When a successful investment banker-turned Treasury Secretary caps his career by arranging a $700 billion bail-out of the banking system after engineering the nationalization of two financial institutions so large that even the reddest socialist would have paused at the prospect of taking them onto the government's balance sheet, when a leading neoconservative suggests, only partly in jest, that presidents of banks seeking to sell their dicey paper to the Treasury should not be allowed to earn more than the President of the United States ($400,000 annually), you know that something fundamental is going on. Which indeed, it is: the day when that engine of capitalism, the financial market, will be allowed to operate more or less unimpeded by government, has passed.

The features of this New Capitalism are:


􀂃 a reduction of the willingness of individuals and politicians to accept the risks inherent in the market system as it has been structured and as it has functioned until now;


􀂃 the replacement of the bias in favour of deregulation that saw airlines, trucking, banking, electricity generation, natural gas production and other industries freed from pervasive (although not all) government control, with a bias in favour of more regulation;


􀂃 a refusal to accept any longer the market's verdict as to how income and the fruits of economic growth should be distributed;


􀂃 the rejection of the idea that the benefits of free trade are so obvious, and so widely distributed, that the post-World War II free-trading regime, its economic benefits notwithstanding, should be extended, and
􀂃 insistence that the balance between considerations of economic efficiency and equity that has guided public policy since the end of World War II be changed, with equity considerations being given greater weight when coping with the increasingly powerful winds of change that are buffeting the US economy.

Stelzer then proceeds to recite all the usual things we've come to expect from him about why anything but total free-trade and market competition, red in tooth and claw is morally wrong and deeply damaging to the human race.

I or any regular here could deconstruct that part of the speech, but I don't think it's important to do so at this time, because of the way he ends the speech:

None of this is to say that the New Capitalism will produce material results superior to the Old Capitalism, which has been no slouch at improving living standards and eliminating poverty. Or that its new regulations, new trade regime, new tax structure, or new emphasis on fairness will satisfy those who are driving these changes. I have my doubts on both scores: the New Capitalists have not entirely met the burden of proof that rests on those who would change a system that has done so much to improve the lot of those fortunate to live under it, and they have the bit I their teeth and little opposition now that conservatives have capitulated. But there can be no doubt that the world has changed, that capitalism as we knew it even until a few years ago is no more, and that we who remain saddened at some of the changes had better learn how to make the New Capitalism function as well as it can, rather than curse those who have capitulated to its demands.

He hasn't changed his views, he's still the Genghis Stelzer who in many ways dogged my economic consciousness as a teenager from his column in The Sunday Times (London.)

But if you'd ever suggested to me that he'd be writing this capitulation. I would never have believed it. Something very large is going on. It's perhaps in part a rhetorical ploy to try and absolve his views from the disaster they helped create, so they can be brought out again in 5 years time. But still, whoever thought that there would even be 5 years hiatus from Genghis Stelzer?