The Financial Times on “capitalism in crisis”

The Financial Times is a salmon-colored British newspaper that covers the same beat as the Wall Street Journal but from a somewhat more “liberal” editorial position. Proof of that is their endorsement of Barack Obama in 2008, a sure sign that they knew what side of their bread was buttered. The Wall Street Journal once dubbed the FT as “orthodox Keynesian”, reason enough to question the value of pump-priming ideology to our current predicament.

Since things took a turn for the worse for the capitalist system in 2007, the newspaper has shouldered its responsibility for the class it represents by defending that system, even if it was forced to admit that Karl Marx was not all wrong. Last August Samuel Brittan wrote an FT article “Mistaken Marxist Moments” that despite its title accepted the possibility that “the system produced an ever-expanding flow of goods and services, which an impoverished proletarianised population could not afford to buy.” That’s quite a mouthful from an economist who defended Margaret Thatcher’s economic policy in 1981 against those 364 of his colleagues who had signed an open letter denouncing it.

The FT has once again taken up the question of capitalism in crisis, and once again concluding that despite its shortcomings it is the best economic system humanity has come up with. Considering the background of some of the contributors to this colloquium, it is not surprising that they lean that way. As “Deep Throat” put it in “All the President’s Men”, you need to follow the money.

Take for example the article titled “A letter to capitalists from Adam Smith” by one David Rubinstein that admits somewhat in a Marxoid vein that “that unfettered exuberance about wealth creation will produce unsustainable booms and inevitable crashes.” Rubinstein’s advice is about what you’d expect. Reduce debt, keep the Euro going, and educate the masses so that they will be able to fill all those openings for computer programmers.

Apparently Rubinstein thinks that after completing courses at a community college in C++ and Java, a 40 year old ex-auto worker will enter the workforce and begin to enjoy the rewards of a triumphant system that has treated Rubinstein so well:

This triumph has occurred because capitalism’s greatest strength – productive economic activity – has succeeded in creating more opportunities for more people than anyone – including me – ever imagined.

As co-founder of the Carlyle Group, Rubinstein has a leg up on the aspiring computer programmer to be sure. The Carlyle Group is a private equity firm that competes with Bain Capital and other cut-throat operations that makes its principals some of the richest bastards on the planet. Rubinstein was smart enough to line up some really qualified people on his board, people with proven track records building businesses:

[W]hen we were putting the board together, somebody came to me and said, look there is a guy who would like to be on the board. He’s kind of down on his luck a bit. Needs a job. Needs a board position. Needs some board positions. Could you put him on the board? Pay him a salary and he’ll be a good board member and be a loyal vote for the management and so forth.

I said well we’re not usually in that business. But okay, let me meet the guy. I met the guy. I said I don’t think he adds that much value. We’ll put him on the board because–you know–we’ll do a favor for this guy; he’s done a favor for us. We put him on the board and spent three years. Came to all the meetings. Told a lot of jokes. Not that many clean ones.

His name is George W. Bush. He became President of the United States. So you know if you said to me, name 25 million people who would maybe be President of the United States, he wouldn’t have been in that category. So you never know. Anyway, I haven’t been invited to the White House for any things.

Not surprisingly, Carlyle Group is one of the nation’s biggest investors in the military and has made deals with the Saudi ruling class worth billions of dollars–just the sort of outfit whose chairman can be relied upon for a dispassionate evaluation of the merits of private property.

If Samuel Brittan was audacious enough to refer to Karl Marx, he is trumped by FT contributor Gideon Rachman who finds something good to say about Gramsci in an article titled “We are all Austrians now”:

The old is dying and the new cannot be born: in the interregnum a great variety of morbid symptoms will appear.” That statement from the Prison Notebooks of the Italian communist Antonio Gramsci was a favourite of student Marxists when I was at university in the 1980s. Back then it struck me as portentous nonsense. But Gramsci’s observation does resonate now – in an age of ideological confusion.

Old certainties about the onward march of the markets are collapsing. But no new theory has established ideological “hegemony”, to use the concept that Gramsci made famous. Some ideas are, however, gathering new strength. The four strongest emerging trends that I can spot are, in very broad terms: rightwing populist, social democratic-Keynesian, libertarian-Hayekian and anti-capitalist/socialist.

One imagines that being able to quote Gramsci knowingly can’t but help an ambitious young man trying to climb to the top of the FT, a newspaper that expects more from its staff than the unsophisticated hard right ideology that pervades the editorial page of the WSJ. Of course, the whole point of quoting Gramsci is to prove that you are familiar with a writer you are about to dismiss.

As the article’s title indicates, it is really not that far from the free market garbage you can read from the WSJ hacks. Rachman confesses that despite his sympathies for social democracy, a political approach that is quite at home in the FT’s boardroom, he feels under such pressure from the pissed-off masses that he just might hook up with the current-day varieties of Reaganism/Thatcherism:

Under normal conditions I would probably sign up with the social democratic tendency. The Tea Party is not my cup of tea. But I spent the weekend reading newspaper accounts of the ever more incredible figures that may have to be poured into the bail-outs for banks and countries in Europe. Then I turned the page to read of demands for more protectionism and regulation in the EU. For light relief, I then went to see The Iron Lady – the new film about Margaret Thatcher. The whole experience has left me feeling strangely Austrian.

“Strangely Austrian”, to be sure, is just another way of saying that you know what side your bread is buttered on.

Of equal interest is how Rachman sizes up the left internationally:

The failure of the hard left to capitalise on the economic crisis testifies to how profoundly communism was discredited by the collapse of the Soviet system. But mass unemployment in Europe might yet produce the conditions for the revival of an anti-capitalist movement. Greece’s two far-left parties are currently at about 18 per cent in the polls. The diverse groups that campaign under the banner of Occupy Wall Street contain some genuine socialists. And China has a powerful “new left” movement that pays lip-service to Maoism.

Despite reading Gramsci 25 years or so ago, Rachman still has a long way to go to figure out what the great Italian Marxist meant when he wrote “The old is dying and the new cannot be born”. The collapse of the Soviet system did not discredit communism. It only discredited the monstrously bureaucratic system within whose bowels free market dogma would find hospitable conditions. Hayek and Von Mises became popular among the Soviet intelligentsia during Perestroika since it conformed to its desire for consumer goods and all the other benefits that accrued to their counterparts at the FT. If Rachman is adept at quoting Gramsci, so were they adept at one point quoting Stalin or Marx. You have to know your enemy in order to defeat him.

The Soviet Union collapsed because its ruling caste (or class—depending on the intro to Marxism class you took when young) proved incapable of resolving intractable social and economic problems exacerbated by an invasion of Afghanistan. While the USSR resisted the one solution to its problems that might have moved the country forward—direct democracy by the majority, including how and what they produced—the U.S. and the European Union are equally incapable. Communism (or socialism, the term I prefer) can only be realized when those who produce the wealth of society make the decisions about how it is allocated. That is something that frightened the bejeezus out of the state bureaucracy in the USSR and their counterparts on Wall Street today. In trying to defend the interests of the latter, the FT is playing the same kind of role that Pravda once served for the former—and will be about as successful.