Saturday, October 17, 2009

To call each thing by its right name

Financial Times:

After massive government bailouts, banks are still enjoying government guarantees, implicit if not explicit. Policymakers have, moreover, slashed the cost of liquidity. Bankers’ handsome compensation is, therefore, in large part underwritten by public money. Second, even before the crisis, inadequate competition failed to whittle away large profits – as enormous returns on equity showed – and therefore outsize compensation, unlike in other industries.

I like to think of capitalism as a system of, by, and for the purpose of capital. If nothing else, it is a system that produces and safeguards capital; administered by whatever group controls the bulk of it.

The fact that this capital class defends its interests through government is not some abrogation of capitalism that suddenly renders it "socialism." It is how the system works, if for no other reason than that this is how power works.

For it's own part, socialism developed out of an acknowledgment that government "picks winners and losers" all the time -- so the public might as well get in the game, rather than perpetually pick up the tab. This is its "social" mandate, which it must fulfill if it is to have any useful meaning.

Talk of "lemon socialism," "socialism for the rich," "Obamunism," and the like, posits some mythical capitalism where privileged minorities don't rely on state protection to secure their interests against the disenfranchised majority at every turn. In a system propped up on myths, this is not surprising; but I don't know of any circumstances in which it is real.


almostinfamous said...

some mythical capitalism where...

that's the function of most economists though, right? to put in common discussions a proper mythology of pure, god-blessed capitalism (with a capital G and a capital C respectively) which is the only pure form of social and economic organization while all the rest are products of pure evil.

JRB said...

Well played.

d.mantis said...

The common discussions are amazing in that they never stray too far, but only talk in superlative terms like 'buisness', 'small buisness', 'the economy', 'the banks' and 'the market'.

Yet, (michael moore notwithstanding) most people still do not see the financial crisis as a fundamental aspect (and result) of the system. The rhetoric is centered around how best to tweak the system to correct a slight flaw.

The superlative language keeps people from asking the simple question, "who exactly has been benefiting from the economic model". I asked this question to a few teabagger friends. It was amazing how quickly the converstion turned from being antagonistic to harmonious.

Call it a corporatist oligarchy, but call it something!

Anonymous said...

get rid of the mud man and many economic issues are corrected.

Coldtype said...

My apologies JRB for the turd above which dragged itself from the comments section of my blog.

Anonymous said...

keep believing lies and see how far that gets you. Douche