The end of capitalism as we know it?

The scene of banks going under and policy makers risking moral hazard and bailing out the guilty is changing US market capitalism as we know it.

The great economist Joseph Schumpeter talked about "creative destruction". This was the great engine of capitalism where the old ways are destroyed, and replaced by new and innovative methods. But the Bush administration's determination to bail out the guilty who created this mess stops this from happening.

It's a point taken up by the Hudson Institute's Irwin Stelzer in his piece New Capitalism.

"Instead we have a capitalism in which financial institutions trade freedom for the protection of access to the government's balance sheet (Goldman Sachs and Morgan Stanley). In which institutions under stress accept pervasive government regulation in return for insurance against failure. In which the advantages of free trade are sacrificed in the interests of preserving jobs in industries best left to adjust to the winds of change. In which regulation of executive salaries is seen as a necessary political price to pay for preventing systemic failure of the banking system. In which taxes on the "rich" and not-so-rich are seen as necessary to offset the inequities of the income distribution system created by capitalism as we have known it … Those changes will undoubtedly deny us of some of the benefits of the creativity and dynamism of a capitalism in which failure was a greater goad to achievement. Sic gloria transit mundi."


only 1 comment untill now

  1. Caliche-Pit @ 2008-09-30 16:14

    The quote from the Hudson Institute is funny. It’s railing against a litany of evils that have NOT happened (but that should). “Accepting pervasive government regulation”? In fact, they’re getting hundreds of BILLIONS and in return the guilty are grudgingly accepting “VOLUNTARY guidelines” (read no restrictins at all). As to “sacrificing the advantages of free trade” to save jobs, where is that happening. We continue to embrace free trade and we continue to lose jobs. Is Hudson bothered by the few jobs we have left? Deny us the benefit of creativity? The creativity that magically transformed bad debt into bonds peddled to pension funds? Oh, puh-leeeze! We can always depend on the right-wing “think” tanks who get much of their funding from CUI’s (CEO’s Under Indictment) to suck up to their benefactors. If this quote is representative of the larger article, don’t bother to read it; here’s the Cliff Note: rich good, poor bad, criminal’s cool, government evil. Or, if you’d rather, just Google Wall Street, Gordon Gecko and Greed.

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