Het kapitalisme onder vuur, waarom eigenlijk? (Vincent De Roeck)

What went wrong and, rather more importantly for the future, what did not? (…) One hundred and sixty five years ago, a Scottish businessman set out his plans for a newspaper. James Wilson’s starting point was “a melancholy reflection”: “while wealth and capital have been rapidly increasing” and science and art “working the most surprising miracles”, all classes of people were marked “by characters of uncertainty and insecurity”. Wilson’s solution was freedom. (…) Ever since, The Economist has been on the side of economic liberty. (…) Now economic liberty is under attack and capitalism, the system which embodies it, is at bay. (…) All the signs are pointing in the same direction: a larger role for the state, and a smaller and more constrained private sector. This newspaper hopes profoundly that this will not happen. Over the past century and a half capitalism has proved its worth for billions of people. The parts of the world where it has flourished have prospered; the parts where it has shrivelled have suffered. Capitalism has always engendered crises, and always will. The world should use the latest one, devastating though it is, to learn how to manage it better.

(…) Even if it staves off disaster, the bail-out will cause huge problems. It creates moral hazard: such a visible safety net encourages risky behaviour. It may also politicise lending. (…) From the taxpayer’s point of view, it might make sense to limit dividend payments to other shareholders until the government’s preference shares have been paid off. But governments need to avoid populist gestures. Banning bonuses, for instance, would drive good people out of companies that badly need them. (…) Given this, it is inevitable that the line between governments and markets will in the short term move towards the former. The public sector and its debt will take up a bigger portion of the economy in many countries. But in the longer term a lot depends on how blame for this catastrophe is allocated. This is where an important intellectual battle could and should be won. Capitalism’s defenders need to deal with two sorts of criticism. (…)

The weaker, populist argument is that Anglo-Saxon capitalism has failed. Critics claim that the “Washington consensus” of deregulation and privatisation, preached condescendingly by America and Britain to benighted governments around the world, has actually brought the world economy to the brink of disaster. (…) In fact, far from failing, the overall lowering of “barriers to intercourse” over the past 25 years has delivered wealth and freedom on a dramatic scale. Hundreds of millions of people have been dragged out of absolute poverty. Even allowing for the credit crunch, this decade may well see the fastest growth in global income per person in history. The free movement of non-financial goods and services should not be dragged into the argument - as they were, to disastrous effect, in the 1930s. (…) A second group of critics focuses on deregulation in finance, rather than the economy as a whole. This case has much more merit. Finance needs regulation. (…)

The failures of modern finance cannot be blamed on deregulation alone. After all, the American mortgage market is one of the most regulated parts of finance anywhere: dominated by two government sponsored agencies, Fannie Mae and Freddie Mac, and guided by congressional schemes to increase home-ownership. The macro economic condition that set up the crisis stemmed in part from policy choices: the Federal Reserve ignored the housing bubble and kept short-term interest rates too low for too long. The emerging world’s determination to accumulate reserves, especially China’s decision to hold down its exchange rate, sent a wash of capital into America. There was something of a perfect storm in which policy mistakes combined with Wall Street’s excesses. (…) Heavy regulation would not inoculate the world against future crises. Two of the worst in recent times, in Japan and Korea, occurred in highly rule-bound systems. What’s needed is not more government but better government.

(…) Sadly another lesson of history is that in politics economic reason does not always prevail - especially when the best-case scenario for most countries is a short recession. But it need not be so. If the bail-outs are well handled, taxpayers could end up profiting from their reluctant investment in the banks. If regulators learn from this crisis, they could manage finance better in the future. If the worst is avoided, the healthy popular hostility to a strong state that normally pervades democracies should reassert itself. Capitalism is at bay, but those who believe in it must fight for it. For all its flaws, it is the best economic system man has invented yet.

Citaten uit het editoriaal “Capitalism at bay” in The Economist.

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SIR - This financial crisis was triggered by the massive credit expansions of central banks in the U.S. and Europe who fuelled the real estate boom and caused an overdrive in consumption and investment - an unsustainable combination according to Austrian business cycle theory. Next to the terrible monetary policy of Greenspan’s heavily politicised Federal Reserve board, also bad left-wing policy decisions (e.g. cheap mortgages and houses for the poor) are to be blamed. The bail-outs have the intention to make the downturn of the financial market less apparent, but unfortunately, and this even regardless of the numerous moral hazards present, they are also hurting the liquidation of bad businesses and bad investments, which is an inherent process to business cycles in a sustainable market economy living through a downturn. This crisis is hence not announcing the death of capitalism per se, but rather the death of monetarism and supply-side economics, as already predicted by Austrian economists decades ago. Only a sound money system and a true free market can save the global economy.

Deze reactie werd als lezersbrief bij “The Economist” ingezonden.