Has the United States of America reached, and perhaps passed, “peak capitalism” – the point where the maximum number of people participate in capitalist relationships?Figure 1: Labour Force Participation Rate and Non-farm Payrolls
The argument could be made, at least on a relative basis, that it has indeed crested, and we are on the slow, inevitable march away.
Let’s back pause a minute to define what this means: Capitalism is the system of relationships between the labour class and the capital class.
Individual relationships are really bilateral. There are two channels: the wage channel, whereby the capitalist negotiates with the worker for the highest output at the lowest salary, and the price channel, whereby capitalists compete with one another to provide the highest quality products and services for the worker at the lowest prices.
The capitalist does not do this at a loss. She endeavors to maintain an advantage between her expenditures and sales – her profit.
This system provides a unique suite of incentives to each class which is responsible for providing the West a previously unimaginably high standard of living, even for the lower classes. The worker is incentivised to produce more and higher quality goods, thereby increasing his advantage in competing with other labour for higher wages. The capitalist is incentivised to produce higher quality goods at lower prices, thereby increasing her advantage in competing with other companies for sales, and ultimately the capital she can accumulate.
The worker seeks to consume the highest quality of goods at the lowest prices, and the capitalist seeks to accumulate more capital.
HT: ClusterstockFigure 2: Wages as fraction of nominal GDP
By looking at this (now well worn) chart of Wages as % of GDP (figure 2), it could be assumed that a net capital advantage has been accruing over time. There are other things that support this view. I would prefer to use U.S. mean family net worth by percentile of net worth to really show how this capital accumulation has played out....MORE
