Thomas Walkom, in The Toronto Star (excerpts):
What's happening now on Wall Street is seen as a new story. It is not. It is a very old one. This old story is quite simple: Capitalism is unstable. It is an economic system that can be ruthlessly productive. But it is also one of wheels within wheels -- internal contradictions, Marx called them -- that can, and regularly do, spin out of control...
Keynes, a British economist, saw them as problems that could destroy a world he rather liked. The welfare state edifice that bears his name was designed in the post-1945 period to, literally, save capitalism from itself. Banks would be regulated to keep financiers from scamming the economy into the ground. Labour unions would be encouraged, in order to give workers a stake in the status quo and inoculate them against radical politics. The rich would agree to government tax-and-spend policies, knowing that -- in the end -- it's always better to feed the poor than have them slit your throat. It was a giant, unspoken bargain...
For a long time, it worked...
Phase one of the retrenchment -- the destruction of the welfare state. In England, it began as Thatcherism, in the U.S. Reagonomics... Their aim was not traditional fiscal conservatism. Indeed, under Reagan, U.S. federal finances spiralled into deficit. Rather it was to alter the balance of forces within society... As a result, the income gap widened throughout much of the industrial world. The rich got richer; the middling classes lagged; the poor got poorer...
Even politicians are beginning to recognize that any lasting solution must deal with more than the bare bones economics of the crisis. Ironically, what they are groping for is the kind of solution that we've spend the past 40 years dismantling. It's time for another grand bargain... And it will go something like this: We'll save your damned old capitalism; we'll let you have the big houses and big salaries (although not quite as big as they were). But in return, you'll have to give us something back -- on jobs, on wages, on the things that we need to live a civilized life. Nor will we let you destroy everything we hold dear just so you can make a buck.
And don't give us all that free-market guff. Because we know, just as you know, that at times of great stress, the free market doesn't work.
