This week the cover of “Newsweek” magazine assures us that “We are All Socialists Now,” and that the end of capitalism has arrived. We have heard this all before.
But Capitalism is not the culprit for the present recession, it is the government’s own monetary and regulatory policies, as I argue in a new piece of mine, “Capitalism the Solution, Not the Cause of the Current Economic Crisis.”
The only truthful policy government could offer, as I emphasize, is for those in political power to admit that they are the one’s who got us into this mess. And the only “pro-active” policy the government could follow for a real positive effect would be to get out of the way and allow the market to rebalance and adjustment after all the misallocations and misdirections of capital and labor their monetary and regulatory madness has created.
As Ludwig von Mises said with great clarity during the real Great Depression:
“If everything possible is done to prevent the market from fulfilling its function of bringing supply and demand into balance, it should come as no surprise that a serious disproportionality between supply and demand persists, that commodities remain unsold, factories stand idle, millions are unemployed, destitution and misery are growing and that finally, in the wake of all these, destructive radicalism is rampant in politics . . . With the economic crisis, the breakdown of interventionist policy — the policy being followed today by all governments, irrespective of whether they are responsible to parliaments or rule openly as dictatorhsips — becomes apparent. Hampering the functions of the market and the formation of prices does not create order. Instead it leads to chaos, to economic crisis.”
This is as true today as when Mises spoke these words in 1931.