Stories about the smashed-up financial sector are everywhere. Hovering above the news of banks toppling, governments handing out wads of cash and unemployment rising, hangs a cloud of guilt, but everyone disagrees as to who it belongs.
Was it greedy, bonus-chasing bankers? Laissez-faire governments, for failing to regulate? Consumers, for borrowing money they could never pay back? The answer is riddled with political risk. The nature of the crash has implications for whole economic ideologies.
Those on the left are quietly smug, for their worst predictions about the destructive force of market fundamentalism have come true, again and again. Those on the right, or even just the centre, are scuttling for cover, as their idol – free, unfettered capitalism – is knocked from its pedestal along with the high priests Lehman Brothers, Bear Sterns and Merrill Lynch.
But some capitalists are sticking to their besieged posts. While Will Hutton argues in The Observer:
This is a crisis that has been 30 years in the making – a Gordian knot of libertarian free-market fundamentalism, unregulated globalisation, the collapse of social and political forces committed to fairness, and the explosive impact of financial innovations such as ‘securitisation’, and sheer greed”,
the Economist‘s cover story, Capitalism at Bay, stubbornly attempts to decry government intervention and champion the free market.
Funnily enough, it feels as though the Economist writer doesn’t quite believe in what he’s writing. It’s like he’s become an agnostic, but someone is still dragging him to church.
Why? Because the Economist’s central, defining tenet is “economic liberty”. And not even the worst crash since the 30′s will let them betray that.
All the signs are pointing in the same direction: a larger role for the state, and a smaller and more constrained private sector,”
the leader-writer says, anxiously.
This newspaper hopes profoundly that this will not happen.”
Poor Economist. Not only has it signally failed to come to terms with the fact that it’s no longer a newspaper but a magazine, it also, bizarrely, feels personally threatened by the incursion of the state. The writer goes on to admit that, “In the short term defending capitalism means, paradoxically, state intervention”. Paradoxical indeed. Don’t worry though, that paradox doesn’t skew his wholly contradictory conclusion: “Capitalism, eventually, corrects itself.”
Hmm. Surely you can’t have it both ways. If capitalism requires state intervention in the short-term, then it won’t have corrected itself; the state will have.
All of which underscores that the ubiquity of political bias puts an ever higher premium on objective reporting. I’d like to recommend a reporter who’s left all prejudice at home and instead relied merely on facts, to shine an investigative light on something most of us know nothing about. Credit rating agencies. Here, a new suspect joins the line-up in the crime of the century, and there’s some solid evidence involved. Here’s what a U.S. Congressman said about them yesterday:
The credit rating agencies occupy a special place in our financial markets. Millions of investors rely on them for independent, objective assessments. The rating agencies broke this bond of trust, and federal regulators ignored the warning signs and did nothing to protect the public. The result is that our entire financial system is now at risk.”
Want to know more? Read Sam Jones’ excellent feature When Junk Was Gold, illustrated quite beautifully by Balint Zsako. And then read Jones’ equally incisive blog post from today’s Alphaville. Now that’s good journalism.
