The logical foundation of capitalism (in the technical sense) is the "Maxwellian distribution".
For those who are unfamiliar with this term it is the general probabililty curve formed when samples of gas molecule velocities [on x axis] in air are taken. They range from 0 to higher velocities. Thus, there are fewest molecules [on y axis] at zero velocity, very many at some velocity characteristic of the particular temperature of the air and a gradual tapering off in greater velocities.
The related principle is a Gaussian distribution. In this form, probability is equally likely to be positive or negative (like that ball dropped through nails pegged in a board ... they can bounce one way or the other ... forward or back but most end up just below where they started from.
For an economic theory, the gas molecule analogy, with the attendant velocities is replaced by individual people and their attendant incomes (the money they make each year which is approximately proportional to their ability to live well). Thus, the minimum you can make in a year is $0 while the maximum has no set limit.
The Fundamental Limit of Capitalism
the curve (plotting people and income) will be
a Maxwellian distribution.
This has disastrous consequences for all social programs instituted by government. It means that everything they do is in vain ... whether it be well intentioned, mismanaged, well thought out, or done poorly. It does not matter. It will all end up the same way. Any attempt to "pitch" the distribution into a different graph will fail ... by the inherent logic of man's condition.
The best that one can hope for is to upset the distribution temporarily ... and keep upsetting it each time it "rights" itself again.
Let's see what I mean ...
My current problem is rent. It's going up again ... this time ~ 51% ... a huge increase. What can be done generically to ease this chronic problem?
Proposed Hypothetical Solution:What's the matter with this scheme (other than it will put a tremendous crimp into the banking business ... which might be a good thing ;o)? It would, in fact, alter the Maxwellian distribution by insuring that no one would have a "zero" housing factor, i.e. the lower income people wouldn't have to struggle to provide themselves with housing on their meager income. Their standard of living would rise and the common distribution of which we've been speaking would move up a bit.
How about it? Can it be made to work? How will it be undone?
Those who receive the interest free loan (it won't be given to those over some unspecified income), will have less money worries than before. They will have some "breathing" space. But it won't last. The extra cash they possess will allow them to accept higher prices for other goods, e.g. if the price of milk goes up they will "eat" the loss without complaint and more importantly without cutting back on their milk consumption. Cutting back on consumption is the prime factor in holding prices down. If you have extra cash, the market will test higher prices until you cry uncle. It will bleed that cash out of your pocket by increasing the price of staples. It won't bleed cash out of your bank account for optional items. You have a choice about getting a new stereo but not about getting a gallon of milk or fixing your car. You've got to do these things to stay in the game.
Also, if you have extra cash and/or could live with less ... when you are job hunting you may accept a lower paying job than you would otherwise because you will think ... "I'll just take this job temporarily till a better one turns up." And in many cases, it will not turn up and over decades of such choices you bid your pay down to minimal levels. This is what happened when women entered the job market en masse. The extra paycheck in the family income presented them with a temporary boom ... but after decades of bidding down, the market has reasserted "minimal living" , e.g. everyone gradually settled for less pay and now it takes two breadwinners to maintain the common household.Eventually, that interest free loan will be taken as the given and the economy will adjust to it such as to force those on the the lowest economic rung into their normal position ... that of scraping out a day to day living ... one step ahead of the creditors. Also, those who build housing (and their suppliers) will up their prices to take advantage of ready cash.
It is important to note that this phenomenon is not founded in immorality or greed but is rather part of the mechanical-logical function of the free market ... the absolutism of the Maxwellian distribution. It's cause is mathematics applied to economics and social relations.
This is the cause for the complete absence of any productivity increase in the last fifty years. What!? No increase in fifty years ... what are economists talking about then???
Well, you think that productivity has increased? Where do you see it? Don't say that there have been wondrous medical advances ... I would counter with the terrible evidence that the average lifespan has in fact decreased somewhat. So no matter what was accomplished in medicine, it must have been offset by something else.
Well, maybe women have been "liberated"! Have they? If women in the work force made the world a better place why is it that now the typical family situation is that the wife works a 40 hour week along with her husband and still ... they're scraping out a living. Fifty years ago, the man went to work and the wife stayed home and took care of the kids and they scraped out a living ... it just took 40 hours less work.
But we have so much more goods now.
What have you got that they didn't have fifty years ago? Hmmm ... remote control TV. A computer to visit porn sites and send email? They had cars then. They went from point A to point B ... no problema. We have better special effects in the movies ... but generally worse acting (or no acting at all).
It's not that things are bad now ... It's that they are not a "whole lot better".
And they should be.
There has been tremendous productivity increase. The problem is that it was stolen. It went into the creation of "make work" jobs that have no real significance to civilization. Perhaps 80% of the work Americans do now is absolutely useless in the maintenance and furtherance of civilization.
Capitalism is not interested in rationality.
It is a machine. It has no intentions at all. Only those people acting within its boundaries have motives. And the bulk of them are not interested in the production of goods and services for the purpose of maintaining and furthering civilization. A few percent are. These are the ones who provide the actual productivity increase. The rest of capitalism's participants (the bulk of them) are interested in the "transference of wealth". they have no interest in producing ... they do not know the difference between producing and merely transferring.
They perform no useful service.
Their names are banker, insurance agent, lawyer, politician, and the whole panoply of pencil pushers. If you could take the useless pencil pushing out of this civilization, i.e. 90% of the former ... the average person shouldn't be working more than 20 hours per week. That means that a husband should be abel to support his wife and two kids on the income of half a weeks pay ... that would double the productivity of fifty years ago. Instead, we now require 80 hours total to do the same job.
This is an unprecedented disaster.
Since we are born into it, we do not perceive this state as incredible ... but it is. It is an absolutely incredible loss.
It is the (Maxwellian) distribution scheme (the logical-mathematical foundation of capitalism) which is to blame. Nothing can be done about it ... except ... identify the problem and choose the best possible personnel to man the government posts for the purpose of "cutting the fat".
If the civilization were kept in a lean and trim state, there would be no where to hide the gradual, true productivity increases. This would be passed on to you in the form of shorter work weeks. But since you are willing to work forty hours, that increase has to be sopped up somewhere so it goes into the creation of "false labor" (make work jobs).
I was going to say that you should have extra cash as a result of a lean and trim civilization ... but then ... you would bid prices up so that those on the bottom rung would still be "scratching out a living". On the other hand, if you did have 20 hours extra time per week, you'd probably bid prices right back up 'cause you'd be thinking ... "Well, if I just take another 20 hour per week job I could buy that new car or afford that new house.". The same thing happened when women went to work en masse. "Harry, if I go to work we can send both Johnny and Susie to college ... let me take a job ... it'll be alright."
Well, it was. It actually worked for a while ( a decade or two). Then the s__t hit the fan and now we find that both husband and wife NEED to work full time just to scrape by.
It all comes out the same way.
There is an end to the rat race ...
I have outlined it in the next page "The End of Economics".