The Samovar


Good article on capitalism and the crisis
April 3, 2009, 12:21 pm
Filed under: Capitalism, Economics, Politics | Tags:

Shame about the title though. I think the words “Yes we can” should probably be banned. Anyway, here’s Robin Hahnel on “Change how the world works? Yes we can“:

Until capitalism is replaced, we want the tail to stop wagging the dog. Finance should serve the real economy instead of the other way around. If the financial sector improves the efficiency of the real economy, it is helpful. But if it misdirects investment resources to where they are less productive, it reduces production in the real economy by obstructing the flow of credit altogether. Then it is failing to accomplish its only social purpose. Jobs producing useful goods and services, and investments which help us to produce what we need with less human toil and less strain on the environment, are what count. Increases in the profit rates and stock prices of financial corporations count for nothing when they fail to correspond to real increases in productivity, as has too often been the case.

We have offered several positive alternatives to capital liberalization and to the governing structures and policies of the International Monetary Fund (IMF) and the World Bank, such as capital controls and a Tobin tax to protect smaller economies from volatile speculative flows. We have made suggestions on how national governments can restore competent regulation of their traditional financial sectors, and stressed the urgency of extending regulation to cover new financial institutions which were allowed to grow outside existing regulatory structures.

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