Regulation hell

The Times of India has this to say in its editorial on the US financial disaster

There are some people, such as former White House economist Nouriel Roubini, who feel that the government’s active role in rescuing Wall Street firms is turning America into a socialist state. There are others, particularly in India, who sees the crisis as proof of the inevitable failure of markets and capitalism. Both these views are wrong. There is nothing in capitalist systems that prevents the government from regulating markets. Indeed, that is the contribution of Keynesian economics, which requires the state to help maintain growth and stability in free market economies.

And a Reuters report

Critics say the “Washington Consensus,” a term referring to the market liberalization pursued by the IMF and the U.S. administration, has led to today’s meltdown.

“It was so patronizing, first it was the lazy Latinos, then it was the corrupt Asians and their crony capitalists,” said Professor Stephany Griffith-Jones, a leading authority on capital flows and developing economies.

“The lesson is you need to regulate everything. Any deregulated market in developed and developing countries leads to these results,” said Griffith-Jones, Executive Director of the Initiative for Policy Dialogue at New York’s Columbia University.

From the preface to the German edition of JM Keynes’ The General Theory of Employment, Interest and Money

“The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.”

A Marxist interpretation of Keynesian economics-

Not only from the Keynesian, but from any realistic point of view, government intervention is now regarded as an inescapable necessity. An increasing amount of “welfare-economics” is advocated by the proponents both of the “welfare-state” and of private enterprise. But even though nobody seems to doubt that government control is here to stay, the question of its character remains controversial. The Keynesians are generally for more government intervention, but as the consistent increase of government regulation and deficit-financing is synonymous with the transformation of the private into a state-capitalism system, it is often opposed as a form of “creeping socialism.” Because Keynesianism may also be regarded as a transitory state towards a completely government-regulated capitalist economy, it has become the theory of social reform within the capitalist system. It stands thus in strictest opposition to Marxism which concerns itself not with social reform but with the abolition of the capitalist system.

State capitalism is socialism. Pity people fail to understand that. Unfortunately, China seems to be the new inspiration as far as “US capitalism” goes.

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  • you12  On September 25, 2008 at 8:30 am

    You know, Americans are afraid of China and India for no reason. America is the sole superpower and it will remain for a long time to come ,Unless they keep making mistakes like flirting with socialism or creating more tougher and tougher immigration laws.

    Sure China and India have more qualified people statistically but they have also been educated in a system that is substandard compared to American system,and they have a big number people who are pour and are a tremendous weight for the economy and infrastructure.

    The whole outsourcing thing started with tougher immigration laws. Qualified Indians and Chinese who cant’ come to America found a loophole through Internet and satellite communication. And if allowed a lot of qualified people will move to America leaving their countries and hence stopping the so called competition.

    America is reacting to a False alarm. And its these reactions that have created consequences that will have a very very negative impact for America.

    Immigration and freedom, America needs to re-remember what its about.

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