Mon Sep 29th, 2008 at 08:59:20 AM EST
There are many who are saying that this collapse "proves" that the US capitalist model is obsolete, or based upon false ideas.
I claim that it is just the reverse. What the US has had since the 1870's is syndicalism - a partnership between big business and government. In an earlier time people weren't afraid to call it what it is.
"The business of America is business." -- Calvin Coolidge
"...because for years I thought what was good for the country was good for General Motors and vice versa". -- Charles Erwin Wilson, GM president (1953)
So we have the latest in a never ending series of benefits awarded to for-profit companies - tax breaks, subsidies, loans and, now, outright purchases of worthless assets.
After the dust settles what we will have is an environment where the "too big to fail" firms are even bigger and the number in the market has been further reduced. After today there will be only be three big banks left, two "investment" banks, four accounting firms, etc. If firms were too big before, why are we letting them get even bigger?
The goal of capitalism is to get to as close to a monopoly position as can be achieved. In the US system, the government assists in this, rather than trying to control the concentration of power.
The result is always the same: big firms are less efficient, innovate less, stifle competition, wield too much political power and cost consumers money.
What is different this time is that the world is now "globalized" and firms elsewhere are playing by a different set of rules. The innovative firms are now in Asia and within a decade or so will be dominating the sectors the the US government has been trying to protect - finance, intellectual property and knowledge-based industries, and bulk agriculture.
One would have thought that this lesson would have been learned after the invasion of the Japanese auto makers, but apparently not. After the dust settles, the wealthy will still be in control, the middle class will still be wage slaves and the nation will be even more uncompetitive in world markets.