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The End of Capitalism Essay

The end of capitalism is near. Nay, it has arrived, officially proclaimed yesterday by the world’s leading media panjandrum of economic doom. In a staggeringly glib, sensationalistic and over-the-top 2,000-word rantorama, Financial Times’ economics columnist Martin Wolf yesterday launched what the Times calls its major new series, The Future of Capitalism. That’s the official title, which unfortunately has nothing to do with the actual content of the series. It’s really about the Future of Big Government, and why we need Big Government and why it’s inevitable because there’s no alternative. The pink pages of the FT have been waging war on free markets for decades, pandering instead to its global readership among hundreds of thousands of bureaucrats in government offices, the IMF, the OECD and other breeding grounds of global statism. Nothing warms the bottoms of this crowd of power-seekers and regulators-in-waiting more than a¬†good financial crisis.

The FT captured the joy of disaster in its description of the Future of Capitalism series: “The credit crunch has destroyed faith in the free market ideology that has dominated Western economic thinking for a generation. But what can — and should — replace it? Over the coming weeks we will conduct a wide-ranging debate on this dominant political issue of the day.” In his opening salvo, titled “Seeds of its Own Destruction,” Mr. Wolf walked all over the supposed grave of market capitalism. “Another ideological god has failed,” he said. “The assumptions that ruled policy and politics over three decades look as outdated as revolutionary socialism.” The evil perpetrators of free market ideology — Thatcher, Reagan, Greenspan and Deng Xiaoping (huh?)–are dragged over the corpse. Mr. Wolf never explains what those “seeds of destruction” are. It has something to do with too much debt and too much financial flimflamery. Not that it matters, because Mr. Wolf’s article is essentially a scare-mongering projection of policy and economic disasters that he says could befall the world economy as a result of the collapse of market ideology.

There are at least 30 looming developments that Mr. Wolf portentously catalogues as consequences of financial collapse and global recession. Here are most of them, in order of appearance:

1. The legitimacy of the market will weaken.

2. Credibility of the United States will be damaged.

3. The authority of China will rise.

4. Globalization may founder.

5. This is a time of upheaval.

6. Massive and prolonged fiscal deficits.

7. Prolonged world recession.

8 Brutal adjustment of global balance of payments.

9. Collapse of the dollar.

10. Soaring inflation.

11. Resort to protectionism.

12. Regulation will tighten.

13. Regulatory separation of commercial and investment banking.

14. Return of banking to home markets.


16. Managers, not shareholders, will control companies.

17. Government will protect against takeovers.

18. Legitimacy of market process is damaged.

19. Central banks will focus on asset prices.

20. Rising unemployment could lead to collapse of liberal trade, socialism and import substitution.

21. The Great Depression produced Nazism, authoritarianism; people became tribal.

22. A shift in attitudes toward inequality.

23. Marginal tax rates on the wealthy are on the way up.

24. Pension savings confidence will wane.

25. Political control will strengthen and markets weaken.

26. A shift toward the national from the global will occur.

27. Protectionist intervention will rise.

28. The number of people in extreme poverty will rise.

29. The size of the middle class will fall.

30. Some indebted countries will default.

31. Collapse of the world financial system.

32. China flourishes.

33. The possibility of human progress is in doubt.

34. Credibility of western policymakers lies broken.

Mr. Wolf makes it through all this and more without really identifying why all this decline and disaster might occur. Worse, though, is that he dodges the issue of whether he thinks any of it should occur. In some cases, such as the rise of Nazism, he clearly does not. But in others, he is often ambiguous. The result is a schizophrenic analysis that does nothing more than joyfully pronounce capitalism dead and issue hysterical proclamations on what will replace it. The Financial Times also opened the Future of Capitalism with another more prescriptive piece by Robert Schiller, of Yale University. Prof. Schiller, pulled forward by a team of straw dogs, listed market capitalism failures. Capitalism, he said, gives consumers and investors what they want, but not necessarily what they should want or need. “The idea that unfettered, unregulated capitalism would invariably produce good outcomes was a wrong economic theory.” People will buy “snake oil,” he said. What we need is a bunch of government intervention — as if the last 30 years had never seen a government intervene — to save us from snake oil.

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