Crises of Capitalism - 4 comments
A vast amount of coverage, but very little response from myself, thus far. I'm going to diverge from most Labour bloggers by linking to this piece (via S&M), which is a succinct response to the doom-mongers (my emphasis):
That is to say, profits and wealth for some, unemployment for many.On greed, let me repeat: If unusually many airplanes crash during a given week, do you blame gravity? No. Greed, like gravity, is a constant. It can't explain why the number of crashes is higher than usual. And let me add: This isn't a morality play. What we're seeing are the consequences of monetary-policy distortions of interest rates and regulatory distortions of incentives, amplified in some degree by private imprudence, not the consequences of blackheartedness.And what all of this points out is that laying the finger of blame on "the free market" is utterly in error, but it's an error that's going to get made continually over the months and years to come. If there's one thing those of us on this side of the battle of ideas can do as this all unfolds, it's to do whatever we can to remind people that the interventionist economy that caused the problems and led to privatized profits and socialized losses (and the "solutions" that will further socialize losses) are NOT "the free market." Asking why anyone would think bigger government will solve these problems when it was the major cause is another public service we can provide.
Many bloggers have argued for tighter regulation of the financial sector. Having kissed a career in financial software goodbye, this month, I'm glad not to be able to comment on particular measures, but my general view is that markets work because they are unregulated, or have been able to work deftly around regulations, just as free trade works - and makes the world richer, and less susceptible to anti-democratic regimes - because it is free. Only political faith is enough to convince people that individual governments are smart and nimble to introduce regulations that are enforceable in an open, international economy.
Free markets do not equal Capitalism, and if there's ever to be a viable Socialism - unencumbered by nationalism and corruption - markets will be free there too, which is identical to saying that economic and social interactions between equal (I know, but read on) individuals will be unrestricted, as they must be in a (I know, but read on) democracy. In practice, Capitalism operates in polities where political and economic rights are unfairly allocated, as they have been for centuries, and where the powerful owe their success to layer upon layer of theft, patronage, and downright luck. The mass of the population have little practical economic freedom, and even relatively benign Governments/States have little to offer.
So when Paulie argues in the comments of this post that "unregulated markets are not compatible with representative democracy", yes, sure, but (a) we (sadly) don't, yet, have workable democratic international institutions; (b) I'm going to suggest that individual economic actions are too nuanced - too frequent - to be able to be scrutinised by politicians, without them having to be made much less easy. There are two axes on the do/don't regulate, do/don't offer a safety-net chart, and I'm suggesting a move not from 'don't/don't' to 'do/don't' but to 'don't/do'. So my solution is similar to S&M's:
The state cannot [...]manage the economy to remove all fluctuations. What it should do is help protect people from the consequences of downturns.It can provide a more robust welfare safety-net. It can guarantee a Minimum Income for all. It can insure (yes, insurance) - or enable individuals to insure themselves - against a loss of their job or a decline in income. It can encourage mutual ownership of businesses. If billions can be spent injecting liquidity into the banking and insurance sectors, in the hope of saving jobs and businesses, that money could instead be used to fund exactly such an insurance scheme.
This is indeed an opportunity for the political Left. The opportunity is, firstly, to rediscover the economic Left. Secondly, to avoid reverting to Statism. Thirdly, to look Capitalism in the face and take what works - genuinely free markets and competition - and throw out what doesn't - 'favoured' corporations, preferential loans, Corporatism, a fawning appreciation of the power of 'business' in defiance of economic analysis (e.g. when determining corporation tax rates, or when determining the highest earners to be the best and brightest).
The opportunity comes not from any innate anti-Capitalism, but because (a) Labour is in power for at least another 18 months; (b) it should be the work of a moment to demonstrate to people that Cameron is for the status-quo, not for reform; and (c) because Labour needs a bit of intellectual direction. Embracing economic reform, and providing a safety net more secure than any offered in the past, might just do the job.
Labels: Capitalism, Conservatives, economics, Labour, socialism











![Validate my Atom feed [Valid Atom]](http://www.bloggers4labour.org/images/valid-atom.png)





