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The end of capitalism as we know it?  
Posted by David Storr on March 27 2008, 15:26 » Uploaded 27/03/08 15:46  

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 investment.

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.

Continues here

COMMENTS Post comment


Comment 01 – Nick Phillips March 27 2008, 16:05

Who is this guy? I like his direct, no-BS style. Most economics articles in the newspapers put me to sleep, but this is a little different.

Comment 02 – Raoul Djukanovic March 27 2008, 22:49

Perhaps his style benefits from not being an economist:[...]

But he's established enough to get printed by NYT-heads:[...]

Good on the guy.

This article will probably send you to sleep, but the FT's chinstroker in chief concedes something similar here:

Remember Friday March 14 2008: it was the day the dream of global free- market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns, the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free-market capitalism, declared this era over...[...]




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