Does Capitalism Make People Happy?
November 27, 2011 at 8:42 pm 2 comments
A few days ago, I talked about Erich Fromm’s psychological critique of Capitalism. People familiar with the thought of Karl Marx might have noticed the similarity of Fromm’s position with Marx’ theme of alienation. As a matter of fact, Fromm was strongly influenced by Marx. Which does not mean that one ought to dismiss Fromm out of hand. Personally I tend to consider Marx’ psychological critique of Capitalism his strongest point, much stronger than his utopian dreams of a revolution by the proletariat.
One may ask, of course, if there is any way to prove or disprove Fromm’s critique. Is there any hard evidence about people within capitalistic societies being less happy than in other societies?
Now as far as I understand Fromm, one cannot reduce his observations merely to the issue of happiness and psychological illness, but if one were to do so, there are in fact several worldwide studies on happiness. Obviously happiness is somewhat difficult to measure, but the studies I have read usually place Denmark at or near the top. And Denmark’s economy is a mix of Capitalism and Socialism.
In North America, Canada consistently outdoes the United States in happiness rankings, and again, Canada has more socialist elements than the more prominent economic powerhouse across its border. The United States, though the biggest economy in the world and one of the highest per-capita income countries, has not made it into the top ten in any happiness rankings I am aware of. It is beaten not only by the semi-socialist Scandinavian countries, but also by much less wealthy places like Costa Rica, Bhutan, The Bahamas, Brunei, Antigua, Malaysia, Saint Kitts, Ireland, and Seychelles. In one study of 2006, it ranked right behind the United Arab Emirates.
Mainland Asian countries in general rank pretty low, whether wealthy or not (Japan ranking lower than China, for instance), and it would be interesting to ask why.
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Entry filed under: Economics, Psychology. Tags: capitalism, Erich Fromm, happiness, Karl Marx, money, satisfaction with life, Socialism.
1.
Justin Oliver | November 28, 2011 at 2:14 am
From what I understand, happiness is highly correlated to income.
That is not to say that happiness can be given to people, as wealth can be. Happiness is something achieved by the fulfillment of one’s own potentialities, which means that people need to be left free from the interference of others to act on their best judgements.
I would also suggest that many economic freedom indexes (at least one of which says Canada is freer than the United States) focus on too narrow of a range of economic freedoms. For example, those indexes fail to take into account the difference between overt forms of intervention meant to maintain corporate power (like bailouts and corporate privileges) and counterbalancing regulations (the kind more common in Europe) meant to moderate how those grants of corporate privilege are used.
To me, limiting how a grant of privilege is used lessens the effect of the government’s intervention into the economy, making it more free. So while Americans are taxed at approximately 80 percent that of Germans, according to Tom Geoghegan, we enjoy no where near the benefits of their welfare state. Instead, the United States spends more per capita for health care with alleged “private” businesses just for Medicare and Medicaid than western Europeans pay for their entire government-funded health care programs.
Now as a libertarian, I do not think either form of statism is suitable or sustainable (or even achieves its desired results). But if given the choice in the short run between interventionist policies that prop up big business or the rather petty condolences a government offers to mask existing interventionist policies one behalf of corporate interests, I would go for the European model every time.
2.
rockomnibus | December 4, 2011 at 10:32 pm
Happiness is indeed difficult to define, let alone quantify. Daniel Gilbert, in Stumbling on Happiness, gives data on the number of self-described people who say they’re happy (which he admits isn’t fool-proof), and he also compares people rating themselves at different states at different times.
Even if happiness were something more measurable, there’s still a problem with comparing different nations, which has to do with size. We would just as well be comparing Colorado with the entire U.S. as we would to compare Denmark with the entire U.S. In other words, the U.S. has several Denmarks within it as well as several states that are on the other end of the spectrum. In short, this would be like trying to compare Los Angeles to random cities of 200,000 people. Basically, they’re different animals.
The higher the quantity, the higher likelihood that it regresses to the mean. The lower the quantity, the more likely you are to see extreme percentages. This is one of the illusions of rates.
In most any index, a country the size of the U.S. is going to regress to the mean and be less extreme than countries with smaller populations. What this means is that if Denmark had ten or twenty times as many people as it does, it would regress toward the mean.
Canada is also much smaller than the U.S. in population, so that’s like comparing apples and grapes.
What would consequently be more useful is to compare countries with similar populations, while hopefully also having some similarities with demographics. Even two countries of the same population will be operating under different conditions if one is comprised mostly of a native population, while the other has a combination of many cultures. An array of cultures is more likely to produce an array of social standings and therefore more of a mixed bag.
So, there’s nothing magical about Denmark any more than there’s anything magical about isolated sectors of the U.S., like Florida, or Arizona, or Tennessee.
We can’t look at an index such as this only at face value, because there’s much more at play beneath the surface.
Another part is to analyze whether any difference is significant or not. A slight difference is really no difference at all. We start getting into standard deviations and such there. But anyway, it’s all truly fascinating to analyze, on all its levels.