Friday, October 10, 2008

Don't let them crash

Periodically capitalism must be saved from itself - the invisible hand is very shaky when left unsupervised. And that's exactly what has been done in these last euphoric and hubristic decades that continued the party, hmm, the orgy that Reagan and Thatcher began. Well, it's hangover time now. Of course things would be fine and capitalism would work smoothly without supervision and regulation if only people would always behave rationally and longsightedly. So would have communism. But we are what we are and will always need checks and balances as long as we stay human. It would be natural in this crisis then to let these arrogant institutions and their once so all-knowing and self-righteous masters fail instead of making them protected state wards. But that would be a mistake - we should never forget that the welfare state and the social democratic compromize worked only because they provided a workable mechanism to harness capitalism for genuine overall good of the community. Without that engine, energy and dynamism it would not have been possible to create a more humane, a more equal society. We are only good in sharing abundance: scarcity will eventually lead to injustice and authoritarianism. So, under proper supervision capitalism can be made work and be made work well. Of course, no-one seems to know how bad things have now gone: it might be possible that even quite apocalyptic changes may happen. But hopefully the governments can once again save capitalism from itself and perhaps remember the lesson better and for much longer this time. This crisis was only too well foreseen and forecast - the hubris and folly was just too strong for reason to penetrate and disinflate.


Anonymous said...

My guess is that the Republicans will lose this year as a result of the latest economic developments. They are somewhat changing their minds about the markets needing oversight but it's coming pretty late.

stockholm slender said...

One hopes - it would be a moderate first step towards the right direction. We would also need another approach to capitalism that would re-emphasize regulation and oversight and provide for significant safety nets and income redistribution. Not only in the USA and there they have the extra problem of a seriously unbalanced public economy after the craziness of this "small government" administration. So I guess I'm not holding my breath yet.