It can be a real challenge to penetrate the cloud of cant and catchphrase that envelopes the discussion of the financial crisis. How profoundly this disarray has shaken American institutions is still far from evident to the great majority of people. Thus the allure of the conventional, that pattern of soothing slogans and bromides, which lulls the active mind to sleep, is very strong.
It is therefore always welcome to read fresh, creative analysis, of which the following two articles are exemplars.
First is Francis Cianfrocca’s assessment of China as “the world’s most Keynesian state.” He explains why this is so quite vividly; which in turn helps explain, perhaps, why commentators from Tom Friedman to Bono to the French Foreign Minister have recently given voice to their admiration for Chinese efficaciousness. For all of my adult life, an assumption undergirding the vision of Globalization was that Chinese openness to private enterprise and growth economics would eventually issue in openness to political freedom. In a word, capitalism would inexorably push that country toward liberty. Now it looks more and more as though the reverse may be true. Chinese capitalism, with its distinctly authoritarian bent, appeals to statists everywhere. They look at China and see a neat arrangement where private businesses answer meekly to the dictates of state policy, which includes an impressive range for profit and growth, thus placating the business class while maintaining the despotic structure of the state. The charm of this arrangement to, let us say, an enthusiast of green technology, or a politician in favor of socialized medicine, or indeed anyone sympathetic to what used to be called “industrial policy,” is no mystery.
Second, this column by Anatole Kaletsky in the (UK) Times is a fascinating read. If he’s right, it adds an intriguing new twist to my suspicion that it was a bad idea to allow the investment banks to become public corporations by issuing common stock. Kaletsky is not above a little creative mischief; he characterizes this development in banking in explicitly Marxian terms. Well worth a read.