Does capitalism need a dose of socialism?

Mon Dec 31 2007 7:15 am by Bob Morris.

"Occasionally, however, capitalism requires a good dose of diluted socialism to keep it kicking, and the capitalist elite may well be hankering for a bit of socialist economics to straighten out the neoliberal disaster engineered by ideologues with fanciful derivatives they can't understand (and neither can the “rocket scientists’ who engineered them) and an energy crisis that they can't break out of."

Oh, the rocket scientists understood their derivatives well enough, it was the risk they didn’t understand. “The range of markets practically never goes outside two standard deviations.” Yet in the 1987 crash, it was twenty standard deviations. Oopsie. “Our models predict no more than a 2% default rate in subprime mortgages.” Whoops, “How did the default rate go to 4%, our models show that to be impossible.” Darn that pesky reality that refuses to conform to mathematical models.

Socialists tend to think that capitalists control the system with a firm hand and glacial calm. Not so. Financial markets sometimes careen about like chipmunks on meth with no one in control or knowing what will happen next. Like now, for example.

Yes, capitalism absolutely needs a huge influx of money to pay for R&D and development of clean energy. They know this. The money will come from governments, private enterprise, and non-profits (like the Google foundation.) Venture capital firms like Kleiner Perkins already are pumping in millions, probably billions. Some governments are deeply involved, sadly not ours (yet.) Hey, I don’t care how clean energy gets developed as long as does and becomes available to all.

As for the derivative debacle, it signals the death knell for neocon lunacy and their hands-off-the-market philosophy, as this rather clearly led to massive greed followed by the credit crisis. Plenty of hardcore capitalists are now calling for increased and strict governmental regulation to insure this can’t happen again.

So, if governmental investing in clean energy and increased regulation of markets be Socialism Lite, then it most assuredly is coming.