jmkeynes

In Defense of Capitalism

The Rise of Free Fall Market Nihilism

The latest financial crisis in the US is forcing old economic ideologies to reinvent themselves. We're long past the old socialism versus capitalism dichotomy.

Many on both the left and the right will object that the $700 billion dollar bailout plan really amounts to Socialism for the Rich.

The left favors a traditional, democratic form of socialism. So, they tend to support the approach the Swedes took when their banks needed bailouts (i.e. give taxpayers an equity stake in the banks being bailed out).

Libertarians, however, are having a harder time of it these days.

Just as there are no atheists in fox holes, we're starting to find that there are no die hard Libertarians in times of financial crisis - unless, of course, you count those who are short the market.

True believers in libertarian dogma always want the government to stand aside regardless of the consequences.

But, there are also those "pragmatists" who can espouse either a Libertarian dogma or a Corporate Socialist dogma depending on their financial position.

If you and the corporation you manage would benefit from a government bailout, then opt for corporate socialism.

But, if you don't manage a company in in need of a bailout then short the market and opt for Free Fall Market Nihilism.

Whereas market bubbles are fueled by self-fulfilling optimistic prophecies, market crashes are fueled both by self-fulfilling pessimistic prophecies and naive free market ideology.

So, during times of financial crisis, Free Fall Market Nihilists short the market and then also cynically espouse a naive libertarian ideology that firms, markets, and even entire economic systems should always be allowed to fail.

The Free Fall Market Nihilist's mantra goes as follows:

"Government intervention is always wrong. In the long run, free markets will always correct. So, bring on those waves of creative destruction: The greater the financial destruction the better. The world is coming to an end, I've shorted the market, and so should you!"

So, lets take a poll of journalists at the Seeking Alpha to see where they stand:

a) Corporate Socialist (Socialism for the Rich),

b) Free Fall Market Nihilist (the End is Near, Short Everything),

c) Plain old Democratic Socialist (we need a Swedish style bailout),

d) Other/confused