The FT's Philip Stephens tells us that "even now someone somewhere is penning The End of Capitalism."
I'm not that someone somewhere. Capitalism hasn't ended, of course, but what we are at the end of is a wisdom-of-the-crowd style capitalism driven by an unfettered market. This week's events prove that the unregulated market leads, inevitably, to short-sellers, subprime mortgages and what Stephens calls "fiendishly complex" financial products that nobody seems to understand. The crisis and the aggressive response of the US government restores the necessary balance to capitalism. One can only hope that the end result will be an American market economy with what an ambivalent David Brooks nervously describes as having "more federal activism and tighter regulations."
What the crisis reveals is the ineffectiveness of the crowd to respond to financial crisis. Where, for example, are the crowdsourced solutions to the meltdown? I see Ben Bernanke and Hank Paulson, two wise and experienced men, leading the government counter-offensive against the anarchic market. But I don't see any evidence anywhere of the wise crowd playing a role in solving the financial crisis.
According to idealists like Wired magazine's Jeff Howe (who James Harkin hilariously describes as being the Lenin of the Wisdom-of-the-Crowd movement to James Surowiecki's Marx), the intelligent crowd will turn business on its head. But the truth is that when capitalism is turned on its head, it takes smart, experienced individuals -- not the crowd -- to turn it right side up again. Events this week prove once again that real wisdom is found with experienced human beings and not with the abstract crowd.