It was an expected debate. As renowned institutions went bankrupt, as a financial tornado squashed global money markets and stock markets, as governments hastily approved huge bailout packages, experts discussed the future of capitalism. Francis Fukuyama, who predicted the End of History, wrote that “it’s hard to fathom how badly these signature features of the American brand (a certain vision of capitalism and liberal democracy) have been discredited”. Jacob Weisberg of The Slate Group called it “the crisis of capitalism”.
Die-hard supporters like Newsweek’s Fareed Zakaria noted that the “history of capitalism is filled with credit crises, panics, financial meltdowns and recessions. It doesn’t mean the end of capitalism. But it might well mean the end of a certain kind of global dominance for the US.” In its lead edit, The Economist wrote that “financial markets need governments to set rules for them; and when markets fail, governments are often best placed to get them going again. That’s pragmatism, not socialism.”
Wall Street: A Cultural History
Price: Rs 361
By: Steve Fraser
Published By: Faber and Faber
Target audience: General readers
Quick read tip: The chapters on the Great Depression will help you understand the current turmoil
Similarly, there were discussions everywhere about greed, manipulations and ignorance that plagued both the Wall Street and the Main Street. People were angry when they saw, heard and read that Lehman Brothers’ employees went holidaying days after the approval of the first bailout by the American government. CNN started a series on the villains of the crisis. And almost everyone blamed the global policymakers for neglecting the crisis as it was brewing.
The beauty of this book is that it tells you that such condemnations, allegations and obituaries on capitalism have invariably been the talk of the town each time there has been a crash on the Wall Street. Throughout its history, spanning over 200 years, the men and women on the Street have been revered and loathed, loved and hated. Their greed has been blamed for all the crises, and policymakers have been ruthlessly criticised for not doing enough to control these financial bandits. In documenting such issues, this book is more of a socio-politicoeconomic history of the Wall Street.
Cut to the 1857 crisis, when railroad shares plummeted and bubbles of land speculation burst. Immediately, the South (of America), “which until then prided itself on immunity from the vicissitudes of Northern capitalism, was particularly enraged. The New Orleans Crescent decried New York as the ‘center of reckless speculation, unflinching fraud and downright robbery’. The New York Ledger editorialised in favour of ‘a system of moral and economic regulation and called for endorsement of the laws against gambling, defamation of character, and conspiracy to defraud.’”
The next crash, which led to the biggest depression in the 19th century in 1873, was yet again due to railroad speculation, and was a direct result of a nexus between politics and the Wall Street. Using political lobbyists, railroad companies cajoled the treasury to help them and also grant land. By 1880, “federal, state, and local governments had contributed $700 million to the building of the railroads and donated 155 million acres of public land—more than the size of France.” When markets went into a tailspin, it “ushered in 65 months of depression”.
Read our review of the book: Grow your Money