The travails of the financial markets have triggered a degree of jubilation among the usual left-leaning suspects, as though this episode reflects badly on “neoliberalism”, deregulation and the free market order. This view is not sustainable because the problems can be traced to a witches brew of causes including over-complicated (and hence ineffective) regulations, moral hazard (knowing the Government will eventually come to the party with a bailout), other regulations that mandate loans to bad risks and old fashioned irresponsible borrowing (yes, and irresponsible lending).
This is same kind of anti-free market spin that was put on the Great Depression, as though the great trading nations of the world through the late 1920s and early 1930s were practicing laissez faire capitalism with unfettered free markets etc etc. Then as now the debacle can be attributed to the failures of intervention, not to the failure of free markets and the other elements of classical liberalism.
Arthur Koestler has left a vivid impression of the economic illiteracy that stampeded so many people into the communist movement during the 1930s when they saw food being destroyed under the New Deal in the US. They thought that was the free market at work!
The event that aroused my indignation to a fever pitch never reached before was the American policy of destroying food stocks to keep agricultural prices up during the depression years at a time when millions of unemployed lived in misery and near starvation. In retrospect, the economic policy which led to these measures is a matter of academic controversy; but in 1931 and 32, its effect on Europeans was that of a crude and indeed terrifying shock which destroyed what little faith they still had in the existing social order. By 1932 there were seven million unemployed in Germany which means that one in every three wage-earners lived on the dole. In Austria, Hungary and the surrounding countries the situation was similar or worse. Meat, coffee, fruit had become unobtainable luxuries for large sections of the population, even the bread on the table was measured out in thin slices; yet the newspapers spoke laconically of millions of tons of coffee being dumped into the sea, of wheat being burned, pigs being cremated, oranges doused with kerosene to ease conditions on the market. It was a grotesque and incomprehensible paradox incomprehensible to the simple-minded among its victims, and to the socially conscious a sign of the complete breakdown and decomposition of the economic system. Had not Marx foretold that Capitalism would perish through its own internal contradictions; that the cycle of prosperous periods ending in a crisis would repeat itself in an accelerated rhythm and each crisis be worse until the last would certainly bring the capitalist system to its end? Clearly, the prophecy was on the point of being fulfilled. When people starve and food is destroyed before their eyes so that their fat exploiters may grow even fatter, then the last judgment must be at hand.
Woe to the shepherds who feed themselves but feed not their flocks! Indignation glowed inside me like a furnace. At times I thought that I was choking in its fumes; at other times I felt like hitting out, and shooting from a barricade or throwing sticks of dynamite. At whom?My seething indignation had no personal target; it was directed at the
System in general, at the oily hypocrisy and suicidal stupidity that were driving us all to perdition. In my rage fantasies no people were killed but huge buildings burst open and their walls came tumbling down, as in an earthquakeEchoes of the hundred days of the Hungarian Commune; echoes of the indignant wrath of the Hebrew prophets, and of the forthcoming Apocalypse according to St. Marx; the memory of my fathers bankruptcy,, the sound of the hunger-marchers broken-down boots on the pavement and the smell of fresh wheat being burned in the fields all these ingredients fused into one emotional experience. My political latency period had come to an end.
Though the mixture that set off the explosion varied from case to case, the reaction was the same for a large number of writers and intellectuals the world over: Barbusse, Romain Holland, Gide, Malraux in France; Piscator, Becher, Seghers, Brecht in Germany; Auden, Isherwood, Spender, Day Lewis in England, Sinclair, Dos Passos, Steinbeck, Caldwell in the USA to mention only a few. In the nineteen-thirties conversion to the Communist faith was not a fashion or craze it was a sincere and spontaneous expression of an optimism born of despair an abortive revolution of the spirit, a misfired Renaissance, a false dawn of history.
To be attracted to the new faith was, I still believe, an honourable error. We were wrong for the right reasons; and I still feel that, with a few exceptions I have already mentioned Bertrand Russell and H G Wells those who derided the Russian Revolution from the beginning, did so mostly for reasons that were less honourable than our error.