picture. But it\’s still an interesting view, no?

That perhaps we don\’t want to throw out the only economic system that produces a general increase in living standards just because it stutters from time to time?

8 comments on “One way to look at it.

  1. Really not sure about that. Soviet Russia had massive increases in living standards (at great cost obviously), China isn ‘t exactly free market capitalism and is doing pretty nicely if you just measure ‘growth’

    I think the arguments for liberty are a better way of defending what we’ve got.

  2. But an opportunity like this might not come around again in our lifetimes. If you were a Greenie or Red under the Bed, wouldn’t you jump at such a chance?

    Shame that the mass of the Sheeple might go along with it though.

  3. “Soviet Russia had massive increases in living standards”

    Say again ?!?!

    So you’re trying to say that all of those stories that we heard about (you know queing up for food, waiting years for a crappy car that would break down, etc, etc) were just not true?

  4. Soviet Russia had massive increases in living standards

    Actually, it’s true. The Soviets took most of the population from living in huts with mud floors to living in decrepit apartment blocks three families to a room. The reason the comment is true despite the appalling standards of living in the USSR is because the standard was so unbelievably low in Tsarist times (although heading in the right direction, just).

  5. The only time the Soviets had a massive increase in their standard of living, was when their own government stopped deliberately killing them. I grant you that the difference between being dead and alive is a fairly decisive one, but I don’t think many of the women who escaped from the Yorkshire Ripper credited him with their subsequent health and prosperity.

  6. The only time the Soviets had a massive increase in their standard of living, was when their own government stopped deliberately killing them.

    On average, perhaps: taking into account all the dead, enslaved, and deported people the average Soviet probably didn’t see much improvement.

    But for those who weren’t shot or imprisoned, the standard of living from the civil war until WWII saw a considerable increase in standard of living, even during the famine years. When you understand how unbelievably backward Russia and Central Asia were up until the revolution, you can see why this was the case.

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