09 August 2008

The Road To A 'People's Capitalism' Is Long.

Joseph Stiglitz writing on comment is free says this:-...

"Unfettered markets do not operate well on their own – a conclusion reinforced by the current financial debacle. Defenders of markets sometimes admit that they do fail, even disastrously, but they claim that markets are "self-correcting." During the Great Depression, similar arguments were heard: the government need not do anything, because markets would restore the economy to full employment in the long run. But, as John Maynard Keynes famously put it, in the long run we are all dead".

Joseph makes the argument that only the Left can save capitalism from itself, just as it did after the great depression.

It is actually quite basic economics that Adam Smith understood. Markets will only self correct if there is perfect competition and perfect knowledge etc. This will never be the case, so there will always be a need for the guiding hand of government to stop cartels and monopolies exploiting their position rather than competing fairly and efficiently. The 'invisible hand' will lead to continual boom and bust. The Left understand this, the Right under the rule of their paymaster corporations either don't understand this or worse - they do understand it very well and that is precisely why they want it.

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