'Today's capitalism has run its course'

You bet it has.

"The Scandinavian countries have for many years practiced a blend of popular socialism and capitalism and as a result they have attained educational excellence, economic prosperity and guaranteed government healthcare for every citizen."

YES!

America, Australia, Great Britain and others MUST develop a much more socialistic form of capitalism, which moves right away from market-force dominated economies and into the arena of strong government regulation, and a much better conversion of wealth into gains for the whole a of a country's populace, and much more equitably.

And it has to be done within a paradigm of sustainability, which necessitates moving right away from continuous growth.

These are the basics.

So what is the chance that the current financial crisis, along with climate change and other huge environmental issues, are going to make us change our errant ways and adopt this sort of governance?

Ludwig, I believe the correct description would be "fat".

Good article.
Sadly, the arguments in this area are usually very 1 dimensional and dogmatic: Don't like corrupt, full-on Howard/Bush capitalism? "Well we tried the alternative and communism lost! So there!".
Maybe now the examples of the Scandinavian countries will be seen as an example of the *balance* that is needed.
Then again we are still fighting "war on drugs" and "war on terror" that are ultimately causing the grief they are trying to solve...so Bugsy is probably right.

Ludwig, the answer is "Buckley's".

David

As it is said to be the Rothchilds with the British government and the Rockefellers with the American, who steer the way for capitalism, you can bet your life they've got their eyes and minds on what is happening now.

Can it be that why they are not mentioned, is they also have the global medias all by what is close to the short hairs?

Have Fun, BB, WA.

Hi Bushbred,

You are dead right the Rockefellers do steer the US economy and capitalism.

They have more than their eyes and minds on the current situation.

They are up to their ears in it.

They and their banker mates are the US Federal Reserve and it is they who employ Bernanke.

Sadly many of those who are championing Bernanke's Bailout don't know that unspoken fact of US financial life.

As for things changing ...well where's that snowball and hell!

All that is occurring at present is a correction to the system. It happens periodically over the decades. Currently it is the markets way of expunging the social engineering that took place when the Democrats created Fanny Mae and encouraged the borrowing of money to minorities, who normally ouldn't possibly attain home ownership, in an endeavour to enrich them. Many people will go broke and many will lose their homes. The rest of us will cope for 4 or 5 years and during that time will recover our losses. Those who lose their homes will be those who probably couldn't afford them in the first place and those who lose their fortunes are those who probably obtained them by trading in 'toxic' mortgages, derivatives and short selling.
Of course the market took advantage of these loose and corrupt practises. The social engineers refused to reverse or even put limitations on these corrupt practises when the Democrats voted against John McCains sponsered bills, that would have legislated reforms to Fanny Mae and Freddie Mac, in the Senate in 2006.

Oh the banks will be mauled and economies based largely on producing consumer goods or digging up minerals will suffer most.

There is a very good article in Yesterdays Australian by John Montgomery.

Dear Author Bashir,
Your lines - "The Scandinavian countries have for many years practiced a blend of popular socialism and capitalism and as a result they have attained educational excellence, economic prosperity and guaranteed government healthcare for every citizen." - were ever an ideal and are, the core, the core of your reasoning.

I am old enough to remember when some Australians once believed we could achieve that here.

Unfortunately that cannot be for the simple reason that Aussies just have far too short an attention span. They turned their back to Gough and let a coup happen.
Kevin'll probably be next if he doesn't have a stroke first, the poor man.
I'm told to be positive writing on these pages - so I shall.
Clearly these last few weeks we've seen enough of the adversarial, inflexible game in politics - then Bingo goes Wall Street.

I'd urge Australians to back off from greed - stop pretending we can play with unsecured credits (Monopoly money is more honest)and get back to thinking about true quality of life (a lovely term Bill Mc Mahon taught me).

The historical fact is that capitalism, with all its shortcomings, is the only system that has increased the "economic welfare of every individual", and ironically it was the wealthy few who engendered the economic prosperity of the masses. It's the logic of the system itself that creates this reality. For if the capitalist system of production is based on mass production then the corollary to this is mass consumption.

And who will take the helm after the present failure of the system other than rejuvenated capitalism based on the Schumpeterian principle of entrepreneurship and "creative destruction"?

http://avant-gardestrategies.typepad.com

Although capitalism appears to increase the wealth of each individual, there are other costs.

It's a system that depends on ever-increasing markets and limitless resources to feed itself. When either of these disappear, it's in trouble.

The increasing resource dependency also makes it a system that actually destroys that which makes it possible for it to exist in the first place.

It also needs social hierarchies to create an aspirational component so participants can have something to strive for yet simultaneously needs to maintain a high level of consumers and an army of workers.

There are only two kinds of people who believe that something can keep growing forever - madmen and economists.

Excellent posts, Ludwig and Wobbles, agree totally with every word.

Imagine what could be achieved if we could harness the same sense of urgency and channel the same energy, currently being expended in saving Wall Street, into saving the planet!

Depressingly, the 'wisdom' I'm hearing filtering through at the moment is that we actually need to put climate change abatement measures on hold while we focus on getting Wall Street cranked up again.

Bashir

"..it seems that leaders of the capitalist world entertained their citizens and the entire world population by extrapolating the menace of climate change while hiding the deluge coming to rob them of their homes and hard earned pensions."

Personally, I think this is drawing rather a long bow, but you could well be right. I think you should have drawn a distinction though between those you accuse of this deliberate deceit and the genuine environmental crusaders like Al Gore, especially when he in particular is dubbed as being part of the establishment elite. I'm not sure you intended it, but your statement could also I think be read as downgrading the importance of global warming, which would be just plain wrong.

Global warming and the current 'financial global overheating' are both symptoms of the same malady. The same solutions - some limits on growth, some strong regulatory control, some emphasis on equity and some retreat from credit-fuelled consumption - would bring both problems back under control. But unfortunately the chance of this ever happening, as Bugsy said, is 'fat'!

Very perspicacious Bronwyn.

David

Bronwyn

Agree with you, Ludwig and Wobbles.

I am staggered at the speed with which the US Fed Gov acted on this - I'm sure that the Hurricane Katrina survivors would've been really impressed on how, when it comes to the money market, action is always taken.

And of course moving across to sustainable living - now put on the back burner.

Listening to the radio, apparently a paltry $3Billion would feed all children in Third World countries, where the Freak are our priorities? Must save the wealthy at all costs - literally!

I'd like to see this:

"1. APPOINT A SPECIAL PROSECUTOR TO CRIMINALLY INDICT ANYONE ON WALL STREET WHO KNOWINGLY CONTRIBUTED TO THIS COLLAPSE. Before any new money is expended, Congress must commit, by resolution, to criminally prosecute anyone who had anything to do with the attempted sacking of our economy. This means that anyone who committed insider trading, securities fraud or any action that helped bring about this collapse must go to jail. This Congress must call for a Special Prosecutor who will vigorously go after everyone who created the mess.....

2. THE RICH MUST PAY FOR THEIR OWN BAILOUT. They may have to live in 5 houses instead of 7. They may have to drive 9 cars instead of 13. The chef for their mini-terriers may have to be reassigned. But there is no way in hell, after forcing family incomes to go down more than $2,000 dollars during the Bush years, that working people and the middle class are going to fork over one dime to underwrite the next yacht purchase....

25% of major U.S. corporations currently pay NO federal income tax. Federal corporate tax revenues currently amount to 1.7% of the GDP compared to 5% in the 1950s. If we raise the corporate income tax back to the level of the 1950s, that gives us an extra $500 billion."

From Michael Moore. http://www.michaelmoore.com/words/message/index.php?messageDate=2008-10-01

Yeah, "fat chance" and "buckleys" to that ever happening.

And consider the following from Tom Wolfe, they're getting away with it:

http://www.nytimes.com/2008/09/28/opinion/28wolfe.html?th&emc=th

The need for the US financial industry to be bailed out doesn't instil must confidence.

It's not as if this is the first time it's ever happened and probably won't be the last.

http://www.time.com/time/nation/article/0,8599,1844980,00.html

Profoundly amazing that those excited enough to comment cannot get past the concept that we come into the world buck naked and bereft of any sort of goods whatsoever - then leave the world in more or less exactly the same state. (Not a problem. I send my most dearest away with 'grave goods', but hopefully nothing the funeral director would be incited to filch.)

Forgive me people.
I reached adulthood in the mid 1970s.
I suppose I was fortunate and never had to fight for a roof over my head or for my young family.

Yet I have seen the age of greed and the players in that game attempting to strip even that from those I love.

How might I say it in order to get the message across.

What has been happening in the US these last few days is in result of the collapse of an immense 'Greed machine' that has finally become so completely dishonest and unmanageable that it has spun itself apart.

The banks that folded in the States were not supporting housing for the less advantaged - rather than exploiting the less advantaged for the gain of the principals.
It is well past time that Australians rediscovered virtue within their immediate community, rediscovered their extended familys, worked this way together and DEEP-SIXED the exploiting bastards who have caused us all so much grief for generations - before the same happens here.

Fortunately for us, our banking/finance system does at least operate with a modicum of regulation. The fact that this was lacking in the USofA has been largely the cause of their undoing. There has been no one to "keep the bastards honest". That being said, our own regulator seems to have his work cut out keeping some of our bastards honest too without mentioning any names.

David

There once was an immensely pleasing scenario presented in a 'Science Fiction' offering. It was written by the (unfortunately deceased and much missed) Douglas Adams and featured, amongst other things, a starship populated by the worthless.
I'm reasonably confident thatAdams had created quite a listof utterly useless bastards for the 'faux first flight', including merchant Bankers'.
Why cannot we accept that this is the way it is.
Or in other terms 'confidence tricks' cannot work if the punters have finally worked out that they have sussed out the 'tricks'.

Ludwig, mate, I'm a bit late, but your suggestion about
capitalism needing to be more socialistic as in Sweden and Norway, reminds me of the Keynesian mixed economy which not only helped to save us during the Great Depression, but Keynes' ideas carried on pretty well till the end of the 1970s when the 1920s neo-free-market get big or get out came back in.

Before he died before the end of WW2, Keynes also figured in talks about the future Marshall Plan, giving reminder how he was shut out after WW1 for predicting trouble for treating a beaten Germany so harshly.

Having a good season round Dally' for a change, Ludwig -

Keep up the Good Work, cobber,

Regards, BB, Buntine, WA.

Its a good point Bushbred - our government's management of the economy (in Australia and elsewhere) was arguably a lot better prior to about the 70s.

When I say that it now needs to be more socialistic, what I really mean is that it just needs to be a whole lot more sensible, a bit like the old days before the big-business moguls and the growth-and-short-term-profits-above-all-else dictum really took hold.

.
I've just passed through the northern wheatbelt of WA on my round-the-country trip. It is indeed looking good. Bumper wildflower season too.

cheers

Sounds delightful where you are Ludwig. :)

Insightful comments from everyone. There was an article in this week's Canberra Times which emphasised the need for a "dose of socialism" to save capitalism. Ironic to say the least. The excesses of capitalism can only be tempered by ensuring that some of our most important facets of life are not ruled by profit motive or greed.

Why have our perceptions and mindsets been so brainwashed against the good of socialism in our Social Democracy.

There is hope on the horizon that we will learn from the financial crisis in the US.

Maybe we can forge ahead with a new sense of community, a fair go and caring for those most vulnerable. Rather than the stark consumerism and individualism that has become characteristic of our modern lives.

Pelican

I can only echo your sentiments.

I too hope that the fiasco of 'greed is good' gives way to a more common sense approach to business. That self-regulation has finally been proven not to work.

The sad part is that it will be 'Main Street' which pays for the indiscretions of 'Wall Street'. I would be happier if the true culprits; politicians and corporate 'high-fliers' be branded as the criminals they are. I can't see this happening except at the level of a few scapegoats.

I find it interesting how hesitant many people are at using the word 'socialism' - just goes to show how brainwashed we all have become.

It was Maynard Keynes who stood by the Mixed Economy, which even Adam Smith father of Lassez-faire supported when he said that certain institutions needed to be always owned by government.

Looking at our problems right now, one could well ask why we have accumulated far more multi-billionares than ever?

bushbred

"Looking at our problems right now, one could well ask why we have accumulated far more multi-billionares than ever?"

I agree, it's a good question and it leads to many others. For example, how much tax have these billionaires avoided paying? And how many government projects would that money have funded?

For those of you who mightn't have read Fractelle's link, Michael Moore's take on wealth disparity in the US is worth repeating.

"The richest 400 Americans -- that's right, just four hundred people -- own MORE than the bottom 150 million Americans combined. 400 rich Americans have got more stashed away than half the entire country! Their combined net worth is $1.6 trillion. During the eight years of the Bush Administration, their wealth has increased by nearly $700 billion -- the same amount that they are now demanding we give to them for the "bailout." Why don't they just spend the money they made under Bush to bail themselves out? They'd still have nearly a trillion dollars left over to spread amongst themselves!"

Now if MM could just land a job as advisor to President Obama..."

I don't think we are witnessing the end of capitalism at all. After enduring several weeks when socialist europeans railed at the excesses of American capitalism we now find that the european banks, particularly including scandinavian banks (seen whats happening in Iceland at the moment?) are in more trouble than the Americans.

What we are really seeing is the end of a period that started with Keynes' dictum of "the euthanasia of the rentier". Saving money was actively discouraged, every incentive was used to persuade people to borrow, and every tactic was employed to debauch the lenders. No wonder that no-one saved. Now this doesn't matter if the money borrowed comes from others in the same country, as you can legally defraud those lenders. However borrowing from foreigners is much more dangerous, as they are outside your political control. Readers of the "Asia Times" will know that the strategy known in China as the "nuclear option" is for China to dump $2 trillion in US Treasury Bonds onto the market at the same time, sending interest rates up to 150% and demolishing the US economy.

This current crisis could well be made much more serious by its conjunction with peak oil and the retirement of the baby boomers.

Twice in our history we have had our foreign debt called in, in 1893 and 1931, when the Federal Government had to default on its bonds. It may be about to happen again.

Our current gross foreign debt must be around $1000 billion, mostly in short dated securities, whereas our overseas assets of around $400 billion are much less liquid. Our balance of payments deficit is running at around $70 billion per annum. At least, this time, thanks to John Howard, we have no Federal foreign debt.

Albert Einstein said that the most powerful force in universe was compound interest.

When, Oh when, will people realise that the final word in economics was uttered 150 years ago by Mr Micawber?

Should be fun.

The world has a great opportunity to adjust its economic systems to move to a fairer, sustainable society. The current turmoil gives the incentive to do something. It will be a pity if miss this opportunity.

There are alternatives to relying on consumption for growth. A much more direct way is to rely on investment in ways to save the planet to provide the economic growth we need to fix other problems.

This is outlined in this entry to the google competition on ideas to help people.

http://cscoxk.wordpress.com/2008/10/19/a-competition-for-ideas-to-benefit-the-world/

As one going on 88, and from my own experience, feel that the Keynsian mixed economy favoured the average Aussie farmer much better than the return to the 1920's style - get big or get out neo - free-market.

Certainly there was more contentment for those who enjoyed sport and were'nt out to make a fortune.

Regards - BB, Buntine, WA.