Returning Finance to the Service of Capitalism

"View in Wall Street from Corner of Broad...
Image via Wikipedia

As we confront the systemic malfunctions that have led first to the Global Financial Crisis and now to the popular reaction of Occupy Wall Street (OWS), conservatives need to step away from our unqualified endorsement of markets and recognize that there are times where markets create perversity and contradiction that harm society. The answer is neither to consign capitalism to the waste basket nor leave the problem to correct itself, but to fix the chunk that is broken. Martin Wolf, the respected economist who serves as associate editor at the Financial Times (nobody’s idea of a lefty rag, pink paper notwithstanding) noted in an editorial from early 2009:

Among the possible outcomes of this shock are: massive and prolonged fiscal deficits in countries with large external deficits, as they try to sustain demand; a prolonged world recession; a brutal adjustment of the global balance of payments; a collapse of the dollar; soaring inflation; and a resort to protectionism. The transformation will surely go deepest in the financial sector itself. The proposition that sophisticated modern finance was able to transfer risk to those best able to manage it has failed. The paradigm is, instead, that risk has been transferred to those least able to understand it. As Mr Volcker remarked during a speech last April: “Simply stated, the bright new financial system – for all its talented participants, for all its rich rewards – has failed the test of the marketplace.”

The heart of the problem the economy faces is a financial system that, like a nuclear reaction freed from containment, has spun out of control. In this case, the proper reaction is to restore the core to a newer, better containment vessel, allowing it to give of heat but ensuring that it is never again allowed to spew damage and destruction across the face of the American and global system.

We do not like regulation very much: every conservative and most Americans nurture a tiny libertarian within. Our economy, however, was not meant to be the playground of Austrian-school theorists. The price of civilization is the judicious, careful surrender of a degree of liberty in return for the benefits of living in a society that allows us each the freedom to find our own level. The alternative is chaos that places liberty at risk.

The financial sector has been allowed its unshackled freedom, and in Paul Volcker‘s words, has failed the marketplace. The time has come to return the beast to the bridle, allowing it to resume its rightful role serving the nation and the aspirations of all, rather than serving itself and the desires of a handful of oligarchs.

One thought on “Returning Finance to the Service of Capitalism

Add yours

  1. I think it is foolish to imagine that capitalism could somehow be eliminated, as some propose. But there never was such a thing as the “free market”, nor should there be. Judicious regulation is absolutely necessary. In my opinion, removal of the rules regulating the smooth flow of market workings over the past several decades has been the primary reason for the economic mess we’re in. Volcker wanted a four-page rule. It ended up much larger, and he says the oligarchs have no one to blame but themselves for that. There are also a bunch of novel Wall St. toys that need to be managed with new kinds of rules. In short, greed will win out if it is allowed to, and be paid for by the rest of us.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

The Golden West Review

A Californian Perspective on History, Arts, Land, Literature, and Politics

A Bucket and a Pen

Capturing Life after the Career

coffeesteffi ♡

coffee, art & my brewed thoughts

Sea Scout Ship 9201

Channel Islands Harbor • Ventura County Council, BSA

Troop 234, Boy Scouts of America

Port Hueneme/Channel Islands Harbor, CA

Dirty Sci-Fi Buddha

Musings and books from a grunty overthinker

The Chinafornia Wolf

Gratefully Chronicling a Remarkable Journey

The Thousand Books Project

Reading a Meaningful Life

Cafe Book Bean

Talk Books. Drink Coffee.

Silicon Hutong

Addressing China as it is, not as we want it to be

Maura Elizabeth Cunningham

Historian and Writer

Runningwinegirl's Blog

Colorado Girl Sharing Insights on Wine, Public Relations and Life's Adventures

ARLIN REPORT...................walking this path together

PERSPECTIVE FROM AN AGING SENIOR CITIZEN

Blue-eyed Ronin

A contrarian who enjoys challenging existing illusions, one truth at a time.

Observer

People and Trends

commentisfreewatch.wordpress.com/

Promoting fair and accurate coverage of Israel

twitchy.com

Who Said What

Barton's Blog

To the clouds and beyond...

Coffee Shop Rabbi

Basic Judaism spoken here.

Cami Ryan

Science, society, and life

Pacific Paratrooper

This WordPress.com site is Pacific War era information

______Assessing China / The TEA Collaborative______

Tech, Energy & Ambitions: Assessments at the Intersection of Technology, Investment and Policy

An Ordinary Website

of interest to few.

Der Bananenplanet

Alternatives Informationsmedium

Corey Robin

Author of "The Reactionary Mind: Conservatism from Edmund Burke to Sarah Palin" and "The Enigma of Clarence Thomas"

Ragan Communications

The Center Must Hold

The China Story

The Center Must Hold

Yale E360

The Center Must Hold

Xindanwei | 新单位

The Center Must Hold

WritersDigest.com

The Center Must Hold

WordCount

Freelancing in the Digital Age

FriendFeed Blog

The Center Must Hold

Business

The Center Must Hold

Blog Daily Listings RSS

The Center Must Hold

Speakeasy

The Center Must Hold

The Center Must Hold

Opinions

The Center Must Hold

RSSOpinion

The Center Must Hold

WebMD Health

The Center Must Hold

Renewal

The Center Must Hold

Village Voice

The Center Must Hold

Uploads from The U.S. Army

The Center Must Hold

TechNode

Latest news and trends about tech in China

WritersDigest.com

The Center Must Hold

Techmeme

The Center Must Hold

The Center Must Hold

Latest Items from TreeHugger

The Center Must Hold

%d bloggers like this: