Sunday, 28 September 2008

On the inevitable consequences of neo-liberalism

It is, it almost goes without saying, a decidedly rare event when a working class anarchist finds himself in agreement with a multi-millionaire Texan venture capitalist. And yet, this week, I have found myself in precisely that position.

The US treasury and the Federal Reserve Bank have received preliminary approval for the $700bn bailout plan for the financial institutions proposed by treasury secretary Henry Paulson. Peter Orszay, head of the Congressional Budget Office, warned that without the bailout we would see "a financial meltdown" on the scale of the Great Depression "that would cause severe dislocations." However, it has been a hard sell. A poll conducted by the Los Angeles Times gauged opposition to the plan by the US public at 55%, whilst a similar poll by CNN found that 65% believed the bailout to be unfair to taxpayers.

Bill Perkins, head of venture capital firm Small Ventures USA, also opposes the bail out, and placed a full page advertisement in the New York Times - at a cost of $1.25m - to that effect. His reason, cause of the rare and unexpected convergence of anarchist and capitalist viewpoints, is that government intervention "in a gladiator´s arena where only the strong survive" isn´t capitalism. I can wholeheartedly endorse his opposition state subsidies for those who live "fat and high on the hog of the real estate boom." But, of course, where Perkins is a devout believer in the virtues of the unregulated free market, I see such dogma as no more than empty idealism which has proliferated the current crisis in the first place. Even Adam Smith admitted that the "invisible hand" would only work well in a hypothetical situation of perfect equality, and in practice we can see the corruption - from state subsidies to monopolies and price-fixing - that a free market brings with it in the real world. And so the chasm between the anarchist and the venture capitalist reopens. This bailout is not, as Paulson insists, "trickle down communism" but a desperate act by neoliberals to repair the damage caused by their own policies of deregulation and minimal government interference.

As to the bail-out itself, taxpayers´money is wiping out the debt and loss incurred by the banks´own unscrupulous lending policies. Is it too much to ask, then, that as repayment the taxpayers see the erasure of their own debts - mortgages, credit cards, loans - that are often also the result of the banks´unscrupulous lending policies?