Godless Capitalism

Death, and taxes, have traditionally been the great levellers of society. This week, however, as news of laid-off Wall Street accountants dominated the airwaves, the vagaries of the economy emerged as a powerful equaliser of wealth. Faith in the free market may have been shaken by this financial crisis, but it also forces one to objectively reevaluate the culture of laissez-faire economics.

While frenzied fingers point in different directions to find a scapegoat, one is reminded of the old Nigerian saying that when one points a finger at somebody, there are three fingers pointing towards oneself. The current meltdown was orchestrated by the environment of deregulation that has been sweeping American markets for the last couple of decades. The theory was that competition would automatically convert a free-market into a fair-market, and a stable equilibrium would be maintained between the seller and the buyer, the employer and the employee, the lender and the borrower. Unfortunately, anybody remotely familiar with the tragedy of the commons knows that, without the supervision of a law-enforcer, human greed will always prioritise selfish gain over societal good.

The same is true for the free market. As is becoming increasingly clear, left to their own devices, the unregulated financial industry did not accomplish the goal of self-policing that would have provided long-term benefits to its employees, its shareholders and to society. On the contrary, the cumulative effect of years of malfeasance was so far-reaching that, ironically, big-government needed to be called in to save the day. Such an instance of heads-I-win-tails-you-lose would have been less likely in the presence of a government oversight body entrusted with the responsibility of raising flags for dicey transactions. Of course, a free market economy would allow a private company to make a risky investment, if it is approved by its board, but it should not expect to be saved by taxpayers if the deal sours.

Unfortunately, the ideology of deregulation is not just limited to the financial market. For instance, Nobel laureate Milton Friedman, father of modern American capitalism, had argued for the abolition of the Food and Drug Administration since, in his view, no private company would gamble with the health of its consumers. Although the FDA survived his campaign, years of budget cuts and gradual asphyxiation have rendered the watchdog as ineffective as a toothless tiger and the recent food contamination scandals demonstrate that faith in the moral compass of merchants is misplaced.

Paradoxically, most proponents of free markets, who dismiss the need for rules and regulations in the financial world, do not hesitate to sneer at a communist for believing that there is no need for a God who governs the lives of men.

AFTERTHOUGHT

I used to rule the world
Seas would rise when I gave the word
Now in the morning I sleep alone
Sweep the streets I used to own.

Coldplay, Viva la Vida