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Saturday, 22 October 2011

Capitalism in Crisis?

The waifs, strays, agitators and rent-a-crowd who have settled outside Saint Paul's Cathedral are living under various banners, of which one of the most prominent declares CAPITALISM IN CRISIS.

It appears that the majority of the squatters broadly equate capitalism with 'bankers' who are inferred to be rich, exploitative, dishonest and void of social conscience. It is probable that a great majority of the British population would endorse that view of bankers, or at least of 'City bankers' or 'wholesale bankers' [as distinct from local retail branch bank counter staff]. But is the equation of 'capitalism' with 'banker' in any way valid?

The City of London and New York banking sectors have been hugely successful in the era since the regimes led by Margaret Thatcher and Ronald Reagan fostered liberalisation of the rules, enabling them to develop a completely reckless cats-cradle of interdependent innovations that made increasing use of developing computer software and passed way beyond the ken of inadequate regulators. Few people could explain how this system crashed and what was the nature of the collapse: but everyone has experience of the consequences, and can see the pathetic attempts of political systems to capture some sort of control over phenomena that they do not understand. The Economists do not fully understand them either: some Economists understand some features of the system and of the crisis very well, and have sensible policy suggestions: but nobody can definitively say to what extent this or that 'expert' has the right answer.The debate is close to stalemate; but it is increasingly obvious that the crisis occurred in 'banking' even though it subsequently threatened the existence of the economy as a support mechanism for human beings.

Few people in or out of politics, inside or outside the 'Economics profession', doubt that human survival in all the industrial and 'post-industrial' countries depends on developing the 'real economy'; and specifically on developing what is broadly [and therefore pretty meaninglessly] described as 'manufacturing'. No materially productive plant can be created without capital  in the forms of buildings, services to those buildings, machinery, supplies, ancillary services, trained labour [which is in itself expensive] and a cash float to pay the bills until sales revenue cover costs. Society cannot survive without capital. So what is 'capitalism', and does the addition of the suffix confer a morally or socially negative inferior - or even hostile - aspect to the necessary investment funds? It is highly improbable that any of the 'protesters' could answer that question in a credible manner.

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