from OurFuture.org:
By Robert Johnson
March 27th, 2008 - 12:17pm ET
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Originally posted at Firedoglake. The crisis on Wall Street appears to be very severe. The Federal Reserve's emergency actions, background discussions with foreign central banks about outright purchase of mortgages, and the premiums on interbank interest rates over Treasury Bills (The so called Ted Spread) suggest that fear of credit collapse is significant. As a result "the rules of the game" are in play.
Naomi Klein, in her recent book, The Shock Doctrine, addresses the strategy of response to crisis. She cites Milton Friedman who once wrote:
only a crisis-actual or perceived-produces real change. When the crisis occurs, the actions that are taken depend on the ideas lying around. That is our basic function: to develop alternatives to existing policies, to keep them alive, and available until the politically impossible becomes the politically inevitable. (from Capitalism and Freedom)
I would argue that the Wall Street meltdown and its shocking consequences will create the crisis conditions that are ripe for change. Albeit, Dr. Friedman had the opportunity to enact change because he often promoted ideas particularly suited to the wealthy and the powerful. Yet it is those ideas, largely underpinning the policies of the last 40 years, that are now called into question. Therein lies the opportunity.
The response to the Wall Street shock will have to, as Thomas Palley wisely suggests, be carried out on two fronts. One is policy. But policies must be justified with sound underpinnings. The extent of this crisis is likely to lead to reexamination in a cold critical light of ideological premises where the neoliberal ideas of free market fundamentalism will be shown to be in sharp contrast to the corporatist practice of the United States. As the Wall Street crisis deepens and spreads, the bailout will contradict the notion of a separation between state and market. Seen from the light of the financial crisis, other violations of market fundamentalism will be scrutinized. State support for military, oil, telecommunications, finance, and more belie the notion that there are clean boundaries between markets and politics. We will increasing realize that we have never been in that dream cloud where markets went unsubsidized.
In another instance, the market fundamentalists have gotten great traction from the "Horatio Alger" mythology of the self made man. Individual responsibility is the key to success, they say. That is an attractive notion. It seems to suggest that one has power to control one's own destiny. While I would never want argue that effort and self discipline are not helpful or necessary components of success, I would argue that context also matters. In the present crisis it is very likely that a multitude of hard working, disciplined and well educated people are going to be blown off their moorings as a result of the fallout from Wall Street. Things beyond their control are going to hurt them. Things that other people were allowed to do.
As a result, the experience dreadful outcomes in our society are likely to illustrate that the attraction of Horatio Alger mythology is illusory. Anxiety is reduced if you feel you have power over your environment. The protection of those beliefs is shattered when activity in society, over which you have no influence, overwhelms your life and livelihood. ......(more)
The complete piece is at:
http://www.ourfuture.org/blog-entry/crisis-wall-street-shock-doctrine-opportunity-notes-take-back-america-panel