Some wonder if this is the end of capitalism as we know it. The joke answer is, "No, it’s alive and well and living in the largest communist country in the history of the world."
The current economic crisis, of course, is no joke. But nor will the Wall Street meltdown and its causes and effects lead to the end of capitalism. Still, it’s fair to say that capitalism will probably look quite different in the future.
First we should clarify that capitalism is not a random act of consumerism or the mere blind activity of supply and demand. Somehow along the way we’ve equated capitalism with survival-of-the-fittest avarice. That policy may serve philosophers who sincerely believe in a kind of economic (and personal) natural selection, as we seek mindlessly to hoard resources and assets.
But let’s not make capitalism too complicated. If you got money you spend money; if you don’t got money you don’t spend money. The more people with money, the more people who spend money.
Does this mean that the government has to referee the process to ensure that capitalism survives? Yes.
Is this socialism (or even "collectivism" whatever that really means)? No.
And besides keeping the process moving forward, the government can play other roles besides regulation, which is its least desirable mission anyway.
On behalf of the economy, the government does what it can to keep as many people as possible paying taxes. This lessens the burden for everyone. On the one hand, it uses regulation and monetary policy effectively to keep too much money from getting stuck at the top or from inflation taking hold. Government should also endeavor to keep as many people as possible off welfare. Welfare does two things to the economy. It requires more taxation for services and lessens tax revenue.
Because of the devastating nature of the financial crisis, we must all look upon sacred cows less religiously. Wall Street, for one, has completely lost its sacred cowness. Executive compensation will change. If Wall Street doesn’t self-correct, government will have to do it.
Closer to home, housing and land conservation funding will be targeted, as will 9,000 state employees. These will be painful cuts. Layoffs in government are always a two-steps-forward-and-one-step-back process at best. Government is saving the salary, then having to pay some of it back in unemployment.
Public schools will be looked at for severe cutbacks, and this will be done less for the sake of declines in enrollments then it will be for consolidation of supervisory unions and schools. Everyone loves their local school, but everyone also understands the economic constraints that we now face. Money saved could be redirected toward actual school programs.
Perhaps there is even a way of repairing the economies of our eastern counties by changing the sales tax structure.
The politicians elected here and in Washington will have a short and rare grace period to act with courage. We’ll see if they are up to the challenge of this new capitalism.