The great screw up and the case for intellectual self defence

“Casino capitalism”, “turbo capitalism”, “robber barren capitalism”, “the greed machine” - call it what you will - the corporate financial orgy of recent years has come to a shuddering halt.

In the midst of the current international financial crisis - catastrophe might be a better word - we have witnessed the astonishing spectacle of one of the leading apostles of free market orthodoxy, George W. Bush, transforming himself overnight from laissez faire fundamentalist to a proponent of public interventionism.

The $700 billion bale-out of the bloated but hollow financial markets flies in the face of all that those philosophical mentors to neo-conservative Washington - Milton Freedman and Frederick Hayek - would have envisioned for the US economy. The (flawed) assumption that “spontaneous order” emerges from an unregulated market has led to an economic nightmare the like of which we have not witnessed and which could spell the end of US financial supremacy.

The problem with the economic fundamentalists of this world is that it is almost impossible to “disprove” their flawed ideology because if industries collapse and share prices tumble, well, it’s a sign that the market is correcting itself; but when the market is on the rise the system is working - hey presto, any way you look at it, capitalism works! All this is reminiscent of the Pythonesque logic of the ducking stool whereby if an alleged witch drowns then she was innocent, but if she survives, well, she is clearly guilty and deserves to be burnt at the stake.

The latest capitalist calamity suggests that market extremism is now a failed ideology: its assertion that wages had to be “freed up” and set by market conditions led, in America, to millions of “working poor” at the same time as the captains of industry pocketed obscenely large bonuses. In effect, the myopic decision-making of CEOs has thrown the world economy into acute crisis while they are being bailed out to the tune of billions of dollars, with many of them clutching on to golden parachutes.

Faced with all this we might ask: where oh where is Francis Fukuyama when you don’t need him? His more than decade old pronouncement on the “end of history” suggested the triumph of US style capitalism - a claim that now sounds like the ranting of deranged evangelist. Fukuyama has of late back-peddled and accused his once neo-conservative buddies of overcooking the economy, Iraq (etc). But despite his efforts at ideological reconstruction, he will be remembered as a prime advocate of the lemming-like rush into world-wide market fundamentalism.

With all the talk of global depression, financial collapse, bankruptcies, economic implosion, bale outs and rescue packages - not to mention the fact that millions of people around the world will lose savings and be plunged into poverty - it is tempting to slide into eschatological rhetoric.

The doom and gloom merchants are already out in force like a gaggle of grim reapers forecasting the end of the world as we know it. Infused with a kind of I-told-you-so self righteousness they point to the imperial overstretch in Iraq that has cost the US $3 trillion (or about $10 billion a month), as well as a culture of corporate greed fueled by the US government’s corporate tax cuts and a conspicuous failure to effectively regulate board room mavericks and rapacious share traders. Greed was not so much seen by the neo-cons as good but more as indispensible to the “success” of the US economy, which was already in trouble well before the current meltdown.

The corporate malevolence that was Enron should have given us a big clue about what was going on across Greedland. CEOs on big fat “salary packages” were cooking the books and assuring worried shareholders that all was sound when in reality, the corporate giant was already cactus.

Over the years it has also become apparent how precarious the US economy had become with its over-reliance on international loans to sustain a bloated, unsustainable lifestyle. The picture of anxious investors staring wide-eyed at digital boards announcing the latest bank collapse or decline in share values is a reminder of what casino capitalism means for those on the receiving end. The prophets of doom argue - and there are plenty of books proclaiming the end of the American Empire - that the classic destructive formula of military overreach and a collapsing financial system are the harbingers of imminent collapse.

They claim that we are on the threshold of a new era. But before we accept the end of US style capitalism it may be worth considering how the same system has survived other such problems - indeed, some commentators have pointed to the fact that economic recession might do the US the world of “good”! But something is very different about today’s global economy and the US’s place in it.

The rise of China, Russia, India, Brazil and other economies - not to mention their growing military strength - has to some extent diminished the US’s claim to superpower status. The fact that the US is so heavily indebted to China and bogged down in Iraq speaks volumes about the changing nature of international relations and the shaky foundations upon which US power is built.