26 Jul 2014

Matt Ridley - Northern Rock - collapse of neoliberal capitalism

This is on the death of the theory and the practice of neoliberal capitalism, and is by George Monbiot in The Guardian on Thursday 24 July 2014 on the Nature Capital Agenda gobbledygook, which is also on YouTube if you like to listen rather than read.

We are witnessing the death of both the theory and the practice of neoliberal capitalism. This is the doctrine which holds that the market can resolve almost all social, economic and political problems. It holds that people are best served, and their prosperity is best advanced, by the minimum of intervention and spending by the state. It contends that we can maximise the general social interest through the pursuit of self-interest. To illustrate the spectacular crashing and burning of that doctrine, let me tell you the sad tale of a man called Matt Ridley. ...While he was a columnist on the Daily Telegraph he wrote the following, in 1996: "[the government] is a self-seeking flea on the backs of the more productive people of this world. ... governments do not run countries, they parasitize them." He argued that taxes, bail-outs, regulations, subsidies, interventions of any kind are an unwarranted restraint on market freedom. When he became chairman of Northern Rock, Ridley was able to put some of these ideas into practice. You can see the results today on your bank statements. In 2007 Ridley had to go cap in hand to the self-seeking flea and beg it for what became £27 billion. This was rapidly followed by the first run on a British bank since 1878. The government had to guarantee all the deposits of the investors in the bank. Eventually it had to nationalise the bank, being the kind of parasitic self-seeking flea that it is, in order to prevent more or less the complete collapse of the banking system. ...It is not just that neoliberalism has failed spectacularly in that this creed - which was supposed to prevent state spending and persuade us that we didn’t need state spending - has required the greatest and most wasteful state spending in history to bail out the deregulated banks. But also that it has singularly failed to create the great society of innovators and entrepreneurs that we were promised by the originators of this doctrine, by people like Friedrich Hayek and Milton Friedman, who insisted that it would create a society of entrepreneurs.

No comments:

Post a Comment