Sunday, October 19, 2008

New era

It must be. Because now even the leading financial magazine in the US, Business Week, is officially using the scandalous word "nationalization". They even featured the term prominently on their Web home page:


The lead article is Forget Adam Smith, Whatever Works by Pete Engardio 10/16/2008 (10/23/08 print edition). The article itself uses the term that has now emerged from its taboo status in the US:

The Bush Administration, by committing $250 billion to buy equity stakes in a huge swath of the U.S. banking system and extending all manner of financial guarantees to depositors and money-market investors, has just violated some enshrined principles of American-style, free-market capitalism.

You might dismiss all this as extreme measures for extreme times, a pragmatic adjustment that will be quickly undone once order is restored. But the significance, not to mention irony, of a Republican Administration partially nationalizing the U.S. banking system cannot be overstated. It could well go down as an important turning point in postwar American economic history, the beginning of a fundamental rethink of the proper boundaries between the public and private sectors. "The pendulum between the state and markets is swinging back before our eyes," says Daniel Yergin, co-author of the 1998 book The Commanding Heights, which chronicled the triumph of market capitalism over state-led economics since World War II. "And it is happening a lot faster than anyone expected." [my emphasis]
It's good to see this because there's some real value in calling things by their names. But it's also a sign of how highly ideological and at the same time vague the way we commonly talk about economic issues has become.

Not that all terminological issues have disappeared. For instance, Yergin's term "market capitalism" is pretty weird. Any kind of capitalism has to have a "market". So does any other kind, for that matter. Which is why the even more common term "market system" is basically meaningless.

The cover of the magazine features the banner title "The Future of Kapitalism". The story linked above features an interview with the author, Pete Engardio, being questioned by BW's executive editor, John Byrne. Byrne asks Engardio to explain why the cover spells "capitalism" as "kapitalism". He responds:

Well, I think the editor thought starting "capitalism" with a "k" kind of denotes a bit of socialism, the way Karl Marx spelled "capital".
Say what? Are you sure it wasn't meant to remind us that Marx's first name begins with a "K"? Because that would make about as much sense. Marx spelled "capitalism" with a "k" when he was writing in German because the German word is "Kapitalismus" (not "Kapitalism"). That's just strange.

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