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It is odd to me that so many people are looking for some kind of abnormality which "caused" the crisis. Capitalism has had cyclical crises since its inception 3
by cia_plant 18y ago
It is odd to me that so many people are looking for some kind of abnormality which "caused" the crisis. Capitalism has had cyclical crises since its inception 300 years ago, so I would say that the crisis was not "caused" by either greed or stupidity, but is a naturally emergent behavior of the capitalist system.
Actually it is even more general than that. The pattern of exponential growth followed by die-off is common throughout nature - algal blooms, for example.
It seems that the whole discussion over the financial crisis has been warped and twisted by this absurd belief, in the face of all evidence, that the economy is in some sense "rational," that it has some kind of steady-state equilibrium, and that its problems are therefore caused by too little or too much regulation, too little or too much greed, etc.
- raintrees 18y agoWith all of the meddling (tariffs, subsidies) by the government, isn't this market closer to mercantilism than capitalism?
- cia_plant 18y agoI don't think the terminology is very much standardized. Our system is not "pure" capitalism, and perhaps it would be better to call it a mixed economy. By using the word capitalism, I mainly meant to contrast it with radically different systems, such as feudalism and central planning (I'm not aware of whether these systems also encountered boom/bust cycles.)
- mighty 18y ago> so I would say that the crisis was not "caused" by either greed or stupidity, but is a naturally emergent behavior of the capitalist system. But greed and stupidity are "natural" forces at work within the capitalist system. Asserting that crises are cyclical and "naturally emergent" doesn't rule out greed and stupidity as causes. It actually doesn't say anything about causes at all. I'd also be wary of concluding that because certain phenomena appear to be cyclical, any similar phenomena must necessarily be an expression of that cycle.
- cia_plant 18y agoYeah, I don't think it's exactly wrong to say that greed and stupidity caused the crisis, but it seems like a category error. If a farmer kept planting crops in September, and they died during the winter, and he said that they died because it got cold, then he'd be perfectly correct. But that way of phrasing it almost suggests that he expects it not to get cold again next year. I think it's very hard for people to see bubbles as forces of nature, because in retrospect you can always see how dumb they were. So it always seems as though, if we just rationalize the system a bit, then we'll no longer have bubbles. However, no system has yet been invented which is capable of preserving rationality within a modern economic system. Hundreds of years of evidence suggest that whatever reforms are attempted as a result of this crisis will eventually run into the same mishaps and errors as ever before, unless someone comes up with a truly systematic account of bubbles. You're right that I shouldn't assume that this crisis is an expression of cyclical booms and busts. I'm very puzzled by this crisis, and the information that's available is maddeningly vague and handwaving.