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January 2, 2009
The economic consensus is that 2009 will be worse than 2008 for Australia but that things are basically fine. They could have been worse. There is no place for pessimism. As an editorial in the AFR said:
Yes, the road ahead looks difficult. But this is no time to abandon our faith in the capacity for enterprises and markets free of oppressive state intervention to reinvent ourselves and bounce back. Human ingenuity will prevail, confidence will eventually return and the wheels of commerce will spin again. There is too much evidence that the world, despite periodic setbacks, continues to progress
Interesting isn't it. The defence of free market capitalism now depends on faith not on reason. Reason cannot do the job any more given the global financial crisis and its aftershocks on the economy. So faith is called in to plug the gaps whilst the progress narrative provides the justification for the faith.
Farr, capitalism
Were the reasoning any more contorted it would be a circus act by aged mime artists. What needs to be pushed into the background is the idea of equilibrium: that market activities would balance themselves out and generate positive-sum outcomes all round.
So what of 2009, the immediate future? The AFR says:
Climate change is the challenge of the 21st century, daunting but hardly insurmountable. We have the means and must will the end. But overcoming the financial crisis is the immediate challenge.
It's all faith and will isn't it. We will survive etc. What ever happened to hard edged neo-liberal economics? What does the end mean in "willing the end"?
There is no hint of contradiction in this account: ---the bailing out of companies and banks to save capitalism by the state is statism, which undermines the bottoms-up innovation by entrepreneurs that is suggested by the phrase "human ingenuity".
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