Fascinating article about the “genetic flaws” if you will of the capitalist system. It’s actually kind of amazing to read an article like this in a major newspaper—and of course, there are others these days—but a decade ago, even five years ago, opinions such as the ones reported here never would have gotten mainstream exposure. Maybe in The Nation or Harper’s or the Atlantic, but not in a daily paper. It’s about time the public wakes up to the facts about “the system” we exist in… and seeks a better one. Capitalism sure ain’t the best we can do, people… It’s not the only—and it’s certainly not the smartest—choice for the greater good.Why capitalism fails: The man who saw the meltdown coming had another troubling insight: it will happen againSince the global financial system started unraveling in dramatic fashion two years ago, distinguished economists have suffered a crisis of their own. Ivy League professors who had trumpeted the dawn of a new era of stability have scrambled to explain how, exactly, the worst financial crisis since the Great Depression had ambushed their entire profession.Amid the hand-wringing and the self-flagellation, a few more cerebral commentators started to speak about the arrival of a “Minsky moment,” and a growing number of insiders began to warn of a coming “Minsky meltdown.”
“Minsky” was shorthand for Hyman Minsky, a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck, and he remains a shadowy figure in the profession. But lately he has begun emerging as perhaps the most prescient big-picture thinker about what, exactly, we are going through. A contrarian amid the conformity of postwar America, an expert in the then-unfashionable subfields of finance and crisis, Minsky was one economist who saw what was coming. He predicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy.
In recent months Minsky’s star has only risen. Nobel Prize-winning economists talk about incorporating his insights, and copies of his books are back in print and selling well. He’s gone from being a nearly forgotten figure to a key player in the debate over how to fix the financial system.
But if Minsky was as right as he seems to have been, the news is not exactly encouraging. He believed in capitalism, but also believed it had almost a genetic weakness. Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.
Sunday, September 27, 2009
from Dangerous Minds