FOREX TRADERS

[twk000jester]

Capitalism II: Brave New World

"The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew." Abraham Lincoln

"All conservatism is based upon the idea that if you leave things alone you leave them as they are. But you do not. If you leave a thing alone you leave it twisting in a torrent of change." G.K.Chesteron

"If you don't like change, you are going to like irrelevance even less." US Army General Eric Shinseki

When you have thoroughly made a mess of things, and realize that it is time for a change, one goes to wise mentors and more experienced friends if you are lucky enough to have them for constructive and sound advice.

But there are times when hearing from your critics as well is a good idea, because they will often tell you things too difficult for a friend to say openly and directly.

This essay below by Michael Hudson and Jeffrey Sommers strikes me as such a critical analysis of the US economy as it exists today. It is useful because it looks at the US from the eyes of the non-G7 countries through the lenses of what the authors call 'Managed Capitalism' in contrast to what they call Neo-Liberalism but what I might tend to refer to as "Financial Capitalism."

There are many things with which I disagree in this essay especially in terms of recommended courses of action in the particular. But there are a significant number of pointed observations "from the other guy's point of view" that makes it worth reading, carefully.

We need to recognize that Japan, China, and many countries today are hardly free markets, and that they embrace a very strong industrial policy formed by central bureaucracies. We may even have more of a structure such as this than we realize, with our outsized financial sector. These countries more are a form of Managed Capitalism.

My argument against that form of economic structure is that centralized decision making, especially as it becomes more particular, tends to get it wrong much more often than consensus decisions widely spread amongst market participants IF information is transparently dispersed. This is because bias and temperament tend to be blended out to the tails. Yes you may get a run of great leadership every so often in a centrally planned economy, but you will often enough get a Hitler, Stalin, or a Mao, and the damage they can do to a country is measured in the millions of the dead in addition to economic and structural loss.

To me, financial capitalism is a clear excess, a distortion of free market capitalism in the same way that managed capitalism is. They both assert unbalancing forces on the course of the neural structure of natural decision making and value transmission to productivity.

But I cannot argue with many, many of their observations. I do not think the US will willing change. Why should it? But I do think the change will first occur in the international trade mechanisms, with the displacement of that lynch pin of the Washington consensus, the dollar as reserve currency.

It is useful to read this not because you agree with it, but because a number of other countries who are your critics will agree, and change is coming. That is without doubt. The current financial system is inherently unstable because the self-correcting and price discovery mechanisms are broken.

I suspect the solution for the US will be to move back to a more progressive, less financial oriented and more productive economy. The cult of pervasive globalization is a hoax, an excuse to centralize power in a New World Order, that is not possible to implement in a world in which people have choices, and wish to maintain societies with the values and policies of their choosing.

If the US stays on its current course and seeks to maintain the status quo the next step will an attempt to establish stronger central planning in a New World Order. One can already see those in the Anglo-American establishment and the Neo-cons trying to pave the way for it.

It is true always and everywhere that if you surrender the management of your currency to another you have handed over the keys to your fiscal and societal freedom, because the control of the money strikes to the heart of your economy in ways that permeate interest rates, industrial production, health care, and personal freedoms.

As an aside, it will be interesting to see how Europe progresses in this, and whether the European Union will grow and transform, or fragment. The great variable will be leadership and vision.

Change is coming, whether we like it or not. It will be coming from the outside if not from within.

The days of both Soviet and Dollar imperialism are ending. The latest attempt to establish a New World Order is failing.

The 'big countries' may be dismantling neo-colonial empires once again, and planning will be moving from a central planning for the world at the Federal Reserve and Washington, as well as Moscow, and back to countries who for good or ill will be trying to manage their own economies for themselves.


"Few will have the greatness to bend history itself; but each of us can work to change a small portion of events, and in the total of all those acts will be written the history of this generation." Robert Kennedy

Link -
http://jessescrossroadscafe.blogspot.com/2008/12/capitalism-ii-brave-new-world.html