The current wave of accounting scams scandals indicates the end of an age. Disillusionment and disenchantment with American capitalism might yet result in a tectonic ideological shift from laissez faire and self guideline to state intervention and policy. This would be the turnaround of a pattern going back to Thatcher in Britain and Reagan in the USA. It would also cast some basic-- and way more ancient-- tenets of free-marketry in serious doubt.
Markets are perceived as self-organizing, self-assembling, exchanges of info, goods, and services. Adam Smith's "invisible hand" is the amount of all the systems whose interaction gives rise to the ideal allocation of economic resources. The marketplace's excellent advantages over central planning are precisely its randomness and its lack of self-awareness.
Market participants go about their egoistic service, trying to optimize their utility, oblivious of the interests and action of all, bar those they interact with straight. Thus, any intervention and disturbance are deemed to be detrimental to the proper performance of the economy.
It is a small step from this idealized worldview back to the Physiocrats, who preceded Adam Smith, and who recommended the doctrine of "laissez faire, laissez passer"-- the hands-off fight cry. The market, as a pile of individuals, they rumbled, was undoubtedly entitled to enjoy the rights and flexibilities accorded to each and every person.
Undaunted by installing evidence of market failures-- for instance to supply budget-friendly and abundant public items-- this flawed theory returned with a revenge in the last twenty years of the previous century. Privatization, deregulation, and self-regulation ended up being faddish buzzwords and part of an international consensus propagated by both commercial banks and multilateral loan providers.
As applied to the professions-- to accounting professionals, stock brokers, legal representatives, bankers, insurance providers, and so on-- self-regulation was postulated on the belief in long-lasting self-preservation. Rational financial players and ethical representatives are expected to optimize their utility in the long-run by observing the rules and guidelines of an equal opportunity.
This honorable propensity appeared, alas, to have been tampered by avarice and narcissism and by the immature inability to delay satisfaction. Self-regulation failed so marvelously to conquer human nature that its death triggered the most intrusive statal stratagems ever developed. In both the UK and the USA, political liberal philosophy the government is far more greatly and pervasively associated with the triviality of accountancy, stock dealing, and banking than it was only two years ago.
The values and myth of "order out of mayhem"-- with its proponents in the exact sciences as well-- ran much deeper than that. The very culture of commerce was thoroughly penetrated and transformed. It is not surprising that the Internet-- a chaotic network with an anarchic method operandi-- thrived at these times.
The dotcom revolution was less about innovation than about new ways of doing business-- blending umpteen irreconcilable components, stirring well, and wishing for the best. No one, for instance, offered a direct earnings model of how to translate "eyeballs"-- i.e., the variety of visitors to a Web website-- to money ("generating income from"). It was dogmatically held to be true that, unbelievely, traffic-- a chaotic phenomenon-- will translate to profit-- hitherto the result of painstaking labour.
State owned properties-- including energies and suppliers of public products such as health and education-- were transferred wholesale to the hands of revenue maximizers. The implicit belief was that the cost mechanism will offer the missing out on planning and policy.
The simultaneous crumbling of these urban legends-- the liberating power of the Net, the self-regulating markets, the unchecked merits of privatization-- undoubtedly triggered a reaction.
The state has acquired monstrous percentages in the decades given that the Second world War. It is about to grow further and to digest the few sectors hitherto left unblemished. To say the least, these are bad news. We libertarians-- supporters of both private freedom and individual obligation-- have actually brought it on ourselves by warding off the work of that invisible regulator-- the market.