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New name for a new economy?

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Stephanie Flanders | 14:36 UK time, Friday, 13 November 2009

Do we need a new name for the kind of economy we live in today? I ask because it's becoming a bit of an issue.

20th anniversary celebrations of the fall of the Berlin WallWe started the week celebrating the 20th anniversary of the fall of the Berlin Wall. It was, everyone agreed, ironic to be marking the fall of communism, when less than a year ago capitalism itself had seemed to be on its knees.

Capitalism has survived. But it's not the capitalism we thought we had. When you consider the scale and scope of government involvement in most of the advanced economies right now, "free market capitalism" seems a bit of a stretch.

Today we had confirmation that the eurozone economy had moved out of recession in the third quarter. But the public sector was almost entirely responsible for the modest growth that the major European countries have achieved since the spring.

The last 20 years were supposed to be about the end of the era of big government. And yet, public borrowing in the leading "free market" economies - Britain and the US - has never been as high as it is today, outside times of war.

You might see that as the statistical counterpart to the intellectual journey that economists have been forced to make as a result of the crisis, which I discussed on my radio programme last week (Analysis: The Economist's New Clothes).

Mainstream economists didn't assume that markets - or their participants - were perfect. But for decades they did assume, in effect, that they were good enough: that markets were competitive enough, and people were rational and well-informed enough, for market-led outcome usually to turn out best. Especially in matters of finance.

Now, it turns out that real-life financial markets were much, much, messier than they thought - and much much worse at self-regulation. The biggest short-term consequence of that mistake is that the government has suddenly become responsible for most of our economic growth.

In the US, economists agree that without the federal stimulus package, the US would still technically be in recession.

We're getting used to this post-crisis landscape. But don't forget to be surprised that decades of the "free market" have ended up here.

John Cassidy tells the story in How Markets Fail: the Logic of Economics Calamities. There have been plenty of books about the crisis landing on my desk in recent weeks, but Cassidy's is the only one I've seen that pulls together the what and the why quite so clearly. He covers some of the same ground as my programme, but in much more depth.

Adam SmithHe reminds us that Adam Smith himself was very sceptical about leaving the financial system to its own devices. So was another fan of free markets, John Stuart Mill.

As Cassidy comments:

"[T]he combination of a Fed that can print money, deposit insurance, and a Congress that can authorize bailouts provides an extensive safety net for big financial firms. In such an environment, pursuing a policy of easy money plus deregulation doesn't amount to free market economics: it's a form of crony capitalism."

The outcome, he says, it's not just unfair - it doesn't work.

John Lanchester, the London Review of Books' chronicler of the crisis, said recently that "bankocracy" might be a better name for the current system.

If you think that sounds inflammatory, remember that Mervyn King, Lord Turner and Martin Wolf of the FT have all made essentially the same point. Unless the rules of the game change fundamentally, it's not really capitalism that we have today. Especially not for banks.

Any other ideas for a new name?


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  • Comment number 1.

    The science of bubble economics.

    It's an old chestnut, but next time it will be different........

    The FT had the banner "The Newspaper of the New Economy" on its front page during the boom. The banner was deleted after the bust.

    We can model chaos, supposedly, but we can't spot a bubble when we're standing on top of it.

    Bubble economies have been growing and popping for hundreds, if not thousands, of years. One day we will learn from past experience, maybe. Perhaps someone should write (yet another) book about the most repeated subject in economics.......

  • Comment number 2.

    Errr... how about:

    1) "The Fictious economy"
    2) "The privatised profits and socialsed risk model"
    3) "The economic kleptocracy"
    4) "The pointless treadmill of consumerist boredom through debt peonage economy"
    5) "The State sponsored wealth disparity creation model"
    6) "The Stockholm Syndrome model of economic serfdom"

  • Comment number 3.

    Just a few suggestions for an alternative to bankocracy:

    Kleptoforarchy - rule by those who steal taxes

    Plutoforarchy - rule by those who grow rich from taxes

    raidiokrematarchy - rule by easy money

    trapezokleptarchy - rule by thieving bankers

    or even trapezokleptoforarchy - rule by thieving bankers who steal taxes

    and best of all, if unpronounceable by anyone who isn't Greek (and probably not even by them):

    ekfugolethrokleptoforarchy - rule by those who have escaped ruin by stealing taxes

    Not that you will find any of them in a dictionary

  • Comment number 4.


  • Comment number 5.


  • Comment number 6.

    Socialism for the rich. Not a new name, but appropriate.

  • Comment number 7.

    At last main stream media is finally commenting on the fact that the so called free market we've been in for the past 30 years is not in fact a free market at all.

    John Cassidy explains the moral hazard that has littered our system for decades very well. I'm glad the role that central banks have played is getting the attention it deserves.

    The fact that the Fed, the most powerful central bank in our system, is a private entity answerable only to the banking oligarchy that controls it highlights the bankocracy/corporatocracy/crony capitalist problems we have.

    And in terms of bubble economics, bubbles and busts wouldn't exist to the extent they do today if central banks (i.e. the financial oligarchs) didn't have a monopoly over the money supply. Every bubble in history has resulted from a central authority artificially inflating the money supply or promoting the use paper contracts instead of physical money. J.P. Morgan himself famously said "give me control of a nation's money supply, and I care not who runs that nation".

  • Comment number 8.


  • Comment number 9.

    How about bentoverandshaftedism...or shaftedocracy.

  • Comment number 10.

    How about .. financial UK onomy....everheady for the next great leap forward onto any AAAbandoned AAA's hole shoe horning it courtesy the taxpayer to inkfinity and beyond ....or simply Comuseumimism

  • Comment number 11.

    Possible names for the current global financial (non)system:



    etc., etc, etc,

    More than 10 Trillion US Dollars are estimated to be stashed and hidden away in tax havens globally. This is corrupting the whole global financial system and enables tax evasion, fraud and corruption on a gigantic scale. When will the western 'democracies' stop this deplorable injustice?
    Please read more about the malfunctioning parts of the
    global financial system here:

  • Comment number 12.


    You are making the classic mistake of thinking this is anything other than Capitalism. I know there are phrases like anarcho-capitalism, corporate capitalism, crony capitalism, finance capitalism, laissez-faire capitalism, technocapitalism, Neo-Capitalism, late capitalism, post-capitalism, state capitalism and state monopoly capitalism.

    However these are all simply various efforts to 'tame the beast' of Capitalism. The underlying principles are the same in all, it's just a varying degree of intervention by the state - to either improve (ha!) or - more commonly - to prevent disaster (as we have right now).

    Nobody has ever controlled Capitalism - and therefore it has not moved into a new form. Many have claimed they control it - like Gordon Brown, Maggie Thatcher - but in reality they were merely passengers on a runaway train.

    The Economists, Government and media do a great job of re-inventing things, and no less than with Capitalism. You see many people in society need to believe there is someone in control - for without that feeling there would be panic. Hence the need for Capitalism to re-invent itself every time it collapses.

    It's always amusing to see the advocates of 'small Government' scrabbling around at these times for an explanation of 'where it all went wrong'. Margaret Thatcher and Ronald Reagan were keen on self-regulation - and look how that turned out. We now have the party of 'light touch' vying for the position of Government - who traditionally were the 'heavy regulators' - and their biggest crime? - not enough regulation! - what a strange situation.

    I think you have to look at the Economy like the law looks at it's citizens. 80% of people could live without laws - because they are guided by their morals - but the other 20% are unable to grasp their actions ultimately 'ruin it for the rest'.

    However under the repeated attempts of Government to allow Capitalism to have free reign and self-regulation, this group of 20% gets more and more powerful by the day - encouraging more to follow their behaviour, until too many people act in that manner and we have social breakdown.

  • Comment number 13.

    "Do we need a new name for the kind of economy we live in today?"

    Stephanie, we already have a word: "Mugabenomics"!
    Destroying your own country's industry.
    Printing more money when it run out.
    Blaming problems on other countries.

  • Comment number 14.

    OK, it was a 10 years from Glass Seagull repeal of free market sponsored by debt ridden troughing goverments their fraudulent cronies/peers, financials and regulators who cannot wait for their next fix of money, an experience that is currently being repeated because the relationships are so incestious their is no other way out than TRY to reflate the bubble keeping the whole shower of C**p in place for our best outcome.

    MOD on Bonus, I Don't BEEEEEEEEEEEEEEEElieeeve it

  • Comment number 15.

    We have not been living in a true free market, that is the problem.

    When Big Business can reap all the upside benefits of their risk taking but can pass on the risk to the taxpayer (too ig to fail, retail deposit guarantees) then I hardly call that Free Market. The old adage: Privatise the Profits, Nationalise the Losses.

    A true free market is where risk is not cushioned by state protection.

    If a market was allowed to be truly free, I have every faith they would self correct themselves without bringing entire countires to their knees.

    Don't blame the markets, they will do as much or as little as they are allowed to get away with, blame the regulators.

    If you repealed all laws on theft/robbery, you would expect the rates iof those crimes to go up as the reward far outweighs the consequential risk. Same principal applies to the Banksters. They will get away with what they are legally able to do.

    Same applies with off shore tax havens, if you want people to pay tax in the UK, fix the legislation to close the loopholes, dont whine when people use legitimate accounting tactics to minimize their tax take.

    You can always rely on Banksters to look out for themselves, thats where good governance is needed to temper their excesses.

    This crisis was caused at its root by bad governance.

  • Comment number 16.

    In deference to the late JJ, I guess this blog wouldn't be complete without the accusation of:

    Anarcho-capitalism: anarchistic/Trotskyite free market capitalism

    As you suggest Stephanie, this is not the free market envisaged by Adam Smith:

    What we have is "exactly the opposite of what Adam Smith, and Ricardo and the classical economists defined as a free market. Classical economics defined a free market as one that is free of overhead charges, free of unnecessary charges of production, free of watered stock. Today a free market means that predators are free to extort any price from the public, they are free to deregulate, free to lie to consumers, free to exploit, free to load any company they want down with debt, and basically lead (us) to a world of debt peonage." Michael Hudson.

    Indeed Galbraith was all too vocal in pointing out Smith's warnings of separating (stock) ownership with (enterprise) management.

    It'll all end in tears.

  • Comment number 17.

    'Managed capitalism'?

    That puts the blame for the successive messes where I (a former governemnt economist) think it belongs; with those failing to manage the system prudently and properly.

    Successive governemnts in many countries have been consciously trying to manage capitalism ever since 1945. Nowadays, North Korea and Cuba are about the only exceptions. The new dimension in this crisis is that we have finally admitted that the task, like dealing with the ozone layer or global warming, needs governments to co-operate.

  • Comment number 18.

    ....and here is the next disaster Capitalism is lining up for us - ahhh isn't it sweet x x x x

    I must agree with sharpcj @7 - it is refreshing to see an article actually questioning what we have taken as gospel all these years.

    Free markets are fictional places in the minds of Economists - we have never had one and we will never achieve one (or not at least until we have developed instant and total universial conciousness between humans - i.e. mind reading)

    That's the only way we can achieve perfect knowledge - which is a fundamental principle of a free market.

    Until then we're all just 'marks' in a scam being played on us by fraudsters - who are protected from reprisal by laws they create and enforce.

  • Comment number 19.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 20.

    From taxpayers viewpoint:

    Expensive Market capitalism

  • Comment number 21.

    Cryptoelitoeconomics or Crapitalism for short.

  • Comment number 22.

    Capitalism = ownership of means of production by a class
    Communism = collective ownership of the means of production by the people

    Soviet Union, China & other 'communist' states = state capitalism, i.e. the ownership of the means of production by a class (the Communist Party)

    The market version of capitalism veers between the liberalist 'laissez-faire' version and the social 'democratic' interventionist version.

    Lately we are seeing a move to the latter; whatever is in the interest of the capitalist class.

    It's all capitalism.

  • Comment number 23.

    It's a common fallacy to think that having named something you understand it. But the suggestion that everything is now different, and so we need a different name, shows that we don't understand at all.

    We have been, and still are, living in an economy based not on wealth (acculuated historical earnings) but on credit (speculative future earnings): and while we like to talk about "credit" we actually mean "debt".

    This was not, and is not, capitalism: if only because there is very little capital involved. But it doesn't matter what it is called.

    Now it has emerged that much of this debt is "toxic" (threatening the lenders); so Governments are purchasing "toxic debts", and colluding in the "recapitalisation" of Banks, at our expense.

    Whether the debt economy can be put back in place is still uncertain. But it is clear that Governments (ie the taxpayers) will be paying for the clean up for a long long time.

    As for public sector growth: it can only continue for a short period when, as now, tax revenues are falling and borrowing is through the roof. Another fundamental is that wealth is not created in the public sector and, sooner or later, we will have to earn the money to pay our way.

  • Comment number 24.

    its always been and still is an oligarchy. the chicago school just called it liberal democracy capitalism.

    there has never been any capitalism. which is why millionaires get farming subsidies and cleaners can pay more tax than executives.

    the big scam today is carbon trading which is basically a tax on air or existence. carbon trading is set to become the biggest market in the world where every person through proxies will be paying in to it. it gives the illusion something is happening when all that is happening is a wealth transfer from poor to rich. look at the the companies making up the carbon exchanges who get a cut of every trade. Look at those promoting carbon trading- ceos of energy companies who get free carbon credits they can then sell to make money out of nothing.

    the monetisation of carbon is like the monetisation of sin for which people had to buy papal indulgences to continue sinning. we saw how rich that made them?

    not so long ago the uk was 'run' by 100 families [some say 1000]. nothing has changed except perhaps the names.

    so we should start calling it what it always has been -an oligarchic regime.

  • Comment number 25.

    "Financial corporatism"

  • Comment number 26.

    Sorry, "Finance Corporatism".

  • Comment number 27.

    We can call it an inversion as the nature of political power in society has changed causing a fundamental switch in economic priorities.

    Previously the state was the instrument of the dominant class who by its very nature had to be the element in society with the greatest control of available resources; whether it be landed estates, coal-mines or weapons factories. In other words the people who owned the country, ran the country.

    Now at some point along the way this structure has changed. Many years ago I thought it had changed to be the social class who generated the wealth on which the country depended who called the political tune. In other words the people who added the value into the economy ran the country.

    Yet it has become progressively evident that this is also no longer the case.

    The controlling element within society today are the people who spend other people's money. That statement alone tells us all we need to know about how we got into this mess.

    The financial services industry has laid waste to the savings of the country by risking the money of other people. The higher the risk taken the better the pay: madness! At the same time government created a vast, often bonussed, bureaucracy on the back of that most other of all people; namely, the taxpayer.

    The distortion is vast and even controls public attitudes where the expectation of a benefit, an expense, a bonus or a free service is paramount.

    The horrible truth which the West has to learn is that you have to earn your own living. Global economic development has meant that there is no longer a vast army of coolies to do the bidding of the colonial master. The poor of the world also want their slice of the pie and expect it to be cut generously.

    At the expense of sounding like a Status Quo record with the same old boring tune, as a nation we have lost the plot. We might know the price of everything but we have no idea as to what true value is. If we want something we just demand it and expect the state to provide. We are as spoiled children screaming in the supermarket unaware that everything has to be paid for and someone has to earn the money in the first place to make that payment.

    It is said that in 1649 after the English Civil War the world was turned upside down. It has been turned upside down these last twenty years or so. To get things back in order we just need to turn it back the other way.

    It is not a case of markets versus state intervention or some other dogma, it is about being pragmatic. There need be just two standards: what value does it add and does it work. We should try it some time.

  • Comment number 28.

    No need for a new name - it is corporatism, a form of fascism.

  • Comment number 29.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 30.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 31.

    15. At 3:59pm on 13 Nov 2009, Nataku wrote:

    You have made the classic mistake - on the one hand it's not a free market we have, but it's the regulators fault for not controlling it properly.

    In a free market there are no regulators.

    Once again the free market is a pipe dream, because the sheer size and magnitude of companies failing is enough to bring instability and social upheaveal to large parts of the country - should they be allowed to fail.

    ....but the whole reason there is a monopolies commission is because is any free market the bigger players have the advantage of purchasing power over the others - the tendancy is for success to be big and getting bigger.

    So you can't have a free market with regulation, but you wouldn't be wise to allow companies to grow to a point where their collapse would create chaos for citizens - remember there is nothing that panics people more than their usual shops and services disappearing - so how do you control it?

    ...the answer is you can't.

    This is a contradiction - and is exactly how we get to the situation we're in.

    Maybe it would be a good idea to allow true free market failure to occur - simply to prove how much mess it would create - it would be free market anarchy - which in turn would produce social anarchy. Then at least we could discount this idea as a pointless one to pursue and stop wasting so much time trying in vain to make it work.

  • Comment number 32.

    18. At 4:06pm on 13 Nov 2009, writingsonthewall wrote:

    "That's the only way we can achieve perfect knowledge - which is a fundamental principle of a free market."

    You are getting "free market" mixed up with "perfect market" - sort it out man.

  • Comment number 33.

    name for current economy = fictocapitalism

    name for the next economy = cryptoplutocracy

  • Comment number 34.

    30. At 4:26pm on 13 Nov 2009, grahambond

    How did you get away with that - I am impressed.

    Sleeping with the moderator are we??

  • Comment number 35.

    It is indeed a crazy world where losers take all.
    Some people, call them property developers if you like, borrowed shed loads of money to finance management buy outs of the companies they worked for.
    Those companies promptly went bust. Owing the banks those shed loads.
    So these now bank owned companies still employ the very managers that drove them off the cliff. And of course those banks also failed. We the taxpayers rescued them.
    So the failed losers are doing very well thankyou.

    So what can we call this arrangement?


    But necessary of course to keep the money flowing. The government is hardly likely to put a stop to it since it is the only show in town. Taxpayer backed banks giving shed loads of money to failed businessmen. Obviously those failed businessmen are actually smart. Looking out for themselves. Using the institutions available to them to the fullest extent.

    I know. Let's call it "Realism".

    It's still nonsense though..

  • Comment number 36.

    What a brill post Steph.

    How about Orwell-nomics

    Or Gnome-omics






    Best SF all year.

  • Comment number 37.

    I think that the current economy reflects a mixed economy as we assume it to be mixed with Behavioural Economics applied to it, i.e. Human deficiencies, not acocunted for in Normal Economics.

  • Comment number 38.

    32. At 4:33pm on 13 Nov 2009, truths33k3r

    I point to this definition of a free market:

    "By definition, buyers and sellers do not coerce each other, in the sense that they obtain each other's property rights without the use of physical force, threat of physical force, or fraud, nor are they coerced by a third party (such as by government via transfer payments) [1] and they engage in trade simply because they both consent and believe that what they are getting is worth more than or as much as what they give up."

    ...and how do the parties in the trade believe that what they are getting is the same as what they are giving up - without knowing exactly the opportunity cost of that trade against all other possibilities

    ...for that - you need perfect knowledge.

    It seems that you are proving that a free market is not possible with your seperation with a perfect market. It's either free and perfect - or it will require intervention.

  • Comment number 39.

    Suckitandseeism, Because I am sure nobody really Knows what's going on.....

  • Comment number 40.

    When will all you (b)ankers who think it's best to keep on blaming a lack of governance and the tardy regulators for this messy struggle get some values ? Want to perpetuate this and live in a police state where anything goes unless you get caught ? When on earth would you ever first blame bad policing for a crime and not the robber for stealing your family silver ? Is this too big a leap for you lot ? I assume you will of course maintain your moral low ground and absolve the burgler next time your house gets screwed !

  • Comment number 41.


  • Comment number 42.

    New name for the same old system? How about Demockeracy?

  • Comment number 43.

    Taxpayers Alliance funded Capitalism

  • Comment number 44.

    38. At 4:55pm on 13 Nov 2009, writingsonthewall wrote:

    "they engage in trade simply because they both consent and believe that what they are getting is worth more than or as much as what they give up."

    This does not refute my point that you can have a free market that is not perfect. Someone can believe that they are getting more or the same as they giving up, but this may not actually be the case.

  • Comment number 45.

    We are enduring a tired old, lumbering giant of a fudge... it's what it was always destined to be and its name is Socio-Capitalism.

    A more important consideration than playing around with semantics, is what and where from here? ... Significant impending global issues from overpopulation through to catastrophic climate change are posing increasingly difficult questions of our buckled and failing economic and political systems... the future is scary, the future is fudge!

  • Comment number 46.

    Bankocracy sounds too narrow - after all there's a lot more to capitalism than just banks, plus they're not actually running the country. But Paul Woolley's argument is that the financial intermediaries, who should be utilities, are able to capture *most* of the wealth created. So it's not a system that really benefits the owners of capital, such as today the pension funds. So what is it that the intermediaries have got instead of capital? Like everything else in this discussion, it's not really clear. So maybe "Darkism" on the basis that: the intermediaries like to keep their world obscure; they have succeeded and ordinary people have very little understanding of the events shaping the economy (we're in the dark); economic theory doesn't properly explain what's going on (we're in a kind of intellectual Dark Ages there); huge bail outs get sewn up behind closed doors with no effective scrutiny.

  • Comment number 47.

    No16 Hawkeye,
    Would that be the same Adam Smith that said ' it only takes a few minutes for four of five businessmen to get together before they begin to conspire against the general public' or words to that effect.

  • Comment number 48.

    We know that doctrinaire socialism does not work, but now we find that unfettered freemarket capitalism does not work either. The state has a role and so does private enterprise. At the moment a combination is set up on an emergency footing, with excessive support of the financial sector in the U.K and also the U.S.

    The nature of the economy we have allowed to develop here is almost medieval in its shape. Money is sucked out of the poorest levels of the least well off taxpayers, for whom tax is a higher proprtion of their earnings, then discharged into the richest area, the financial sector. This now takes for granted public finance as capital of last resort.From here money flows out of the economy to the far east.

    As yet none of the political parties have dared look seriously at the enormous rebalancing which will have to occur. It is not important whether enterprise is private or state or a combination. What is important is that all of it, including the state, has to be wealth creating and profitable. The exception are public services, which must be effeicent and effective, thus contributing indirectly to economic efficiency.

    This will require the closing down of government by review and inquiry and the demolition of the quango state. Something of the order of two million workers will have to move from jobs where they drain resources to jobs where they contribute to the rebuilding of national wealth. This is going to be a very painful process. To get the people not only to back it but do it will require a much fairer distribution of resources than we have at present. The gap between rich and poor has to be narrowed.

  • Comment number 49.

    How about Mythocracy.

    This is a system in which those in power attempt to convince the populus that they know best; that governments and banks inventing money from nothing is fine; that boom and bust is ended; that you can borrow your way out of debt; and there is no price to pay for personal or governmental profligacy.

  • Comment number 50.


    Then, we can keep reliving to past 30 Years over and over again.

    Therefore, Back to the Future.

  • Comment number 51.


  • Comment number 52.

    economic national socialism...minus the bullets and gas chambers

    I suppose you could call that progress.

  • Comment number 53.

    Have we had free-market Capitalism since the time of Woodrow Wilson? As far as I was aware this died out completely by about 1936.

    Since then we've had Controlled-Market Capitalism, and we've benefitted or suffered in turn under it as successive Governments strove to vary the degree and nature of the control to fit the circumstances of the time.

    I think that the one lesson to be learned as a result of this "slump" is that we're still learning, and cannot afford to be complacent about our economic models and policies.

  • Comment number 54.

    Deludonomics within deludonomics

    For me the only real tragedy if all that has been created truly
    comes crashing down is the scientific research work which
    is how I value wo mans achievements and in my opinion
    how we should find value - for what is paper money, gold
    and all those abstract nonsense ways wo man has created to
    fool himherself into believing there was value ? - deludovalue

    I was going to include art but sadly that has been so thoroughly
    corrupted by the money delusion it has to be put on one side
    as well. No financial regulation there - wanna bet that's where
    capitalism heads. Curators of 'important' art institutions are
    like central banks they can magic money out of nothing. Take an
    'artist' (anyone will do really, Emin is proof) and make money pour
    out of them by the best use of affinity fraud known to wo man.

    Lene Vestergaard Hau stopped light and converted it into matter
    then back into light in open space - now that's value in my book -
    science value.

    We are on the verge of massive breakthroughs with disease and
    extending human life wouldn't it be ironic if in the next 100 years it
    all comes crashing down because humanity cant come to terms
    with what value is.

    The Spartans used iron bars as currency instead of gold and silver
    to discourage the accumulation of wealth and deal with the money
    love problem. A vicious 200 year rule brought to an end by a now little
    know hero - General Epaminondas at The Battle of Leuctra.
    Still the Spartans understood the problems with money - but it still
    cost them dear at Thermopylae.

  • Comment number 55.

    We know what the system is called already – it’s called state capitalism!

    US of A and the UK have joined the BRIC nations as they are mostly state capitalist nations, the EU will follow soon.

    The next step is logically to directly intervene in the economy and plan the recovery.

    This will have to be done by directing investments into the various sectors of the economy.

    We have nationalised the banks and confiscated their weapons of mass destruction, now it time to turn those weapons into weapons of mass wealth creation.

    I know there are plenty of failed planned economies (Soviet Union, Nazi Germany, Labour Government post 1945 etc.), but the two most successful were the UK and America during the Second World War.

    It will require a monumental effort to get the country out of this mess and that can only be done by the mobilization of the economy.

  • Comment number 56.

    Free bank economy (as opposed to free market economy)?
    Although I like the Kelptocracy suggestion.

    The truth is though that those who have pointed to corporatism are right. I've been banging on about it for years to anyone who would listen but both of them had stopped listening until Le Crunch arrived.

    It started years ago when I heard of a US firm breathalysing people in the morning and sacking them if there was any trace of alcohol. (if they could do their job competently, why was good enough not good enough?).

    Then I noticed that teh Working Time Directive meant that people who worked through lunch has 1/2 hour docked - supposedly. But the directive actually says that the worker may have a break of twenty minutes after any work period of six hours. The key words being TWENTY and MAY - i.e. it is at the worker's discretion. Presumably designed to protect workers from slave-drivers, but then turned to be used against them by slippery old Mr Corporate-Beast.

    The you notice that the concept of teh "profesional day" has been slipped into place so that although a contract says 7-8 hours per day many are expected to work 11-12 hours or be seen as slackers. I guess that means 2 people are doing the job that 3 people used to do... a factor in unemployment perhaps.
    I work to live, not the other way round.

    Add to this the way pension funds are being closed, staff are being "TUPE'd" over to other companies and the law does not require their pension rights to be maintained. The debate rages on about whether pension needs should be a governemnt or a private uissue - but the bottom line is always that whenever anyone's pension arrangements fail the burden will fall upon the state and therefore all pensions are underwritten by the state, like it or not. Start from there and the rest falls into place quite naturally, but I digress, back to corporate misbehaviour...

    Political parties are funded by corporations and affinity groups of corporations who expect their interests to be looked after. This is a major factor in allowing corproatism to overtake us.

    You can also see it in the way taxes on corporations are passed on to the customer, never the shareholder. Example: the great G3 mobile phone licence sell-off. £16bn raised for the Treasury, , so you might expect tax savings for the citizen. Nope. Instead the monthly cost of a phone contract leapt from £10 to around £30-35 thereby effectively passing it on to the customer as a tax on mobile phone USERS that we are still paying today.

    The banks. To recover, they simply lend at 5% in a 0.5% base rate world. Or at 19% on credit cards. Again, it's the customer being hit and not the shareholder. And they all do it, irrespective of the state of tyheir balance sheets - surely this must be cartel operation?

    I believe that the way forward is not to nationalise, nor to do the opposite in total (as we do now). But to have in every walk of life, a government-run company that competes with the private concerns and has the remuneration of the employees based on their performance in that market.

    So there would be a government bank, and critically, it COULD fail. It may need to be re-created, but the shareholders and investors could lose the lot and so there is no unfairness in competition terms. This would be clearly understood by all - no moaning at the government for not intervening when it does fail. They must, in fact, be legally prevented from doing so.

    In that vein there would also be, for example, a government-funded pharmaceutical research company - this to discourage excessive research into "solutions" that require lifelong treatment rather than an out-and-out cure. We are seeing too much of that today from companies that want their customers to pay all their life and not just once.

    There woudl also be a government shiping company - if it's cheaper to send goods on the train then let's find out if we can live without the road transport lobby clogging up our roads with lorries, protected by their paid-for political cronies - by actually trying the alternatives.

    A form of social contract may also be required, with real penalties for directors or other responsible persons. The Treating Customers Fairly approach to regulation works well in the insurance side of financial services - shame it wasn't in place in the rest of it.

    We may even need to revisit what exactly a company is and what it is allowed to do. It is not set in stone that it has to be as it is, limitations on size and on the scope and range of buisiness activities may be required and even on the way shareholding works. Perhaps all customers have to become shareholders? There is a lot that could be done here, but largely we have lived with the same structures for centuries now and there is no immutable law of nature that says it must be so, and yet we see very little discussion of these matters.

    The individual must also be encouraged by law to focus on their responsibilities as much as on their rights. It makes me see red to watch the young people on tv documentaries who are suddenly trying to learn to write and count AFTER they have left school. They spend their time at school doing nothing because it’s “un-cool” to learn anything. They wait until the real world hits them and then ask us to foot the bill to give them yet another chance to learn the absolute basics. And we wonder why government think we need immigration. Why not show them the real world earlier? *cough* National service? *cough*

    But the bottom line is that we cannot afford to have shirkers in any niche of society.

    Blimey. I think I've written enough to start my own blog. I'll shut up now.

  • Comment number 57.

    A few years ago the BBC had a brilliant documentary called the Trap, which - even before the whole bubble collapsed - explained why it would eventually. Unfortunately they have never seen any reason to repeat it or bring it out as a DVD. Perhaps they should now.
    The Trap seems a perfect name for the kind of economy that we are locked in now....

  • Comment number 58.

    This is getting rather tiresome Stephanie.

    Capitalism has many meanings but most identify with the term 'free market economy'rightly or wrongly.

    I'm having difficulty finding an example in the world of a truly 'free market economy' because there isn't one.

    Most economies are of the mixed market variety' (private/public sectors) which have certain laws and regulation to protect various 'property rights' or to negate potential adverse behaviour against the majority.

    Distortions in market economies come from various taxation policies, artificial central bank interventions, the degree of public sector mix and involvement, public subsidies and distortions emanating from these (a simple current example would be the BBC, a monopoly in the media which gets the benefit of taxation but also operates commercially affecting the industry around it).

    At the moment we have distortions all over the place from EU farming subsidies through to various tax benefits and schemes (scams!) like the old bangers for cash. There are literally hundreds of thousands.

    The financial crisis was probably a combination, as I have stated previously of poor regulation, taxation policy and government reliability on tax income as well as previous central bank intervention (see Greenspan's bubble for example) rather than any philosphical leaning.

    It's been very noticeable that supposed experts have been queueing up to blame the free market economy line to abscond from personal poor judgement or lack of judgement. The market is created by us collectively stupid.

    But lots of media commentators have lapped it up of course showing their own ignorance of the subject/situation.

    If we want to 'solve' our current predicament we need to look at the things I've mentioned above and either stop, dismantle, simplify or realign (particularly taxation and intervention) otherwise we are just creating tomorrow's (worse) problem.......

    Coming up with another unwanted naming exercise is, maybe, a great parlour game but ultimately just '******* in the wind' and another case of misdirection from the real issues.

  • Comment number 59.

    Bancofascism - obviously. Not that you'll get that past your editor on the 6 o'clock news.

  • Comment number 60.


    You mention self-regulation in your post. Self-regulation is always a conspiracy against the laity. All humans are subject to the temptations of corruption, complacency and self-aggrandisment. Those who believe they are above these human frailties are exactly those who are most likely to practice them. Lawyers, politicians, financiers - all convince themselves they have the moral superiority to self-regulate and by doing so define themselves as being untrustworthy. We are right to be suspicious of any such groups.

  • Comment number 61.

    How about:

    and others that will not pass moderation!

    Take your pick!

  • Comment number 62.

    Gordonomics. Cheers Gordon, thanks for your legacy.

  • Comment number 63.

    'Kleptocracy' (like many others) given the ensuing transfers of capital from the majority to a tiny minority led by mostly be-knighted individuals. Sir Fred Goodwin, Sir Tom McKillop, Lord Stevenson etc.

    Was in Berlin on Monday night and the irony wasn't lost on me either. Big difference though was that Honecker and co. finished up in prison(OK so they ordered border guards to shoot escapees so there is a slight difference!). Here the likes of Aliiance Boots go out and hire Andy Hornby to be their CEO within 3 months of the Treasury inquiry.

    What is going on?!

    How about Sir Fred hosting a TV game show Family(Mis)Fortunes?

    Nonetheless, a bit of

  • Comment number 64.

    We seem to be back to Orwell here.

    There is no need to run competitions for a new name for our economy, the old one remains accurate - it is called Fascism. That means that managers, supporters and administrators of this system are Fascists.

    It is quite easy really if you understand a little history and a little of the English language. "Fascism is a merger between corporate and state power" - Mussolini. Let us try to recognise the past, it may have something to teach.

    Back to Orwell and back to Fascism. The BBC considers it appropriate to comment: "And yet, public borrowing in the leading "free market" economies - Britain and the US - has never been as high as it is today, outside times of war."

    Hello!!! Does anyone know the way to Afghanistan? Just because you choose not to report US/UK actions in Iran and Pakistan does not mean that those actions are not taking place.

    Aint it funny how political correctness does not prohibit the casual dismissal of the pointless loss of life by poor people.

    So economists assumed that people were rational and well informed enough to produce market led outcomes. If this is true then these economists must be more stupid than the human mind can imagine. Do you really think there was a rational demand to invade Iraq or a rational demand for young people to consume vast amounts of alco-pops, or for people to gorge themselves on burgers until they were too fat to live a normal life. If that demand existed then why bother lying, manipulating data, and devoting vast tracts of advertising space to promote rubbish products that no-one would ever naturally choose to consume.

  • Comment number 65.

    What is interesting about all the comments so far is their negativity. All the old justifications for our way of life have proved false. The truth is that we have a fundamental model - once clearly stated by Adam Smith / Margaret Thatcher - a free market, which is no longer "free" and is being propped up by continual government tinkering.

    Thomas Kuhn said that you could tell when an old paradigm was about to be discarded when it became "messy". Our understanding of the economy looks like Ptolemy's version of the universe which in a sense "worked" but was "messy". It needs to be replaced by a radically different model.

    Name for the present "system"? "Outdated capitalism"?

  • Comment number 66.

    New name for a new economy?

    Legally sanctioned fraud and corruption.

    It is not a new economy at all it is what always happens when the monopoly power of small groups (cartels) becomes greater than is manageable by a society. (see K Marx)

  • Comment number 67.

    Given the way the Labour government keep harping on about it despite their own 12 years to fix stuff, why don't we call it the "Blameitallontheconservativesonomics"?

  • Comment number 68.

    "What has been will be again,
    what has been done will be done again;
    there is nothing new under the sun." (Ecclesiastes 1:9)

    "No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money." (Matthew 6:24)

    The "ism" doesn't matter. They're just new names for an old, old problem...

  • Comment number 69.

    Back in the 1980s we were taught that the United Kingdom was a Mixed Economy, given that we had socialised welfare and health and some nationalised industry.

    I can't see that this has not continued to be the case.

    We haven't been a capitalist society or economy, like the USA or the Republic of Ireland, for many decades.

  • Comment number 70.


  • Comment number 71.


    IMHO you keep asking the wrong questions. For instance in this case instead of asking for a "New name for a new economy?" ... a better question would arguably be to ask for a "New Name for a New Economics?"

    ... as traditional 'economics' is too narrow in scope and is now effectively dead. Dr W Edwards Deming wrote his landmark book over 20 years ago (called 'The New Economics') - which resulted in the creation of Leanomics, and the 'battle' of the future will be a "battle of values' ... summarised as

    Leanomics vs Poweromics & Ignoromics


    Leanomics = People taking responsibility for adding value and continuously improving the situation for others (e.g. customers, communities, overall environment), based upon fundamental values such as trust, honor, responsibility and respect.

    Poweromics = People using position and power for their own personal gain, based on poor moral values, self interest and greed.

    Ignoromics = People are either effectively ignorant of the situation (e.g. the overall environment) or not prepared to take responsibility to make sure it changes for the better.

    None of this is rocket science, but what's clear is that things will be getting much worse before they start to get better ... as Ignoromics will need to reduce a lot more before Poweromics is properly challenged ... ... but happen it will, and we are not very far away from this now ...

    David Clift, A Future 500 Leader

  • Comment number 72.

    (Government) Directed Capitalism

  • Comment number 73.

    The future of capitalism surely lies with the Waitrose/John Lewis/ worker shared ownership model. The more peole who are involved in the decisions the less extreme the compny's actions. The market therefore becomes MORE efficient as the wisdom of crowds/employees kicks in.

  • Comment number 74.

    I suggest we call it the "New Corporate State".

    Perhaps Tony Blair was right when he talked of his "Third way" because the term was originally coined by Il Duce - Mussolini to describe his corporate state where private business was allowed to run itself until it failed and then the State stepped in and took over.

    Of course in a true corporate state there is an attempt to reconcile workers and management to work together so the Post Office strike seems to tell against that.

    However the death of Gobalisation as banks/companies are chopped up smaller so that governments can control them within state borders would seem to indicate that the Corporate State is alive and well. Likewise the fragmented approach to the stimulus package would seem to sound the death knell of Globalisation as individual states find their own way through the problem.

  • Comment number 75.

    Well, let's see:

    It's the rich and privileged elites stealing from the poor, following the "vile maxim" as pointed by good old Adam Smith of "everything for us, nothing for anybody else".

    So why do we need a new name for it?

    It's just business as usual.

  • Comment number 76.

    I wonder why it was necessary for there to be a crisis in the banking system for Stephanie to realise that we don't really have a free market system!

    Just take a look at your tax bill. Well before the credit crunch (you remember, back when Gordon Brown had abolished "Tory Boom and Bust"), the government was spending nearly half of what we all earned, nearly half of what all businesses make.

    So in 2005, in a way, the government already owned half of every business in the UK, and in a way it owned half of every person. It's only nearly-half communism, and nearly-half slavery, but half is pretty bad. It's even worse when you consider that it has gradually got like that over decades, and it will probably continue to get worse as the decades pass. "Sleepwalking" would be a good way to describe it.

    And yet in the other half of the economy, the private sector, there is half a free market, and it does indeed work very well, mostly left to itself. It struggles under the weight of a mountain of regulation, originally created with the good intention of stopping unscrupulous businesses from ripping people off. However, unscrupulous businesses tend to break the law anyway, so regulations don't really work on them. So the regulations just create a massive additional cost burden on the scrupulous.

    Our private sector must be reasonably healthy because we continue to attract economic migrants. The Berlin Wall was built to stop people trying to leave communism - which no one in their right mind would volunteer to live under. So we have every reason to celebrate the fall of the wall, and it is crackers to suggest that we should pretend that we have no advantages over the Eastern block. The fall of the communist states was a miracle!

    The reason for the credit crunch, as many people have said, is that the bankers did NOT take a risk, as they knew they were too big to fail (and had been told as much by the government). The banking sector is so intimately related with the money system itself, it has to be regulated. This is surely not a shock to anyone?

    The above blog post is written rather misleadingly. The key phrase is "Especially in matters of finance". Before that, Stephanie talks about markets in general, and the widespread belief (well supported by experience) that they produce wealth if left to themselves. After that phrase, she switches to talking about financial markets, i.e. the extending of credit to other businesses. That is, and always has been, and probably always must be, a regulated special sector of the economy. Ultimately government controls the base rate, which controls everything else. And all other business activities depend on the credit supply.

    So it is frankly odd to say that because the government screwed up the regulation of credit, we can cast doubt on the effectiveness of markets and personal economic freedom in all other areas of our lives. That is the implication of saying that it is "ironic to be marking the fall of communism, when less than a year ago capitalism itself had seemed to be on its knees." The only part that failed was the part that the government absolutely has to regulate. Instead, Gordon Brown said he'd ended Tory Boom and Bust, and kept interest rates low (and in 2005 Labour campaigned on the basis of how wonderfully low interests were - they made a whole poster about that, as if it was an achievement rather than an idiotic decision). That failure of government is what has endangered all other economic activities, so to praise the government for being the source of growth right now, is misplaced praise, to say the least.

    In fact, another misleading claim here is that governments are responsible for economic growth at the moment. Governments aim to create a fixed structure, something static. This means they cannot cause economic growth. At best, they can stop economic collapse. They can cause inflation though, which can look like growth for a while. Economic growth has to be created by people looking for efficiencies, inventing smarter ways of doing things - Government incentivises the opposite! It rewards the wasteful. It punishes the efficient.

    Also, although Stephanie claims that "economists agree" that the growth is being driven by stimulus packages, in fact there is much dissent over this. Search for 'Cafe Hayek' for some Austrian perspectives.

  • Comment number 77.

    How about Catastrophonomics - the study of economies that gradually balloon out of all control and the type of system it creates is a Catastrophism.

  • Comment number 78.

    # 15. Nataku

    I dont think any truly free market (ie banks not protected by government etc) would be self regulatory since some individuals within the system would see opportunities to make massive personal fortunes and parachute out to live in splendour while the mess they leave behind reduces millions to poverty.

    This is the fundamental problem which regulation is required to prevent (or at least mitigate).

    It is also worth noting that the short time perspective of people who would take the 'earn like crazy then parachute out' would be similar to elected politicians (4 or 5 years) who have next election perspective (e.g. Gordon Brown's huge layering of debt so the next Government have to sort it out, take all the hard decisions etc etc and then Labour get re-elected at some point because the electorate forgot who started it all!

  • Comment number 79.

    The Age of Discredit. False economics, false reasons for going to war, false Parliamentary expenses. Never have so many important people have had so much to live down.

  • Comment number 80.

    Some great therapudic reading.

    Whereismydoleism comes to mind.

    currently battling the state in this regard :(

  • Comment number 81.

    #76 danielearwicker

    Glad to see somebody else who can see through the misdirection and misunderstandings - see mine at #58

  • Comment number 82.

    How about "Symbiotic Capitalism"

    That is, rather than the owners of capital exploiting labour without caring about the effect it has, a recognition that in the short term they are mutually dependent on labour and government to ensure their survival. Of course it will not last.

  • Comment number 83.

    There are two ways to increase efficiency - improved management or improved technology.

    Given that both politicians and the public free-market are no good at management (both are too prone to marketing and short-term reward), our only hope are the scientists and engineers.

  • Comment number 84.

    Do we need a new name for the kind of economy we live in today?

    Tripartite myopic Brownian motion economics or Government overspending!

    - work it out.

  • Comment number 85.

    How can you say Stephanie that in country where most of the essential public services like railway, water, gas, electricty, communication etc. are owned, occupied and operated by capitalist enterprenures and they decide when they want to increase price of their commodities and services and as you mentioned the public sector (I would say the 'watchdog')would simply make statements and watch this things what is happening around us. Am I right....

  • Comment number 86.

    #76 wrote

    'The Berlin Wall was built to stop people trying to leave communism - which no one in their right mind would volunteer to live under.'


    I have met more than a few people in Hungary and several other former soviet block countries who said they preferred life under the old communist regime.

  • Comment number 87.

    #76 ...oh and btw...Hungary considers itself to be a central european country.

  • Comment number 88.

    We were in the Goldilocks economy - we now have the 3 Bears; bare-ly any money, bare-ly any new jobs and bare-ly any short-term prospect of getting back to growth soon.

    I'd like to see some recognition from the financial masters of the Universe that they are sorry, and, more importantly, accept that things need to change to stop it all happening again.

  • Comment number 89.

  • Comment number 90.

    Economics ..... the art of the SWAG (scientific wild assed guess)

    Up here in Scotland I call the current situation "Westmiddenism".. It's the practice of taking something very valuable such as North Sea oil revenues and pouring them down the drain and gaining no value from them whatsoever. It's almost as if we never found oil/gas off our coasts.

    But I think that what probably sums up the real problem with the whole economy can be summarised by a throw away comment by the former energy minister Malcolm Wicks in his recent report on Energy Security. He was talking about how badly the UK compared with our main competitors when it comes to R&D in new energy technologies and he put it down in part to the fact that the UK didn't really have an energy industrial base to build on.

    Now those of us who have been involved in the industry for most of our working lives are very aware of that. We know that countries such as Norway, Germany, France, Denmark, the USA and others own most of our industry and are certainly responsible for the manufacturing of all the strategically important bits of hardware.

    Worse - now that we're moving towards new clean energy technologies we are still not investing anything like enough either in R&D or in the creation of new technology companies as compared to our competitors. Most of those nice shiny wind turbines being installed off the E Coast are beimg built by Siemens or Vestas or GE.....

    There's no avoiding the fact that this is due not just to the attitude of the Treasury but also the financial services sector. The Treasury would much prefer everyone else developed all the kit so we could just buy what we want when we want it. The financial services sector thinks in pretty much the same way. Sadly, the City is simply not up to the job. Not only are that mob socially useless they are strategically inept.

    Now all this bodes very badly for the promises (which I simply don't believe) by both the Commissariat and the Tories that they will rebalance the economy by building up the manufacturing sector...

    To cure all this I think we need some radicalism starting with the downgrading of the Treasury to a customer service type organisation and the demotion of the Chancellor to nothing more than an advisor and chief beancounter.

  • Comment number 91.


    "Brownian Motion" is good - but for the age of misrule and disorder we are currently labouring under I think Brownian Commotion is a more apt description of what capitalism has become.
    It can also be argued quite fairly that the global economy has been Greenspannered - or perhaps Greenspanked - by a bunch of complete Benankers.
    But capitalism, predicated on the mythology that ever increasing wealth could ever exist on a finite planet, was always due to run out of road some day. The fact that we have pulled the vehicle from the ditch and continued further along that road - fuelled with debt to encourage the belief that this myth can still sustain our wanton appetites - only ensures that the final crash will be even more painful when it comes.

  • Comment number 92.

    Why so coy, Steph? We already have a word for what we have. The word is "plutocracy". The richest and wealthiest among us get to to decide how we are informed (eg Rupert Murdoch), how we are governed (Murdoch too), what the laws will be etc. When they screw up the economy big time they have the ear of government so closely that they can ensure that their bonuses will be paid and that the poorest waitress who serves them at table will pay for it.

    And this is what the "free-market purists" don't understand. The biggest players in the 'free market' - folk like Murdoch - don't, and never have, subscribe to the notion of a genuinely free market. They wield their political power, they call in their debts, they use their financial muscle to jig the market. They always have. When times are good they seek "deregulation". When they are bad they seek "intervention"

    Frankly, anyone who believes in a genuinely free market needs his/her bumps read

  • Comment number 93.

    What about your employer steph (the BBC)?, who imposes a non means tested poll tax which through non payment send lots of women to jail every year?

    What sort if capitalism is that?

    Good for the goose, good for the gander

  • Comment number 94.

    @danielearwicker #76:
    Where to start with your litany of inaccuracies?
    "the government was spending nearly half of what we all earned, nearly half of what all businesses make" Wrong -the Govt spends what it takes in tax. This is NOT 'half of what all businesses make' - Business Tax is WAY below 50%. And the richest individuals hire accountants to ensure that they pay as little tax as possible. Meanwhile, the poorest get stuffed by increased purchase taxes - like Mr. Osborne's proposal to ramp VAT up to 20%.

    "And yet in the other half of the economy, the private sector, there is half a free market, and it does indeed work very well, mostly left to itself."
    Utter rot. Even when one takes account of your use of the weasel word 'mostly'. Why do so many small businesses go bust? 'Big Govt regulation'? Or profiteering by banks? How about targeted attacks by pseudo-monopolistic larger firms with the resources to kill them off with lowered local prices until the small-fry die?

    "unscrupulous businesses tend to break the law anyway, so regulations don't really work on them. So the regulations just create a massive additional cost burden on the scrupulous."
    How right you are! Using this logic, let's also abolish the laws against property theft, as they 'don't really work' on the unscrupulous - such as burglars - and just create a 'nightmare of tax-hungry bureaucracy' to be funded by the scrupulous. Let's repeal the laws against kidnapping too, because the 'unscrupulous' will always ignore them!

    "Our private sector must be reasonably healthy because we continue to attract economic migrants."
    Another rotten fallacy. This country sucks in people from dirt-poor countries, tempted by the 'huge' wages they can get paid here. Firms pay them wages that are a pittance by UK standards. This enables the firms to cut the pay of local employees, or just fire them. The migrants may well be living to live in very unpleasant conditions for a few years whilst sending cash home - analogous to students living in overcrowded, awful houses for the few years while they study - before going back home.
    Cui bono? The already-rich bosses at the firms, who get an immediate increase in Profits. The rest of us get increased unemployment, increased rents & house prices (as there is an increased demand for housing for short-term migrant workers), and an increase in acquisitive crime, drug abuse, and the violence and social breakdown that accompany them. NONE of which affects the wealthy in their gated enclaves.

    "The reason for the credit crunch, as many people have said, is that the bankers did NOT take a risk, as they knew they were too big to fail"
    This part's accurate - but the banking system can NEVER be allowed to fail, as anyone who has even the barest knowledge of 20th century history knows. If banks start to fail, EVERYONE tries to 'save' their money by taking it out of the banks and, hey presto, you have NO liquidity in the economy i.e. NO 'economy'. Lots of people thrown out of work, then out of their homes when they cannot pay their rents/mortgages.
    People DON'T just sit and starve you know, they have these things called 'riots', and 'revolutions'.

    The current crisis has been caused by the 'Masters of the Universe' in high finance having being allowed to do whatever they pleased.
    Mis-selling mortgages to people who would never be able to pay them back - and thereby 'earning' themselves billions in Commission.
    Packaging-up those bad debts with others, in exotic new forms of 'commercial paper' that were expressly designed to get around the few Regulations that were still left - and selling these 'interest-bearing 'AAA-rated' 'assets' for more Commission.
    The *really* criminal bit was, of course, buying-up other banks' Bad Debts and thereby 'earning' yet more Commission.
    Then somebody points out that it's all toxic debt that cannot ever be repaid, and NOBODY can tell you where the bad money is?
    That will be £1 Trillion for the taxpayers please - and we sure as heck aren't going to lend your money back to you, let alone give up our billions of £ of annual 'bonuses' for our 'exceptional' performance!

    "In fact, another misleading claim here is that governments are responsible for economic growth at the moment. Governments aim to create a fixed structure, something static. This means they cannot cause economic growth."
    More rot. Governments pay employees, who spend their cash in the economy, thereby stimulating it - causing it to 'grow'.
    Rich bankers take their money in to offshore tax-avoidance schemes - they do NOT re-circulate the capital within the economy.

    And here's the final kicker:
    "Search for 'Cafe Hayek' for some Austrian perspectives."
    You are another disciple of Hayek - the man whose 'brilliant' ideas were pushed by Reagan & Thatcher - deregulate the wealthy, let them pay ever-falling amounts of tax, and it will all 'get better'.
    Utter rot! The economies of the USA and UK followed this rubbish and - what a 'surprise' - the richest have got much, much richer, whilst everyone else's incomes have FALLEN as the rich have shifted all the capital OUT of the economy.

    Deregulate the richest, and they sack people here in order to increase their own profitability!

    But who cares? As long as the wealthy get richer and richer, eh?

  • Comment number 95.

    Since the " econnermists" are trying o repackage into one unit the combined efforts of every AAA's hole within the orbit of Uranus from which the sun is no longer shining, then their can be but one name

    Butt0cracy for themasses with the great Tony as bankrolled king of the cAAA's hell

    Debt cannot be written off without wiping out powerful leveraged interests, so it will be kept on the books to inkfinity and beyond or mayan calender year 2013 whichever is sooner

    Money and its ficticiuous derrivatives is/are being revealed as the numerators of power not wealth.The fact that central banks driven by political elites are shoring up balance sheets with money created from thin air proves this

    The relationship of money to wealth as defined by true market forces will be removed and debt will be allowed to hang on assets whos market price is a fraction of book price/loan value with the help of 0% interest rates embalming fluid free on demand to those in high places

  • Comment number 96.

    94 Johnny P

    The fact is that the total tax take in this country is 46 percent. It is a matter of public record. It has wobbled along between 43 and 46 percent for donkeys years. Ken Clarke in the early nineties said that was the developed EU country average driven by heath and social cost expectations. So the statement that HMG effectively owns half of all private sector activity is entirely reasonable.

    I am afraid I disagree that the masters of the universe are to blame. There are always masters of the universe about. It is the job of a government to govern and to regulate markets and also educate consumers. That is the key failure. Actually very little appears to have changed in the finance sector, most changes have come in the realisation that regulation is needed, so QED.

    There is no such thing as a free market. The concept is a nonsense. All markets have to be regulated. It is a matter of how much. I am not sure capitalism as such exists.

    If you take Browns Bubble froth away the economy is in decline and has been for sometime. Taking the froth away does not stop decline just shows what is there. If the economy takes a shock then some overshoot is inevitable. The fact that the overshoot is sorted out within 18 months, a fairly typical timescale does not mean the economy is in growth, it is a transient. The problem remains decline linked to poor strategic thinking. The fact the tax take decade after decade has run at 43 to 46 percent has to mean that the public sector has to decline sooner or later.

    If the situation is better in countries nearby such as France and Germany then it means that their model is better, a model established by their governments.

    In the light of govenments having a disproportionate number of property developers in office from Thatchers time onwards and nothing much else being around to offer growth the development of the financial sector underpinned by housing expenditure was a 'reasonable' thing to do, the fatal flaw was HMG effectively becoming a profit sharing partner in the financial activity and forgeting the regulation need.

    The underlying economic decline relates to the vandalism done to the wealth creating sector - the private sector - in pretty much all areas other than finance. This has been overseen by government of all colours for decades who have seen the de facto manipulation of the UK property market as the way forward. The Great British public have happily gone along with this and bought ever increasing import volumes.

    The merry song now is that manufacturing will save the day. That is a bit like saying the Mary Celeste is a good name for a cruise holiday. The public have voted governments in, they have gone along with the game, enjoyed short term gain, governments have not governed, now the long term bill is here and the public collectively have to expect a reversal of fortune. More particularily their children will pay the price of their parents partying.

    Almost everywhere you look the madness is deeply embedded. I won't list the destruction of R and D facilites which are needed to provide innovative development and a health manufacturing base, lets look at something simple like food that everybody has to buy everyday

    - Take a look at 'Fair Trade'. Fair trade for overseas countries, mainly farmers, yes I cannot disagree, I buy the brand myself. But the farmers here do not get a fair trade do they, they cannot apply for the label, they are shut out. And no I am not a farmer. Or take a look at air travel, is it any wonder it is in growth against other transport alternatives when the fuel has effectively no duty on it. So lets fly vegetables around the world. Or Prawns caught in the N Sea from the UK to the Far East for shelling and back here for sale and claim it is green to do so, yes it is going on, they are flown back and forth. If the imbalances are there at a micro level the macro level is unbalanced. People do not have to aid and abet this madness do they. If nobody buys then the practice stops very quickly. But it would seem there is an appetite for destruction. Just like the Blue Fin Tuna which is heading for extinction can be laid down in deep freeze storage for consumption when the species is gone and CITES exempt (CITES does not apply to extinct species) and 1/3rd of the surviving stock can be caught this year. Other Tuna species are in deep trouble but the last time I went in the supermarket I could barely get down the isle due to stacks of special offer BOGOF tuna deals, buy now, never been cheaper. pallet loads of it. Or perhaps the idea of catching declining sea fish stocks, pelletising them, and feeding them to supposed 'sustainable' farmed salmon who infest the wild species with sea lice threatening the native stock is a good idea. BTW This practice also concentrating some elements in the artifical food chain in the process. But lets switch from fish - how about cauliflowers, they are due to not be grown here, it will not be a matter of consumer choice, the supermarkets will buy elsewhere a few pennies cheaper so the farmers are giving up on producing them here. If a nation cannot produce its own cauliflowers what next.

    If anybody seriously thinks this sort of approach to matters, which is endemic, is a basis for sustained growth they have a very serious delusion.

  • Comment number 97.

    95 Sparty

    Goodness, somebody else kept wake by trees coming down in the gale.

  • Comment number 98.

    Glanafon ,This 24 /7/365 blog is great for insomniacs and you seem to be the most lucid poster on this board, probably because you are not obsessed by money as so many are, who post here.

    Your logic bombs are causing the fine cracking in the system that will help it turn to dust at the appointed hour .

    What ever you do ,don't stop now!

  • Comment number 99.

    How about The Corporate State?

  • Comment number 100.

    Goldstein and Blair's concept of "Oligarchical Collectivism" would appear to fit present circumstances quite well. Why look further?


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