Get ready for the Millenarian Bubble
Why did our leaders fail to foresee and prevent what is now proudly touted to be the greatest financial crisis since the Great Depression, a crisis that happens only once in one-hundred years? The financial leadership, according to our wisest political-economic statesman, George Soros, had been deluded by their fundamentalist faith in the ability of a free market to reestablish equilibrium when it tips over, believing that the market will right itself of its own accord, if not by operation of the invisible hand, and go merrily along the way supplied on demand and demanded by supply, that demand equals supply.
Basically, the market fundamentalist wants his market to be free, to be a law unto itself, or, in effect, lawless, so that everyone can get and keep or dispose of whatever they can get their hands on while, most importantly, the redistributive law of rational fairness keeps its mitts off. Ironically, laws are needed for lawlessness to exist. Of course where might is right, the mightiest economic animals will in effect rule the business jungle, and therefore the political world under one guise or another, hence their ideal government is their business.
The truth of the matter of separation of church and state is that there is no church without its distributive politics nor is there a state without its religion or worship of power. The religion of the market fundamentalist is the economic cult. Some critics call it the religion of selfishness or greed. Economics is exalted by its enthusiasts over politics, or is established as the underlying motive for all political systems, or may even be perceived as an apolitical, amoral, or scientific way of life. Hail, Homo Economicus! Everyone should be raised as an economic animal to freely struggle for survival in the jungle economy – the struggling results in natural order. The highest aspiration a philosopher could have nowadays is to produce economists. In 1848, Frederic Bastiat illustrated the preference well in his famous essay, Academic Degrees and Socialism:
‘And why do political parties aspire to take over the direction of education? Because they know the saying of Liebnitz: “Make me the master or education, and I will undertake to change the world.” Education by government power, then, is education by a political party, by a sect momentarily triumphant; it is education on behalf of one idea, of one system, to the exclusion of others. “We have made the Republic,” said Robespierre; “it remains for us to make republicans” – an attempt that was renewed in 1848. Bonaparte wanted to make only soldiers; Frayssinous, only religious zealots; Villemain, only orators; Guizot, only doctrinaires; Enfantin, only Saint-Simonians; and I, who am indignant to see mankind thus degraded, if I were in a position to say: “I am the state,” would perhaps be tempted to make only economists.’
Bastiat objected to the emphasis on classical education of his day because he perceived the classical Greek and especially the Roman way as an essentially vicious way, one that cultivated predatory national socialism or fascism, and even worse, communism. ‘Ever since God pronounced this judgment on men: “In the sweat of thy face shalt thou eat bread,” earning a living has been for them so great, so absorbing an affair that, depending on the means that they employ to provide for their existence, there must be great difference in their manners, their opinions, their ethics, and their social customs. People that live by hunting cannot be like people that live by fishing, nor can a nation of shepherds be like a nation of sailors. But even these differences and nothing in comparison with those that must characterize two nations of which one lives by labor and the others by theft.’
Bastiat associated the thieving life with Roman immorality, with a Rome depraved by slavery and patriotic war. The laborious or economic life, then, is the peaceful way to live. Then let us be economists instead of soldiers, our motive profit instead of plunder. And let us not believe that free trade follows the battle flag under which it is imposed on the losers, or that economics is simply a nonviolent form of a selfish and greedy war of all against all, guided by the invisible hand of the old god of war, in the interludes between inevitable wars.
Professor Gary S. Becker, in his 1992 Nobel Lecture entitled ‘The Economic Way of Looking at Life,’ wants to divorce his perspective from the Marxian notion “that individuals are motivated solely by selfishness or gain.” His way, he stated, “is a method of analysis, not an assumption about particular motivations. Along with others, I have tried to pry economists away from narrow assumptions about self interest. Behavior is driven by a much richer set of values and preferences.” His analysis “assumes that individuals maximize welfare as the conceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic. Their behavior is forward-looking, and it is consistent over time.”
Our analysis of his statement gives us cause to believe that if someone can find a different way of saying the same thing, so that her statement does not seem platitudinous, she might win a Nobel Prize. And the Pulitzer Prize can be won by historians who merely restate original sources in a different manner. Our history might be ‘The History of Organized Greed, its Virtues and Vices.’ We have our desires, and we categorize and judge them according to the goals consciously, subconsciously, and unconsciously pursued. Rational or rationalizing human beings are moral, meaning judgmental creatures who think and behave customarily, according to their mores. There is no such thing as an entirely objective or amoral social, or political or economic science. Behavior including the symbolic action called thinking proceeds from desire, and desires are rooted in the so-called self; hence altruism is impossible without selfishness. Desire is endless, generally speaking, in the will for eternal life, but we may measure desire in the realization of certain limited objectives, our so-called desires, which are desired in the presumably scarce time we have in the face of eternity.
The professional economist, then, with symbols in hand, devises a methodic, usually statistical approach to assess or weigh the relative degrees of success we might have in obtaining the objectives of our “forward-looking behavior,” and, given enough data and analytical skills and some luck, he might predict the outcome of certain behaviors and recommend how certain goals, even the happiness of the greatest number, might be better obtained. The success of an economist is not measured by the accuracy of his predictions, but by his tendency to abide by the consensus of his peers, a moral convention that expects more of the same under business as usual, but which might be wrong in the long run, especially when the trend is taken to its extreme. Market fundamentalism, like other extremes, for instance Islamism, is one such wrong. Market fundamentalism is being severely corrected as we speak, and at great cost to our race if not considered as an investment in the future so that history might not be repeated. The dissident minority of economists, who were dead set against market fundamentalism because of its immoral radicalism, are now, almost too late, taking front stage
Market fundamentalism believes that wealth has a natural right to rule. Wealth is literally worshipped, and people scrape and bow to its great possessors. The worthy, meaning those with high net worth, will naturally rise to the occasion to preside over the economy. They are principled to amass as much wealth as they can; and, since they cannot take their fortune with them, they may leave it to their family or cats or to the tax collector; or they may leave behind monuments to themselves, perhaps raised in the name of the Humanity if not the Invisible Hand, to purge them of selfishness. The Mughals forbade inheritance; canals were donated to further commerce; and the sight of the Taj Mahal now sooths suffering labor. In any event, if wealthy individuals were not worthy, how could they be worth so much? It would behoove the world to publish everyone’s net worth annually, and require people to display their net worth in a common denominator on their foreheads, that competitors be stimulated to amass more capital.
Now the economy is the market fundamentalist’s church, over which private property presides in the name of money, and he wants no separation of church and state. Business is his politic and politics must promote his business, not hinder it, and business is conducted to make a profit. It is in the profit motive that we find the fundamental difference between fascism and communism, the reactionary, totalitarian forms that the unregulated individual will to power spawns – the anarchist, once rid of government, would govern the world. What the free market fundamentalists would have if only he could get it is absolute power, or the power to persist forever without external impedance, but without resistance there would be neither individual will nor world. Every world has its laws, and lawlessness is not the way of the world devised by man; he must intervene to have his way. If humankind does not keep his hand on the wheel and his eye on the general plan, preferring to rely instead on the mutual exploitation of individuals for stability and guidance, expecting everything to be all right as long as every one tries to make a profit at each other’s expense, the vehicle is bound to careen and crash and burn.
“Since they did not understand the nature of the problem,” Mr. Soros told Global Viewpoint editor Nathan Gardels, “that the market would not correct itself – they did not see the need for government intervention. As the shock of the Lehman failure set in, (Secretary of the Treasury Henry Paulson) had to change his mind and rescue AIG. The next day there was a run on the money markets and commercial paper markets, so he turned around again and said we need a $700 billion bailout. But he wanted to put the money in the wrong place, taking the toxic securities out of the hands of the banks. They have finally now come around, with the government buying equity in banks, because they see the financial system is on the verge of collapse.”
Of course Congress, cowering before plunging stock market indexes, afforded discretion, virtually absolute power, to the Treasury Secretary for dispensation of the bailout billions. True charity has no strings attached: he has apparently given almost absolute discretion to the corporate recipients to dispense it as they see fit. He allegedly did not see the financial crisis coming, although his conduct in the private sector helped foment it before he took his public chair and put his hundreds of investment banking millions in a blind trust. It all ready appears that we are about to witness yet another colossal boondoggle, perhaps the greatest privately-led government-orchestrated ripoff of all times. The People’s representatives will no doubt object, for example, that the use of funds from the taxpayers’ purchase of nonvoting stock in banks for purposes other than lending, say for buying other banks, paying dividends and huge compensation, is contrary to the Bailout Act; but if such usages are not expressly prohibited by the Act, the contrariness in spirit is not illegal, and is in fact to be expected given market fundamentalist principles..
Market fundamentalists claim that free-market capitalism is not at the root of the evil end of boom-to-bust cycles – it is only responsible for growth and prosperity. No, the bad government and not good capitalism is the cause of the busts. For example, the Great Depression was simply caused by a U.S. tariff act that caused world trade to shut down in retaliation. In any event, whenever something goes wrong, the government aggravates the wrong by doing something wrongly or by not doing anything at all. Government intervention is a bad thing, but sometimes it is a necessary evil, and even then it is bound to compound the evil.
The market fundamentalists, whose ideologues now possess the highest political and economic offices in the land, make a good half-assed point. Yet Americans are overdue for a change of the guard, and they think they might get it from Barrack Hussein Obama, instead of having another rotation of plundering to see to it that the spoils are more equally shared by the power elite of both parties. Perchance he will appoint George Soros, an expert on bubbles who has a keen sense of social injustice, as Treasury Secretary. If there is no sea change – and we know that people actually hate big changes no matter how much they embrace hypothetical change – Mr. Soros had better start writing about the bubble that shall bust the world up into warring particles in about five years. Forget about the Great Depression and one hundred years: the catastrophic collapse of that bubble would a millennial event.