Greenspan: Battle for Capitalism 'Far From Won'
Thursday, 26 Jan 2012 12:48 PM
By Julie Crawshaw
Former Federal Reserve Chairman Alan Greenspan says meddling with markets invites disaster.
"Capitalism, since it was spawned in the Enlightenment, has achieved one success after another," Greenspan writes in the Financial Times.
"Standards and quality of living, following millennia of near stagnation, have risen at an unprecedented rate over large parts of the globe," he wrote.
"Poverty has been dramatically reduced and life expectancy has more than doubled. The rise in material well-being – a tenfold increase in global real per capita income over two centuries – has enabled the earth to support a six-fold increase in population," he wrote.
While central planning may no longer be a credible form of economic organization, the intellectual battle for its rival – free-market capitalism – is far from won, says Greenspan.
He asks if there is a simple trade-off between civil conduct, as defined by those who find raw competitive behavior deplorable, and the material life most people nonetheless seek.
"During the past century, for example, competitive-market-driven economic growth created resources far in excess of those required to maintain subsistence," Greenspan says.
"That surplus, even in the most aggressively competitive economies such as America’s, has been mainly employed to improve the quality of life: advances in health, greater longevity and pension systems that go with it, a universal system of education and vastly improved conditions of work."
"We have used much of the substantial increases in wealth generated by our market-driven economies to purchase what most would view as greater civility."
He says that “whatever the imperfections of free-market capitalism, no regime that has been tried as a replacement .. has succeeded in meeting the needs of its people.”
“Yet I fear that, in response to the crisis, innumerable ‘improvements’ to the capitalist model will be enacted. I am very doubtful those ‘improvements,’ in retrospect, will appear to have been wise.”
Meanwhile, a four-year economic crisis has left societies battered and widened the gap between the haves and have-nots, financial leaders conceded Wednesday — with one suggesting that Western-style capitalism itself may be endangered, the Associated Press reported.
As Europe struggles with its debt crisis and the global economic outlook remains gloomy at best, there's a sense at the heavily guarded World Economic Forum that free markets are on trial.
Many at the elite economic gathering in the Swiss Alps accept that more must be done to convince critics that Western capitalism has a future and that it can learn from its massive failures.
For David Rubenstein, the co-founder and managing director of asset management firm Carlyle Group, leaders must work fast to overcome the current crisis or else different models of capitalism, such as the form practiced in China, may win the day.
"As a result of this recession, that's lasted longer than anyone predicted and will probably go on for a number more years ... we're going to have a lot of economic disparities," Rubenstein told the AP.
"We've got to work through these problems. If we don't do in three or four years ... the game will be over for the type of capitalism that many of us have lived through and thought was the best type."
© Moneynews. All rights reserved.
Thursday, 26 Jan 2012 12:48 PM
By Julie Crawshaw
Former Federal Reserve Chairman Alan Greenspan says meddling with markets invites disaster.
"Capitalism, since it was spawned in the Enlightenment, has achieved one success after another," Greenspan writes in the Financial Times.
"Standards and quality of living, following millennia of near stagnation, have risen at an unprecedented rate over large parts of the globe," he wrote.
"Poverty has been dramatically reduced and life expectancy has more than doubled. The rise in material well-being – a tenfold increase in global real per capita income over two centuries – has enabled the earth to support a six-fold increase in population," he wrote.
While central planning may no longer be a credible form of economic organization, the intellectual battle for its rival – free-market capitalism – is far from won, says Greenspan.
He asks if there is a simple trade-off between civil conduct, as defined by those who find raw competitive behavior deplorable, and the material life most people nonetheless seek.
"During the past century, for example, competitive-market-driven economic growth created resources far in excess of those required to maintain subsistence," Greenspan says.
"That surplus, even in the most aggressively competitive economies such as America’s, has been mainly employed to improve the quality of life: advances in health, greater longevity and pension systems that go with it, a universal system of education and vastly improved conditions of work."
"We have used much of the substantial increases in wealth generated by our market-driven economies to purchase what most would view as greater civility."
He says that “whatever the imperfections of free-market capitalism, no regime that has been tried as a replacement .. has succeeded in meeting the needs of its people.”
“Yet I fear that, in response to the crisis, innumerable ‘improvements’ to the capitalist model will be enacted. I am very doubtful those ‘improvements,’ in retrospect, will appear to have been wise.”
Meanwhile, a four-year economic crisis has left societies battered and widened the gap between the haves and have-nots, financial leaders conceded Wednesday — with one suggesting that Western-style capitalism itself may be endangered, the Associated Press reported.
As Europe struggles with its debt crisis and the global economic outlook remains gloomy at best, there's a sense at the heavily guarded World Economic Forum that free markets are on trial.
Many at the elite economic gathering in the Swiss Alps accept that more must be done to convince critics that Western capitalism has a future and that it can learn from its massive failures.
For David Rubenstein, the co-founder and managing director of asset management firm Carlyle Group, leaders must work fast to overcome the current crisis or else different models of capitalism, such as the form practiced in China, may win the day.
"As a result of this recession, that's lasted longer than anyone predicted and will probably go on for a number more years ... we're going to have a lot of economic disparities," Rubenstein told the AP.
"We've got to work through these problems. If we don't do in three or four years ... the game will be over for the type of capitalism that many of us have lived through and thought was the best type."
© Moneynews. All rights reserved.