"Free Market" Capitalists and Hegemony

[MikeSC]

In the current climate, do any of you "Free Market" capitalists feel your position has been scapegoated by the mainstream? The former darlings of media capitalist hacks have been turned on quite viciously, it's now unthinking dogma that this crisis is caused by Free Marketism and Free Marketism alone.

This all seems quite hegemonic to me. The fact is, it's a failure of adjective-free capitalism, not "Free Market Capitalism." Any anger at the capitalist system has been subverted into anger at the extreme capitalist fringe, most disparaging comments tend to be centred around "unfettered capitalism" and so on, while Capitalism escapes scott free. Like an extra superficial layer on an onion that you have to peel away before you can start on Capitalism as it exists in reality.

So Free Marketism alone becomes the scapegoat, the mainstream of capitalism survives and consolidates its power- in fact, we're meant to believe the way to fix the free markets mess is to consolidate the power of monopolies with state money, and bump up the states role in capitalism (which, let's face facts, never went away in the first place).

I can't help but feel that the Left has been striking at the wrong target in this recession. The Left attacks the mythical Free Market, the Right attacks mythical socialism, the Strong-State Capitalist mainstream goes pretty much un-attacked. It is presented as the answer, when it is in fact the problem.

We're meant to think that state regulation of bankers is "compassionate capitalism". It is not. When the next crisis comes about in a few years time or whenever, we'll be expected to believe it's because of a resurgence of Free Market dogma. It won't be, as ever it will be a failure of real, existing capitalism. The best time for socialists to "strike" (I mean that both ways) would be in the immediate aftermath, before this protective straw man layer can be recultivated, I think.

Anyway, my two pence.

[Kappie]

The free market is being scapegoated, but that is because the average American doesn't have any idea what the free market is. The fact that this crisis was caused by the fascist state-backed banking cartel which is the modern American banking system (with the Federal Reserve at its head) has been for the most part completely ignored, except for some people on the fringes. Instead of the culprits being identified and punished for their crimes, they are in fact the ones who are being hailed as our saviors and given more power in order to fight the crisis they themselves caused!

[Robert]

Duplicate post. Sorry.

[Robert]

In the current climate, do any of you "Free Market" capitalists feel your position has been scapegoated by the mainstream?I don't qualify as a pure free market capitalist, I guess, but I have to say yes and no.

It's not scapegoating because large investment banks really did, as alleged, make gabillions in sales of securities (bonds) secured by subprime mortgages that are now distressed to non-performing. That impacts the value of the bonds and drives away investors who are needed to keep the machine running. These banks were insured by the devil AIG, which ran out of dough, got giant advances from the government to prevent a meltdown in the credit industry, and then promptly started paying themselves bonuses! They didn't plan or "cause" the crisis, but it sounds like they didn't blow the whistle when they could have.

Then again, to whom were they going to blow the whistle? Bush? He was just as bad as Clinton in continuing to support government intervention (American Dream Act or some such nonsense) to make sure everybody got a home, no matter their ability to repay (see below).

I would say it is scapegoating to this extent: the crisis is traceable in part to high minded pressure, from the Clinton administration, on government sponsored mortgage brokers, to relax lending standards for "the poor." I put that in quotes because subprime loans went not only to the working poor, but also to middle class borrowers and speculators who just had bad credit scores. They also went to pay for giant homes that the borrower should have known he had no business buying.

There's always posturing and finger pointing in every crisis. This one's no different, and everybody's dirty.

[Robert]

Kappie, were you referring above, in reference to the cartel, to government (both Clinton and Bush) complicity in encouraging subprime lending?

[Kappie]

Kappie, were you referring above, in reference to the cartel, to government (both Clinton and Bush) complicity in encouraging subprime lending?I was referencing the Federal Reserve, which I see as most emblematic of the fascist state which we currently reside in in terms of the marriage of state and the owners of capital. Clinton and Bush's complicity in encouraging subprime lending is another issue, and while it had its role in the creation of the current crisis it was hardly the driving force, the driving force was the fact that for decades now a handful of oligarchs have had a complete monopoly on the production of money and credit with the blessing and force of the state to back them up.

[RGacky3]

Mike, it goes along with all this "moderate" talk, or centerism. People love to call themseves a moderate, or that they don't like extremes in politics. Its always taught that the rational viewpoint is the moderate one. Ultimately, this means, the status quo, it means disregarding facts in the quest for non-confrentation which ends up just being something to uphold the ruling class.

So of coarse the blame is going to be on the "extreme" Capitalism, they always attack the fringes, because those are the easiest targets and because it takes responsibility away from where it is due, the actual system.


the driving force was the fact that for decades now a handful of oligarchs have had a complete monopoly on the production of money and credit with the blessing and force of the state to back them up.

That simply seams like the natural progression of Capitalism.


This one's no different, and everybody's dirty.

No one is dirty, the system is dirty.

[Bud Struggle]

I don't qualify as a pure free market capitalist, I guess, but I have to say yes and no.

It's not scapegoating because large investment banks really did, as alleged, make gabillions in sales of securities (bonds) secured by subprime mortgages that are now distressed to non-performing. That impacts the value of the bonds and drives away investors who are needed to keep the machine running. These banks were insured by the devil AIG, which ran out of dough, got giant advances from the government to prevent a meltdown in the credit industry, and then promptly started paying themselves bonuses! They didn't plan or "cause" the crisis, but it sounds like they didn't blow the whistle when they could have.

Then again, to whom were they going to blow the whistle? Bush? He was just as bad as Clinton in continuing to support government intervention (American Dream Act or some such nonsense) to make sure everybody got a home, no matter their ability to repay (see below).

I would say it is scapegoating to this extent: the crisis is traceable in part to high minded pressure, from the Clinton administration, on government sponsored mortgage brokers, to relax lending standards for "the poor." I put that in quotes because subprime loans went not only to the working poor, but also to middle class borrowers and speculators who just had bad credit scores. They also went to pay for giant homes that the borrower should have known he had no business buying.

There's always posturing and finger pointing in every crisis. This one's no different, and everybody's dirty.

I think Robert's analysis is dead on. As long as people were making money and everything seemed OK the market was goi9ng up--no matter how corrupt it was. what happened with the credit market was there was both too much government intervention--lowering industry standards for the "poor" as Robert said which lowered the lending standards for EVERYONE. And not enough government intervention--having NO regulation on such an important industry.


I have to say that it was pretty obvious that this crash was going to happen. I remember the radio ads for mortages ("just show up and have a pulse and get all the money you want") and thinking at the time--"this can't be right, something's wrong here." Now, I personally wasn't smart enough to bet against the market with credit default swaps (I didn't know they existed, and I'm rather market savvy) but there were a lot of people that saw this comming and for relatively small bets (and betting it is) made billions.

I'm one of those people that think AIG (and GM and Crystler) should have been allowed to fail--I don't see government involvement in private business as being helpful in the least. There's a tried and true way that has been working for hundreds of years--bankrupcy.

Everyone in the financial world know how it works and why it happens and are sanguine with the course it takes. The government of the US really has no business interfearing in corporations--let alone taking them over.

[Lynx]

Two words: moral hazard

[Robert]

Gack, what I mean by everyone is dirty is this: as the housing boom accelerated, it wasn't just mortgage brokers and international bankers who were enjoying windfalls. Lots of ordinary folks like appraisers and real estate brokers and home sellers made money too. That's where lots of the money went.

If you had bought your house in San Diego in, say, 1999, and sold it at the peak of the bubble in late 2005/2006, you made a fortune. The appraiser made an easy fee. the real estate agent got 4-6% for doing nothing, and she may have been the lady living down the street. And you got the money from the buyer's bank.

Who's dirtier there, you or the bank? If the bank goes bust and the depositors are made whole by the FDIC, should you give your profit to the FDIC?

Blaming it all on the system is, I suppose, one way to think about it. But we need to be fair about who exactly comprises each of the "classes" that socialism will supposedly eliminate. A famous line from Pogo comes to mind....

[Robert]

Lynx, I don't get it. Please spell it out.

[Lynx]

Moral hazard. Too big to fail. A situation where certain people and institutions enjoy freedom from risk or responsibility. This is what is being defended.
Free markets? The message from the champions at the top is clear: give us a break :rolleyes:

[Jimmie Higgins]

Nice post MikeSC,

The draw of the status-quo is always very strong and most people who do not have a specific ideology tend to look for "fixes" before looking at the big picture. So WW1&2 is sold to the population as problem of a lack of international rules to which the answer is the UN or League of Nations (never mind that the L of N didn't stop WWII). Revolutionaries on the other hand realize that the conflict was rooted in the problems of Capitalism and Imperilaism the way that competition between business needs the state and the state's military to secure trade routes and acess to resources and this leads to conflict between capitalist nations.

In this crisis, I actually find that it is much easier to talk to people about Socialism in the States right now because people are no longer willing to forgive or ignore neoliberal "free-market" ideas but are not convinced that what Obama is doing will work. Since the right is basically saying "more of the same" and the liberals are hesitent to propose a strong Keyesian or social-democratic reform program, there is space to talk about working-class socialism and making change from the workplaces and communities rather than waiting for a savior in Washington DC.

[Robert]

Since the right is basically saying "more of the same"

The same? The same what? The same government mandated loans to unqualified borrowers? The same government bailouts of failing car manufacturers and insurers?

What rightists say this? Name one.

[Jimmie Higgins]

The same? The same what? The same government mandated loans to unqualified borrowers? The same government bailouts of failing car manufacturers and insurers?

What rightists say this? Name one.

Well I meant more of the same neoliberal policies, but since you mention it, I think George W. Bush made some pleas for the TARP bailout. It goes to show the narrow difference between the two parties the ruling class has to offer us here in the states. The Bush administration was full of Ayn Rand types and neoliberals and yet they dropped all that when the ruling class demanded something be done to save the banking system. Now Obama's economic advisors -- mostly Clintonite neoliberal Milton Friedman types such as Larry Summers who said (as head of Harvard University) that women were not as smart as men in Math and Schience; then as head of the World Bank that US and Europe should buy the right to dump their pollution to the third world; then spoke at Milton Friedman's funeral and said that all Democrats are now Friedmanites (just as Nixon famously said "we're all Keyensyans now"). So these free-market warriors like their predacessors in the Bush administration are forced to abandon their long-standing ideological convictions because Capital demands another plan in order to restore profitability and try and prevent a worsening of the crisis.

[trivas7]

Well I meant more of the same neoliberal policies

Exactly. The same consolidation of money going to the hands of the financial sector responsible for the economic crisis.

http://rawstory.com/news/2008/Economist_US_collapse_driven_by_fraud_0404.html

[Robert]

Stop the presses; I agree with nearly every word of this comrade's excellent post. I kid you not:


Well I meant more of the same neoliberal policies, but since you mention it, I think George W. Bush made some pleas for the TARP bailout. It goes to show the narrow difference between the two parties the ruling class has to offer us here in the states. The Bush administration was full of Ayn Rand types and neoliberals and yet they dropped all that when the ruling class demanded something be done to save the banking system. Now Obama's economic advisors -- mostly Clintonite neoliberal Milton Friedman types such as Larry Summers who said (as head of Harvard University) that women were not as smart as men in Math and Schience; then as head of the World Bank that US and Europe should buy the right to dump their pollution to the third world; then spoke at Milton Friedman's funeral and said that all Democrats are now Friedmanites (just as Nixon famously said "we're all Keyensyans now"). So these free-market warriors like their predacessors in the Bush administration are forced to abandon their long-standing ideological convictions because Capital demands another plan in order to restore profitability and try and prevent a worsening of the crisis.

My only quibble is that these pols are not "rightist", at least not when they are voting for the bailouts.

When you start agreeing with me, you run the risk of getting restricted.

[Jimmie Higgins]

We agree but probably not for the same reasons. Many conservatives in the conservative base are very angry about this and some of their leaders have smartly taken up right-wing populist outrage.

The liberal base is also equally angry, but the difference is that their leaders are calling for moderation and not tapping into populist outrage (except for Krugman maybe).

This means radicals, should really jump headfirst into trying to bring a left-wing analysis of the crisis and why these bailouts only help the rich, hurt workers and probably won't work anyway. The left-wing populist sentiment in the US anyway if for things to be done to relieve suffering for workers and the middle class and the poor and so radicals have to tap into that now and argue that what will be best for workers/middle class/poor people is for an aggressive push from working people to put their demands out front so that the recovery dosn't have to come on the backs of us for the sake of the ruling class.