Capitalism gets the jitters, but don’t make a dash for the Blaskets just yet

At the same time, there are some ill winds blowing which will have economic and political consequences for all of us. But a revolution? Let’s just say, it isn’t imminent

In 2001, Cuban dictator Fidel Castro produced a volume of his interminable speeches called ‘Capitalism in Crisis’. Most of us regarded it is as typically delusional. After all, the world economy was in pretty good shape back then. Many Cubans, meanwhile, had little idea where the next meal was coming from.

Fast forward to 2008 and what do you see? The old tyrant’s last remaining defenders appear to be holding the book up as an example of enlightened prophecy. The end is nigh, we’re told; the death knell has tolled for market economics.

Astonishingly, The Guardian, Britain’s more solid leftish newspaper, even ran a comment piece last week entitled ‘Marx is being proved right’.

It’s in the nature of journalism to focus on the dramatic. ‘Capitalism in Crisis’ has a ring about it. I don’t recall many ‘Capitalism Carries on Delivering’ headlines a year or two ago. Broadcast journalists love to talk of “billions wiped off share prices”. Again, “steady upward shares movement” doesn’t have the same appeal; nor does “billions put back on”.

Picture editors just love photographs of exhausted, stripy-shirted traders with their heads in their hands. One idiot, Jerome Kerviel, has even become a household name. His thousands of counterparts who spend their days keeping the supply of credit running, benefiting us all, remain nameless, faceless.

The mundane truth is that if you had spent the last week on the Blaskets without access to television, radio or newspapers, you wouldn’t have missed much. OK, so George Soros told us we were heading for the worst crisis since 1945 and much of the media lapped up his dire predictions. The more prosaic reality, though, is that the financial world didn’t implode.

Capitalism has not been scuppered. Actually, share prices are now back to the levels at the start of the year — about the same place they were 12 months ago, as it happens.

That is not to say nothing has happened. It’s just that the strength of capitalism lies in its ability to adapt itself to new realities. At the same time, there are some ill winds blowing which will have economic and political consequences for all of us. But a revolution? Let’s just say, it isn’t imminent.

Rather, it seems some commonsense has been injected back into the financial world. We are going back to the good old days when anyone wanting to borrow money actually had to prove they could pay it back — or pay a penalty. In short, normal service is being restored. Unfortunately, pointing this out makes for less exciting news than the idea that we are experiencing some sort of unique and existential blow to the modern way of life.

Still, things did look pretty bad for a day or two. There was the biggest one-day fall in Wall Street since 9/11. It spilled over into every world stock market and the largest single cut in American interest rates for 25 years as an emergency attempt to stop the rout. Even wise heads at the mighty US Federal Reserve looked panicky. A new crisis emerged in an obscure US insurance business and, to cap it all, there was the €5bn bank ‘fraud’ at Societe Generale, France’s second-biggest bank.

But wishing the free market would collapse under the weight of its own irresponsibility wasn’t going to make it so. There is no great magic at work here. The free(ish) market is not some vast construction, the right-wing’s ‘700-year plan’ — it’s just the mass of individual wants and needs and judgments of everyone out there.

True, the wild swing in share prices suggests there is considerable uncertainty over future trends. But the bottom line is that the bottom line of most companies remains pretty healthy. Most of us are still in work. Most economies are still growing, if a little more slowly. Marches by thousands of unemployed workers and soup kitchens on city streets are some way off yet.

Anti-capitalism might be rather fashionable again but, in case we forget, it wasn’t that long ago that it was the socialist command economies which collapsed before our very eyes under the weight of their own contradictions. It wasn’t the capitalist ones as Marx had predicted.

That is not to overlook some interesting longer-term trends. In last year’s general election, then Labour leader Pat Rabbitte posed the question: “Are you happy?” He was probably ahead of his time.

As people get richer, they do appear to care about material things rather less while demand grows for fulfilling leisure time alongside a greater environmental — and even cultural and artistic — awareness.

As we know, the electorate in 2007 didn’t respond to Rabbitte’s poser by giving their preferences to Labour. Perhaps Irish wealth was too recent a phenomenon. Nevertheless, so-called ‘quality of life’ issues are ones to which all the parties are devoting more attention as the old debate about tax rates fades into the background.

The challenge for governments will be to reconcile successfully this demand for socially desirable outcomes while maintaining a relatively light economic touch. Acceding to populist demands for ‘fairness’ has an awful habit of leading to unfairness for everyone. It’s true there is anger at the emergence of a super-rich elite on the back of the IT industry, racing away from the rest of society. Something must be done, people say. But if that something scares away a whole entrepreneurial class, who benefits then?

At a wider level, the full — and perhaps questionable — force of globalisation was made evident when such blue-chip finance houses as Citigroup, Merrill Lynch and UBS had to raise billions in foreign capital to bail themselves out. It wasn’t just any old foreign capital but the so-called sovereign wealth funds — the state-owned investment authorities of Asian countries, all too often with poor democratic and human rights records.

THIS isn’t nationalisation as we knew it in the last century. But if it leaves the commanding heights of western economies in the hands of governments that are not subject to market disciplines, the consequences could be much the same.

China could bully the world’s financial markets the way President Putin does the energy markets and, through them, influences his neighbours’ political and economic decisions. Gazprom, the Russian gas supplier, behaves more like a country than a company.

In Britain, the government is contemplating the awful prospect of a much more traditional nationalisation, of Northern Rock bank. The Government in Dublin will be watching events with equal distaste: the same could happen here. No-one knows where the next crisis will emerge, but further intervention by western governments is likely in an attempt to stabilise markets.

Incidentally, the Department of Finance will be glad the Shannon furore has died down. Similar concerns about routes led to Air New Zealand being taken back into public ownership, the best example of renationalisation in a western economy in the last two decades.

Change is a constant. But if you are one of those, like Castro, who finds capitalism filthy, gross and alienating, perhaps the Blaskets are the answer.

You won’t even have Charlie Haughey as a neighbour any more.