Last night on the tube I saw in someone else's Evening Standard the headline of an article:
"So have the free marketeers been proved wrong?"
Which reminded Bozo of a much loved witticism. Viz
"How many Frenchmen does it take to defend Paris?"
"Who knows, they have never tried!"
The one thing we learned from the crash and the credit crunch is that the market system we have been running in the West bears no relationship to a free market system. Any more than the Soviet system that collapsed in 1989/90 represented Communism in any real sense.
Let's go back to the Soviets for a second. Basically, everyone had a job, but people didn't always have food - still less tvs or gagdets or a free press. But the system could say - "Everyone has jobs!"
When the food went short - it wasn't the people running the system (let us call them the Apparatchiks) who suffered. Apparatchiks always eat well and get limos to drive them down special lanes in the middle of the road. It is only the ordinary folk who actually suffered from Soviet systemic failure. The central system always paid whatever price was needed to be paid to preserthe system. And this system endured from 1917 to 1989 with only a few million victims of starvation or purge. It endured until the cost of military competition with Ronald Reagan made the last rouble of cash or credit just run out.
Whoa!! Wait a minute.
Let me get this right.
You mean when the system went wrong, the central government bailed out the system?
You mean that when the system went wrong, ordinary people suffered but the people at the top of the system didn't?
Surely thats the same system we have been running!!!!!!!!!!!!
Indeed erudite readers. Exactly the same.
We have no idea if the free market works - because we don't operate it.
Bear Stearns and Lehmans may have been allowed to go broke - but AIG wasn't. And if AIG had - well then so would half a dozen other investment banks (with Goldmans at the fore). Indeed - we are told that the reason AIG and RBS et al were balied out is to preserve western society as we know it. Right?
When Hank Paulsen was still at Goldmans he could have explained how the free market worked. That's why, as Secretary of the Treasury, he let Lehmans go down the loo. The market reaction to this scared ole Hank so he then decided the greater good involved making sure Goldmans survived.
The whole market - at this point in time was not saying "We are a free market, government must keep its hands off. The market will police our failures!"
Or if it was I didn't hear them - and nor did ole Hank. (Nor ole Gordon).
What I heard the market saying was:
"Give us money now! Or we won't get our bonuses! Er no, we mean give us money now or the whole fabric of western society will crumble into dust!"
Nowadays - whenever the subject of more stringent government regulation comes up the HSBCs of this world talk about moving HQ back to Asia. Why? So they can be free of course! free to be proper free marketeers! Until they need the tax payer to pay their losses and underwrite their bonuses again.
You can make a gazillion comments telling me Capitalism is superior to Communism.
You can tell me the western system has given more people more benefits than the Soviet system.
You can tell me more scientific and medical progress has been made in the Western system (and I will nod my head and say, yeah, military too - and wait till we start designing the enclaves we will need to build to protect the wealthy from the rapidly growing underclasses we have created).
You can tell me all that - and I will say but two things
1) Fine, its superior - but don't tell me its the free market - because in the free market the Federal Government doesn't own AIG or Royal Bank of Scotland "in order to preserve society as we know it".
2) The Soviet system worked too - until there wasnt enough money to bail it out any more.
I will let Abraham Lincoln say the third thing:
Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.
Feel free to spout that capitalism is superior - but don't tell me its the free market - not until 100 years after the banks return to private ownership.
The soviet system did not fail for any other reasons than that the pople stopped standing for it and the money to preserve it ran out.
When I read about JP Morgan's CIO (already long gone from our headlines) I am left wondering how long a "free" market full of such cowboys will take to repeat the whole crash. After all - if you keep doing what you have always done - you will get what you always got! And if we get another crash or two - I do wonder if the people will stand for it -and if the money will exist to bail it out again.
How familiar it all sounds.


Recent Comments