There have been a lot of opportunistic comments made by a lot of bitter people around the world regarding the merits (or lack thereof) and supposed flaws with the fundamental concept of capitalism. Any I have heard, including the recent tripe peddled by the Dail representative of the Irish Socialist party regarding the supposed failure of capitalism, have completely missed the point and, seem to have lost track of the positive role that socialism can play in the 21st century western world.
The current global economic malaise is universally accepted to have been caused by a myopic overdose on cheap cash and an explosive increase in general levels of leverage. However, the roots of this crisis are found, ironically, in working class America. The incessant demands of bank equity holders for increased growth in earnings and profits led management in US banks to lower standards for those seeking mortgages. This gave birth to the type of parasitic breed of mortgage brokers that thought it was a good idea to give a mortgage to an unemployed single mum, just released from San Quentin. While we, in Europe, can hardly scoff at the americans, we didn't quite reach this level of reckless lending. That said, RBS shareholders may disagree with that last statement in light of Ulster Bank's funding of Sean Dunne's eye-watering €274mm purchase of the Ballsbridge Jury's site (rumour has it that the keys are in the post!).
The American dream was originally conceived to promote the idea that anybody who was driven and committed to hard work could 'make it' in the USA. This admirable concept is still valid in the 21st century and is completely compatible with the basic concept of capitalism however, its true meaning has been muddled through the last economic boom cycle. In a period of economic growth and prosperity, the financial gulf between the 'haves' and 'have-nots' is magnified and so, it is inevitable for those left behind to feel hard-done-by. The result of this situation in the US was for the general public to believe that it was a fundamental part of the American dream for every US citizen to have the right to own their own home. This mis-quoted bending of the American dream led the US to inadvertently stray into communism.
The fundamental premise of capitalism is that there are winners and losers, and therefore that we are not all equally deserving of the spoils of economic prosperity. This lapse in concentration by the US led to people, with no hope in hell of being able to make repayments, getting mortgages. These time-bomb mortgages started to explode in early 2007 and led us to the current situation. Even at that stage, the damage was done and there was no going back.
Capitalism hasn't failed - we've failed it. Our collective lack of control led us to turn full-circle and all the way back around to communism. While we are all equals as people and citizens, we are not all economic equals. There are those who are driven and work hard for what they aspire towards, and there are those with no interest in contributing towards society. The role of socialism in the 21st century should be to ensure a frictionless path for those coming from an economically challenged background to succeed in climbing the ladder of prosperity, as long as they have enough drive and determination. True capitalism knows nothing about race, class, religion, or creed. It should reward those who work hard enough for it. Equally, it should allow those who take their foot off the gas, to slide back down again. If we can remember these principles and make sure we never again completely lose control like we have done, capitalism can a positive force again. Likewise, if equity investors can have a realistic attitude towards the benefits of prudence in running a business, the management of banks may not be driven to (and rewarded for) reckless lending in search of endless earnings growth. It is arguably this complicity by the pension and insurance fund managers of the world (equity investors in the banks) in the irresponsible stewardship of global banking that allowed this to happen.
The Joe Higgins (Irish Socialist party TD) of this world must realise that their role in the 21st century is not to wallow in schadenfreude by sticking the boot into capitalism but, to fight for the rights of those born into economically disadvantaged backgrounds. To make sure that there are no glass ceilings to impede the progress of anyone willing to work hard enough to succeed. Meanwhile, the morons in the equity market need to realise that sometimes consolidation and control is better than revenue growth by any means.
WNgC
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