"Virtually every aspect of conventional economic theory is intellectually unsound; virtually every economic policy recommendation is just as likely to do harm as it is to lead to the general good. Far from holding the intellectual high ground, economics rests on foundations of quicksand. If economics were truly a science, then the dominant school of thought in economics would long ago have disappeared from view (Steve Keen, 2001, p. 4)."
In the full flood of the current credit/financial crisis there appears to be no shortage of people and organisations to blame short-sellers in the market, profligate home-owners in the USA who signed up for mortgages that they could not afford, Fannie Mae, Freddy Mac, the executives of investment banks and their million-dollar bonuses, hedge funds, the Fed, etc. Whilst the desire to find a culpable victim is perfectly understandable, it is also obvious that there is no "silver bullet" causal mechanism for this rapidly developing systemic failure. This article looks at the political and cultural determinants of the current crisis, using three intertwined themes:
(1) the development of financial derivatives themselves;
(2) the subversion of risk analysis by globalising capitalism; and
(3) the co-opting of the concept and analysis of fair value by the big accountancy firms and banks, through which financial derivatives were valued.
It will be the suggestion of this article that the development of an enculturated, fundamentalist, market-orientated economic discourse since the 1970s has acted as a stalking-horse for the development of new, powerful, unrestricted and unregulated markets in the financial services sector, a stalking-horse which is by its very character anti-democratic. Thus far nothing particularly new except that, with the development of financial derivatives and CDOs, such is the power of this supremacist ideology that a massive global market has developed in products which are essentially imaginary.
Whether we're talking about democracy underpinned by law or constitutional framework, the liberal democracies of Western Europe or the constitutional democracy of the USA, democracies work on the basis of the refreshing and realistic precept of the inevitability of human frailty all power corrupts and democracy is the politics-made-flesh of that acceptance. There can be no end-state to democracy, it is and will always be a process undergoing continual fracture, revision and change. To paraphrase the quote about art often attributed to Mussorgsky, any given form of democracy is not an end in itself, but a means of addressing humanity; it is a process whose development is characterised by endless subversion, thwarted and side-stepped by constant attempts from within and without to turn its frail authority into forms of power to be used against it.
Democracy by its very nature both hosts and is vulnerable to a limitless range of counter-narratives, ranging from tiny political movements to global meta-narratives which, in being given freedom to thrive, may at any time metastasise into the illness that kills the host. Ideological fundamentalists of whatever kind (Christian, Islamic, nationalist/populist or left/populist, for instance) whose core beliefs may allow them to use democratic mechanisms to achieve power within a given democratic type, may then use those same mechanisms to restrict or even close down democratic practices as being inimitable with contradictory core beliefs.
Next Page 1 | 2 | 3 | 4 | 5 | 6 | 7
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
