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28 comments from readers

taghioff.info
23 October 2008 at 11:40

"The next phase of capitalism will combine policies of localisation with an understanding that there are problems we share - such as carbon-dioxide emissions - that cannot be tackled alone."

Which is a bit like saying everything and nothing. What is the response to this crisis likely to be like in terms of regulation and trade relations?

writeon
23 October 2008 at 15:28

The 'hangover' from a economic depression can last a long, long, time. For example, my wife's grandmother's family owned a town, or more precisely most of the factories. They lost nearly everything in the Great Depression. The daughters who had never really lifted a finger and were used to luxury were transformed from princesses into four Cindarellas! All they had was charm, elegance and beauty to get by on. Husbands had to be found, but having a stubborn streak they rebelled against the wealthy suitors they'd been found. One of them turning down a wealthy Duke! The families fortunes never returned to their former heights. The girls had to learn to save what they had left and marrry solid and rather dull professionals, but at least men they chose, apparently chosing stability and safety before money which they had seen could vanish almost overnight.

The next generation never trusted money but saved every penny and were became socialists. The present genration are even more committed to the overthrow of the capitalist state, funny how these ripples spread.

Nilsey105
23 October 2008 at 20:47

I enjoyed reading this. Nice peice.

Without doubt something has to change.The death of, unregulated globalisation as, the

paradigm for the economy is doubtful. Equality is not the concern of market forces it is

anathema to neoliberal economics. This is the main reason,on an inter and intra national

level, for the gap between rich and poor having widened over the last 20 years.

The "laissez-faire capitalism" of the past 20 years has been a period of smoke and mirrors.

The notion of a "free market" has been a con for most of the world. America has put up some

of the most protectionist trade barriers. Steel for example. It now has its auto industry

seeking funds to aid its recovery. Is this the mark of the hidden hand? Is it permissible

within the EU for grants etc be given to ailing companies ,other than the banking sector?

"Countries have to have the freedom to determine their economic policies to meet their own

needs."

I agree wholeheartedly but that then means they go it alone or with those who choose to take

the same route. This then leads to isolation and unless they and their leaders have the

resolve of Fidel Castro they will very soon be consumed and bankrupted.

Provision to protect any dissenters has to be a mandate upon the strong. Will the strong agree?

Today we have seen something not seen since the Thatcher campaign against the trade union movement in the 70s-80s.

The workers of JCB voted to a drop in wages of £50 to save 350 of their brothers and sisters from being made redundant. Working class solidarity.

rimshot515
23 October 2008 at 23:47

"In any compromise between food and poison, it is

only death that can win."

Ah, another parasite screaming for the overthrow of

capitalism. Thank goodness there are so few of you.

You see, there is no such thing as laissez faire

capitalism in the real world today, and I emphasize the

word today. Europe is a socialist continent, most of

Asia is no better (however, China is headed on the

right path), and America? America is capitalism with

its arms and legs removed with almost every piece of

the Communist Manifesto enacted into legislation.

Social Security, Welfare, Medicare, a progressive tax

system, the highest corporate tax in the world, and not

to mention the tiny little nugget that helped push this

mess known as the 1977 Community Reinvestment

Act. Do you honestly believe that forcing banks to give

out bad loans before letting them expand is laissez

faire? Do you really think that giving tax breaks to

mortgages (debt) on houses and extra tax on large

bank accounts to pay for a house is laissez faire? And

establishing Fannie Mae and Freddie Mac to help

provide loans to these subprime recipients is going to

end well? As we have seen, it has not. And yet the

parasites call for more regulation and blame it on the

"predator lenders." Funny, it's altruism that got us into

Iraq, altruism that is making the country run at a

massive deficit, and altruism that people come

screaming for to draw us out of this economic hell

hole.

Do you really want to get out of this mess? Or are you

like all other egalitarianists who want to drag down

everyone who is great, intelligent, and wealthy to your

standardized poverty you call socialism?

Readers, whenever you hear a writer put equality

before liberty, run for your life. That is the leper's bell of

an approaching looter. What this author wants is for

America, the greatest country in the world, to be

chained down to the level of Venezuela, a socialist

country that can't even keep itself powered in the 21st

century.

Pole43
24 October 2008 at 10:46

Dear rimshot515,

Could you explain what you propose? Your criticism is full of emotions and unnecessary exagerations, e.g. about the foundation of US legislation on Communist Manifesto. The present problem is completely new. We are in the initial period of diagnosing it. Sticking to paradigms, which just proved to be obsolete, will not save us from trouble.

Regards

Pole43

gnuneo
24 October 2008 at 15:04

:sighs: quite how can a society have liberty, without equality (in the sense of equal opportunity, NOT equal result!)? How can a society achieve equality, without liberty?

the two go hand in hand, not hierarchically.

"The laissez-faire capitalism embraced by the US and the UK some 20 years ago"

umm, no. What was embraced some 20yrs ago was 'laissez-faire Feudalism' - restructuring property, company ownership, and political discussion (such as control of the Media) into the hands of the very few, the 'Neo-Liberal' agenda which appropriated the language of classical liberal economics but actually pushed through the exact opposite. Very similar to how Christianity appropriated Iesu's message of Love, and attached it to totalitarian, intolerant and murderous political structures, in point of fact.

what we are witnessing is the inevitable result of far too many decisions, social, political and economic, being taken at far too high levels of hierarchy - the essence of why the USSR collapsed, which can certainly not be blamed upon 'laissez-faire capitalism'.

yes, there can be little doubt that new regulations need putting in place, yet it is also noticeable that the few mutual societies left in the UK do not seem to be feeling the pinch as much as the corporate banking monstrosities, those who actually felt responsibility to the community, and not just their (often foreign) owners.

"at energy companies who record massive profits, yet allow pensioners to struggle to stay warm in winter; at CEOs who can earn up to a 1,000 times the salary of their average worker"

indeed, and could this happen under a social democratic system, where the workers would directly choose their CEOs, and force discussions of their income rates? Unlikely. Could it happen under State Socialism though? Yes, in the USSR and Red China, it could and did.

power has to be accountable, and the best method of that is to spread ownership/active citizenship around.

gnuneo
24 October 2008 at 15:20

"And the myth that "a rising tide lifts all boats" must be jettisoned. It was never true. Social mobility in the UK has barely improved in 40 years. In the US, a quarter of the wealth is in the hands of just 14,000 families."

now cross-check that to statistics about ownership of the companies, what % of the population owns their own business, what % of the population works for the big Chains. In the US, many small businesses have gone broke because Walmart opened up near them, which not only bankrupted the small, often family owned chemists nearby, but also bankrupted the domestic American companies that made the medicines those stores supplied, replacing them with medicines made in Walmart's Chinese factories using almost slave-labour.

the same is true of the UK and Tesco's and its ilk. Every supermarket that opens destroys far more jobs than they create, and funnels the money instead of through the local economies, straight up and out even of the national economy.

this is VITALLY important, and explains why rising prosperity and productivity has not raised the living standards of the normal citizens, and has instead gone to making the ultra-wealthy even more grotesquely wealthy.

this is the world-view that must be grasped by 'world leaders' if their national (and thus by implication international) economies are to grow in a proper capitalist manner, what we do not need is for this current crisis to be used (abused) by the global elite to put in measures (under either the language of Socialism or Neo-Liberal pseudo-capitalism) that further consolidate Elite (or political class) control of our economies and societies.

it is not only 1984 we face, but also Brave New World, the latter may lack the permanent warfare of the former, but in terms of lack of Freedom, of Liberty and Equality, the technological Fascism of BNW is equally repugnant.

gnuneo
24 October 2008 at 15:25

"the technological Fascism of BNW is equally repugnant."

actually, the term "fascism" is too small for that. It is both socialist AND fascist, in fact perhaps the best description is 'High Modernist', which also incorporates the fundamental error of behaviourism. Such a pity Huxley also saw sexual freedom as part of this process of control, pretty much the only flaw in the work, yet so large as to almost torpedo it.

writeon
24 October 2008 at 20:20

Consolidation by the ruling elite is precisely what is happening. The big fish are eating the little fish. The vast fortunes being transfered to the financial system, isn't leaving again, it's staying put. We may have saved the banks, but at the risk of losing the rest of the economy.

The banks aren't lending fast enough or in sufficient amounts to maintain the economy, and this is a problem to put it mildly! This is of course understandable as we are probably entering a deep and long 'recession' where many, many, firms will go under, why lend to them now when one will be able to pick them up for song in the future?

There are enormous opportunities in a falling market and a slump for those who have access to lots and lots of cash, and guess what our brilliant leadership has provided the banks with cash at the taxpayers expense! There is a lot of irony here. It's like we are actually paying to be hoisted with a petard.

Given our system and the massive injection of liquidity into the banks they will probably survive and come out of this even stronger, the ones that survive that is, it's the rest of us that have to worry.

What we could do is take over all the banks and financial institutions and create one enormous state bank. Then we could be directing loans to small businesses and homeowners in trouble. This of course would mean a frontal attack on the power and privilidges of the elite, financial aristocracy. Not trying to soothe them, or pursuede them, or ask them nicely, or bribe them, or bail them out; but removing them from the scene permanently. As they are effectively bust anyway and desparately need the state and the taxpayer for support, why not just push them aside and take over the entire system once and for all? We don't actually need them anymore and anyway they've proved that they not just redundent, incompetent, but that they are also incredibly dangerous for the rest of us.

physiocrat
24 October 2008 at 21:02

In a nutshell, the problems are caused by private appropriation of the economic rent of land. The solution is the replacement of existing taxes by an annual ad valorem tax on the rental value of land. This has been known for almost three centuries but vested interests prevent this from even being discussed, so almost nobody has got to hear about it. You can read all about it on http://www.landvaluetax.org and on the links from the site.

Nilsey105
24 October 2008 at 23:55

writeon

"Given our system and the massive injection of liquidity into the banks they will probably survive and come out of this even stronger, "

isnt that stating the obvious as there will be so few of them left at the end of the day.

"What we could do is take over all the banks and financial institutions and create one enormous state bank. "

I have been saying this since the bank bailout was first muted. Nationalise them all with the exception of the Co-Op and the mutual building societys and mutual insurance companys.

William
25 October 2008 at 18:33

The EU is a Statist State. Since New Labour came into power in 1997 over 110,000 laws have been rubber stamped into existence by a Parliament that continues to believe that parliamentarians controll their own existence. After the debacle of the Credit-crunch brought on by the laissez-faire of the ruling elite who are a legend in their own lunch time, Naomi Klein expose' The Shock Doctrine explains quite succintly the closing arguement of George Bush in sofar his last Presidential Decree, before he hands over Power to the Incoming Colleague of the Bilderburg Forum.

Nilsey105
25 October 2008 at 19:22

i am sorry to post this but its important;

The Treasury Committee is asking members of the public to send in questions they would like to see put to the Chancellor, the Governor of the Bank of England and the Chairman of the Financial Services Authority at an urgent inquiry into the banking crisis.

How to submit a question

E-mail questions under 100 words to bankingcrisis@parliament.uk if you wish to remain anonymous, please state clearly at the beginning of your email.

These can be submitted up to 48 hours before the hearing, which will take place on Mon 3 November 2008 - so get all questions in before 4pm on Sat 1 Nov.

Paul Lettan
25 October 2008 at 20:59

Writeon, don't disagree with most you say. Labour's failure since 1995/96 has been its craven failure to support mutuals. That failure has come back to tweak its goolies in recent weeks. Back in 93/95, I was teaching Swedish trade unionists/mutuals/co-ops. Their absolute horror was to have to follow the 'anglo-saxon' neo-liberal agenda when they joined the EU. I had also lived in Quebec where I and most people banked with the Caisse Populaire Desjardins, a credit union of 3 million people.

I found great similarities between Scandanavian and Quebecois attitudes to banking. Also why not make everyone's tax codes accessible at local post office as they do elsewhere? Why don't we ask the Quebecois and Swedes to come over and show us how to turn Northern Rock into a modern mutual/credit union along tried and tested lines of Quebec/Sweden? Cheers! Full of head cold so hope this makes sense.

writeon
25 October 2008 at 22:17

The more I think about this current crisis the worse I feel, the more I get the feeling that this is potentially the biggest crisis capitalism has ever faced.

I realise that's saying a lot and sticking my neck way out, and this isn't because I'm inclined to pessimism or I revel in doom 'n' gloom - I don't, and I've done well out of the current system, too well in fact.

What annoys me is our media and journalists; they are mostly, grossly underestimating the scale and depth of the crisis and they've been doing this for well over a year. Still, I suppose that's all water under the brigde now. It seems like people with the ability to ask critical questions and probe the workings of our financial system, are mostly filtered-out and vetted, so they rarely achieve positions of real power and influence.

I think that governments have lost control of the situation and are at a loss. They don't know what to do and the shere scale of the meltdown is beyond and above their abilities.

Things aren't getting better or stabilizing, they are getting worse. The 'credit crisis' is spreading rapidly into a currency crisis, a commodity crisis, a trade crisis, an insurance crisis, a credit card crisis, a hedge fund crisis, a profound crisis in the real economy.

Capitalism has changed our civilization and the world. It has incredible power to produce wealth, goods and services, and change society. However, as we are now witnessing, it also has enormous destructive power as well, destroying lives, businesses and even entire countries.

We aren't at the end, we are at the beginning of the crisis. It is very doubtful that governments are in charge anymore of events, if they ever really were. Governments and politicians have become the servants of market forces and now they are doing their best, and failing, to save the system they serve and rely on.

Bush was right, 'This sucker could go down'.

BillN
25 October 2008 at 23:32

The family resemblance between rimshot515 (who, incidentally, amused me enormously in saying it was altruism that took America into Iraq) and an evangelical Christian praying to the lord to bring on the rapture is not coincidental.

Both cling to an other world ideology and serve a truth that has no empitical foundation in the real world. Both preach the highest values but treat the well being of actual blood and guts people with a barbaric and malicious contempt. Both would have us do the bidding of an all powerful but invisible entity, the hand of god or the hand of the market.

Our modern ideologues of capitalism praise classical political economists who in reality offer little support for the modern ideology of economics. rimshot515 has his roots in the political economy of Malthus who prosletized for mass starvation on the alter of the liberty of the market.

However, I would caution Noreena and other s not to talk to prematurely of "ends". We may be seeing the fracturing of politicaleconomic hegemonic regime but nothing follows automatically. What follows will depend on a long poltical and ideological struggle and no putcome is guaranteed.

From the brilliant commentray of Marx on the capitalism of his day to the unfolding drama before us now we see the process in which the conditions that have nurtured capitalist expansion crumble and question of a different future opens. What follows is a struggle which will result in either new conditions being secured for capitalism to mutate and recover its hegemony or in a movement that will open a path to a funamentally different future.

Nilsey105
26 October 2008 at 01:15

BillN

"...a struggle which will result in either new conditions being secured for capitalism to mutate and recover its hegemony or in a movement that will open a path to a funamentally different future."

From what our foreign secretary has to say on the EU / Eeastern meeting in China this weekend today the latter option seems to be the dominant one. Pity.

Nilsey105
26 October 2008 at 01:16

oh dear

seems not to be the dominant one .

that should have said

Paul Lettan
26 October 2008 at 01:35

There is major change afoot, even though initially it won't look or feel that different. And the danger of a retrenchment to a neo-feudal elitism can't be ignored. (I've always wondered why sci-fi writers often depict the future in feudal structures of governance.) I am struck by economic and social similarities between our age and 3rd century Rome or better 8th/9th century Tang dynasty. The crucible of civilisation wends its inexorable westwards way. In 50 years, India, China and SE Asia will determine the architecture of global finance and governance. This is 'western' hegemony's last kick at the can. Sarkosy's trip is recognisant of that. Europe wants to be a major player in 2060 if so it may be a swan song. There is also the Arctic to be remembered. The Arctic will be a major zone of economic activity over the next century. Why does this matter? It matters for our children and grandchildren. Decisions of how we govern ourselves and structure our socio-economic relations during this recession will impact on their life chances. In large part we have failed them due to our mantra of low taxes. Those under 35 don't have that luxury.

gnuneo
26 October 2008 at 13:58

"(I've always wondered why sci-fi writers often depict the future in feudal structures of governance.)"

generally for two reasons - the dystopian Sfi-Fiers because that is the antithesis of the Science model of free speech, liberty, and equal access to the marketplace (in their terms the marketplace of Ideas and Knowledge), the early (50s to 80s) Sci-Fi because such simple structures are far easier to model than post-modern ethnological multi-polar worlds and social structures. It is also the kind of structures they would have faced in their school years etc, whereas it is less likely they would have experienced more complicated democratic schooling systems.

Europe may be in the first stage of throwing off the Imperial meme that was introduced in large scale by the Romans, and culturally set by Christianity. If that is so, and Europe turns back to democratic memes, then Europe will remain as cultural and economic leaders. The irony is, although Britain did not create its own Empire to spread Democracy (although perhaps a minority impulse), it is precisely the spread of the notion of 'Equality' and 'Liberty' into the debate of the whole world, that is causing the current Empires so much trouble. Not to say 'we' created such, just that 'we' gave political voice to those aspirations. Even the dictatorships we generally left in charge have been undermined by them.

and it will be the social-democratic structure of Europe that will achieve this, not the neo-liberal model of Reagan/Thatcher/Friedman.

ironies abound, it seems.

ton
26 October 2008 at 15:02

Marx analysed the cyclical boom-bust capitalist history.

So, what's new this time around? Anything that he hadn't already pointed out? After "soviet"communism, and its chinese variant - hybrid Monopolistic State Capitalism, we have truly reached the end of history. Whatelse is there? Another 'begining' of history?

Hayak-Thatcher, Friedman-Reagan-monetarists abetted by Noble prizes benefitted maybe i billion people; we are 7billion today; we will be 9 billion in 2020, can any system handle that? More Wealth creation? More planetary destruction? Where are the resources: air, water, land, energy etc? A Malthusian reckoning before the dawn of the brave new world?

writeon
26 October 2008 at 17:22

Let's get some things straight. There is enough food, water, land, energy, resources for 7 billion people to live reasonably.

The big problem is how the worlds' resources are distributed and exploited. Westerners swallow and gorge themselves on far more than their rightful share, with the Americans in the lead.

So, in theory, we could divide the resources and the wealth more equally if we wanted to or were able to. Half the world's population live on less than two dollars a day! Two dollars a day! Yet there are people in our part of the world who have fortunes of hundreds of millions of dollars. How do they look themselves in the mirror? How do they sleep?

Once we, in theory, divide and share the wealth more fairly, we should be able to stabilize the world's population and then bring it down over time to a lower and more sustainable level, for the benefit of all and the planet's ecosystem.

This is of course a simplified version of what needs to be done. What is the longterm eco-capacity of Australia, for example? Currently there are about 20 million Australians, compare that to the 100,000 that lived there before the European invasion. Without massive amounts of cheap and plentiful energy, how many people can Australia suppport?

What is certain, beyond doubt, is that our planet cannot support nine, or twelve or fourteen billion people, over the long term. The concept that billions could possibly maintain a lifestyle comparable to California is insane, a myth, an obscene joke. We would need two or three extra planets in a row, where do we find them?

So there is a dangerous myth at the heart of captialism which is an illusion, almost a death wish. That we can have limitless growth on a finite planet. We can conjure money out of thin air under the state/capitalist dictatorship, but one cannot conjure unlimited resources, or extra planets. Despite the dogma, despite the ideology and mythology, reality simply won't bear it.

Nilsey105
26 October 2008 at 20:44

writeon

what do you mean by

"unlimited resources"

If in your account the need for space to live is on the surface of the planet, then that can be removed. There is no reason why we cant live a subterranean life style.

Travel by air, land or sea will be a thing of the past.

Scientists, in Austria, are teleporting matter over 600 metres at present. The need for roads ,rail etc will diminish.

Agriculture will change vastly. We as a species will have to adapt. If meat survives as a food will it be for the poor, rich or all? As the planet heats up new crops are going to have to be found.

This is not the theories of Reverand Malthus but of modern day scientists who see climate change as the greatest danger to mankinds existence.

The supply of power from renewable sources is a problem at present. That, however, doesnt mean it will be in the future. Fusion power maybe one of the results of the , CERN - The Large Hadron Collider experiments. Hydrogen powered vehicles are on the list of soon to be in production. Other forms of renewables are out there waiting for someone to say yes make it happen as economic considerations have now changed and its a feasible project.

And that is the problem at present. There are solutions but capitalist economics stand in the way of progress. Research and development costs are an overhead not many want to incur. Projects can be in production but the returns in the short term are not seen a value orientated, they dont yeild a quick return.

IMHO "unlimited resources" is a red herring.

The overriding problem is the nature of our economic system. It is a system that has greed at its very heart.

The profit motive for any form of investment has to be abandoned. Only when this is accomplished can we advance as a civilised humanitarian society.

At 62 years of age i dont think i shall see it.

David
26 October 2008 at 23:44

Well, it wasn't going to take long before someone tried to link the financial crisis to free market economics. Irresponsible lending is and poor monitoring systems are not indicative of floors in laize faire ecoomic theory and the suggestion regarding a movement away from the free market is ludicrous. When will people learn that when any other economic system is exposed to Capitalism it falters and fails.

The comment about social mobility in the UK is also laughable. Anyone who knows anything about poolitics or economics would know that what was supported by Thatcherism was the average increase in living standards (the ride rising for all). Social mobility is no measure of economic progress or living standards.

All this socialist riff-raff is tired and old. Let's see you try and create and run successfully a socialist nation and struggle against the very fibre of human nature as you attempt to normalize ambition, creativity and progress. People have different endowments, whether they be physical, psychological , opportunity-based or financial and you will never succeed in putting them all on a level playing field. You need to realise that you are not working with a blank canvas and your idealistically nieve views are as ridculous as your inability to learn from history

Cybertiger
27 October 2008 at 21:48

@David

"People have different endowments, whether they be physical, psychological , opportunity-based or financial and you will never succeed in putting them all on a level playing field. "

Can you tell me how the endowments of a creep like Dick Fuld, CEO of Lehman Brothers, make him worth $38 million per year?

writeon
28 October 2008 at 08:41

But surely the idea, one hesitates to call it a theory, that a 'level playing field' actually mitigates against a successful society, flies in the face of the most basic principles of meritocracy and democracy?

Isn't it because people are differently endowed that one needs a reasonably 'level playing field'? If on top of everything else one allows and accepts an 'unlevel' society to support and magnify what people are 'endowed' with, one creates a cycle of self-perpetuating and intensifying inequality of opportunity that will have profound and very negative soical implications.

Nilsey105
28 October 2008 at 16:21

Great minds hey. lol

"We are witnessing the death of a paradigm."

YOURS

hmmmm thought i had seen that sentence before.

We are now witnessing the end of one paradigm. If capitalism wants to continue its existence then now is the time for its reinvention. Its time for a new paradigm.

MINE on the 11-10-08

gnuneo
29 October 2008 at 17:24

" But surely the idea, one hesitates to call it a theory, that a 'level playing field' actually mitigates against a successful society, flies in the face of the most basic principles of meritocracy and democracy?

Isn't it because people are differently endowed that one needs a reasonably 'level playing field'? If on top of everything else one allows and accepts an 'unlevel' society to support and magnify what people are 'endowed' with, one creates a cycle of self-perpetuating and intensifying inequality of opportunity that will have profound and very negative soical implications."

this is true. The danger of course comes from both the idiot Right and the equally idiotic Left, the Right because so many do not grasp that the same politicians who loudly bang their chests and proclaim themselves 'free marketeers' are actually the ones putting in the anti-free-market neo-liberal 'reforms'. The Left because so many of those who bang their chests and proclaim themselves 'socialists' are actually the ones who would put all decision making into the hands of a political class.

neither of these are meritocratic, and the media has done a grand job of ensuring that virtually everyone falls into one of these two (not very dissimilar groups), by attacking the 'opposite camp' without exploring the failings of their own championed philosophy.