On crisis and opportunity

It’s all doom and gloom at the moment amongst the commetariat. Ambrose Evans Pritchard predicts a depression no matter what we do saying that it will take years for the toxins to wash through the system. I disagree. What we are seeing now is the breaking apart of 20th century capitalism to make way for its replacement. Nobody knows exactly what will happen, whether the bailout will fail or succeed but it is clear to me that within this crisis lies the opportunity to reshape the way things work. And the opportunity could only emerge this way.

It is not limited to commerce. Government too is subject to the same decentralising forces and again the replacement is better than the original. Barack Obama has run his campaign in a completely different way than anything which has gone before. This is not to say he has thrown out everything but taken new tools to turbocharge the best of what happened in the past. In a way his campaign is similar to what George Bush did in 2000 and 2004. Both men have a core of ultra committed supporters who galvanise and organise people around them into an impressive ground operation.

The new model

The right wing throws the jibe ‘community organiser in chief’ at Obama to portray him as a lightweight but it’s the reason why he will win. By embracing online fundraising Obama has tapped a new revenue source which is much cleaner and frees him from the rubber chicken circuit. In doing so he has demonstrated a new way of approaching politics and fundraising which is far better than it’s 20th century equivalent. It allows a much more direct connection with his supporters and allows them to contribute much more than just cash.

Another example I have written about before is Kiva. The 20th century model of aid is state to state which has all the drawbacks of bureaucracy at the donor end coupled with corruption at the recipient end. By contrast Kiva makes a direct connection, individual to individual, and as such is far better way of distributing funds. The individual lending the money also acts as assessor of the project and the individual receiving the money approaches them as an equal without having their sense of independence taken away. Aid is good in some short term circumstances but long term, enterprise is the only sustainable model.

What needs to happen is for these experiments to be extended to the Western financial system. In one sense it means going forward to the new model but in another going back to a past in which credit unions and building societies made loans. Regulation will have to change to facilitate these new models. It can be lighter because instead of relying on the state for oversight, just like Kiva, we can rely on the small lender. If the current crisis allows smaller, nimbler lending to take hold and provide real competition to these large institutions which go gambling then hold a gun to the taxpayers head when things go wrong it will be a great thing. As always the best opportunity lies amidst the crisis.

Pic: Julian Bleecker

Related articles by Zemanta

• Reasons I love Barack Obama