Mover Mike

I started to read “Capitalism 4.0″ by Anatole Kaletsky and I’m done with it and I’ve only begun.

In the Introduction Kaletsky looks back at the financial crisis of 2007-2009 and writes that Capitalism didn’t die, but pre-crisis faith in the wisdom of financial markets and efficiency of free enterprise will never again be what it was.  He shares with us that the left-wing anti-capitalist ideologues and the right wing free-market zealots, need to have their hubris challenged for the government intervention was “clearly necessary to save the system.”  Imagine, he uses the word hubris as in “arrogance, exaggerated pride, or self-confidence that often results in retribution.”  In old Greece, to say one was filled with hubis was the worst form of disapproval.

I argue right off the bat that spending $1 trillion dollars to save Chrysler and GM, AIG and Goldman Sachs, and all the big banks was not necessary.  Those auto companies, for example, were saved for the unions which had done so much to make them uncompetitive and puts Ford in a precarious position. Kaletsky disagrees writing:

After the worldwide bank bailouts and the U.S. government’s takeover of General Motors, the dogma that government intervention is always inimical to private enterprise can no longer be sustained.

Kaletsky argues that we are in the fourth iteration of Capitalism.  The first laissez-faire Capitalism 1.0 lasting from the early19th century to 1930.  Capitalism 2.0, FDR to Lyndon Johnson, lasted from 1930 to the Margaret Thatcher-Ronald Reagan Capitalism 3.0 of the 1970s to 2007-2009. I would argue that small government and Capitalism 1.0 ended when Congress established the Federal Reserve System in 1913.  Prior to that governments played a small role and had to sell bonds to conduct wars.  Capitalism 3.0 began when Nixon took us off the Gold Standard.  I expect Capitalism 4.0, when ever it arrives, will be a complete repudiation of government intervention after 1913 and a return to what the Constitution says about money.

Then there is this howler from Kaletsky:

…if the rising generation of American and European politicians and business leaders play their cards well, the new economic model can be more prosperous than the last one.  Perhaps it will one day be described as Obamanomics. (my emphasis)

Then Kaletsky trots out Greernspan.  We all know now that all the reverence Wall Street and Congress showed this man was misplaced.  Touted as an Ayn Rand believer, he was incompetent as an economist and had no spine for her economics.  Asked whether he found his free-market beliefs were dangerously flawed, he replied, “Yes, I have found a flaw.”   He failed to tell us that he was the flaw.  He didn’t walk the talk!  The flaw to Kaletsky is lassez-faire Capitalism.  Ayn Rand said “The ideal political-economic system is lassez-fair capitalism…In a system of full Capitalism, there should be (but, historically has not yet been) a complete separation of state and economics…”  Greenspan believed he not the market could discover what interest rates are appropriate, how low or high to keep them and how much money should be in the system, even though he wrote a paper about the role of Gold in an economy.

Kaletsky believes on the other hand that the only good examples of Lassez-faire are Somalia, Congo and Afghanistan!  The new kind of capitalism now emerging will essentially reverse Ayn Rand’s objectivist ideal.  Instead of separating the state and private economy, Capitalism 4.0 will bring them into a closer relationship.”

Ayn Rand wrote Atlas Shrugged in the late1940s and  50s and laid out exactly what our economy would look like if we continued down the path we were on.  She was exactly right and the state involvement in the economy has not worked and more state will not make it work better.

Kaletsky continues, “Experimentation and pragmatism must therefore become the watchwords in public policy, economics, and business strategy even if this means a loss of consistency and coherence.” Pragmatism is spineless, fascist and morally ambiguous.

Kaletsky, while advocating more Keynes will help us, suggests we look to China for guidance.

China’s tremendous economic growth and the gain in international prestige for its state-controlled economic model after the 2007-0 crisis have cast doubt on the theory that capitalism and democracy will always be mutually supportive.  The optimistic slogan of the Thatcher-Reagan period that “free markets create free people” can no longer be taken for granted.

We’ll see if that continues to hold as China is rife with mal-investment and the correction has been held off by the politicians in charge.

I’m not alone in my view of Kaltesky’s economics:  Peter Foster: Statism 4.0 - Author Anatole Kaletsky’s ‘new’ capitalism is just a regurgitation of the tried and failed fantasy of a ‘mixed economy’

Finally, who is Kaletsky?  Mish Shedlock shares one Kaletsky idea:

Three Ideas That Should Scare The Hell Out Of You

I quoted Kaletsky back in 2006 when he said

DEFEAT IS NEVER pleasant, but often it is better to lose than to win.

The elites and statists will slobber all over this book, however Kaletsky is wrong on the dividing line between his various forms of Capitalism and he’s wrong about a coming marriage between business and government.  We already have it.  It’s called corpocracy and all it means is more debt, more government and less freedom.

Tags: Book Review, Economics, Liberty //
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