Capitalism and its Discontents

Kevin Lewis

August 28, 2009

Growing Up in a Recession: Beliefs and the Macroeconomy

Paola Giuliano & Antonio Spilimbergo
UCLA Working Paper, August 2009

Do generations growing up during recessions have different socio-economic beliefs than generations growing up in good times? We study the relationship between recessions and beliefs by matching macroeconomic shocks during early adulthood with self-reported answers from the General Social Survey. Using time and regional variations in macroeconomic conditions to identify the effect of recessions on beliefs, we show that individuals growing up during recessions tend to believe that success in life depends more on luck than on effort, support more government redistribution, but are less confident in public institutions. Moreover, we find that recessions have a long-lasting effect on individuals’ beliefs.


Against the mainstream: Nazi privatization in 1930s Germany

Germa Bel
Economic History Review, forthcoming

Nationalization was particularly important in the early 1930s in Germany. The state took over a large industrial concern, large commercial banks, and other minor firms. In the mid-1930s, the Nazi regime transferred public ownership to the private sector. In doing so, they went against the mainstream trends in western capitalistic countries, none of which systematically reprivatized firms during the 1930s. Privatization was used as a political tool to enhance support for the government and for the Nazi Party. In addition, growing financial restrictions because of the cost of the rearmament programme provided additional motivations for privatization.


Wealth and the capitalist spirit

Johanna Francis
Journal of Macroeconomics, September 2009, Pages 394-408

The wealth distribution in the U.S. is more unequal than either the income or earnings distribution, a fact current models of saving behavior have difficulty explaining. Using Max Weber’s [Weber, M. (1905). The Protestant Ethic and the Spirit of Capitalism. Charles Scribners’ and Sons (1958 translated edition)] idea that individuals may have a ‘capitalist spirit’, I construct and simulate a model where individuals accumulate wealth for its own sake rather than as deferred consumption. Including capitalist spirit preferences in a simple life cycle model, with no other modifications, generates a skewness of wealth consistent with that observed in the U.S. economy. Furthermore, capitalist spirit preferences provide a way to generate decreasing risk aversion with increases in wealth without resorting to idiosyncratic rates of time preference.


Intergenerational Occupational Mobility in Britain and the U.S. Since 1850

Jason Long & Joseph Ferrie
American Economic Review, forthcoming

The U.S. both tolerates more inequality than Europe and believes its economic mobility is greater than Europe’s. These attitudes and beliefs help account for differences in the magnitude of redistribution through taxation and social welfare spending. In fact, the U.S. and Europe had roughly equal rates of inter-generational occupational mobility in the late twentieth century. We extend this comparison into the late nineteenth century using longitudinal data on 23,000 nationally-representative British and U.S. fathers and sons. The U.S. was substantially more mobile than Britain through 1900, so in the experience of those who created the U.S. welfare state in the 1930s, the U.S. had indeed been “exceptional.” The margin by which U.S. mobility exceeded British mobility was erased by the 1950s, as U.S. mobility fell compared to its nineteenth century levels.


Inequality, Discrimination, and the Power of the Status Quo: Direct Evidence for a Motivation to See the Way Things Are as the Way They Should Be

Aaron Kay, Danielle Gaucher, Jennifer Peach, Kristin Laurin, Justin Friesen, Mark Zanna & Steven Spencer
Journal of Personality and Social Psychology, September 2009, Pages 421-434

How powerful is the status quo in determining people's social ideals? The authors propose (a) that people engage in injunctification, that is, a motivated tendency to construe the current status quo as the most desirable and reasonable state of affairs (i.e., as the most representative of how things should be); (b) that this tendency is driven, at least in part, by people's desire to justify their sociopolitical systems; and (c) that injunctification has profound implications for the maintenance of inequality and societal change. Four studies, across a variety of domains, provided supportive evidence. When the motivation to justify the sociopolitical system was experimentally heightened, participants injunctified extant (a) political power (Study 1), (b) public funding policies (Study 2), and (c) unequal gender demographics in the political and business spheres (Studies 3 and 4, respectively). It was also demonstrated that this motivated phenomenon increased derogation of those who act counter to the status quo (Study 4). Theoretical implications for system justification theory, stereotype formation, affirmative action, and the maintenance of inequality are discussed.


The Primacy of Economics versus the Primacy of Politics: Understanding the Ideological Dynamics of the Twentieth Century

Sheri Berman
Perspectives on Politics, September 2009, Pages 561-578

The current economic crisis has once again bought debates about capitalism and globalization to the forefront of the political agenda. Until very recently almost everyone seemed to be convinced that the world was at the dawn of a new era. Yet, the issue at the heart of globalization debates — whether political forces can dominate economic ones or must bow before them — is not new at all. I show that many of the great ideological and political battles of the last century were fought over precisely this ground, and argue that because we have forgotten or misunderstood these earlier debates our current discourse is thin and impoverished. To understand where we are and where we are going, we have to first step back and look closely at where we have been.


Diagnosing Our National Disease: Trends in Income and Happiness, 1973 to 2004

Jason Schnittker
Social Psychology Quarterly, September 2008, Pages 257-280

An important paradox of the happiness literature is the apparent disconnect between economic growth and happiness, referred to as the “Easterlin Paradox.” Although real income has grown over the last thirty years, happiness has stagnated or perhaps even declined. There are a variety of explanations for this. Some emphasize psychological factors, such as relative deprivation or growing financial dissatisfaction, whereas others emphasize the behavior associated with higher incomes, such as longer work hours and the trade-offs such hours entail for leisure, relationships, and health. Drawing on the cumulative 1973 to 2004 General Social Survey and using a sample of working-aged adults, this article demonstrates the complexity of these trends and suggests that once we consider multiple sources of satisfaction, trends in real income have less paradoxical implications. The principal force behind declining happiness has been a decline in the number of working-aged Americans who are married, as well as declining marital satisfaction. These trends, however, have been largely independent of trends in income. In fact, once marital factors are considered, the negative trend in happiness reverses direction, and economic factors emerge as the single most important force underlying growing happiness. This result reflects a number of things. First, contrary to speculation regarding growing financial dissatisfaction, trends in financial satisfaction have, in recent periods, overlapped with gains in real income. Relatedly, perceptions of relative income have increased, despite growing income inequality. Finally, there is no evidence for “overwork” among families, at least as applied to happiness. To be sure, families are working longer hours, and there are (occasionally sharp) trade-offs between work hours and assorted sources of well-being. Nevertheless, families are far from the point where their work patterns begin to compromise their happiness. Indeed, families  are, if anything, approaching an optimum. Overall the results suggest that happiness is the net result of multiple factors, and much can be gained by focusing on economic improvements, as well as the objective and subjectively rational behaviors underlying these


Inequality and political stability from Ancien Régime to revolution: The reception of Adam Smith's Theory of Moral Sentiments in France

Ruth Scurr
History of European Ideas, forthcoming

This article examines the excitement that Adam Smith's Theory of Moral Sentiments generated in France during the French Revolution, focusing particularly on the writings of political theorists, participants and commentators such as the abbé Sieyès, Pierre-Louis Rœderer, the Marquis de Condorcet and Sophie de Grouchy Condorcet, who were dismayed at their political opponents’ use of Rousseau, and looked to Smith for an understanding of the passions that was compatible with democratic sovereignty and representative government. In the political context of the early 1790s, clarifying the concept of natural sociability, which Rousseau had rejected, but Smith and Helvétius, in different ways, each regarded as indispensible to a society dependent on advanced division of labour, became a central concern in the public lectures delivered by Pierre-Louis Rœderer as the Terror took  hold.


The cultural framing hypothesis: Cultural conflict indicators in The New York Times from 1981 to 2007

Philemon Bantimaroudis & Eleni Kampanellou
Media, War & Conflict, August 2009, Pages 171-190

The authors investigated attributes related to a `cultural framing hypothesis', the notion that mass media have promoted Samuel Huntington's `clash of civilizations' theory, establishing its `salience' outside the academic environment. Media salience of cultural attributes can be linked to several public outcomes: (1) an overall attribution of importance — the fact the `clash of civilizations' paradigm is recognizable and important in the public mind; (2) the theory may be used as a tool for interpretation for whatever conflicts happen around the globe, overshadowing various other plausible and scientifically sound explanations; (3) the theory may be leading to notions of expanded inter-ethnic or `civilization' identities as described by Huntington. To assess the existence of cultural framing, the authors conducted a quantitative content analysis of five different micro-frames, derived from Huntington's seminal work, over a 27-year period. The authors examined two main hypotheses: H1: cultural frames will be predominantly traceable in media content after Huntington's theory appeared in the early 1990s; and H2: cultural frames will be salient in newspaper content during periods of intense terrorist activities, mainly after the year 2001. Both hypotheses were supported by the data.


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