Where it all Went Wrong

Over the last few months, I have been reviewing my thoughts on capitalsim and its effects. For those that have read, I have talked before about the dis-association between the growth in the economy and an individual's well-being, the desire and ability to turn different working groups against each other, whether we are really better off now than before, crazy (suspicious) real eatate price growth, and a few other topics I can't seem to recall at the moment. This all leads to a discussion of the failings of the current "capitalist" system. However, yesterday I found this interview with - who else - Noam Chomsky. He had some very interesting things to say on the subject: Keynes regarded speculation as destructive. His basic insight is well described by Indian economist Prabhat Patnaik, at the UN conference of October 30 on the global financial crisis. Patnaik explains that Keynes "had located the fundamental defect of the free market system in its incapacity to distinguish between `speculation' and `enterprise.' Hence, it had a tendency to be dominated by speculators, interested not in the long-term yield on assets but only in the short-term appreciation in asset values. Their whims and caprices, causing sharp swings in asset prices, determined the magnitude of productive investment and, therefore, the level of aggregate demand, employment and output in the economy. The real lives of millions of people were determined by the whims of 'a bunch of speculators' under the free market system." The replacement of governmental "demand management" by "bubble booms" created by speculators is a prime cause of the current financial crisis, Patnaik argues plausibly, supporting Keynes's analysis. The difference between "speculation" and "enterprise"..... hmmm.