Monday, July 14, 2008

The free market in action

The US government is going to provide security on the firms Freddy Mac and Fanny Mae (the ones that provide security on mortgages).

This is the free market in action, it seems - in the heart of free enterprise capitalism, the state is going to prop up the finances of the capitalists who own the firm, let their bankruptcy leads to social collapse.

Just as the Inca Empire used to keep on operating the property of the dead kings as if they were still alive, enacting the will of the long dead - just so the functionaries of the US state capitalism will continue to obey the formalities of private ownership whilst in effect socialising the risk of capital.

Will this have a long term effect? Well, it will if things get so bad that they have to explicitly break with the formalities of private capitalism. Until then, if stability is maintained, and the fiction of private capitalism is maintained, then things will carry on as before. Watch this space.

Update: The New York Times covers the story nicely...

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