The end of capitalism as we know it?
By Phillip Blond
Sunday, 23 March 2008
The Western world is in an economic crisis similar in scale to
the oil shock of 1973. What we are seeing is nothing less than
the unravelling of neo-liberalism – the dominant economic
and ideological model of the last 30 years.
The disintegration of Anglo-Saxon-inspired markets has come about
largely because of the confluence of two tendencies of the "free
market": speculation and monopoly capitalism. Contrary to
received opinion, free markets – unless subject to civil
regulation, asset distribution and persistent intervention –
always tend to monopoly.
Similarly, there is nothing inherently efficient about free markets
– they do not of themselves promote sound investment or
wise management. Rather, when markets are conceived wholly in
terms of price and return, and when asset wealth and the leverage
that this provides becomes as concentrated as it was in the 19th
century (which is a scenario we are approaching), then markets
encourage nothing other than gambling masking itself as sound
For example, before 1973 the ratio of investment to speculative
capital was 9:1; since 1973, these proportions have reversed.
So huge have the numbers, leverage and derivative instruments
become that their value now far exceeds the total economic value
of the planet. For instance, in 2003 the value of all derivative
trading was $85 trillion, while the size of the world economy
was only $49 trillion.