Reykjavík Grapevine - 28.08.2009, Side 8

Reykjavík Grapevine - 28.08.2009, Side 8
8 The Reykjavík Grapevine Issue 13 — 2009 Capitalism is dead. This may come as news to no one, but the implications are vast. In fact, it changes everything. We have always known that capitalism was a brutally unfair system of distributing society’s wealth. What we did not know was that capitalism would be so bad for the capitalists themselves, or that they could be so incompetent when it came to creating wealth. We did not know that the capitalists had no clue when it came to making money. In fact, capitalism has never created anything (bar misery). All the technological wonders that have changed our lives so much these past 100 years have been created by gigantic government institutions. Perhaps there was a time when independent entrepreneurs such as Edison or the Wright Brothers could come up with something new, but that time is long past. Inventions these days are so costly and time consuming that it is only governments on a war footing that have the resources to commit to them. The jet engine, the computer, the internet, GPS and GSM are all compliments of World War II or the Cold War. They are then handed over to private enterprise, which makes inferior versions that need to be upgraded every other week. This is not to say that war is good, only to stress that capitalism cannot do anything right. It corrupts our bodies and our environment, and in the end it even does the one thing it said it would never do, it destroys the market itself. THE 100 YEAR WAR So, capitalism, as we all know, is dead. In fact, we can soon celebrate the 100th anniversary of its demise. For you see, the capitalist system broke down in 1914. By the early 20th Century, capitalism was spinning towards its inevitable conclusion. Every part of the world had been colonised and the magnates wept for there were no new markets to conquer. All of the five richest men in history had amassed their wealth and were alive during this period, according to Forbes magazine. The American oligarchs Rockefeller, Carnegie and Vanderbilt controlled US industry. Even tsar Nicholas II of Russia was infinitely richer than his predecessors, while his countrymen remained destitute. The fifth, Asaf Jah VII of India, was under the protection of the British until India became an independent country and deposed him in 1948. The Germans wanted colonies of their own to squeeze, but the British and the French were busy squeezing and in no mood to let others in on the game. And so the major industrial countries, Germany, Great Britain, France and eventually the US, along with the industrialising Russian Empire, invented a new kind of warfare, total war. By its nature, this led to a breakdown in trade and massive government intervention on every level. The war, which was partly fought over access to markets, led to their demise. The backbone of capitalism, the Pound Sterling, went off the gold standard. After the end of hostilities, an attempt was made to resurrect capitalism. The gold standard was reintroduced in 1925 but eventually abandoned in 1931. The attempt to revive capitalism had led to financial collapse and even a Great Depression. THE END OF THE CAPITALIST EXPERIMENT Most thinkers at the time realised that the capitalist experiment was over. It was only saved by the timely outbreak of World War Two. This again led to massive government intervention and technological advancement. After the end of the war, no attempt was made to revive unregulated capitalism. Instead, regulation became the order of the day. This was partially because of the lessons of the Great Depression, partly because the fear of communism led the leaders of capitalist countries to adapt some of communism’s attributes. In fact, this system worked so well for almost 30 years that it seemed this strange hybrid of government regulated capitalism might prevail. But it was not to be. In 1971, as a consequence of the Vietnam War, the US Dollar went off the gold standard. Nothing had any real value anymore, and governments gave up all attempts to control markets. We are now seeing the logical conclusion. Even if it may temporarily revive this system, which has been kept artificially alive for almost a century, it is in its death throes. In two or three or five years time, another crisis will hit and the people will again be called upon to bail out banks and corporations that have become too large to be allowed to fail without dragging the whole world down with them. But these solutions are temporary. The time will come when there will be nothing left to squeeze out of the pockets of taxpayers or even out of the soil itself. This system cannot stand. It is time for another. Articles | Interview Opinion | Valur Gunnarsson Capitalism: Its Last 100 Years Hannes Hólmsteinn Gissurarson gave a candid interview, and he argued his views vigorously. You might not neccessary agree with his convictions, but at least he has some. HAUKUR S MAGNÚSSON BALDUR KRISTJÁNSSON So it’s Fréttablaðið’s fault? The economic collapse can in part be traced to the media bill not being passed? The fight over the media law is maybe mostly symbolic for a certain battle in society between people like Davíð Oddsson, who wanted tycoons to stay in their place, being useful and making money, and their opponents. What was the battle of 2004 about? It was about whether tycoons should own all the media and control all the opinion making in the country. We went through a great struggle between David and Goliath, where Goliath was the president of Iceland along with the tycoons; the people on the private jets and yachts. And they won. I’ve been reading your articles and watching you on television for almost twenty years, on talk shows and on the news. I’ve heard your criticisms and suggestions and ideas on how to improve society, and how our communities are best run. And I’ve heard you boast about how successful we’ve been, as late as last year you boasted that the deregulation and privatisation of everything—the climate you claim to have helped create—contributed to the well being and wealth of the Icelandic nation. You said that we owed our prosperity to the changes that your party implemented in our system of government. Then everything goes to hell, we find ourselves in the final chapters of ‘The Road To Serfdom’ and it’s suddenly the fault of your political opponents. You had no problem taking credit, ideological or otherwise, when things were going well, yet now you refuse to accept any responsibility whatsoever or attribute it to the system you implemented. This doesn’t make sense to me. It sounds like a huge cop- out. I’ve already explained to you the three reasons for why the credit crisis hit Icelanders so badly, and two of them have nothing at all to do with the changes and progresses we made during the nineties and early 2000s. The third reason, the recklessness, can be explained by lack of supervision, but that doesn’t explain anything. The nations that are most free in the world are the ones that offer the most prosperity. It is not free market capitalism’s fault that we had a subprime loan crisis. That can be directly attributed to state intervention in the market. You cannot blame the free market for the subprime crisis, flaws in the EEA regulation or the Brits invoking terrorist law against Iceland. As for the lack of oversight and supervision, I think that was an accident that happened, but I think that the critics of capitalism should agree with me that capitalists need to be monitored and supervised. And they weren’t between 2004 and 2008. But isn’t deregulating the market a key factor in creating prosperity, according to you? I am personally of the opinion that capitalists fare best when they are creating wealth. They do not fare well controlling a society and they should not buy entire political parties and media outlets, so as to avoid their criticisms. The Social Democratic Alliance did everything the magnates wanted them to. The media did their biddings and the courts did as well. And is that the fault of libertarianism? How can you blame libertarianism for Ingibjörg Sólrún Gísladóttir saying in her Borgarnes speech that you couldn’t criticize Kaupþing? There is a misconception going that since Davíð Oddson and his supporters were powerful between 1991 and 2004, they kept control after that, and steered the development after that. But he quit in 2004. What is your opinion on ideological responsibility? The answer is that everyone that has favoured the free market, a freedom of choice on consumer products and everything else... I don’t think that people who favour consumer choice and freedom of trade can be held responsible for the fact that capitalism fluctuates and goes through periods of instability. It’s thankfully not as stable as a system where everyone is equally poor, and where nothing happens. I would say that it’s very strange if the free market thinkers are blamed for world recession. That being said, as soon as you create freedom, you create a risk, do you not? As soon as you leave your parents’ house as a young man, you are at a risk. But if you get yourself in trouble, is that somebody else’s fault? The main thing should be to limit the damage to the one that causes it. And that’s one of the reasons I feel it’s absurd for us to accept responsibility for the damage that Landsbanki caused with Icesave. We never signed any commitments. I believe that those that do well should reap the benefits, and those who do ill should equally suffer the consequences. The Icelandic nation should therefore not cover Landsbankinn’s debt. How can a nation be expected to pay the debt of private companies? But speaking of responsibility, are we, then, responsible for letting things go too far? If I make a mistake, I freely admit it. And I think I’ve been wrong in two or three instances. I did not believe the men behind Baugur [father and son team Jóhannes Jónsson and Jón Ásgeir Jóhannesson] were such bad businessmen as we are now witnessing. I thought their investments were sensible. I was shocked by their ruthlessness and aggressiveness, but I assumed they were smart businessmen. That was one mistake. Another thing that surprised me was that Landsbankinn invested so much money in them. Lastly, I believe I should have better supported Davíð Oddson when he criticised the magnates. I grew up on Hayek and Friedman, on their beliefs that wealthy capitalists were useful for society. As I said before, that is still my conviction, and it is backed up by centuries of experience and evidence. But I still should have supported Davíð more strongly in his fight against Goliath. Which Icelandic party bears the most responsibility for our current state of affairs? The Baugur team. It is obvious, and I am not saying this out of personal hatred or dislike. They are the biggest debtors; we have a credit bubble and who took these loans? It was them and their friends, the men with the cellular phones on the yachts and in the private jets. You’ve been quoted as saying that everyone, save for Davíð Oddson, is responsible for the recession... I used one reference from the Bible earlier, about the dance around the golden calf. There is another reference relevant here; the voice in the wilderness. I feel at times that Oddsson was the voice in the wilderness. I am not saying that he was infallible or perfect, or that everything he did was right—he made his mistakes like everyone else, he is frail and human. But he was the first to see the dangers of the ascending plutocracy. But doesn’t that place an unfair burden on him, even? But who else...? I’ll ask you a simple question, who else, on normal premises instead of a sick hatred for the wealthy, warned about the dangers of the Icelandic plutocracy? Sick hatred for the wealthy? Yes, I am talking about the Left Green party. They are against the wealthy, because they dislike them. But answer me this, who else warned of the plutocracy? Is it fair to make it a condition to have supported tycoons that weren’t the Baugur father-son team or their friends? Other people’s success doesn’t bother me; it doesn’t deprive me of sleep. I think the Left Greens are a completely different story. ‘Distribute misery equally,’ that’s the leftist creed. Tel +354 577 60 50 www.sixt.is CONTINUED FROM PG6

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