Any Silver Lining in Sight?
ANY SILVER LINING IN SIGHT?
ANY SILVER LINING IN SIGHT?
By Angus Mackay
Can anything good come out of the current stalled economy?
This is hardly capitalism's first crisis. While Karl Marx may not always have been right about everything, he correctly anticipated that recurring downturns were certain to be part of the inner logic of a market-driven economy. Nowadays we would call it the business cycle. When the trough phase of the cycle is severe enough, the ultimate question tends to be re-asked: can capitalism survive in its traditional form? The answer may well turn out to be, yes and no.
The first serious crisis of the modern era was the bursting of the South Sea Bubble' at the beginning of the 18th century. English war debt was financed by granting the South Sea Company a monopoly of trade with South America. The extravagance of the Company's ornate London offices, and prospect of quick financial returns, led speculators to drive up share prices along with many spurious money-making ventures. Inept management eventually led to catastrophic operating losses and the complete collapse of the Company's share price. Huge amounts of money were lost, and there were many suicides.
Nineteenth-century financial speculation was wonderfully satirized by Charles Dickens in his novel, Martin Chuzzlewit', through the character of Tigg Montague: self-reinvented from his former and less extravagant identity as the needy sharper,' Montague Tigg, into the Chairman of the Board of the Anglo-Bengalee Disinterested Loan and Life Assurance Company. In a strikingly prescient foreshadowing of later Ponzi schemes, Dickens has Tigg say that provided we did it on a sufficiently large scale, we could furnish an office and make a show, without any money at all.'
Dickens's novels, as well as the writings of Victorian social commentators like Thomas Carlyle and others, were to become factors in the movement for reforms which, eventually, somewhat eased the worst ravages of industrial poverty in England. And, in the next century, the Great Depression itself was the backdrop for a new social compact here in the United States that included the creation of the Social Security system.
From the perspective of this latest crisis, should capitalism survive? Most of us who experienced the dead hand of State-owned industry in the UK would probably not wish to return to those days; and, significantly, when the Labour Party took office in 1997, Tony Blair and Gordon Brown opted not to reverse the privatization policies of their predecessors, Margaret Thatcher and John Major.
Yet is it too much to hope for that the easing of the present economic doldrums might include, not only needed safeguards to ensure that there is no repeat of the excesses that led to the sub-prime mess and the strange new phenomenon of toxic assets,' but also a broader societal understanding which would affirm, in the words of the 17th century English metaphysical poet, John Donne (a Dean of St. Paul's Cathedral, London) that No man is an island, entire of itself; every man is a piece of the continent, a part of the main?'
Could it be possible that an emerging new paradigm might include, not only smarter financial oversight and regulation, but also a stronger sense of community connectedness and perhaps slightly less of the individualism that has been a lingering perhaps unintended legacy of the Reagan and Thatcher era?
Can globalization somehow link the developed world not just with innovative markets overseas, but also with the estimated one-third of the world's population living on less than $1 a day? And is there a chance that economic recovery, when it eventually gets going in earnest, as it hopefully will, could be premised on the wholesale transformation of our pattern of energy consumption, from greenhouse gas-emitting, declining fossil fuels to unlimited renewable sources helping avoid a looming climate catastrophe and creating new green jobs?
That would be quite a silver lining.
Any Silver Lining in Sight?
By: Angus Mackay
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