With the dramatic events in the financial services industry over the past few weeks and the world’s bastion of capitalism and the free market economy resorting to what might (if it hasn’t reached such proportions already) easily become a thirteen figure bailout, one has to ask, “is capitalism dead?” After all, with these multi-billion or trillion dollar rescues the US economy has arguably become one of the most socialist in the world almost overnight, albeit through sheer scale rather than philosophic intent.
Clearly, the ramifications of these events are going to be felt for a long-time to come, and it is going to take a while for the debates to reach their conclusion and a new way forward to be found. In his “Insight of the Day” today, Bob Proctor states, “The entire world is in the midst of a paradigm shift, which is unprecedented. There have been transitions in the past but nothing to equal what we are presently experiencing. The world is moving from an intellectual to a spiritual vibration.” This is certainly an interesting perspective.
There are very few who would argue that the present financial crisis could not have been foreseen. The big question has always been “when?” rather than “will it?” For decades western economies have been driven by rampant consumerism, with “retail therapy” fuelled by increasingly indiscriminate lending and people’s own lack of prudence. Now the chickens are coming home to roost. In spending so blindly people have sacrificed their own savings and relied upon the enforced savings of their pension contributions. These, having been invested in/by these self-same financial institutions, have been effectively eradicated and will take years to rebuild. Whether we like it or not, we are all financially poorer than we were a month ago, and likely to become more so as government looks to us – as taxpayers – to make good the gap in its revenues that the decline will inevitably produce.
Unfortunately, this consumerism has infected governments too, and with high levels of fiscal borrowing exacerbated by these latest crises they will be unable to spend their way to the rescue as they have in the past. Governments cannot borrow their way out of this one, and with the wars already going, war is also unlikely to kick-start a period of renewed economic prosperity as some say it did last time. In any case the demographics wouldn’t allow it, and in fact further restrict governments’ ability to raise revenues.
In this void it seems likely that society will go back to more spiritual values and in that regard Proctor is probably correct. What is perhaps more debatable is whether we can justifiably say we reached the current situation through ‘intellectual vibration’ rather than perverse iconoclasm! The “free market” has been proven, once again, not to be a rational economic instrument but a blind, hysterical force impelled by the herd instinct and shaped by some of humankind’s baser urges. New solutions have to be found that will require all our spiritual and intellectual capacities.
The global economy cannot withstand the scale of the ‘busts’ engendered by such market failures. The imperative for better economic and commercial management with better checks and balances on the excesses of human nature (individual and collective), is unquestionably going to change the rules. In the same way that kings lost their “divine right” to rule over the masses, so too will corporate leaders lose their powers to lead the employed masses to their economic doom. The rules of both conducting business and policing its administration are going to change. You’d better be ready.