The end of neo-liberalism

Today, U.S.-president Barack Obama presented his plan to introduce legal changes – the newspapers report either about a whole new agency or about an extensive reorganisation for an increased control of financial intermediaries in the U.S. capital markets. Whether new agencies are established or existing ones empowered, anyway, the direction of this policy is clear: away from a neo-classical/ capital market-oriented, neo-liberal/ state-independent economic system towards a system of governmental supervision. The American idiosyncrasy has found an end – the end of neo-liberalism draws near. Whether the Americans, still locked up in their paradigms and barely able to find system-criticial/-extrinsic approaches out of their deep mole, already realize what that means? A walk to Canossa, respectively Berlin, Tokyo and Beijing, the re-writing of economic textbooks that stylized the neo-liberal market-system as the best and most efficient one in the world: separate banking system, rating agencies, hedge funds and funds of hedge funds, dispersion of ownership and last, but not least: Friedmann, that arrogant Nobel-laureat.

Whether the Obama administration has realized or will have realized in time what radical change they’re really up to, will be crucial for the consistency and extensiveness of this turnaround. There couldn’t be anything worse but an administration that just fights symptoms and ends up stuck in the same paradigm, just a bit more twisted in its logic, which would harm the system and its participants even more.

Basically, economic systems are just like religions – in the latter case, you call it belief, in the first one, it’s trust. The integrity and consistency of such a system needs to be maintained in order to keep people trusting in it. Of course, with a bit of self-discipline and moderation, the neo-liberal system could have worked – but so would have communism.