Financial Crisis: Has capitalism now failed as socialism failed 20 years ago?

Discussion in 'Politics & Law' started by Sim, Nov 12, 2008.

  1. Sim

    Sim Registered Member

    In the past decades, neoliberal thought, the idea of deregulation privatization and business-friendly policies, was en vogue. Traditional leftists and social democrats adopted neoliberal ideas, like Bill Clinton with his "third way", Tony Blair with "New Labour" or Gerhard Schröder in Germany, who streamlined the welfare state.

    On the right, we had even more prominent supporters of deregulation and privatization, like Ronald Reagan, Margaret Thatcher or Angela Merkel's pro-free market platform from 2003 on which she ran in 2005.

    All this seems to be gone with the financial and economic crisis. Most observers blame a lack of regulation for the financial collapse, and everybody calls for a strong state again, which is supposed to bail out companies to prevent a total economic collapse. Both left and right in America have agreed on such a bailout plan -- the same people who only a few months ago said we have to leave as much as possible to the market and the smaller the state is, the better.

    Here in Germany, it's even more extreme. Many prominent observers and even moderate politicians from left and right now officially declare the crisis is proof of the failure of neoliberal ideology -- the ideology of untamed free markets.

    For example, the new Prime Minister of Bavaria and chairman of the conservative Christian Social Union (CSU), Horst Seehofer, in the latest print issue of Der Spiegel:

    Horst Seehofer (CSU)

    SPIEGEL: Does the financial crisis change the political coordinates in Germany?

    Seehofer: I am glad you are asking this question, because I had been victim of a worldview that now has collapsed. I had been labelled as backwards, a Blümian [reference to a former politician with a strong social democratic streak].

    SPIEGEL: The financial crisis is an advantage for you?

    Seehofer: Not just baks have collapsed, but the philosophy of brute neo-liberalism. I did not expect that would happen so fast, but I had seen it coming for a while. This mere maximation of profits, this chase for interest yields, which sees life only through economic glasses, but which ignores everything else that's important in life, this ideology has collapsed.
    You know the debate about dismissal protection. Do we want a social calibration of society? Is solidarity still modern, or is egoism the ultimate yardstick? I was frowned upon when I criticized that Nokia left Germany with a yield of 20 percent, because they considered it too few. They were not interested in the question what that means for the families of the 2000 employees who lost their jobs. Equity prices and budgets were all they cared for.
    Human well-being had not been the yardstick anymore, for quite a while. (...) When thousands lose their jobs, we cannot just leave them behind. This has nothing to do with leftism, it is essential for a Christian party.

    SPIEGEL: Do you have an explanation why neoliberal ideas were so successful, especially within the Christian Democratic Party (CDU)?

    Seehofer: These ideas were considered modern. It was mainstream. The whole economy pushed these ideas, and when you had the nerve to voice even the slightest opposition, you were branded as backwards. I neither want a centralized command economy, nor neoliberalism. Germany has a traditional model of success: The social market economy. For more than one century, it stood for great economic success and social safety. Of course it has to be reformed and revitalized. The problem is to equip the positive aspects of the market with a social guard railing. The balance between social security and innovation must once again be found.

    SPIEGEL: Is neo-liberalism now entirely dead?

    Seehofer: Yes. At least for my lifetime, it will be dead.

    SPIEGEL: And who is the winner of this shift of coordinates?

    Seehofer: The common people. So far, only an elite, a few, had profited from the neoliberal system. There was a loss of welfare in the broad mass of the population. I am not a socialist, but I want that there is a balance again. (...)

    So even a right-leaning conservative politican declares the failure of neo-liberal market ideology.

    What do you think? Is neo-liberalism dead?

  2. Wade8813

    Wade8813 Registered Member

    From what I've heard, part of the problem is that we're very socialistic for a capitalist society. So it's hard to tell where exactly the fault lies. If our banks weren't regulated, but also had nobody to bail them out, there's a good chance they wouldn't have taken those foolish risks.

    Actually, IIRC, Bush and a few conservatives joined the liberal side, and Pelosi and some liberals joined the conservative side on this one.
    Last edited: Nov 12, 2008
  3. ExpectantlyIronic

    ExpectantlyIronic e̳̳̺͕ͬ̓̑̂ͮͦͣ͒͒h̙ͦ̔͂?̅̂ ̾͗̑

    Laissez-faire capitalism was shown to be a farce during the Industrial Revolution (or, perhaps, made a farce).

    Nobody took that huge a risk from their perspective. Mortgage-backed securities should have been largely safe, but few realized that small banks were giving out loans to people without demanding proof of income. The smaller banks saw no risk in doing so, since they were just selling off the debt to larger banks. I doubt anyone was thinking, "I might as well bet the farm since our socialist government will just bail me out anyways." That seems a rather huge risk in itself.
    Last edited: Nov 12, 2008
  4. Ainabla

    Ainabla Registered Member

    Let's see will happen...
    But one thing is sure, that the united states will never be as before.
    Things are changing. China, India, Brasil,Russia and other countries in development process now can have more impact on what is going on.

    I don't really understand very good financial crisis.
    Please can anyone help me and explain what were the factors that caused that.
    I get confused because i follow this principle "If there is a loser, must exist a winner to ? WHO IS THE WINNER
  5. Stab-o-Matic5000

    Stab-o-Matic5000 Cutting Edge in Murder

    The American market system is still one of the least regulated markets in the world. If we're very socialist, Europe is straight up marxist. The collapse had little to do with not enough or too much regulation, it was as EI said, everybody looking for their own gain without thinking of the broader consequences. The American market (companies AND consumers) has been using credit to run headfirst off of a cliff. And unfortunately for the rest of the world, when our market suffers, theirs does too to an extent since we're so tied into everyone else's economy.
  6. Kazmarov

    Kazmarov For a Free Scotland

    It seems to be intellectually exhausted, much like the Democratic Party at the tail of the Carter administration- where the New Left basically fell apart against a insurgent conservative movement led by the Moral Majority. People are tired with its explanations, and since the capitalists have been lazy at making sure their economies are actually capitalist (Wade's missing the target by a while- the lack of antitrust vigilance has created 'too big to fail' financial institutions everywhere), they're going to have to sit in a corner for a while and revitalize themselves.

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