Time has really come for a return to sane and sustainable capitalism

By John Cranage on Jul 27, 08 09:20 PM in Economics

The golden rule for those at the top of the quangocracy that rules so much of our lives is that the more you are paid the less you are expected to spend your own money - on anything.

We learned last week that the chairman of the governors of the BBC, Sir Michael Lyons, is putting his subscription to Sky on his taxpayer-funded expenses. It cost us £459, including installation fees, to enable the former chief executive of Birmingham City Council to put his feet up at home and find what the opposition is doing. He doesn't have to fork out for a television set or a DVD recorder. According to the BBC's accounts, they're "lent" to him.

In all, Sir Michael claimed expenses totalling £26,167 last year on top of his salary of £140,000. It is obviously an expensive business, being a figurehead for a broadcasting empire funded by the taxpayer.

He's worth every penny, you might think. Perhaps he is.

But sadly, he's also part of a culture of greed and stupidity that is soundly lambasted in a new book, The Gods That Failed: How Blind Faith In Markets Has Cost Us Our Future, by Larry Elliott and Dan Atkinson (Bodley Head, £12.99).

At the heart of the book is a clinical and ruthless analysis of the sub-prime mortgage crisis in the US that created the global credit crunch, the collapse of Northern Rock, the destruction of billions of pounds of value throughout the wider banking sector and brought financial grief to millions of ordinary people. This is no neo-Marxist, anti-capitalist rant, but a book that seems to have been written both in sorrow and anger.

And Elliott and Atkinson have a specific set of economic and financial villains firmly in their co-authorial sights.

They call them the "New Olympians", those free market hot gospellers that gathered around Milton Friedman and Friedrich von Hayek in the years following the Second World War and who now command the heights of national and intra-national economic policy.

They have used the US and the UK as laboratories for testing their conviction that economic paradise is attainable if all semblances of regulation are thrown out, all public services (no matter how essential to social well-being) privatised and the markets are left free to work their magic. So lofty are these gods that they are able to look dispassionately on as job security is destroyed, affordable homes disappear and public services wither away (but not the vast army of unproductive bureacrats needed to run them).

Nor do they seem to care that much of the Anglo-American "real economy" has been destroyed; that the illusion of prosperity has been maintained only by a huge credit bubble that has loaded corporations and homes with unsustainable levels of debt; that the bedrock middle classes in both countries are being milked of tax pounds and dollars.

What's worse, as Elliott and Atkinson point out, the New Olympians are quick to ditch their free market dogmas and go cap in hand to the central banks for a bail-out when things go wrong.

The time really has come for a return to sane and sustainable capitalism.

This post was orignally published as a Business View.