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

governing the economy « Previous | |Next »
March 26, 2009

"We have to clean up the banking system" is the refrain from politicians and policy advisors as they gear up to the G20 Summit, to discuss the reforming the governance of the global economy. The Summit will probably achieve very little, but they will present the face of consensus and warn about the need to avoid protectionism.

We do need to remind ourselves that very few of the country's economic experts (market economists who are representatives of financial institutions) foresaw the global financial and economic crisis that is now upon us. Most of them thought that the global economy was working well and needed nothing more than some tweaking here and there since the invisible hand of the deregulated market would continue to do its thing etc etc.

BellSbailout.jpg Steve Bell

The reality is that the culture of financial capitalism is rather rotten. How could How could so many economic experts have been so mistaken something as significant as the global financial and economic crisis? How come they didn't see the flaws in the neo-liberal mode of governance?

The shift is to governance of the conduct of a population rather than ideology of the free or unregulated market. Neo-liberalism, on this account, is a mode of governing a population, not a fundamentalist belief in extreme capitalism and excessive greed; a mode of governance of an economy that is currently undergoing a major restructuring.

The market economists, along with the economic experts in the Obama administration (eg.,Timothy Geithner, Larry Summers), remain deeply committed to Wall Street and its economic mode of governance, and they assume that when the crisis is over, everything will return to normal. Until then, the government must support finance sector at all costs and the taxpayer foots the bill.

| Posted by Gary Sauer-Thompson at 7:52 AM | | Comments (4)


Are the fat cats (investors) eager to feed off the carcass of the US banking system? They must have the stomach for the risk since the government is shouldering most of the risk for them.

"...very few of the country's economic experts (market economists who are representatives of financial institutions) foresaw the global financial and economic crisis that is now upon us."

Yes the STUBBORNLY failed to see this debacle for about a decade. They AGGRESSIVELY avoided seeing a multi-trillion dollar bubble, exploding debt and a collapsing manufacturing base.

In the same way I constantly miss the subtle connection between that the bathroom scales tell me and my lack of aerobic fitness.

And it's funny (no, not really) that my 15yo daughter was taught a few months ago, that two of the reasons for the Soviet Union's failure were cronyism and a deeply flawed economic model.

How do I tell her....

How do you tell your daughter, mars?

Quite simply.

Cronyism can readily occur, regardless of the economic system in which cronies operate. Two economic models may be flawed, but with quite different flaws from one another. The Soviet flaw was believing that detailed central planning and control of the economy would lead to prosperity. The American Republican flaw was the opposite: believing that virtually no central control and planning, and leaving it to market forces, would lead to prosperity.

And they both did lead to prosperity - until they didn't.