Monday, March 30, 2009

The Failure of Managed Capitalism, not the free market

This isn't free market capitalism. It's Davos capitalism, a managerial capitalism run by an enlightened elite--politicians, business leaders, technology gurus, bureaucrats, academics, and celebrities--all gathered together trying to make the economic world smarter or more humane. It might even be, as Bill Gates famously said last year at Davos, a more "creative" capitalism.

The late Samuel Huntington coined the term Davos Man -- a soulless man, technocratic, nation-less, and cultureless, severed from reality. The modern economics that undergirded Davos capitalism is equally soulless, a managerial capitalism that reduces economics to mathematics and separates it from human action and human creativity.
If they get away with it, they'll have a fundamental confusion to thank: Davos capitalism has become equated with free markets. While this is a thoroughly bi-partisan affair with roots stretching back many decades, much of the current confusion stems from the work of the New Democrats and New Labour of the early 1990s. The Soviet Union had collapsed and Keynesian economies in Europe and the United States had failed. It was politically unacceptable to use the language of centralized planning, so astute politicians like Bill Clinton and Tony Blair used market-friendly language. They spoke about a smarter capitalism, managed globalization, the government working with business, and public/private partnerships. They used market language while pursuing managerial capitalism.
Critical thinking that can be applied far beyond Davos.