Monday, December 15, 2008

Krassimir Petrov on the Collapse

Krassimir Petrov always writes good stuff. His most recent piece is no exception:
Mark Twain once said that “if you don’t read the newspaper, you are uniformed. If you do read the newspaper, you are misinformed”. It is no surprise then, even to people who don’t follow the news, that a truly serious financial crisis is sweeping the world... ...What is missing is a deep analysis of the causes of the crisis, as well as possible future scenarios – papers look neither in the distant past, nor in the distant future. The cause of the financial crisis is claimed to be driven by two emotions - fear and greed; blame goes to poor regulations and greedy Wall Street investment bankers; rhetorically is added the fact that crises accompany capitalism, that they have regularly occurred in the past, and that they will continue to occur in the future. Some stock broker releases investment advice that from a long-run perspective, now is a good time to buy stocks.
The piece ends this way:
History shows that every changeover from one organisation of society to another has been very painful. Nevertheless, each following step, no matter how painful, has moved humanity forward and offered a better life to more people. Hopefully it will also go forward this time. All we have to do is hang on.
Needless to say, he probably disagrees with those stock brokers advising you to buy those undervalued stocks now. Each time I check in with the Austrians I read, the prognosis gets worse and worse. I hope they are not simply feeding on one another's pessimism. Dr. Petrov is a pro; I'm really not good enough to say whether this surreal prediction, that we sit on the verge of another great earth-shattering transition, from capitalism to something nobody has ever dreamed of, is accurate or not. Certainly, big changes are on the way, and things will be painful for an awful lot of folks, probably for a long time. But the idea that capitalism will be replaced with some superior system conflicts with my understanding of capitalism itself. Slavery is, well, slavery. Feudalism isn't a whole lot better, but at least it came with the idea that human behavior ought to be restrained by unbending, unchanging laws of God, which served to restrain at least the most brutish behavior. On the other hand, capitalism is only the realization of ethical behavior in the marketplace. As I have said before, it is not a "something" in-and-of itself, but more the natural outcome of ethical treatment of others. Certainly, it has never been perfectly realized, but at the same time, at least as far as the ideal is concerned, where is there to go but down? I could see a slip back into the command economy of century and millenia past, but upwards and onwards to something "better than ideal"? Perhaps my imagination just isn't good enough. I hope he is right. I hope the transition is more like the one from feudalism to capitalism, than the transition from slavery to feudalism. Barbarian hordes storming Washington and throwing the bums to the lions may sound like fun now, but I don't really wanna be around when it happens.

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