And yet, this turns out to be the most succesful strategy civilization has used so far.
It's just that to survive to the long term you have to get through the short and medium term, where a lot of froth and misallocation happens.
(This is not unique to this point in history, BTW - during the Rennaissance-era Age of Exploration and Second Industrial Revolution, there were also massive speculative bubbles, ventures that didn't work out, misallocation of capital, and outright fraudulent schemes. Most of them were swept away in the periodic financial panics. One way of looking at the situation today is that you have governments who are determined to avoid a panic at all costs, but the process of panics & financial crises is what sweeps short-term-oriented people out of the market, so without them they can offload the costs of short-term thinking onto the taxpayers.)
Exactly, which turns these "short term bubbles and money-grabbing schemes" into long term institutionalized parasitic organizations which slowly erode the foundation for small business. A healthy forest sees many small forest fires to clean out the dead brush. Without these small fires, a major fire event can wipe out a forest.
Many political arguments arise from disagreements over whether a given task is best handled by market or the government, but there are few who would prefer to live in either a pure government-run society or a pure unregulated free market with no government services.
Hunter gatherers were real stable for a long long time. One person, or even a fairly large group of people couldn't cause much trouble.
We're moving much faster, which again i think is cool, but it's much riskier. An obvious one, there are enough nuclear weapons to wipe out humans in a few hours. I don't think nuclear war is coming any time soon, but we've only been at this 'high tech' stuff (i'm picking agriculture, neolithic revolution) for about 10,000 years. Wealth of nations is around 250 years old - traders are much older of course, but 10k seems like a good upper bound. Can we avoid nuking ourselves for 10k years? I sure hope so.
Anyway, there are existential risks, and other, less dangerous things like world wars that have the potential to be much worse than a guy with a club.
Also, there's not much incentive in the system to not wreck the system. For, example "The big short" is a fun movie. "Too Big To Fail" is a much more in depth look.
I guess, my point is, That strategy is a powerful tool. It's not a pat answer to all the world's woes. It's wise to treat it like any other dangerous piece of equipment. Be aware, be alert. It's ok to take a little more time with power tools to avoid cutting off an arm.
This is what I find interesting about the Amish. They are not, as I understand things, truly anti-technology, they are anti-adopting every new thing as soon as it's available.
I wonder if they're the ones who are going to have the last laugh if/when this house of cards tumbles (although in all likelihood it'll probably be the Sentinelese).
They consider the social and lifestyle impacts of technology. Which can be quite profound.
There are also differences among Amish settlements, with the Swartzentruber Amish, of Michigan, the most conservative: http://amishamerica.com/who-are-the-swartzentruber-amish/
(The site generally has a great deal of information on the Amish.)
I wasn't declaring it's success as a 'good' it's more a point of fact that other systems (e.g. socialism) weren't able to survive as competition.
The period in which the American economy was growing most was when it was also most organized. The post-war consensus was about scientific management of industry and the economy, not about free markets and profit maximization; that dogma only took hold in the 80s (both in business schools and in politics), and it has been a steady downhill since then from the relatively sunnier period of high-level management. The American economy was heavily planned through most of that period (mostly through the military), and the beleaguered stump remains in the form of public funds for research and development flowing into private industry (the Internet, biomedical research, semiconductors, defense, etc).
What short-term profit mostly succeeded at doing was producing the largest and most rapid accumulation of private wealth and power the world has seen in a century.
http://d3i6fh83elv35t.cloudfront.net/newshour/wp-content/upl...
Non-sequitur, I also found this, one of the coolest figures I've seen in a while: http://www.zerohedge.com/sites/default/files/images/user5/im...
The problem with that is that the post-WWII period was much different than today. Pretty much every other advanced economy besides the US had been economically devastated by a long and bloody war. The US didn't have to be competitive to compete against a Germany or a Japan where people were boiling shoes to eat the leather or catching rats for meat. They only had to be relatively competent. Also, both before and after WWII, scientists flocked to the US, fleeing from repressive and doomed regimes. US R&D got a huge boost from these people.
Another question is just how "organized" the economy actually was back then. Most of the really complicated regulations like Sarbannes-Oxley were still far in the future in the 1940s. By the time the EPA was created in the 1970s, the US was already well on its way to stagflation and economic incontience. Tax rates looked high back then, but just like today, most truly wealthy people found ways around paying them.
Of course the government has a role to play in funding research and moderating some of the excesses of capitalism. But to argue that some bureaucrat can just push a button and bring back the golden years of the 1950s is a leftist fantasy.
In the same way, if we could have a benevolent dictator, he would certainly govern better than our crappy government. But dictatorship is inherently unstable because the most ruthless person seizes power. So the dictator could not stay benevolent for long. Better not to have the dictator, even if it means having a less efficient government.
Allocating R&D funds based strictly on "whether or not traders and stock owners can profit in the short to medium term" is relatively new in the US (although you could argue it was the norm before we became a superpower). Our most exciting projects still come from outside that model -- crazy billionaires that want to go to Mars, meager NSF/NASA budgets, and things that mutually benefit Defense/DARPA and the economy.
May I ask, is this what you call success?
Natural resources which are accessible are being consumed at high rates, and access to further resources will likely require the use of existing reserves put toward that goal.
True socialism - on the soft European model - has literally mountains of evidence for it.
The basic problem is maximising productive - i.e. innovative and practical - activity, and not allowing the economy to financialise, which replaces actual activity with meaningless proxy casino activity.
Capitalism on its own concentrates wealth and chokes off its own air supply. Government management on its own ossifies into bureaucracy and oligarchy.
There's a sweet spot between the two where government provides stable markets, seeds R&D, and prevents excessive concentration of wealth and power, but talented and inventive individuals are still rewarded for talent and invention, and the cost of entry for new business ideas is as low as possible.