[Marxism] The End of Capitalism as We Know It

chegitz guevara absynthe at gmail.com
Wed Mar 11 18:32:19 MDT 2009

>From the Financial Times

Seeds of its own destruction

By Martin Wolf

Published: March 8 2009 19:13 | Last updated: March 8 2009 19:13

Another ideological god has failed. The assumptions that ruled policy
and politics over three decades suddenly look as outdated as
revolutionary socialism.

“The nine most terrifying words in the English language are: ‘I’m from
the government and I’m here to help.’” Thus quipped Ronald Reagan,
hero of US conservatism. The remark seems ancient history now that
governments are pouring trillions of dollars, euros and pounds into
financial systems.

“Governments bad; deregulated markets good”: how can this faith escape
unscathed after Alan Greenspan, pupil of Ayn Rand and predominant
central banker of the era, described himself, in congressional
testimony last October, as being “in a state of shocked disbelief”
over the failure of the “self-interest of lending institutions to
protect shareholders’ equity”?

In the west, the pro-market ideology of the past three decades was a
reaction to the perceived failure of the mixed-economy, Keynesian
model of the 1950s, 1960s and 1970s. The move to the market was
associated with the election of Reagan as US president in 1980 and the
ascent to the British prime ministership of Margaret Thatcher the year
before. Little less important was the role of Paul Volcker, then
chairman of the Federal Reserve, in crushing inflation.

Yet bigger events shaped this epoch: the shift of China from the plan
to the market under Deng Xiaoping, the collapse of Soviet communism
between 1989 and 1991 and the end of India’s inward-looking economic
policies after 1991. The death of central planning, the end of the
cold war and, above all, the entry of billions of new participants
into the rapidly globalising world economy were the high points of
this era.

Today, with a huge global financial crisis and a synchronised slump in
economic activity, the world is changing again. The financial system
is the brain of the market economy. If it needs so expensive a rescue,
what is left of Reagan’s dismissal of governments? If the financial
system has failed, what remains of confidence in markets?

It is impossible at such a turning point to know where we are going.
In the chaotic 1970s, few guessed that the next epoch would see the
taming of inflation, the unleashing of capitalism and the death of
communism. What will happen now depends on choices unmade and shocks
unknown. Yet the combination of a financial collapse with a huge
recession, if not something worse, will surely change the world. The
legitimacy of the market will weaken. The credibility of the US will
be damaged. The authority of China will rise. Globalisation itself may
founder. This is a time of upheaval.

How did the world arrive here? A big part of the answer is that the
era of liberalisation contained seeds of its own downfall: this was
also a period of massive growth in the scale and profitability of the
financial sector, of frenetic financial innovation, of growing global
macroeconomic imbalances, of huge household borrowing and of bubbles
in asset prices.



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