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Since the onset of the financial and economic crisis not quite a year ago, a growing number of voices have been raised, often gleefully, to proclaim the death of capitalism. Without a clear definition of terms it is impossible to know what many of these critics mean, but the argument seems to run like this: the current crisis is the result of lax regulation of business and a too-cozy relationship between politicians and business executives, and the only solution is for government to get tough on business by exerting greater regulatory – and sometimes financial and management – control over companies and financial institutions.
The problem, as these critics see it, has its roots in the Thatcher-Reagan philosophy of free markets and minimal government control of enterprise, which even the subsequent left-of-center governments of Bill Clinton and Tony Blair dared not tamper with. Capitalism, it appears, has collapsed from its own internal contradictions – the lack of regulation leading to reckless and destructive corporate behavior – and although private initiative can produce great public benefit, it should henceforth be allowed to do so only under strict government control. As it happens, these critics of capitalism may be right in predicting the death of capitalism, but they are right for the wrong reasons. [click to continue…]
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