Laissez-faire is French for ‘allow to do’. Laissez-faire capitalism is therefore allowing near-complete economic freedom and having a free market, one which is left largely untouched by government forces or the state. Apparently the American government understands this as ‘allow to do except in cases where the entire economy is about to implode’.
The US government is giving what has been called “The Mother of All Bailouts”: up to one trillion dollars will be spent on protecting banks, mortgage institutions, and the investment banking enterprise. This comes after the bankruptcy of Lehman Brothers, the near-bankruptcies of Fannie Mae and Freddie Mac, and a general downturn in the US economy. It’s hard to say why this financial crisis has come about: some are saying that this is an inevitable result of unbridled capitalism and some say that spending an estimated $550 billion on war hasn’t helped either.
Whatever the cause may be, the effects are all too clear. The free market has always been a staple of the libertarian right-wingers in America and American government. The separation of economy and state has been enforced with more vigour than the separation of church and state has been recently. Now, with their precious financial institutions failing and with laissez-faire capitalism crumbling before their eyes, the US has realised that they have to intervene and, by offering such a great amount of aid, is effectively moving towards nationalisation and a breed of socialism; a move that would be admirable if it were done for the right reasons and not simply because the Bush administration is hypocritical.
Gordon Brown on the other hand is not being a financial apologist. He is placing the blame for the economic crisis squarely on the “high flying financiers” whose callous disregard for fairness, worker rights, and plain common sense has led them down a path into ruin. He has vowed to clean up the UK’s financial institutions by getting rid of these ill-educated and irresponsible bankers who have captained their ships straight into icebergs.
America has always been afraid of nationalisation, gripped by the irrational fear that they’ll turn into Cuba or Soviet Russia. They have one of the worst health systems in the West precisely because they are afraid of nationalising it. It’s therefore hard to say what the effects of this quasi-nationalisation of financial institutions will do to the country. Perhaps it will lead to more government intervention in economic practices; maybe it’ll lead them down a road to a fairer economy; maybe some Americans will even read John Rawls’ ‘A Theory of Justice’.
When a forest grows too wild, a purging fire is inevitable and natural. We can only hope that the economic crisis of 2008 rids the economy of the frivolous risk-taking financial leaders whom we have nurtured with our ‘allow to do’ laissez-faire approach and whose sloppy management has plunged their companies into debt. As the noose of poverty tightens around the USA, politicians and citizens alike will feel the true cost of war and may think twice next time before charging into a sovereign nation.