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Source link: http://archive.mises.org/18927/capitalism-has-failed/

“Capitalism has failed”

November 2, 2011 by

This image is being passed around on Facebook and elsewhere. H/T Ed Lopez.


Franklin November 2, 2011 at 8:26 am

This is nicely done.
A similar trend analysis graphic, with appropriate annotation, could be scaled accordingly and used for other purposes, such as global warming or climate change or whatever the alleged prediction/phenomenon is being called today…

Glasshammer November 2, 2011 at 8:55 am

Except for the fact that an index is not a barometer for capitalism.


The last few years of the chart reflect a period of “forcible intervention into exchange processes” (Leonard Read) and that is not a trait of capitalism.

If the chart said “Socialism has failed, revert to capitalism.” it would make much more sense to me.

soe November 2, 2011 at 9:59 am

I thought the title is meant ironically.

J. W. November 2, 2011 at 2:41 pm

I interpret the chart differently. I think it’s satire directed toward people who think that 1) a stock market index is a measure of how well an economy is doing (whatever that’s supposed to mean); 2) the U.S. is and has been for a long time capitalist (whatever that’s supposed to mean); and 3) the relatively recent downturn, measured numerically by stuff like a stock market index, indicates that U.S. capitalism has “failed” to keep the economy going well (whatever that’s supposed to mean).

J. W. November 2, 2011 at 2:42 pm

Oops, I meant to respond to Glasshammer, not soe.

Tom Dougherty November 2, 2011 at 9:58 am

The stock market index is a great barometer for capitalism. The fact that there is a stock market shows that the means of production are owned by individuals. You own a stock, you have ownership in the means of production. Socalism by definition is the government owning the means of production. There would be no need for a stock market in this case. Of course, there is government intervention in the capitalist economy, but we will know socialism has arrived when the stock markets are shut down.

iawai November 2, 2011 at 11:25 am

Ah, but measured against an ever devalued dollar, the stock market prices don’t have any bearing to social well being.

As to the second point of your comment: how much of the traded shares on the NYSE are owned by the govt (federal, state, or local), their pension funds, their unions, or any other public entity? Even then, who sets the rules for the stock markets? Surely the entity that makes the rules could be said to “own” the means of production. And since the 1930s markets have been “owned” by govt, playing the role of the ever-less-neutral referee.

“If I could have convinced more slaves that they were slaves, I would have freed thousands more” – Harriet Tubman

Tom Dougherty November 2, 2011 at 4:49 pm

“Surely the entity that makes the rules could be said to “own” the means of production.”

Hmmmm. Then this entity, whoever it may be (Dow Jones, NASDAQ, the US Government, The Tooth Fairy), must be receiving the all the profits from owning all the means of production. Can anyone beleive such a fairy tale?

Glasshammer November 2, 2011 at 11:38 am

“The fact that there is a stock market shows that the means of production are owned by individuals.”

If your definition of socialism (or any ism) is limited to ownership then you will miss how ownership is transferred. (From private owners to the state via market intervention)

In your definition it really would be that “socialism has arrived when the stock markets are shut down” but what happened before that event would be lost. It would look like a long period of owners then suddenly no owners at all. You would need to explain how all this happened and then the claim that “An index of stock ownership is a good measure of capitalism (or any ism)” would fall apart.

Phinn November 2, 2011 at 11:57 am

A better definition of socialism is focused on control rather than ownership. After all, control is what “ownership” used to mean, and what it ought to mean. But when the State controls a firm, or an industry, without owning it, it might as well be the owner.

Tom Dougherty November 2, 2011 at 4:36 pm

Fine. But this is not the case. The state does not have controlling interest in the ownership of corporations. GM being a notable exception.

Glasshammer November 2, 2011 at 5:45 pm


I am not asserting that ownership isn’t an important part of how we define socialism but I am asserting that there is more to it than that.

I agree that when it comes to the S&P500 the government has neither direct title nor direct control. But the government does act in ways that diminish ownership and control for those that already have it.

Phinn November 3, 2011 at 11:28 am

“Holding an ownership interest” is not the only means of controlling a company. That’s a very 19th century way of looking at things. State-owned stock was how Socialism was defined in the 19th century, because people still thought in those terms — owning something meant you could control it.

(It’s sort of like how automobiles were first called “horseless carriages,” or how people still say “tape recording” even though no one has used a magnetic tape to record audio and video for 15 years. The vestiges of old ways of thinking linger on, even after things change.)

Nowadays, governments just control companies directly. They pass legislation saying they can do this and can’t do that. They tell businesses how their employees have to be paid, what products they can build, and manipulate the prices on the market through complex schemes of controls, loans, guarantees, etc. They use “regulators” and prosecutors to manipulate the ones that don’t fall in line. Try selling milk or interstate trucking services below the mandated price, and you’ll see what I mean.

Why mess about with owning stock when the State can simply dictate what businesses can and can’t do? Control is a lot easier to come by when the State sets itself up as the “manager of the economy.”

The last time I went to hell (i.e., Washington, D.C.), there was an exhibit on display at the American History museum about the imperial (i.e., federal ) government. It had the various roles that the emperor (i.e., President) plays. Setting the legislative agenda, head of the Executive branch, Commander in Chief, etc. And right there, along the others, I kid you not, was “Manager of the Economy.”

Il Duce himself would have been proud.

nate-m November 3, 2011 at 2:10 pm

It depends on your perspective.

In a non-free market the person that can destroy a thing can control that thing.

If you equate ownership with control then the government effectively owns much of the stock market.

Nowadays the ‘state government’ has expanded far beyond it’s constitutional borders into quasi-private enterprises. Fed and Post office is just one example. Government-funded enterprises like Fannie Mae is another. And by extension their corporate cronies like Goldman Sacs is effectively part of the government. Corporate sponsored members of the Counsel of Foreign Affairs, etc etc.

All that stuff makes up ‘the government’ nowadays, even if it’s not ‘technically’ part of the Federal government. They all still have special privileges, influence, and corporate welfare benefits, that are exclusive to them and is backed up by the force of the police state.

Inquisitor November 2, 2011 at 8:06 pm

A valid point but I think he’s evoking Mises’s criterion for differentiating a market vs a socialist economy, as in the latter ownership of the means of production is prohibited. Naturally the stock market will deplete in its true value as the government usurps private firms more readily, be it directly (socialism) or through regulation (fascism.)

Barry November 2, 2011 at 1:38 pm

“The fact that there is a stock market shows that the means of production are owned by individuals.”

No, actually; corporations or other institutions could well own the means of production.

Also, it’s clear by now that ‘ownership of the means of production’ isn’t worth that much – control is. And worth most of all is control of finance. Production is not nearly as profitable.

Tom Dougherty November 2, 2011 at 4:40 pm

“No, actually; corporations or other institutions could well own the means of production.”

The shareholders of the corporation owns the means of production. But please spell out what you mean with actual examples.

“Also, it’s clear by now that ‘ownership of the means of production’ isn’t worth that much – control is. And worth most of all is control of finance. Production is not nearly as profitable.”

I will be happy to take any “worthless” shares of corporations off your hands if you happen to have any.

iya November 3, 2011 at 11:02 am

Maybe he meant private, i.e. not publicly traded companies.

Jake November 2, 2011 at 11:53 am

Here’s the inflation-adjusted DOW:


Pretty flat performance, which would imply time preferences have not changed in terms of real purchasing power in the last 100 years. You could still stick the same “Capitalism has Failed” meme on it and deliver a pretty similar message.

nate-m November 2, 2011 at 11:32 pm

I was always a bit mystified by the use of the stock market to show economic health.

The fluctuations and prices in the stock market has nothing to do with the capabilities of wealth generation or production capacities of the corporations that they represent. It’s a money game.. shell game. People invest in what they think other people want to invest in. There is no way in hell that the wealth of the country fluctuates 5 or 10% in a week or a month.

The whole thing is just stupid.

I believe he actual productive sector of the USA is found in small and medium sized businesses. Large corporations can get capital to do big things that smaller ones cannot do.. but typically all the work and wealth generated is done by smaller groups.

Every major corporation represented in the S&P 500 or DJI can go jump off a cliff and we would still be just fine. People’s perceptions will be negative and these perceptions will impact the actual economy…

.. but I am fucking really getting tired of these mind games that the government, banks, and large scale speculators are playing with the American people. It’s just sick.

mikey November 2, 2011 at 12:01 pm

A better chart- one showing the amount of food clothing fuel and shelter purchased by one hour of labor since the start of the industrial revolution. Or. showing the change in lifespan and infant mortality since same.

Gil November 2, 2011 at 9:53 pm

What for? After a certain increase in wealth life expectancies start going down as people get “diseases of affluence”.

mikey November 3, 2011 at 1:24 pm

ok, forget the life expectancy part then

Daniel November 3, 2011 at 9:11 pm

That’s the USDA’s fault for recommending 300g of carbohydrates per day while also pushing humongous amounts of fructose and gluten as being “healthy”

Barry November 2, 2011 at 1:36 pm

I have a social law that is the most pure and perfect law of human behavior ever discovered:

The right always, without exception, can not call out liberals on anything unless they’re doing it at least 10x as much (or is planning to, at the next opportunity). There are no exceptions.

In this case, aside from their lie about ‘socialism’, the part they’re claiming liberals are ignoring happens to be a time of much higher government regulation and tax rates on the rich. Not to mention much lower income and wealth inequality.

Which, by the standards of the right, should have destroyed the economy of the USA, no ifs, ands or buts.

Daniel November 2, 2011 at 8:25 pm

I think that goes both ways

After all, just as only Nixon can go to China, only Obama could be Bush on overdrive

Anthony November 2, 2011 at 9:51 pm


nate-m November 2, 2011 at 11:36 pm

He still hasn’t figured out that the ‘right’ and the ‘left’ politics in this country is a lie.

The reality, as I am sure you know, is that democrats and the republicans are all the same type of people with the same type of politics and the same aims. They are in it for themselves and the groups that they represents.

It’s no longer right vs left or liberal vs conservative; it’s not been like that for a long time. It’s about which group is the one that gets the leverage and the special privileges. Whatever they say is a lie that is carefully fabricated by focus groups, advertising agencies, and public opinion researchers to garner enough support to make it into office and keep it.

Glen Smith November 3, 2011 at 3:34 pm

Many people who claim to be conservative or even libertarian love big government when things don’t go their way in the market. Many who claim to be “liberal” or left-wing only love big government when it panders to them. I also notice that those who think of themselves as “right-winger” almost always turn into “left-wingers” on some issues while those that consider themselves “left-wingers” turn into “right-wingers” on some issues. For example, many “conservatives” (even some who identify themselves as right libertarian) I know full on support big government when it comes to military. I also have known many self-described left-wingers who generally support the market as long as it acts as they want then they want government intervention.

nate-m November 3, 2011 at 4:16 pm

Both sides are for big government as far as the actual people that matter to government: politicians. They like big government because that offers big opportunities for big profits and big power grabs.

Conservative vs liberal is just a trap to keep people thinking that every issue has two sides. Most people are brought up in this country and are trained by our educational establishment to believe that there are always 2 sides to every argument and that the truth lies in between. This is just the brainwashing that goes along with training people to think that somehow having a defense and prosecuting attorny makes sense… that having 2 political parties make sense.. etc etc.

The reality is that far more often then not both sides are wrong. That the truth lies not in between, but way off and completely unknown to both people arguing.

The conservative vs liberal debates are just BS designed to keep people from thinking for themselves. It’s comfortable to be lead by other people and not have to think about things for yourself. So these arguments are structured by media to provide just to keep people’s minds closed to alternative possibilities. They are just knee jerk positions designed to make people feel comfortable with their pre-existing assumptions and built in biases.

When you listen to the radio and you have so-called conservative talk show hosts or liberal news papers or whatever… these are NOT deep heartfelt convictions.. these are people telling the consumers what they want to hear in order to get enough audience to justify their ad revenue. Politicians, in turn, exploit these simplistic and lowest-common-denominator political positions to garner the 15-20% of the vote they need to get into office.

The modern economic debates really center around:
A) Democrats want to raise taxes and increase spending and borrowing. They want to increase the number of laws, increase penalties and want to increase the presence of the military abroad.
B) Republicans that don’t want to raise taxes, but want to increase spending and borrowing. They want to increase the number of laws, increase penalties and want to increase the presence of the military abroad.

That pretty much sums up 95% of what passes for modern economic politics in the USA.

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