Is History about to Repeat Itself

The 'puzzling failure of economics' highlighted by The Economist, London, in a recent lead article reflects essentially the underlying failure of the capitalist system. And since the socialist model of the USSR, model 1917, has also proved to be a failure, perhaps we are heading, after yet another crisis, for a revival of the 'welfare state' and each nation-state seeking its own pattern of economic development WRITING at a time when the financial experts are warily comparing the gyrations in stock markets around the world with the Black Monday of 1987, one is reminded of the cyclical nature not only of human tastes a la the length of ladies skirts but also of human beliefs. A bare few weeks back, the lead article in The Economist (August 23) talked of 'the puzzling failure of economies'. The article went on to conclude, 'This is not a failure of economics, in fact, but of modern (one might say Samuelsonian) economics". (Shouldn't The Economist have condemned John Maynard Keynes instead? Since it goes on to add that "Smith's Wealth of Nations conveyed this sense that the market, for all its 'failures', is a marvel"? But then, Keynes today is passe; Samuelson is still around and kicking.) Contrast The Economist view with the forebodings of Arthur Schlesinger, Jr in the Foreign Affairs of September-October 1997. In the lead article 'Has Democracy a Future?' Schlesinger discusses some of his deep concerns in regard to the future, "Democracy is impossible without private ownership because private property resources beyond the arbitrary reach of the state provides the only secure basis for political opposition and political freedom. But the capitalist market is no guarantee of democracy, as Deng Xiaoping, Lee Kuan Yew, Pionochet, and Franco, not to mention Hitler and Mussolini, have demonstrated. Democracy requires capitalism, but capitalism does not require democracy,,." Schlesinger goes on to conclude: 'The Computer Revolution offers wondrous new possibilities for crcative destruction. One goal of capitalist creativity is the globalised economy. One unplanned candidate for capitalist destruction is the nation-state, the traditional site of democracy ...Cyberspace is beyond national control. No authorities exist to provide international control. Where is democracy now?" One is deliberately combining (and identifying) the views of The Economist with those of Schlesinger. For, Schlesinger has categorically stated that "capitalism has proved itself the supreme engine of innovation, production and distribution. But its method ... is that Joseph Schumpeter called 'creative destruction'." Alas, nobody seems to attach any importance to Schumpeter's last great work.