Parallels Between Today and Tomorrow in the Financial Sector
Parallels Between Today and Tomorrow in the Financial Sector
Basically there is very little difference between today and tomorrow when it comes to thinking about finance and economy. This is the conclusion one draws after going through pages of history in the middle of the financial crisis of today.
In China uring the pre-Quin period a debate raged between the Taoists on one side and the Legalists on the other. Today it is the same argument with other names thrown between those who advocate free philosophy and those who believe in government controlling the markets. To the Taoists the entire system was in the wrong and that order would return as per natural rules following the chaos. Confucius wanted a return to the feudalistic order with each having a place in society. Mozi was radical and wanted socialistic society where all were equal. The debate raged on whether there should be greater decentralization or flattening down of social order or more centralization.
The very same debatable question had been posed by Lord Mandelson former Trade minister of the Labour Government of UK. Following the sub-prime and then the European debt he posed the question as to whether the free market style capitalism of the West continued to be superior to the Chinese brand of state capitalism.
Some experts feel that this argument is the same as between the Taoists and the Legalists. The free marketers are akin to the Taoists who believe in the natural cycles of the market and that state puts its nose in when that market gets wobbly. The State capitalists are like the Legalists of yore who have faith in the introduction of regulation while holding out carrots of incentives.
The proponents of free market are like the Taoists. They think that if Bear Stearns had not been saved the crisis would have not been so severe. It would have preserved the market's purity. But the intervention of the Federal Reserve in reducing interest rates and assuming the soured risk marked the swan song of free-market-ism.
Mandelson very diplomatically placed the truth that the rise of state capitalism in China cannot be ignored. But to engage China one has to understand the nation and so too must China be understanding about the West. En route misunderstandings will arise because the West feels that only itsbrand of society has the legitimate stamp. But each society has its own yardstick about legitimacy emanating from its history.
The pre-Qin debates were not about myriad schools of thought but basically about three or four models. Today also it is about few main models relating to market economy but the basic point is who has the dominating say the market or the state?