Valuable insights from a non-American perspective (an expat living in Russia): “(Back) Under the Volcano” (1.3 MB PDF), Eric Kraus, Truth and Beauty, 24 May 2010 — Posted with permission. Excerpt:
The frankly self-serving free-market orthodoxy, still taken as axiomatic by many in the financial industry, and which has recently acquired a status close to Holy Doctrine in much of the Anglo-Saxon world, implies at least one quasi-theological assumption – shared, oddly enough, by believers in the Earth Goddess Gaia, as well as by the wilder exponents of the organic foods movement: the assumption is the child-like faith that whatever is “natural4” is by definition “good”.
This can be a dangerous misconception. Both tetrodotoxin and botulism toxins are entirely natural; ingestion of even the tiniest speck will reliably cause death. Similarly, entirely “natural” financial montages can develop structural faults which very naturally lead to economic and thus political catastrophes blighting the lives of generations.
In Praise of Passivity?
One of the most pernicious intellectual sleights of hand of the Neoliberal/Austrian schools of economics is their attempt to ban the very discussion of the purpose of financial systems – i.e. whether or not any particular aspect of the market-economy actually benefits the people living in a given society, asserting instead that markets are natural phenomena which must be left to evolve freely, without any attempt at shaping or channelling them in the interests of “the greatest good for the greatest number.” Their standard assertion is that all attempts at regulation simply introduce inefficiencies, leading to a relative impoverishment of all, a claim that flies in the face of the most obvious evidence: 20th century economic history has seen the greatest increase in wealth in human history, attained during a period characterized by the ever-increasing weight of government.
Markets, and especially, the politico-economic context in which they develop and function, are man‟s creations: from private property to the limited liability corporation; eminent domain to taxation; direct vs. representative government; the various definitions of democracy; war and related means of asserting economic dominance; the role of the individual viz his society; regulation and the role of the state as arbitrator/owner of productive assets; social decisions are made – consciously or otherwise – which condition the economic evolution of each society.
… Perhaps the most vital conclusion is that one size does not fit all. Highly socialized systems seem to work best in the Nordic countries, characterized by a high degree of social consensus and a rather Calvinistic view of society and the obligations of the individual; in the more individualistic/anarchic Latin and Slavic cultures, laws and regulations tend to be seen as hurdles – to be gotten over, under or around. The “ideal social model” is thus one corresponding to the era, culture and economic conditions of a given country. …
The Twilight of the Ideologues
… We find that the ideology accompanying the Reagan-Thatcher Revolution meets most of the criteria for Dogma: a unitary ideology proposing one simple solution (Free Market Magic) to every conceivable problem, oblivious to any empirical evidence to the contrary. In brief, said evidence would include the observation that aggressive deregulation has resulted in the relative impoverishment of the Western middle-classes, that the best human development indices are to be found in Nordic countries practicing a relatively statist form of capitalism, but especially, the fact that none of the Asian Tigers undergoing the spectacular transformation from agrarian backwater to industrial powerhouse did so on the basis of laissez-faire – all employed complex, pragmatic mixtures of free-market capitalism with very substantial state involvement. The sad fate of those post-Soviet states which adopted the most extreme forms of liberalism – the Baltics – contrasts with the relatively better outcomes in the more moderate Central European countries – e.g. Poland, Slovakia, etc.
A Covent of Whores: The Economist
As we had expected, the Western press has begun to tone down its anti-Russian rhetoric, at long last displaying some measure of balance in its reporting. The great exception – the Economist – now confronted with the defeat of virtually everything it had shilled for (The Orange Revolution, Saakasvilli, “the Baltic miracle”, NATO expansion up to Russia‟s borders, Russia‟s pro-Western opposition, Russia‟s “isolation” by the West – all now reduced to ashes…) is growing increasingly hysterical. Despite their oft-reiterated predictions of doom and gloom, of fratricidal political wars (which, in fact, never broke out), of riots and revolutions (existing only in the fevered brains of the authors), and of the inevitable failure of what proved to be Russia‟s first successful economic model in a century at least, Russia is beginning her new decade on a very positive note. Although the effects of the global credit crunch were amplified by Kudrin‟s excessive reliance upon the global financial system, the economy has recovered, and is once again growing well above consensus.
More to the point, on the diplomatic front, the EU has abandoned the insanely confrontational policy of the Bush administration and is actively courting Russia; even the British have become suddenly solicitous as they watch Germany walk away with all the best contracts (with France and Italy bagging the rest.) NATO has resumed discussions with Russia, and has gone dead silent regarding Abkhazia and So. Ossetia, the de facto independence of which has now been recognized by all but the most clueless of observers. Significantly, negotiations have resumed in Brussels aimed at defining the “New European Security Architecture” – met with such scorn when first suggested by President Medvedev a year ago.
… The absurd prediction put forward by The Economist and its ilk that President Medvedev would mark the beginning of a new wave of Russian reform by releasing one of the men who most contributed to the catastrophic failure of the first post-Soviet government now lies in a cold grave, along with virtually every prediction they have made.
Other posts about Russia
- Forecasts – Why wait? Read tomorrow’s news … today! (part I), 11 July 2006 – Rise of the petro-empires
- More news about Russia’s demographic collapse, 6 June 2008
- Perhaps *the* question about the Georgia – Russia conflict, 10 August 2008
- Keys to interpreting news about the Georgia – Russia fighting, 12 August 2008
- What did we learn from the Russia – Georgia conflict?, 13 August 2008
- Comments on the Georgia-Russia fighting: Buchanan is profound, McCain is nuts, 15 August 2008
- Best insight yet about America and the Georgia-Russia fighting, 15 August 2008
- Georgia = Grenada, an antidote to Cold War II, 16 August 2008
- “The Medvedev Doctrine and American Strategy”, by George Friedman, 4 September 2008
- Rumors of financial war: Russia vs. US, 22 September 2008
- Before we reignite the cold war, what happened in Georgia?, 12 December 2008
- Rumors of financial war: Russia vs. US, 22 December 2008
- More weekend reading; information you want to have!, 23 December 2008 — Russia as the last man standing in a region of demographic collapse.
- A free lesson from Russia: how to manage a banking crisis, 6 February 2009
- “The Russian Economy and Russian Power” by George Friedman of Stratfor, 2 August 2009
Afterword
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