Monday, June 15, 2009
Capitalism: The Salvation of Itself?
Fareed Zakaria's piece in Newsweek addresses, among other things, how the response to the economic crisis has been firmly within the realm of capitalism, rather than wholesale adoption of socialist principles. Furthermore, it appears to him that the worst is over, and that now begins a slow, painful process towards recovery. The fearful crystal ball conjecturing of well-renowned economists and important figures appears to have been more severe in rhetoric than in reality. I am waiting any moment for a conspiracy theory to emerge that it was known beforehand by major world leaders that this recession would not be nearly as destructive as had been predicted but that the only way towards massive, desperately needed reform was to collectively scare the hell out of the masses. It's a not entirely unfounded view, though as I analyze the situation more closely I find that what is more plausible is that we averted major catastrophe just in time before meltdown.
This is, of course, not to say that times have not been tough. Indeed, finding a job has been ridiculously difficult for me and others. I have noticed firsthand just what happens when states themselves and government-owned institutions that depend on federal, state, and local tax revenue find themselves with obscenely high budget deficits; they are forced to cut costs and cut corners as a result and basic services suffer as a result. Teachers end up having to buy school supplies out of their own pockets. Roads go unpaved. Freezing hires go into place, forcing existing workers to work harder and cover the responsibilities of tasks which would normally be delegated to two separate people. The cost of many commodities goes up when either public or private coffers are depleted. Pay cuts go into effect and benefits are pruned judiciously. Many employers now only offer medical insurance to their employees and have rescinded the ability to invest in a 401K or other insurance plans.
I can't help but notice we seem to almost wish for the end of times when conditions turn sour. At the beginning of this recession, shortly before the Presidential Election, I saw doom and gloom laden predictions everywhere in the media, the blogosphere, and in conversation with strangers. Behind each of those sentiments was a hope that, if conditions worsened enough, we would all be aroused from our collective stupor to make the change we need. Adversity, as conventional wisdom goes, keeps people from falling asleep at the switch. Tough times require immediate action.
Good times always make people complacent. As the cost of capital sank over the past few years, people became increasingly foolish. The world economy had become the equivalent of a race car—faster and more complex than any vehicle anyone had ever seen. But it turned out that no one had driven a car like this before, and no one really knew how. So it crashed.
Any sensible person knows this instinctively. It falls under the category of sound wisdom. I wouldn't disagree at all that most people are resistant to change and the topsy-turvey state we are in at the moment is indicative of that. These are strange times and stranger still are the ways I have seen people act in response to so much newness in such a relatively brief period of time. It is as if we are all gingerly walking through a field of landmines, hoping not to detonate one. The old adage, "be careful what you wish for..." seem appropriate. But if these be times that we are aiming to put into place reforms and regulations inside ourselves, then let us make the most of them.
Most of what happened over the past decade across the world was legal. Bankers did what they were allowed to do under the law. Politicians did what they thought the system asked of them. Bureaucrats were not exchanging cash for favors. But very few people acted responsibly, honorably or nobly (the very word sounds odd today). (Italics mine). This might sound like a small point, but it is not. No system—capitalism, socialism, whatever—can work without a sense of ethics and values at its core. No matter what reforms we put in place, without common sense, judgment and an ethical standard, they will prove inadequate. We will never know where the next bubble will form, what the next innovations will look like and where excesses will build up. But we can ask that people steer themselves and their institutions with a greater reliance on a moral compass.
And therein lies the problem. The question that remains is whether or not excess and the resulting complacency which goes hand in hand with it breed immorality and unethical behavior. If it does, then perhaps, as Thomas Jefferson put it, "I hold it, that a little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical." Familiarity breeds contempt, as the proverb goes, and this might be true if we are to maintain economic health as well.