|Cartoon from Anti-Capitalism|
Many of the leading lights of free-market (neo-liberal/neo-conservative) capitalism were asserting before the crash that the market had correctly valued property, shares, derivatives and other exotic products that the “moneymen” were engaged in trading in. They failed spectacularly to predict the 2008 crash, the second largest economic crisis in history, after the great depression.
You would think, wouldn’t you, that those high priests of neo-liberal economics would now be contrite, admit that their models of the market and human behaviour are wrong, or at least are in need of serious modification. Not a bit of it, they just carry on regardless, as if the crash never happened.
(In fact, outside the US, the economic collapse in some places--Greece, Spain, Ireland--was as severe and traumatic as the US Great Depression)
The use of the word ‘free’ in free market is a misnomer and a more accurate phrase to encapsulate the ideology would be ‘privatizing profits for the too-big-to-fail corporations and socializing losses’. As for the word ‘liberal’, all it means is giving the super-rich the liberty to exploit people without due regard for their human rights, and to pay them poverty wages.
Lest we forget, we the taxpayers have rescued the too-big-to-fail banks from the folly of their actions to the tune of hundreds of billions, only to see that money paid in bonuses to the very bosses who were the architects of the mess in the first place. Governments then had to cut their spending through austerity programmes that affect almost everyone — apart, that is, from those who caused the crash in the first place.
The hardships and the misery of such cuts are particularly felt by the working poor, the disabled, and the vulnerable. Our young have paid a particularly heavy price through unemployment. The adverse effect of such unemployment on societies will cascade through future generations in the foreseeable future.
If a company is too big to fail, it is also too big to be left to its own devices. If a bank is too big to fail, it needs to be regulated so that the risk of failure is low. Just as they used to be before untrammelled free markets in finance became fashionable.
Ha-Joon Chang, a Cambridge University economist, in his book 23 things they don’t tell you about capitalism, emphasises his enthusiastic support of capitalism and frames his criticism of the free-market model with these words:The neo-liberal consensus assumed that financial markets were efficient, self-regulating and rational, and that the vastly increased inequality of wealth which resulted from embracing free markets would have no political consequences. They were wrong, badly wrong, on both counts, as the GFC showed. More on both subjects to come.
‘Being critical of free-market ideology is not the same as being against capitalism. Despite its problems and limitations, I believe that capitalism is still the best economic system that humanity has invented. My criticism is of a particular version of capitalism that has dominated the world in the last three decades, that is, free-market capitalism. This is not the only way to run capitalism, and certainly not the best, as the record of the last three decades shows.’