Economics is a bit like poetry, in that it is very subjective; you can’t formularise it. Sure, there are lots of theories about economics floating around, but they are just that: theory. A good example of this is the recent recession. Do the economists actually know what caused it..? Of course they don’t, because economics is Alice in Wonderland stuff. You can point to some things that were at the root of it, like defaults on subprime mortgages in the US, the bankrupcy of Lehman Brothers (which was the biggest bankrupcy in history), and even inflation in the Euro zone, yet economists can not say definitively how the worst recession since the 1930s came about.
In the western economies recessions occur about every 12 years (think back, if you’re old enough). Recessions are caused by the two Gs, Greed and Growth. Greed is self-explanatory, and without continual growth a capitalist market economy will collapse. If you think about it, this is a totally crazy way to run a financial system; ie, that unless it keeps growing and growing and growing (all fueled by greed) it will collapse. Events in Japan earlier this year are a good example of how a natural disaster can stop growth, and thus the capitalist economy collapses. Perhaps even a demented ant would realise that an economy has to be more resiliant than that.
As well as the need for continual growth, the other fatal flaw in a capitalist market economy is the ‘confidence’ thang. Investors have to feel confident or else we get panic selling and panic buying. In otherwords, the health of the markets is heavily reliant on human emotions; or should I say the emotions of greedy people. Once again, our demented ant might have some thoughts about this.
Capitalism is as big a failure as communism, and I suppose the reason I’m banging on about it is because of the bizaare spectacle that’s been unfolding on Capitol Hill, which, from an outsider’s point of view, boils down to a bunch of ignorant right wing bigots in the USA (the Tea Party), most of whom have no experience of government, who can’t stomoch having a black man as the President. It’s a sad thing to watch, and whether or not they manage to thrash out a deal before Tuesday, and whether or not Obama uses the 14th Amendment (most think it doesn’t have the necessary legality) is irrelevent in a way. The United States of America, the most powerful nation on earth, for the first time in its history is close to being unable to honour its debts. Remember that confidence thang, and remember how people in Dublin and Lisbon and Madrid and Athens, etc, wondered how on earth mortgage defaults in the US could effect them. The debt default crisis in the USA is going to have massive repercussions worldwide. I’m afraid that I don’t have much sympathy for ordinary Americans (who will suffer most from all this), because they’re the ones who tolerate a moribund political system, and they’re the ones who vote these arseholes into power. Perhaps Americans are too busy fucking around on the likes of Facebook to take an interest in things that really matter.
Capitalism? Communism? There has to be a better way of managing an economy. Perhaps we should ask that demented ant.