Free market capitalism, politics, and a new paradigm

MSNBC has an article up on the end of American-style capitalism. While there is clearly some truth to the idea that things certainly won’t be the same from here on out, I disagree with the sentiment that the new paradigm necessarily requires a) more government intervention and b) less globalization, both sentiments hinted at or openly expressed by various economists quoted in the article. For one, there is plenty of evidence that shows that government intervention can muddle things even more. For another, isolationism would be nearly impossible to achieve simply because nearly every country on earth now depends heavily on the importation and exportation of goods. Almost no country on this planet could even hope to be 100% self-sufficient in today’s world.

But let’s get back to the government intervention problem before I get slammed by some of my more liberal friends. There certainly is a place for government intervention, though at a minimum level. The question is: what is that minimum level? In a sense I think the world is ripe for some brand new economic theory that is a break from any of the classic models. But I think it requires, likewise, some sort of change in the style of government. Now, the advantage of the American system of democracy (over other forms of democracy) in its simplest form – two houses, president, etc. – is that it provides more stability and predictability than a parliamentary system. Elections are very regular. Perhaps the greatest disadvantage in my mind is the dominance of the two-party system (I have a theory it leads to voter apathy). But too many parties can simply lead to chaos. George Washington felt the entire concept of political parties was a disaster waiting to happen and I tend to agree.

An additional disadvantage to the American system at present is that the balance of power has been upset. With a true – true – balance of power between Judicial, Executive, and Legislative branches, the system of checks and balances remains in place to prevent any one group from assuming too much power. In theory, compromise becomes a necessity in many cases. But since Andrew Jackson this original interpretation has been slowing chiseled down to one in which the Executive branch has greater power. Simply in terms of sheer size the Executive is the largest branch (every government agency you deal with is part of that branch), though the prison system does keep the Judicial branch propped up. Nonetheless, the sway that the Executive branch has over the other two, particularly the Judicial, is far beyond what the founding fathers envisioned and certainly not a true balance. In addition the system has swung to one with a large centralized government, depriving citizens of local control. In a way this is akin to the debate among the founding fathers between the Federalists and the anti-Federalists, though in today’s world the meaning of the terms are not quite the same (see, for instance, the portion of this article on ‘centralist’ versus ‘federalist’).

But clearly isolationism is not the answer either which would, seemingly, sound a death-knell to the proponents (such as myself) of local control. However, I believe it is entirely possible to reassert local control while still enjoying the benefits (and necessities) of a centralized system. In such a system, sectors such as banking would not necessarily be controlled or run by a centralized government, but there could, nonetheless, be certain safeguards in place to prevent mass meltdown. This new system, whatever form it might take, would balance not just the power of the three branches, but also the power of the various levels of government right down to the municipal level. The importance of this is that it would reestablish the sense that everyday people actually had a stake in the larger system.

What might a system like this look like? Well, actually I think it could be accomplished within the framework of our present system. The genius of the Constitution is that it can be amended, though it might not need to be for this to work. The details of accomplishing something of this nature would certainly need to be worked out (I don’t have the answer but I’m hopefully at least planting the seed of an idea), but I envision that, again, within the current framework, there might be some structure perhaps somewhat analogous to the ancient idea of leagues of city-states. That is not to say borders would disappear, but nations would really be more loosely aligned regions whose central governments served in an oversight capacity while keeping the actual act of meddling to a minimum. In this case, we might begin to see more bartering for services on a local level, and the reliance on cash might decrease a tad. Or, to put it another way, the money that did exist would be backed by something more tangible – people’s hard work (by the way, for all those people who advocate bringing back the gold standard, my question to you is what true practical value does gold have in today’s world?).

Obviously I don’t have a full plan worked out and likely never will since I’m not an economist nor am I a political scientist. But, as a thoughtful citizen, it seems to me that we’ve been going around in circles for quite awhile and that it is perhaps time we tried a different shape. While my idea might sound almost a bit ‘tribal’ in its nature, that might be precisely the type of model best adopted, though perhaps taking its cues from complexity theory. If there ever was a time for the merger of complexity theory with politics and economics, this seems to be it. Well, guess what, such a field already exists. Let us hope it provides us with something by which we might better avoid the mistakes of the past.


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