Panic on Wall Street – Is this the end for America’s financial system?

Nervous traders on the trading floor in the midst of one of Wall Street’s most historic weeks

Things are looking grim down on Wall Street. Rather than trying to explain the chaos myself, I’ve chosen two articles that will do it better than I can. Suffice it to say that what is easily noticed is that the credo in American capitalism seems to be “privatize the profits, socialize the losses” as several companies have been rescued by the United States government and more rescues are bound to come.

From The World as we Know it is Going Under:

Things got worse after the markets closed. Washington Mutual, America’s fourth-largest bank, announced that it had started the process of putting itself up for sale. The Wall Street Journal reported that both Wells Fargo and the banking giant Citigroup were interested in taking over the battered American savings bank.

And then came the announcement that would dominate all of Thursday’s market activities: Morgan Stanley — the venerable Wall Street institution and one of the last two US investment banks left standing — had lost massive amounts and was fighting for survival. Media reports were saying that it was even in talks about a possible bail-out or merger. Rumor had it that possible suitors might include Wachovia or China’s Bank Citic.

China?

GZA and the Liquid Swords Revival

GZA rocks the crowd at the Fillmore in New York City, September 12, 2008

The juggernaut known as capitalism becomes a steamroller when combined with the corporate entertainment history. All forms of artistic expression that break the barrier between the unknown and the popular are quickly co-opted by the industry, packaged, marketed, and force-fed to the willing masses.

Hip Hop hasn’t escaped this truism. Born in the South Bronx, the DJ and rapper formed two of the four parts of the hip hop culture rising at the time (the other two being breakdancing and graffiti). Similar to punk and to rock’n'roll in the 1950s, hip hop was rebellion in musical form. From the deconstruction of the popular music of the day in which singing was overdubbed and manipulated, and instruments were numerous and played with by sound producers, hip hop stripped it bare by having a DJ with a turntable and an MC with a mic.

Why Gordon Gekko Got it Wrong: Michael Shermer and Evolutionary Economics

“Greed is Good” – Michael Douglas as the corporate vulture Gordon Gekko in Oliver Stone’s “Wall Street”

The scene is certainly an unforgettable one. Gordon Gekko, the notorious Wall Street corporate vulture, stands in front of a shareholder meeting playing Robin Hood to the unsuspecting people in attendance as he confronts the executives of the company and pulls off a hostile takeover by appealing to peoples’ baser instincts when explaining that “greed is good”.

Although Gekko was meant to represent the cutthroat corporate culture of America in the high-flying 80s, many took his philosophy to heart. The argument went that man’s selfishness is what has propelled human invention and evolution. But is that the case?

Michael Shermer, writer, historian, and founder of The Skeptics Society tells us that this argument is in fact completely wrong. Read the interview with Michael Shermer here. Here’s a sample:

Why, if capitalism is so great, did the Enron scandal occur? Some have suggested that it was a few bad apples in the corporation.

The “bad apples” theory doesn’t explain what really happened at Enron, and it doesn’t explain the nature of corporate evil. Jeff Skilling, the CEO of Enron, set up what he thought was a Darwinian marketing environment. Skilling was a fan of Richard Dawkins’s important book The Selfish Gene, which Skilling misread. He took it to mean that evolution is driven by cutthroat competition and self-centered egotism. He liked the notion of the “survival of the fittest.” Skilling set up a Peer Review Committee, which became known as “rank and yank.” Everybody was ranked on a scale of one to five, and 20 percent of all fives had to be fired. The reviews were posted on a company website with a picture of the employee, increasing the potential for personal humiliation. Good luck being able to go out and have some fun with your teammates. Teammates! These are people who may be taking my job. Once you set up an environment like that, people begin violating rules. Skilling’s evaluation system led to a lot of behind-the-scenes wheeling and back-door dealing between department heads and managers, swapping review evaluation points. In addition to his belief in an outdated and untenable doctrine of social Darwinism, Skilling was a high-risk taker — short on dopamine, we might conjecture. What causes corporate corruption is an environment of evil established by the founders, corporate executives, and managers — a corporate psychology — that creates situations that encourage our hearts of darkness to beat faster.

Canada’s Naomi Klein: Anti-Capitalist Crusader

After the success of “No Logo” Naomi Klein has set her sights on “Disaster Capitalism”

Her grandfather was a Marxist who was fired from Disney for trying to organize the workers. Her father fled to Canada to avoid the Vietnam War. Naomi Klein made her name in the materialistic 1990s by railing against Nike for using dirt cheap labour abroad and against Starbucks for squeezing out the little guys. She became an intellectual celebrity with the publication of “No Logo” in 1999 where she decried the rise of corporations and how they monetized every aspect of our lives and culture. In our post 9/11 world, Klein has upped the ante in her war with the corporations in her latest book The Shock Doctrine: The Rise of Disaster Capitalism. Klein turns her fury towards American policy since the Second World War and how “disasters” have provided pretexts in which to spread globalization and corporate power at the expense of the poor. Her central thesis is that free-market economics as defined by the Chicago School and in particular Milton Friedman were implemented against the will of the people around the world through disorientation whether caused by war, coup d’etats, or disasters such as Hurricane Katrina.

Is Klein right? Is there a conspiracy by corporations and their government partners to cause chaos like war or to take advantage of disasters like tsunamis in order to spread the reach of corporations for the sake of profit? Jonathan Chait of The New Republic doesn’t necessarily agree with her theory in: Dead Left.