Joseph Schumpeter began his 1942 book Capitalism, Socialism and Democracy thus: "Can capitalism survive? No. I do not believe it can." He went on by explaining that "capitalism...would spawn a large intellectual class that made its living by attacking the very bourgeois system of private property and freedom so necessary for the intellectual class’s existence. "
I felt an echo of this in the preamble of Gordon Rayner's article on the British £37 billion bail-out of banks - leaving it in charge of £500 billion of British mortgages - in the Daily Telegraph yesterday: "October 13, 2008, will go down in history as the day the capitalist system in Britain admitted defeat". However, in the same paper, Martin Vander Weyer's "Countdown to Recovery" refers to a novel theory of capitalism Schuster expounded in the same book, creative destruction - the concept whereby economies develop through new technologies and thinking, evolving to replace the old order in what sounds like a shivaistic dance of breaking-down and renewal.
This process seems to refer to whole countries as well as sectors. On the Jeremy Vine show on Radio 2, Alan Cochrane, the Telegraph's Scottish Editor, referred to Westminister's buy-outs of the majority shares in HBOS and RBS as a a "massive blow" to Alex Salmond, Scotland's First Minister, noting that the Scottish Executive was unable to broker a deal to take over the banks domestically.
The Scotsman's leader article, however, shows that the implications of what happened yesterday haven't yet sank in. It notes the "as yet incalculable consequences for the political economy of Scotland" of the "humiliation of this admission of catastrophic failure [and] the injury inflicted on national morale", but goes on to conclude that "Scotland's banks have not been levelled flat". The point is, those banks that are being nationalised that were - nominally - Scottish are Scottish no more. They belong to Westminster now - ie to the taxpayers of Great Britain. Guess where most of them live? To add insult to injury, the title of Bill McLaren's article today shows that some of my countrymen are coping with the crisis by pointing at "the auld enemy": "Government's rescue plan cloaks what will be a financial Culloden".
What a historical bloomer: Charlie wanted to be the king of Britain, not Scotland. The Young Pretender had no more care for the ordinary Scots than the banks did. On vine's show, a fromer RBS manager called "Clare" spoke of having to meet quotas of people called in for reviews as a pretext for selling them loans.
In April, The Spectator's Fraser Nelson wrote about Alex Salmond's policy of nudging the English towards independence. Case in point: the Campaign for an English Parliament, of which I am a member, has issued a press release detailing benefits that the aforementioned taxpayers will be paying for but which will not be available in England. Except, will these benefits still be distributed in the Shumpeteresque wave of financial refashioning that is coming?
My guess is that they will. Not only that, but it's not unlikely that Labour Government pressure on the banks it will have representatives on may seek greater parity of loans for members of their pet disadvantaged groups - the selfsame policy which has been laid at the door of Bill Clinton for setting parameters for the financial sector that were always going to bring us here.
As I've said before, regardless of what Scotland does, England will never be independent of it while both remain in the European Union; the monies which presently disappear north with the Barnett formula will simply be rerouted through Brussels. So the situation seems more grim on reading Cranmer's reference to Former EU Commissioner for Belgium (itself riven by secessionists) Viscount Etienne Davignon's speech in Ireland, stating that governments should stand down if they do not ratify the Lisbon treaty; not ratifying it was not an option, according to him.
Cranmer compared his language to that of quondam monarchs who insisted on their divine right to rule. This belief was a signal failing in the Stuart line, which ensured that James II/VII was the last of them to rule in Britain, and engendered the hubris in his son which ended in Culloden.
So maybe the hubris which has brought us here should be rewarded with the same short shrift. As "Clare" said to Vine, this was not just down to CEO's: "it's time bigwigs in the boardroom who forced staff to do pressure selling whould be named and shamed".
And hopefully, in time, Schumpeter's destruction will fuel a creation that might be something quite changed, different from what we know now, but free from an excess of hubris and still capitalism.
NB: The item on the financial situation can be listened to again on Jeremy Vine's page on the BBC website, and will remain there until Sunday 19 October.
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