Sunday, September 21, 2008

Free Market Ideology is Far From Finished

There are 126 days until Jan. 20, 2009.

Free Market Ideology is Far From Finished

But with Wall Street rescued by government

intervention, there's never been a better time to argue

for collectivist solutions

By Naomi Klein

The Guardian ( UK )

September 19, 2008

Whatever the events of this week mean, nobody should

believe the overblown claims that the market crisis

signals the death of "free market" ideology. Free

market ideology has always been a servant to the

interests of capital, and its presence ebbs and flows

depending on its usefulness to those interests.

During boom times, it's profitable to preach laissez

faire, because an absentee government allows

speculative bubbles to inflate. When those bubbles

burst, the ideology becomes a hindrance, and it goes

dormant while big government rides to the rescue. But

rest assured: the ideology will come roaring back when

the bailouts are done. The massive debts the public is

accumulating to bail out the speculators will then

become part of a global budget crisis that will be the

rationalisation for deep cuts to social programmes, and

for a renewed push to privatise what is left of the

public sector. We will also be told that our hopes for

a green future are, sadly, too costly.

What we don't know is how the public will respond.

Consider that in North America , everybody under the age

of 40 grew up being told that the government can't

intervene to improve our lives, that government is the

problem not the solution, that laissez faire was the

only option. Now, we are suddenly seeing an extremely

activist, intensely interventionist government,

seemingly willing to do whatever it takes to save

investors from themselves.

This spectacle necessarily raises the question: if the

state can intervene to save corporations that took

reckless risks in the housing markets, why can't it

intervene to prevent millions of Americans from

imminent foreclosure? By the same token, if $85bn can

be made instantly available to buy the insurance giant

AIG, why is single-payer health care - which would

protect Americans from the predatory practices of

health-care insurance companies - seemingly such an

unattainable dream? And if ever more corporations need

taxpayer funds to stay afloat, why can't taxpayers make

demands in return - like caps on executive pay, and a

guarantee against more job losses?

Now that it's clear that governments can indeed act in

times of crises, it will become much harder for them to

plead powerlessness in the future. Another potential

shift has to do with market hopes for future

privatisations. For years, the global investment banks

have been lobbying politicians for two new markets: one

that would come from privatising public pensions and

the other that would come from a new wave of privatised

or partially privatised roads, bridges and water

systems. Both of these dreams have just become much

harder to sell: Americans are in no mood to trust more

of their individual and collective assets to the

reckless gamblers on Wall Street, especially because it

seems more than likely that taxpayers will have to pay

to buy back their own assets when the next bubble bursts.

With the World Trade Organisation talks off the rails,

this crisis could also be a catalyst for a radically

alternative approach to regulating world markets and

financial systems. Already, we are seeing a move

towards "food sovereignty" in the developing world,

rather than leaving access to food to the whims of

commodity traders. The time may finally have come for

ideas like taxing trading, which would slow speculative

investment, as well as other global capital controls.

And now that nationalisation is not a dirty word, the

oil and gas companies should watch out: someone needs

to pay for the shift to a greener future, and it makes

most sense for the bulk of the funds to come from the

highly profitable sector that is most responsible for

our climate crisis. It certainly makes more sense than

creating another dangerous bubble in carbon trading.

But the crisis we are seeing calls for even deeper

changes than that. The reason these junk loans were

allowed to proliferate was not just because the

regulators didn't understand the risk. It is because we

have an economic system that measures our collective

health based exclusively on GDP growth. So long as the

junk loans were fuelling economic growth, our

governments actively supported them. So what is really

being called into question by the crisis is the

unquestioned commitment to growth at all costs. Where

this crisis should lead us is to a radically different

way for our societies to measure health and progress.

None of this, however, will happen without huge public

pressure placed on politicians in this key period. And

not polite lobbying but a return to the streets and the

kind of direct action that ushered in the New Deal in

the 1930s. Without it, there will be superficial

changes and a return, as quickly as possible, to

business as usual.

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