RDN in the FT on capitalism

I had a letter in the Financial Times recently and I’m afraid it gave me rather a buzz. This is partly because attention at that level is always welcome, but also because my note appeared during the paper’s quite sustained attampt to get its brain round the current crisis. Oh, and I think the letter said what I had been struggling to say for a while.

An unruly phenomenon in constant need of social control
12 March 2009
From Mr Richard D. North

Sir, Martin Wolf writes that “another ideological god has failed”, and as a result “the legitimacy of the market will weaken” (“Seeds of its own destruction”, March 9). However, much of the rest of his article was about how important it is now to avoid a retreat from markets into nationalistic state meddling.

Thank goodness your editorial the next day (“The consequence of bad economics”, March 10) is much less ambiguous, and allows us to be more confident that you maintain your faith in capitalism. After all, it isn’t an ideology but an unruly human semi-natural phenomenon in constant need of social control. We can never get that quite right, of course. It just happens that our generation got it badly wrong.

Bernard-Henri Lévy told the Today programme something similar last year: “Capitalism has not failed. We have failed capitalism”. (I’m sorry I cannot convey the insouciance of his Gallic tones.)

As Gillian Tett says (“Lost through destructive creation”, March 10), too few people spotted that many of the new banking “gizmos” weren’t properly traded at proper prices. This is to say, surely, that the regulators and financiers didn’t spot that the market wasn’t being allowed to do its good work?

It’s obvious something very big is happening to our financial system. But – to use an old but not outmoded way of talking – we are not necessarily in the middle of a paradigm shift. One reason we can suppose the scene remains recognisable is our mild confidence that we can return to some older capitalistic habits and avoid the practices that have done so much damage.

Richard D. North,
Media Fellow,
Institute of Economic Affairs,
London, SW1, UK