When the Global Financial Crisis hit many pundits argued that Western capitalism had failed. They had a point. Half a point. Capitalism is essentially the private ( as opposed to government) manufacture and trading of goods and services. But such a non-government, free trade system cannot survive unless it is built upon a foundation of integrity, honesty, and the prevention and punishment of theft. Capitalism only prospers and benefits the majority if it cares deeply about the sovereignty of other people's property, believing that what God has given, let not man take away.
Capitalism is as self-destructive and self-annihilating as socialism unless the rock-solid ethical foundations of the Eighth Commandment (Thou shalt not steal) are institutionalised into commercial law. (That, of course, only happens when the Eighth Commandment is inscribed into the hearts and minds of the population at large. Which it no longer is. Therefore, Unbelieving capitalism will turn out to be as self-destructive and self-annihilating as socialism, communism, statism and any other idolatrous ideology.)
The Global Financial Crisis was the fruit of this fundamental ethical foundation being ignored or blithely dismissed by the large financial institutions, and the politicians, and the regulators. Since this is still the case we will go on having financial crises that will finally debilitate us all.
By now there will be many people who are ready to shrug off the GFC of 2008. They survived. They are still employed. Life goes on. But this is a chimera. Things have changed. If folk don't recognise this, they are willing themselves to happy ignorance. Things are not going to sweep back to deliver the "good times" largely because it was governments going into debt to bail out the failing financial institutions that prevented major calamities in 2008 and 2009. But all that has done is laid off the price to be paid to forthcoming generations.
John Lanchester puts the matter in perspective:
And it's going to be one hell of a bill. For the sheer size of the Figures of Doom, nothing can beat the world's biggest economy, which has had a property bubble, a credit bubble, and years of growing deficits thanks to George W. Bush's high-spirited experiment in big-spending conservatism. [To which, of course, we can now add President Obama's big-spending, quadrupling of the national debt since he took office after Bush, Ed.]
The projected deficit--that is based on the government's own figures--will come to $7.14 trillion over the next ten years. [John Lanchester, I.O.U: Why Everyone Owes Everyone and No One Can Pay (New York: Simon & Schuster, 2010), p.219]
And then there are the US government bailouts of the too-big-to-be-allowed-to-fail financial institutions. The cost amounts to between $4.6165 trillion and $7.76 trillion (depending on who is doing the calculating). Take the lower, more conservative estimate:
That number is bigger that the Marshall Plan, the Louisiana Purchase, the Apollo moon landings, the 1980's savings and loan crisis, the Korean War, the New Deal, the invasion of Iraq, the Vietnam War and the total cost of NASA's space flights, all added together--repeat, added together (and yes, the old figures are adjusted upward for inflation). (Ibid., p. 220.)Lanchester points out that the UK is no better off. The total projected government debt for the next four years is going to be 606 billion pounds. UK national debt will hit just on 80 percent of GDP--a record for peacetime.
All this means tax raises, a near-total freeze on government spending, massive public-sector job cuts, companies laying off every worker they can to save costs, and in turn a dramatic upward spike in unemployment. . . . To compound this already desperate picture, we also have a huge level of personal debt, arising directly from our credit bubble. The average British household owes 160 percent of its annual income. That makes us, individually and collectively, a lot like the cartoon character who's run off the end of a cliff and hasn't realised it yet. (Ibid., p.221).Times have changed. The costs of the defalcation, the greed, the debt, and the covetousness will be borne for decades. (We have not considered in this summary, we have not factored in the debt and monetary crises in Europe, nor the real possibility of a second Global Financial Crisis.)
It remains to be seen how Western electorates, conditioned to government help and hand outs, will "do" austerity. Quite likely, not so well. Maybe the West will end up like Shelob lingering in the dark, bleeding, and nursing a bitter malice against the Fates for pricking our debt-bloated body.