Adonis Diaries

What resolutions in the aftermath of the crush of Wall Street?!

Posted on: October 13, 2008

Note: this is the third article on the causes of the crash of Wall Street.

What resolutions in the aftermath of the crash of Wall Street?!  (October 7, 2008)


Many contradictory economics school of sciences that earned Nobel Prices such as the School of Chicago, the School of Vienna and even Amartya Sen tried to interpret a few of Adam Smith’s economic principles and his metaphor of the invisible hand guiding prosperous Nations’ economies.  Capitalists have usurped Adam Smith’s economic principles as their system guideline to cheat out their countrymen of their life savings.

Let us revisit briefly Adam Smith who published in 1776 “Investigation on the nature and causes of the wealth of Nations”.  He stated that individuals have the tendencies to invest whatever capital they own within the areas of their residence so that they could have better control over their business because they know the people they can trust and the environment that can use their skills and products and the functioning of the legal system. This process of increasing the added value of their businesses in the local commerce or inner commerce is like “an invisible hand” at work for increasing the wealth of the whole economy.  When the State risks to orient or guide an individual or moms and pops family businesses in the manner of investing his capital it is meddling in pointless exercises since the investor is better positioned to know the kinds of activities he is fit to undertake.  Smith relied heavily on the liberal scientific economic principles of the French School of the Physiocrates; then three economic revolutions carried his manuscript as their Bible: mainly, the French Revolution in the political debates, the industrial revolution seeking justifications for their capitalist system and lastly the scientific revolution. Smith warned against freight commerce where the capital of an investor is divided among foreign countries and never under his control (does the stock market correspond to freight commerce?). Thus, a businessman prefers to deal within the inner commerce over external commerce and by far over freight commerce.  How Smith’s explanations for a strong economy could ever be matched with the principles of these mega businesses that nobody even know the behind the scene power manipulators?

In order to keep in the spirit of Adam Smith the commercial banks and even the investment banks under stricter regulations and accounting should get to know the businesses they are lending to, the people, the environment and the legal system of the States they are doing business in.  Hiring just banking and finance graduates would not cut it: knowing the businesses that add values requires various experts on the field.  For example, it is not specific enough for a bank to be specialized in the agriculture domain; it has to state in which products it is specialized in.  Knowing the business unit of a borrower in and out is the main guide to adding value to national economies.  The smaller, more localized and specialized the commercial banks the more secure are the investments.  This free world finance investment scheme is caput and makes no sense; it needed only a decade to prove its embezzlement objectives.


Maybe the immediate problems of climatic changes would usurp the primordial rank of the fall of Wall Street for dire consequences in the next decade; and maybe the next US Administration might decides to lead the environmental remedies in a political gimmick to redirecting the attention of its public away from this major handicap. The focus on the environment might generate the necessary good will for behavioral change and away from this “stupid consumerism growth” ideology. Are you hopeful that the temporary fall of greedy capitalism might enhance a revival for the environment?  Don’t count on it.  Only a serious movement to restructure the actual US political system with serious independent institutions invested with the authorities to control and monitor and investigate the so-called check and balance porous institutions might offer a glimpse to the light at the end of the tunnel.  Once this mass movement is on the march then the rest of the world will back it with all its might to save this one Earth and its 8 billions inhabitants.

I sincerely expect the Chinese people to revisit their economic policies and the untenable export growth trend.  I expect the huge continents of India, Brazil, Russia and the European Union to get the message of the pitfalls of an uncontrolled capitalist system and sever the cozy relations between their political structure and financial institutions.

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October 2008

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