For the last few weeks, I’ve been studying the different economic systems, reading some general books, and learning about the various big names in the western economy. There were a few things that caught my attention and one thing in particular.
The books I read and browsed through are primarily written in America and are for the most focussed on that country. But the other two large economic powers (Europe and China) are not ignored.
Europe as a whole has a lot of economic power, but every country has there own economic system, though they mix socialistic and more capitalistic ideas. Europe seems to have learned from their long history that there is not such a thing as one direction; there needs to be a compromise between all the different ideologies; Europe is a little wiser than Young America and China.
In America, there is a much clearer direction, which is in principal more capitalistic than in any other country in the world. We all know the stereotypes, but if you want to capsulate it in one word, then it is a meritocracy. People that believe in meritocracy believe that your “merit” or your talents determine your place on the economic ladder. There are enough people in America that believe that they are poor because they have no talent and that their millionaire boss got rich because they worked hard and were talented. In some cases, this might be the case, but most people that get rich start with a significant advantage. We all heard the stories of rich people who boast about their hard work and the success they finally got. Everybody can do that if they are not so lazy, is what they let you know. They conveniently forget to tell that they started their company with a 5 million dollar loan from their family. Born in poverty, in a bad neighborhood with little chance of good schooling, makes it much harder to become (financially) successful. In the book “Success and luck” by Robert H. Frank you can read more about luck in a meritocratic society like the American.
The thing that I realized for the first time happened after reading about Friedrich Hayek and his economic ideas. It reads like a blueprint of the American (conservative) idea of a good economic system. It is not that I agree or disagree with him but how his writing is like a gospel for so many political leaders. Friedrich Hayek, together with Milton Friedman, had economic theories, among many others, but some politicians run with it, and now it has America in an economic grip it can’t get loose from. In Europe, these ideas are also popular, but there are other economic ideas as popular, and they try to work with each other. For example, I like to mock the American idea of social mobility and how great it is, the so-called “from poor to riches”. You can get much richer in America when you start with nothing compared to Europe. Still, there are millions of talented Americans that never get the chance to pay for education so they can lift themselves from poverty. In most European countries, a lack of money is not a hindrance. If you are talented and want to study, you can, in most cases. The people in Europe have decided that it is important to try to give everybody a chance.
But the main thing I got from reading all these books is the idea that in “the land of the free,” they have bound themselves to a really specific economic system, I want to find out how that makes you free.
One other thing, some theorists say that America is not an actual capitalistic state anymore, or it is reaching the end state of a capitalistic system. We all know about the big tech companies and that they are technically not monopolies, but in practice, they are. Without competition, you drain the oil out of a capitalistic society, and it will grind down, according to some. Rich and powerful companies in America can also influence politicians; that’s why they arrange “socialistic” subsidies, as you see within the fossil fuel industry. For these reasons, some of these modern economists say that China is more of a purely capitalistic system than what you find in America.
I have no deep knowledge of economics; I read some books and synopsis of other books and well-known figures within economics. The opinions go both ways, and the truth lies probably somewhere in the middle. The strange thing is, is that economists, like psychologists, think for the most that they work in an exact science where you can measure and predict. But looking back at more than 150 years of economic science shows that all the predictions were not much more than idle hope. Like the picture above, economic theories are not represented by a hard-line but by a gradient, in my opinion
These are some of the books I read (partially) in the last two weeks: