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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

good ole capitalism « Previous | |Next »
April 21, 2003

I have refrained from writing about the collapse of some of the major Australian corporations. These more or less speak for themselves--incompetent management and corporate that is the norm in Australian capitalism. But the collapse of HIH is a different kettle of fish. The Report by Justice Neville Owen on the HIH debacle opens up a window onto the dark side of capitalism---what business writers call dubious practices.

HIH was just a vehicle to make money by the bottom feeders. As long as the money could be made these suckers, who called themselves advisors, lawyers and merchant bankers, couldn't care a hoot if HIH turned belly up. HIH was a fee-takes picnic.

There is a classic paragraph in the Moral Hazard article by David Brearley in the Weekend Australian (No link, p. 25, April 19, 2003). It says:

"The greed was spectacular. Everywhere they were men with contempt for others people's money and jyet nothing but lust for money to call their own. They had a disturbing attitude to what they regarded as small sums----anything up to, say, $5million.

Some of them weren't even witnesses before the commission, but merely names that existed in abstract, faceless players in this or that regretable episode. They lived in London or Monte Carlo or maybe some island in the Carribean, and their sole professional function in life was to deal with money-- source it, shift, it, grow it, hide it, work it. These men live in a vacuum." "

The word missing is moral--- ie., capitalism as a moral order. The world of financial capitalism is a moral vacuum. It is nihilistic, as the values of liberal society have long been eroded and emptied out. This is a capitalism that is destructive of liberal society. What are called dubious practices are little different from the actions of a gang of robbers and thieves.

HIH means ithat it is hard to take Hayek seriously when he goes on about the learned morals of the market order that underpins the Great Society. What are the morals that arise from exchange and the marketplace in the HIH case? What are the moral critieria that are necessary for the survival in an impersonal market order? What are the moral rules that the evolutionary logic of the Great Societ has give rise to?

Are the libertarians going to say the responsible individualism of the spontaneous order? HIH indicates that the individualism is little more than the individualism of a bunch of robbers, pirates and looters. Are they going to say that Rodeny Adler, Ray Williams, Dominic Fodera and Daniel Wilkie were striving for excellence, suceeded better than others and deserve great praise?

It is not a case of safeguarding the Great Society from the socialist dangers that threaten it, as Hayek argues. The danger comes from the marketplace. Its a wrecking ball. Libertarians can hardly argue that capitalism lack moral legitimacy because only because the moral ethos of socialism (altruism and solidarity) has been allowed to dominate public debate.

| Posted by Gary Sauer-Thompson at 10:22 AM | | Comments (4)


With all due respect to Hayek and not lightly wishing to put words in his mouth he may say of the looters, robbers and dubious practitioners you speak of- Welcome to the morals of the market-place as you stand among the ruins of the HIH you created, with a Treasurer calling for your jailing if the charges being levelled against you are proven.

Hayek would be comfortable with their demise if it means the remaining moral leadership of the insurance industry can carry on providing the service the community requires, with appropriate long term returns, free of these scoundrels and their turnover pricing policies.

Of course he would know only too well that such carpet-baggers will rise to prominence from time to time, wreaking the havoc we see before us now, as well as the other notable examples of similar men's failings-Ansett, OneTel,WorldCom, Enron,etc. However, the one thing he will be sure of in surveying the damage of these wrecking balls, is the knowledge that the destruction of a corporation or even a whole economic sector, is far less than that wreaked on whole economies and societies, when such carpet-baggers have become responsible for running them. (Need I mention Iraq or the Eastern Bloc planned economies here)

Yes, I have no doubt he would also be morally outraged by those goverment sponsored bottom feeders in APRA who also partook of their fat salaries under false pretences. Who will jail them for incompetence I wonder?

You will be pleased to know Gary that I dropped my wife and daughter at the airport this morning to catch separate flights to Brisbane. My daughter is flying with the SA U18 netball team with Qantas for the National Championships this week. Obviously the SA Netball Association got a good group deal with Qantas. My wife and another mum were flying with Virgin because they could fly for $380 return when the best Qantas could do was $676 return. Wonder what Compass and Ansett would have offered? Snap out of it Observa- you're living in the past again you silly old fart!

Oh! I almost forgot to mention for your benefit Gary, seeing as you're a South Ozzie. Don't pull up at the temporary Virgin terminal at the end of the International terminal like I did. Virgin have moved into the previous Ansett domestic terminal now. Apart from the Virgin signs, you'd swear you were travelling Ansett.

What is needed is democratic control of the economy. Neither the 'free market' (ha ha ha, history just get's thrown in the dustbin of course with the 'blank slate' economy where we all started equal) nor the 'democratic centralism' (no, no stop, it my sides are hurting) of the command economy can provide it. Nor can Social Democracy which leaves both bureaucratic and corporatist hierarchies intact. Instead of throwing up our hands in shock and then keeping the same systems in place, changes, in my view quite radical ones, are needed.

Until political power is firmly rooteed in ever day life and not something left to politicians we will see the same old same old. Until the workplace is democratised and our lives become less compartmentalised, morality or ethics will continue to play a limited role in determining the behaviour of those who like to feed us the crumbs from their table.

For all you doomsayers of capitalism, read Pr. JQ's blog titled 'New on Website II' and particularly my last comment where I unearth a shocking abuse of corporate power from The Advertiser. Seems like the representatives of public servants interests are on the ball even if some public servants are not.