Free Market Farce

A great piece on the coming crisis by Ulrich Beck - author of Power in the Global Age:

"The Play. Act one: Chernobyl. Act two: the threat of climate change. Act three: 9/11. Now the curtain is rising on Act four: Global Financial Crises. For a backdrop, see yesterday's headlines: IMF slashes world growth forecast; Credit crisis could cost $1 trillion. Dramatis personae are the Hardcore Neoliberals, who in the face of the danger have overnight converted from the market faith to the state faith. Now they're praying, begging, pleading for the mercy of the state interventions and multi-billion pound handouts of tax payers' money - the sort of thing they condemned for as long as the profits were pouring in. What a priceless convert's comedy is being performed on the world stage. If only it weren't tinged with the bitter taste of reality.

Here's John Lipsky, a senior official and economist of the International Monetary Fund and longstanding market fundamentalist, who in a dramatic appeal is suddenly urging the governments of the fund's member states to sign up to the antithesis of everything he has previously preached: prevent a world economic crash with massive rescue spending. When even John Lipsky is urging politicians to "think the unthinkable", the gravity of the crisis is plain.

The spectre of the "unthinkable", which is now being raised everywhere, is of course supposed to awaken memories of the world economic crises of the last century - and save the banks from disaster. Next Joseph Ackermann of Deutsche Bank appears and admits that he, too, no longer believes in the self-healing powers of the markets. Before you know it, there he is retracting his retraction and insisting that he has no doubts about the stability of the financial system. That sounds reassuring. Or does it? If the respected banker were being frank then he would have to concede two things. First, that the history of the present crisis is a history of market failure, and second, that perplexity, or indeed sheer ignorance, dominates on all sides."

Read the full article here.