I continue to read Naomi Klein’s excellent the Shock Doctrine – an expose of the way in which fundamentalist free market ideology has caused so much damage. The power of corporations is immense, drowning out the voice of the people. Crisis was not only welcomed but, at times, manufactured in order to allow non-democratic policies to be introduced, giving national wealth to corporations, concentrating wealth in the hands of the few. Their mantra isn’t just that greed is good, it’s that crisis is good because it allows the changes necessary to allow greed to run free. It’s scary to read about people thinking that comparison to Pinochet was a compliment.
The Friedmanites ignored Klein for a while, but have started trying to defend their guru. When I read their defences I am struck by how light weight they are, nit-picking over minor details while leaving her central thesis intact. It’s hard to see how they can do otherwise, as Friedman’s own words condemn him. We need a return to the middle ground. Neither of the two extremes, communism and laissez faire capitalism, are an answer to our problems. I’m starting to wish I had paid more attention in economics class when I was young. In trying to understand the issues, I’ve found myself at the Guardian’s website quite a bit.
Joseph E Stiglitz, winner of the Nobel Prize in Economics in 2001, weighs in:
A sad day for Wall Street, but it may be a glorious day for democracy. Hopefully Congress will now devise a plan that is not based on trickle-down economics. A plan that identifies the real sources of the problem and does something about them – a real stimulus to the economy, a real programme to stem the flood of foreclosures, and a transparent programme for filling the holes in bank balance sheets. A plan that assures US taxpayers the costs will be borne by those who created the problem. Accountability means paying for the full consequences for one’s actions – and the financial system has much to account for.
Gary Younge’s piece, to which I linked yesterday, should be mentioned again. It is an excellent read. Its conclusion is rather memorable:
“Capitalists can buy themselves out of any crisis, so long as they make the workers pay,” said Lenin. It is rarely regarded as common sense to quote him in polite company. Yet as a description of what is taking place right now, it is the most sense I’ve heard in a long time.
David Marquand writes on the need for a new economic theorist to take the lead, one echoing Keynes after the Great Depression and World War II, one that will help reform capitalism to serve the people better.
The need now is for clever regulation, on a global scale. In the EU, there is an equal need for much stronger political institutions to complement the central bank. But the greatest need of all is for a new theory of the mixed economy, framed for the global marketplace of today, as the now-defunct Keynesian system was framed for the national post-war economies. In the early 90s, economists like John Kay and Will Hutton were groping their way towards such a theory, but when New Labour won its crushing victory their work was buried. It’s time to return to the charge.
The Guardian is becoming a regular visit for me. Previously it was their Science section, with excellent podcasts and coverage of the Large Hadron Collider, that drew me to it, now the business section is also attracting my eye.
