Twenty years ago, we gloated over the collapse of Soviet communism and the "centrally planned economy". Capitalism - with all its freedom and democracy - was "victorious". Assuredly, it would remain dominant and secure, not just now, but for ever more. One analyst saw it as the "end of history”. Multitudes concurred.
That conviction about capitalism - and freedom and what we have been conditioned to call democracy - lasted until quite recently. It was still there when the "sub-prime crisis" reared its ugly head around July 2007. It became less a conviction and more a nervous expectation when Bear Stearns and its troubles became public about March 2008.
Stock markets, money markets, Over-The-Counter (OTC) trades have tended to move with unprecedented volatility in a 2008: a year distinguished for its widespread financial gyrations and gathering trauma.
If so many financial "institutions" have fallen off a cliff so suddenly, then so are attitudes to the system which nourished them so splendidly. That system was capitalism in the raw, or "extreme capitalism" as some now call it.
This is not the first time capitalism has been threatened.
When a more modest, less obsessive addiction to debt and speculation ended in the Great Crash of the New York Stock Exchange in 1929, the ensuing collapse threatened that the whole capitalist system - with idle factories, foreclosed properties and massive unemployment - would grind to a halt. The collapse nourished many alternatives of right and left, reinforcing fascism, Nazism and a whole range of socialist, communist and other left-wing refuges. Extreme right movements came close to defeating our "capitalist democracies" in World War II. The leftist alternatives came to flourish in a “socialist sixth of the world" before World War II and even more, with the communist victory in China, after the war.
It was a close-run thing but, with just enough and just in time, a New Deal, a catastrophic war and an unusually brilliant economist managed to rescue a capitalist system elsewhere.
John Maynard Keynes saw his mission as rescuing a capitalism worth preserving: not capitalism’s demise. That rescue could be effected only if capitalism became more disciplined, better managed and more wisely regulated. Left to its irresponsible self, it would inevitably self-destruct.
Between 1945 and 1969, variations of Keynesian capitalism in a variety of countries yielded high and stable rates of growth and employment. That sort of stability did not encourage speculation. The cowboy capitalists were in retreat. A primary element in Keynes' rescue plan was thereby realised: speculation belonged at most at the margin; it must not inhabit the economic mainstream.
We ignored that warning, especially from the early 1980s onwards.
We did not blatantly campaign in favour of speculation to convert the world economy into a gigantic gaming parlour. Rather the greatest, most widespread and most "sophisticated" casino of all time emerged from such "motherhood" concepts as "small government", freedom and democracy. Adam Smith’s "invisible hand", free markets, free trade, deregulation, privatisation and globalisation determined mainstream policies so that they were elevated to religious-style mania with their basic dogmas virtually uncontested.
The inherent dangers revealed themselves in junk bonds, cowboy takeovers and Michael Milken in the 1980s; but most of those I then called adventurers, marauders and buccaneers were prosecuted or were, anyway, not accepted into the respectable capitalist mainstream.
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