The Collapse of an Ideology 10.25.08  
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The Crack in the 4th World Paradigm

Yuroc

In public testimony 10/24/08 Alan Greenspan, the long-time cheerleader for unfettered capitalism, was forced to admit that his perception of the way the world works, i.e. the 4th World Paradigm, had a flaw in it. Corporations in the absence of regulation could not be trusted to be guided by the invisible hand to the best interests of all, not even the best interests of the stockholders of the companies involved. This is a major admission, akin to the Vatican recognizing that the Earth revolves around the Sun, or that the Earth is not flat. This moment is the beginning of the end of the 4th World Paradigm, soon to be supplanted by the 5th World Paradigm, a sustainable-growth, environmentally friendly, long-term survival way in which the world works.

Ayn Rand Grave site Much has been written about the influence of Ayn Rand, who has been called the high priestess of unfettered capitalism, on former Fed chairman Alan Greenspan, who was a member of that author’s inner circle during the 1950s when he was in his twenties. He was said to be among those who read her 1957 novel, ”Atlas Shrugged,” before it was published, a work intended “to glorify the real kind of productive, free-enterprise businessman in a way he has never been glorified before,” according to Rand.

GreenspanIn the wake of Greenspan’s testimony yesterday before a Congressional panel, in which he said the current financial crisis had exposed a “flaw” in his concept of a free market, the executive director of the Ayn Rand Center for Individual Rights felt it necessary to issue a “commentary” Friday. Unlike Atlas, Yaron Brook was in no mood to shrug at such heresy.

ALAN GREENSPAN: Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

REP. HENRY WAXMAN: You found a flaw in the reality...

ALAN GREENSPAN: Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak. REP. HENRY WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working?

ALAN GREENSPAN: That is -- precisely. No, that's precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

“Opponents of the free market are giddy at Alan Greenspan’s declaration that the financial crisis has exposed a ‘flaw’ in his ‘free market ideology.’ Greenspan says he is ‘in a state of shocked disbelief’ because he ‘looked to the self-interest of lending institutions to protect shareholder’s equity’…and it didn’t. But, he added, “any belief Greenspan ever had in truly free markets was abandoned long ago… (Greenspan) proceeded to work for two decades as leader and chief advocate of the Federal Reserve, which continually inflates the money supply and manipulates interest rates… Greenspan should have recognized that what he wrote in 1966 of the boom preceding the 1929 crash applied here: ‘The excess credit which the Fed pumped into the economy spilled over into the stock market…triggering a fantastic speculative boom.’ Instead, he superficially blamed ‘infectious greed.’”

We’re not sure how Brook can juxtapose the pejorative “blamed” near the self-evident good, at least to Rand, of the phrase “infectious greed,” but there you are. Were we in Kensico Cemetery in Valhalla, N.Y., we might discern the sound of Rand rolling in her grave.

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