The Gods that Failed
by Larry Elliott and Dan Atkinson
The Bodley Head, £12.99
FOR far too long, the high priests in the temple of capitalism preached free markets, privatisation, excessive credit, debt, deregulation and minimal state intervention. Greed and speculation masquerading as financial engineering and risk management was the order of the day. Derivatives and credit default swaps conjured money out of thin air. Governments allowed industries such as steel, mining, heavy engineering, shipping and textiles to become bit parts in the British economy. Then, as this excellent book shows, it all came crashing down. Instead of the prosperity and stability promised by the gods of the financial world, we got chaos and an unprecedented crash.
The Gods that Failed is a must-read book for anyone trying to understand the current mess. It lucidly explains how poorly regulated capitalism failed. Larry Elliott and Dan Atkinson tell the story of the last 50 years: how politicians, Labour and Conservative, listened to the financial gurus and made the country “the laboratory mouse for the New Olympian experiment”. Neither the politicians nor the priests had any idea of the risks this lop-sided economy posed. They fuelled the economy through consumption and unsustainable personal borrowing. Cheap credit created housing and stock market bubbles. Regulators aped the three unwise monkeys while financial institutions developed complex instruments that are now bankrupting nations. Then the high priests waived their wands and governments bailed out the financial sector while workers lost jobs, homes, savings and pensions.
Huge trade deficits in the UK and US did not encourage thoughts of restructuring the economy. And the gigantic executive bonuses did not change the economic growth rates at home. Because in the new shelf-stacking economy wealth did not percolate down – as evidenced by huge income and wealth inequalities. Elliott and Atkinson argue that, if anything, the financialisation of the economy increased insecurity. Yet politicians are still committed to privatisations that will strip more public assets and impoverish more workers.
The authors don’t spare the left because, they say, the left vacated the economic arena and did not develop coherent alternatives. They persuasively argue that a fundamental rethink is needed to prioritise public control and rebuild the economic and political system. A start, they say, should be made by caging finance, reforming financial institutions, shackling tax havens and removing limited liability from companies and their directors.
The difficulty, of course, is that the political class has its snout firmly in the corporate trough and has not provided any moral or intellectual leadership for change. So there is a long way to go. But this book is highly recommended.
Prem Sikka
