The current financial crisis

It appears that a number of economies across the world from Iceland to South Korea and from South Africa to Argentina are in crisis through lack of confidence in their currencies and need to be propped up by all manner of means, ranging from handouts from international institutions to nationalising private pensions funds.

This follows highly publicised bailouts for banks in the USA, UK and several EU countries, and the partial or complete collapse of certain ‘big name’ financial institutions across the world.

Yet, I can remember the ways in which Alan Greenspan, when he was head of the Fed in the USA was hailed as an economic guru when he preached less and less regulation of markets and led almost all western politicians to at least tacitly worship at the alter of the free market. Apparently the free market creates wealth, engenders democracy, and is the one and true benefactor of mankind. Our politicians only just fell short of praising the free market for Santa Claus, the Easter Bunny and even virtue itself. It is now apparent that this was, as some of us heretics always suspected, utter nonsense; at best a bag of hot air, at worst a recipe for collapse. The economic Tsunami has now arrived and these great apologists for the free market are expressing amazement and wonder. One needs to be reminded of the dangers of false prophets (and false profits).

The rhetoric of the free marketers also posited another dangerous thesis; that economic growth would always be per se a good thing. How on God’s earth did they work that one out. The clear and unambiguous dangers of climate change, driven by unfettered, loosely regulated industrialisation since the late eighteenth century, and particularly since the enormous changes in human economic activity that have taken place from the beginning of the twentieth century to the present day, have driven the planet to a probable climatic tipping point, whose consequences we cannot possibly envisage until they are upon us. Economic growth was the watchword that brought us to this point. The environmental Tsunami will follow the economic Tsunami as sure as night follows day.

Even before the current financial crisis the free market has led to other disasters. The development of cotton as a cash crop in Sudan in the 1970s just before the bottom fell out of the ‘free’ cotton market led to mass starvation, and eventually the appalling crisis in Darfur. Africa’s problems over the past three decades have been well publicised; starvation and drought and mounting debt; another free market triumph. Comfortable liberals in the West mourn the passing of huge tracts of the Amazon and other rainforests. I believe that logging is a free market activity. The Sumatran rainforest is so diminished now that we will probably witness the extinction of the Orang Utan within our lifetimes; yet another triumph for the free market. The difference with the present crisis is that dumb animals and the people from the poorer countries have been joined in the firing line by those from the developed world.

There is, and always has been another way; the way of fully accountable democratic control of the economy and seeing the economy as an economy not just in terms of the cash nexus. The economy comprises, to be sure, the banks, insurance companies and other financial institutions (but must never again include such total parasites as hedge fund managers; the worst criminals on the planet). It also comprises manufacturing and service industries. What, however, seems forever to have been ignored, is that the economy also comprises the natural resources of the planet both as the raw material for manufactured goods and also as the heart and lungs (and liver and kidneys if we wish to stretch the analogy) of the earth. What is required is economic stability, an even playing field and a full and sophisticated appreciation of nature in all our economic activities. To say such things even now is seen as heterodox, after all that would be socialism, or worse still the green subversion of environmentalism.

Nothing worthwhile will happen. We will muddle through the present crisis and then wait for the next one. Capitalism is the scourge of the earth, but sadly is yet to fall terminally ill. As someone once said, there are none so blind as those who refuse to see.