Posts Tagged ‘capitalism’

Banking Commission: Only Labour can save capitalism

12/09/2011, 09:18:07 AM

by Jonathan Todd

When the global financial crisis struck, as John Kay recently noted:

“The political left offered no diagnosis or new ideas, and it gained no electoral advantage. Instead, across Europe, the parties that had waited a century for capitalism to collapse under its own contradictions congratulated themselves that such collapse had been averted by the injection of incredible amounts – trillions of dollars – of taxpayer funds into the banking system”.

Gordon Brown and Alistair Darling were right to bring us back from the brink. The left’s failure is the dearth of explanation as to how we came to be in this position or prescription as to where we go next. The explanation is a precondition of the prescription. If you can’t say how the crisis came about, then you can’t say how repetition should be averted.

The left’s explanations have tended to be personalised (e.g. “greedy bankers”), in spite of the left’s historic mission being to identify and correct structural explanations. We don’t think people are born wretched (even “Fred the shed”); we think that injustice and circumstance makes them so. The left’s explanation, therefore, shouldn’t be the banker’s greed but the structures that create and sustain this greed.

The left, for the most part, was no more analysing these structures than anyone else in 2008. Such analysis would have revealed a paradox: what we thought was high capitalism was anything but. Well functioning markets wouldn’t have allowed the banker to be so greedy. Effective competition would have restrained wages to merit-based levels.


Facebook Twitter Digg Delicious StumbleUpon

Will the right face its 1989 moment?

04/08/2011, 02:00:36 PM

by James Watkins

1989 was a bombshell for many people on the left. Any hopes that a communist utopia would flourish went up in a puff of smoke when the peoples of eastern Europe turned against their governments.

In Britain, the impact of 1989 was profound. The Communist party went into freefall, various factions split into further factions, Marxism Today went off the shelves and a further spur was given to the changes in the Labour party.

So why has there not been a “1989 moment” for the right? For in 2008, the confidence in laissez-faire markets should have gone up in a puff of smoke when the markets failed – and the only thing that held economies together was the intervention of the nation states.

The 2008 moment went against everything that Friedman, Hayek and other free market thinkers had been advocating. This was clear, conclusive evidence that rolling back the state and giving free rein to markets does not lead to a natural equilibrium in the economy. Former US federal reserve chairman, Alan Greenspan, said he was “surprised” by this. One former Tory Parliamentary candidate told me at the time that if free markets led to the collapse of all the banks and the mess that this would lead to, then so be it. This was the confused and muddled state the right was in back in 2008. (more…)

Facebook Twitter Digg Delicious StumbleUpon