A question from Yahoo! Answers:
Capitalism. A house of cards?
With the fiasco of “Northern Rock” in the UK and the prime lending furore in the US, do you not think that our whole economy is a house of cards?
Is the Stock Exchange not anything more than a glorified bookmakers?
Wasn’t the the great depression caused by pumped up greed and then loss of confidence?
I’m not saying that we should go back to the barter system, but it would at least ensure a more equitable, solid system, or not?
Can’t we do it any better, or must avarice always lie at the heart of an economics?
A modern market economy is indeed a house of cards. Its success depends on people doing what they promised do. When too many people are unable or unwilling to fulfill their promises, we have a crisis. Fortunately or unfortunately, there is no other basis to build a modern economy.
Are stock exchanges glorified bookmakers? Yes and no, depending on your perspective. Yes, because they do accept bets. No, because the game that is played on a stock exchange is a positive-sum game, whereas bookmakers generally administer negative-sum games.
Was the Great Depression caused by pumped up greed and then loss of confidence? Perhaps (other explanations include overregulation of the banking system, underdiversified economy, and unexpected bumper crop), but it was prolonged by downright stupid fiscal policy.
As to your claim that the barter system would ensure a more equitable system, it’s simply wrong. A number of societies in pre-Columbian America lived under a barter system, and invariably ended up as brutal tyrannies where a war-loving tribe would subjugate and exploit its neighbors, with the bulk of wealth controlled by the ruling family.
Distribution of wealth is determined largely by government policy and demographics, rather than by how the underlying economy works…