Could you have imagined the changes that are afoot, six or twelve months ago?
Such is the scale of the collapse that the government has been forced to take an ever increasing role in the economy. Banks are no longer economic automatons but dealers in public interest. We'd gotten cocky about credit and it turns out it's a lifeline we cannot do without.
It was always Keynes' argument that the state should intervene to save capitalism. The system, he argued, works rather well, just need to polish some of its flaws.
The public discussion is that the current situation is the result of an extremely big cock up - shuffling debt into incomprehensible packages - that have unravelled to reveal the depth of their incomprehensibility. Greed was the seed that sprouted this miss, and now we all have to pay.
So much for systemic collapse and so much for the finger-licking of idealists everywhere, and the counterclaims of so-called pragmatists, disgusing their idealism as conventional rationality.
The invisible hand of the last 15 years was not self-interestedness, but increasing concern for values. The rise of fair trade, increasingly vocal opposition to the global trading regime, organic food, understanding of IMF malpractice each has been gaining a stronger foot. All are signs of a values-based economy. That these signs take place in such different theatres does not reveal their diffuse nature, but the undercurrent of deep social change.
As self interest has reached its zenith with the ridiculously nepotisitic Bush administration, it seems the people, through market choices are wanting a world that sits more easily with their conscience.
So here comes are the steps in my thinking. Firstly, following economics, I believe that the economy reflects the values of those who take their part in it. This occurs in a weighted way, so those with more market power have a greater say over the values that arise in it. In countries with strong government, weak corporations, governments have more say over the values that preside. If the government represents its people well, this power is a direct channel of the people, then the people have power. In less representative democracies, we get what has been caled the "self-regulating state" an organ looking out for its own interest.
Secondly, the values represented by the overarching societal structure can only discoincide with the prominent values of the people for so long. The point is not that the people necessarily revolt up but will evolve their own institutions, through the natural course of their behaviour, that undermine the existing regime. This is the thinking of Schumpeter, who coined the term creative destruction, an Austrian with a beautifully evolved sense of the interplay between society and the economy. To rephrase, if the overriding structure diverges from the emerging values of the populace, the people will act so as to render the overriding structure obsolete.
What looks like a revolution, or rapid evolution has its seeds at an earlier time.
What is occurring now is a structural shift in the way society thinks and works that will determine how it thinks and works for the next fifty years, perhaps centuries. It's revealing of problems that are deliciously deep-seated. The size of the collapse will reflect how deep seated the problems are, by nature of just how far society has begun to shift.
Thus, as my my third point, I argue that it is not the greed of the bankers that is new, this has always existed and in forms far more despiccable than are apparent today. What is new is society's lack of tolerance to put up with ths greed. This ha occurred, not in some upright frenzy of moral attack, but by the diffuse nature of how it has been going about its business for perhaps the last 15 years.
The move to the value based system was triggered by the absurdly individualistic Reagan/Thatcher shift. In some sense, this showed socialists the game was up, that markets has taken primacy. The moral case was thus retracted and fed through the unavoidable architecture of consumer choice.
The diversity of expression that consumer choice allows (depsite its undeniably herd instinct) will not be thrown into the dustbin. We'll just have to be a bit nicer with the choices we make. And superstructural decisions (those on defence and international trade) will have to shift too, or risk becoming violoently obsolete.
We're coming to a point in international relations where interests very much opposed to each other are coming into extremely close contact. Shortages of resources from oil to water will strain a world that divides its thinking into who owns what. That the Arctic is being divided into plots for oil claims is a frightening signifier of the strains that are already present.
What is necessary is that a global system is produced that harmonises and absorbs these tensions. This, consistent with the earlier point, is purely a reflection of the harmony the world population is able to deal with.
I argue that we're ready for such a step, that moves for world governance should move ahead so to show the interelatedness that this world already enjoys.
Finance will not stop, though must be made more sensible. International relations takes place round the debating table and not on the battlefield or through violent resource strong arming.
The rise of values becoming more central to their lives, coupled with a better idea of what their current ideas are having, will demand that these changes take place. Whether the ride is smooth or bumpy is up to Messrs Brown, Bernanke, Sarkozy, Obama, Wu Jintao, Rockefeller, Buffett et al.
Populist Backlash and Political Economy
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