Another Economic Crash Is Inevitable

The economic crash of 2008 left people in their millions across the globe bewildered and shocked by the catastrophe and devastation inflicted on their lives: the hopelessness of the unemployed young facing a bleak uncertain future, pensioners struggling to survive on pensions that have lost their value, the employed poor accepting a cut in their working hours and wages to avoid losing their jobs, the very poor, the sick and disabled trying to survive the cuts to the welfare safety net. People find it difficult to comprehend how a few powerful bankers could cause so much damage and misery to the lives of countless millions.

In a previous article (Dissident Voice), two years ago, I wrote:

How did it come to this? What sort of a system have we created that gives so much power to these people? How is it that these people, who are entrusted with the money made by working people, end up gobbling up the money for which people have laboured so hard? How were they ever allowed to have such a stranglehold on the lives of millions? Where were the people we elected to look after us when such a distorted, corrupted form of capitalism was being developed? Were they so incompetent, or have they become part of an oligarchy that enriches them as well as the gamblers of the market?

So what has happened since then; have the masters of the universe who caused the crash changed their ways? Are they contrite for the misery they have caused? Have our politicians taken the necessary action to prevent another crash happening, or at least if it happens, ensure that it doesn’t threaten the entire economies of nations?

The Independent (April 2013), quotes Jeffrey Sachs, the well-known Columbia University economist as saying:

I meet a lot of these people on Wall Street on a regular basis right now…I am going to put it very bluntly: I regard the moral environment as pathological. And I am talking about the human interactions … I’ve not seen anything like this, not felt it so palpably…. They have no responsibility to pay taxes; they have no responsibility to their clients; they have no responsibility to people, to counterparties in transactions.… We have a corrupt politics to the core, I am afraid to say, and … both parties are up to their neck in this. This has nothing to do with Democrats or Republicans.

It is clear that the “moneymen” have not changed their behaviour; their arrogance is undiminished, with no recognition of their responsibility to society.  The politicians, it seems, are unwilling or unable to take action to protect society from the next crash, which will surely happen if the necessary rules, laws, and regulations are not in place. Every attempt at reform is vigorously resisted with the argument that it interferes with the sanctity of the free market.

What is a free market? Is it something that can be objectively defined?  Professor Ha-Joon Chang of Cambridge University argues this point thus:

The free market does not exist. Every market has some rules and boundaries that restrict freedom of choice. A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them…There is no scientifically defined boundary for a free market. If there is nothing sacred about any particular market boundaries that happen to exist, an attempt to change them is as legitimate as the attempt to defend them. Indeed, the history of capitalism has been a constant struggle over the boundaries of the market.

He cites the legislation in 1819 to regulate child labour in Britain as an example. This was a law prohibiting the employment of children under nine in cotton mills, which were considered particularly hazardous to workers’ health. This caused a huge controversy with opponents seeing it as “destroying the very foundations of the free market.” No one, I hope, in the industrialised rich nations today, is suggesting that we should bring back child labour as part of liberalising our labour laws.

Our government, using hundreds of billions of pounds of our taxes, rescued the banks from collapse. Have they got the guts to do what is required to save us from the next collapse? I am not holding my breath.

Adnan Al-Daini (PhD, Birmingham University, UK) is a retired University Engineering lecturer. He is a British citizen born in Iraq. He writes regularly on issues of social justice and the Middle East. Read other articles by Adnan.