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yuan_zcen
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Is Capitalism dying?

Read the big four to know capital's fate
http://www.ft.com/cms/s/0/b1d04e ... html?nclick_check=1
By Paul Kennedy

U S presidents, in confronting crises, have often let it be known that they are serious students of history and biography. George W. Bush, an unusually voracious late-night reader, devours books on the lives of Great Men, including his hero Winston Churchill, (who in turn liked to read about his illustrious ancestor, Marlborough). Barack Obama looks to biographies of Abraham Lincoln for inspiration.

Given the enormity of the banking, credit and trade crisis, might it be worth suggesting to Mr Obama and his fellow leaders that they study the writings of the greatest of the world's political economists, instead? After all, we may be in such a grim economic condition that the clever direction of budgets is a greater attribute of leadership than the stout direction of battleships.

Since today's leaders cannot possibly read all the major works of political economy, let us help them by selecting four of the greatest names from Robert Heilbroner's classic collection The Worldly Philosophers : The Lives, Times, and Ideas of the Great Economic Thinkers: Adam Smith, the virtual founder of the discipline and early apostle of free trade; Karl Marx, that penetrating critic of the foibles of capitalism, and less reliable predictor of its "inevit-able" collapse; Joseph Schumpeter, the brilliant and unorthodox Austrian who was certainly no foe of the capitalist system but warned of its inherent volatilities (its "perennial gale of creative destruction"); and that great brain, John Maynard Keynes, who spent the second half of his astonishing career seeking to find policies to rescue the same temperamental free-market order from crashing to the ground.

Perhaps the supremely gifted playwright Tom Stoppard could put those four savants on stage and offer an imaginary weekend-long quadrilateral discourse among them about the future of capitalism. Failing such a creative work, what might we imagine the four great political economists would say about our present economic crisis?

Smith, one imagines, would claim that he had never advocated total laissez faire, was appalled at how sub-prime loans to fiscally insecure people contradicted his devotion to moral economy, and was concerned at the deficit spending proposed by many governments. Marx would still be badly bruised by learning of Lenin and Stalin's perversion of his communistic theories, and by the post-1989 withering-away of most of the world's socialist economies; yet he might still feel pleasure at observing how modern financial capitalism was foundering on its own contradictions. The austere Schumpeter, by contrast, might be lecturing us to swallow another decade of serious depression before a newer, leaner form of capitalism emerged again, though with lots of evidence of severe gale-damage (the end of the US car industry, the decline of the City of London, perhaps) in its wake.

And Keynes? My own guess is that he would not be very happy at today's state of affairs. He might (only might) regard it as fine that he was quoted or misquoted millions of times in today's media, but one suspects that he would be uneasy at parts of Mr Obama's deficit-spending scheme: at the US Treasury's proposal to allocate more money to buying bad debts and rescuing bad banks than investing in job creation; at a Washington spending spree that seems unco-ordinated with those of Britain, Japan, China and the rest; and, most unsettling of all, at the fact that no one is asking who will purchase the $1,750bn of US Treasuries to be offered to the market this year - will it be the east Asian quartet, China, Japan, Taiwan and South Korea (all with their own catastrophic collapses in production), the uneasy Arab states (yes, but to perhaps one-tenth of what is needed), or the near-bankrupt European and South American states? Good luck! If that colossal amount of paper is bought this year, who will have ready funds to purchase the Treasury flotations of 2010, then 2011, as the US plunges into levels of indebtedness that could make Philip II of Spain's record seem austere by comparison?

In the larger sense, of course, all four of our philosophers would be correct. Capitalism - our ability to buy and sell, move money around as we wish, and to turn a profit by doing so - is in deep trouble. No doubt Smith, as he watches the collapse of Iceland and the Irish travails, is reconsidering his aphorism that little else is needed to create a prosperous state than "peace, easy taxes and tolerable administration of justice" - that did not work this time. By contrast, rumbles of satisfaction might be heard coming from Marx's grave in Highgate cemetery, causing excitement for the still-considerable numbers of Chinese visitors. Meanwhile, Schumpeter will have due cause to mutter: "This is not a surprise, really." As for Keynes, we might imagine him sipping tea with Wittgenstein at Grantchester meadows, pursing his lips at the incapacity of merely normal human beings to get things right: at our tendency to excessive optimism, our blindness to the signs of economic over-heating, our proneness to panic - and our need, every so often, to turn to clever men like himself to put the shattered Humpty-Dumpty of international capitalism back together again.

All these political economists instinctively recognised that the triumph of free-market forces - with the consequent elimination of older social contracts, the downgrading of the state over the individual, the end of restraints upon usury - would not only bring greater wealth to many but could also produce significant, possibly unintended consequences that would ripple through entire societies. Laissez faire, laissez aller was not only a call to those chafing under medieval, hierarchical constraints; it was also a call to unbind Prometheus. Logically, it both freed you from the chains of a premarket age, and freed you to the risks of financial and social disaster. In the place of Augustinian rules came Bernie Madoff opportunities.
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2009-3-20 10:29 AM

liztao686
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In my opinion,there isn't a absolute ism...unless it can develop the economics...

2009-3-20 10:25 PM

xinghai
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For Post #1 - A Good Old Question

Capitalism is alive, but is sick. People seem to know, or maybe some didn't know, it was sick. Few seemed to know how much sicker it has gotten or could get until today, though.

Certainly the sickness won't be cured by B. Madoff, or the AIG bonus recipients.

2009-3-20 11:48 PM

totothedog
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Ha Capitalism?

How can it be called Capitalism when the Anglo Amerikans HAVE NO CAPITAL.

They're broke AND highly indebted. NO CAPITAL. They went bankrupt in 1971 when the gangsters "closed the gold window". The Anglo Ekonomic text books refer to this as breaking the link with gold.

Of course, it's really FASCISM and always has been even before Mussolini formalised it. But now it's DEBTISM, GANGSTERISM, THIEVING, LOOTING, WAR KRIMINALING. But NOT Capitalism.

Perhaps the next thing they'll try is CANNIBALISM. Perhaps that's why they're trying to peddle Creationism and other such quackery. It'll be "just jump into this nice hot bath with all those vegetables and I'll put this lid on top. Then you can be re-born as a big giraffe." Quack!!!

[ Last edited by totothedog at 2009-3-21 02:11 AM ]

2009-3-21 02:02 AM

sonohito
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if anything it shows how socialism has failed

there was a time when banks required 20% down and were very conservative to who they lended to, but thanks to the instiutionalization of lending to people who shouldnt of received the credit they did, we are in this huge mess

course those werent the only factors in the equation, but it was key

2009-3-21 02:02 PM

uokiokok (akaCaring, WC Friend.......)
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QUOTE:

Originally posted by yuan_zcen at 2009-3-20 10:29
Read the big four to know capital's fate
http://www.ft.com/cms/s/0/b1d04e ... html?nclick_check=1
By Paul Kennedy

U S presidents, in confronting crises, ha ...

OK to let it DIE

as STUPID CHEATING system like HEDGEHOGs funds

2009-3-21 03:18 PM

totothedog
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Socialism?

QUOTE:

Originally posted by sonohito at 2009-3-21 14:02
if anything it shows how socialism has failed

there was a time when banks required 20% down and were very conservative to who they lended to, but thanks to the instiutionalization of lending to ...

Klinton's modification of Karter's Kommunity Re-investment Act Programme (KRAP) was never socialism. In fact, some are now complaining that it targetted ethnic minorities.

The purpose of this was to generate debt (and therefore a demand for dollars) plus a need to earn those dollars and therefore a desperation for a wage and therefore wage restraint generally.

The purpose of that was for the current stage of QE.

2009-3-21 06:35 PM

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