Reykjavík Grapevine - 28.08.2009, Page 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