No regulation has had as great an effect on the risk-taking of the banking sector than the lifeguard role of central banks (and now finance ministries, as well). This has taught the major financial players to take hair-raising risks in the knowledge that they can privatize any gains and socialize any losses because they are too big to fail. The dilemma, however, is that they would never have grown so big if they had not had that safety net. Present-day capitalism is sometimes attacked for being nothing more than a "casino economy." But I know of no casino where the head of a central bank and the finance minister accompany customers to the roulette table, kindly offering to cover any losses.
The problem is, we do not have a casino economy. To borrow a metaphor from child rearing, we have a "helicopter economy." Helicopter parents hover over their kids, preventing them falling and hurting themselves. This means their children never grow up and learn to see dangers for themselves. And for this very reason, such children will eventually fall in more serious and dangerous contexts instead, because risk is part of the human condition. The helicopter economy works in a similar way. The government hovers over the banks and investors, making sure they do not get hurt too badly (and cleaning up any messes they leave behind.) Whenever there is an accident, the benchmark rate is lowered, the central bank extends credit and taxpayers' money is pumped in. The players never learn to look out for risks; they just continue their reckless behaviour, and sooner or later they will fall off a ledge that they were not watching out for and pull us all down with them.
Capitalism without bankruptcy is like Christianity without hell -- it loses its ability to motivate humans to be prudent or respect their fears. If completely removing the safety net from under the financial market is not politically feasible, then it is necessary to make a division so that they protect only pared-down banks engaging in simple operations. All other financial institutions should be told in no uncertain terms that the government's only responsibility to them, if they fail, is to wish them luck.
Or, as Jesus said, Capitalism without bankruptcy is like cancer without the slow painful death. If we're never punished for our risky behavior how will we ever grow up to be prudent and fearful? Like good capitalists.... ? More importantly, how can the winners win, if the losers don't lose? That takes all of the fun out of it.
It doesn't explain why the free market would be better, but it does hint at the sadistic appeal for some on the extreme right.
"Chaotic do-goodery" reminds me of the Pynchonian motto "Keep Cool, But Care" and the notion of anarchistic miracles. Individual acts that restore local areas of order and fend off entropy for a little longer. Which is pretty much all we can hope for now-a-days and what divides the majority of us from the tea partiers.D'Ortolan, who has lived for 200 years by transitioning into younger bodies, represents the raw, libertarian lust for personal gain. And Mulverhill characterizes D'Ortolan's position tartly in this way:
Libertarianism. A simple-minded right-wing ideology ideally suited to those unable or unwilling to see past their own sociopathic self-regard.
Whereas Mulverhill promises something akin to what the Culture has - a chaotic do-goodery which attempts to help people in finite ways while acknowledging it is impossible to make the entire universe a perfectly good place.
Libertarianism ... is a theory of those who find it hard to avoid their taxes, who are too small, incompetent or insufficiently connected to win Iraq-reconstruction contracts, or otherwise chow at the state trough. In its maundering about a mythical ideal-type capitalism, libertarianism betrays its fear of actually existing capitalism, at which it cannot quite succeed. It is a philosophy of capitalist inadequacy.I've always had a suspicion that libertarianism was for the beta-males of the pack: resentful, isolationist, exiled, jealous, cunning. But Mieville correctly shows it for the joke it really is.