[lit-ideas] Re: Worried?

  • From: "Simon Ward" <sedward@xxxxxxxxxxxxxx>
  • To: <lit-ideas@xxxxxxxxxxxxx>
  • Date: Tue, 27 Jan 2009 18:46:18 -0000

My take - from way over the wrong side of the fence - is that, post cold war, a humungous assumption was given play. Namely that earning a profit by whatever means is the natural order of things. That if you're earning a profit, the market is behind you and all is good. In technical speak, neo-liberal economic thoughts was 'proven', and all alternatives were out of play.

This approach applied just as much to speculators as it did to real world economic agents - the guys that produce stuff or create value. And so regulations were removed, speculation was once more a good thing and all would be rosy for ever and ever.

Unfortunately, this thinking was proven wrong. Speculation is not necessarily a good thing. Regulated dealing in the value of a company's prospects (share-dealing) works, but the creation of unregulated financial products that earn money from bad decision making (short selling, default swaps etc), only serves to hasten market exit. If all production was achieved through the application of capital (100 per cent robotics) this wouldn't be 'as' bad, but when there is a workforce earning wages to take back to so many families, the consequences are dire. And yet somewhere, more than likely high up in a sky scraper, some people have made a profit from all the misery.

From where I sit (a long way from the fence) speculators do no more than accumulate unproductive capital. While some finds it's way to being productive capital (as equity), much does not. When there's too much unproductive capital, stuff starts to happen and it's not nice.

In short, David has it right.

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