The End of American Capitalism? 5 Short Takes on Where the Financial Crisis Might Be Headed

The past week has seen the US economy rocked by some of the worst global financial turmoil in decades, with venerable firms collapsing, global banks and governments pouring huge sums of money into financial markets in a bid to ease turmoil and thousands facing unemployment or financial ruin. 

As US officials announce planned measures to tackle the crisis, Al Jazeera asked five prominent economists: Does the crisis signal the end of US-style capitalism? And if so, what are the lessons learned?

James Galbraith, economist, professor at University of Texas, Austin

This does not mean the end of the United States' position in the world economy.

The US dollar has not moved, which does suggest that the position of the US government is still very much intact.

I think what it means is that in the future the big firms will have a smaller presence.

The years when the US government took the position that financial firms can run the country as they see fit and that regulation could be dismised is finished. There will be a major examination of how the financial markets are regulated.

Such financial events will have a lagged effect on everyone ... its most likely consequence is that the credit crisis will get more intense and the foreclosure crisis will get worse.

We will have to wait and see. But people do not learn from mistakes. How many times do we have to go through this?

'Enormous mess'

A well-functioning financial system has rules and it's when the rules are relaxed that shady practices and get rich quick schemes abound, which is what happened in the [sub-prime] mortgage system in 2005 and 2006.

The banks' behavior was conditioned by Bush. [He] sent a clear signal that they could get away with everything, [that there was] no more effective supervision so go ahead and make toxic loans, we won't stop you, then everyone made a bundle and left an enormous mess.

The evolution of good conduct is defined by effective rules. John McCain [the Republican presidential candidate] lectures on the morals of Wall Street but they are no more or less corrupt than other humans.

A full recovery will only begin with a new administration with a different philosophy seriously committed to ... bringing in new people, giving them adequate resources and the legal authority.

I would argue it is impossible for McCain to do it. Even if he is a genuine convert to prudent regulation which he has opposed thoughout his career, who would believe it?

He has been an enabler of the most speculative elements of banking system.

I think Barack Obama [Democratic presidential candidate] appreciates the severity of the issue and has the judicious temperament.

This is not a job for zealots or revolutionaries, it's for serious people to build institutions that can last for a long time. 

Gerald Friedman, economics professor, University of Massachusetts

The end of US capitalism? I really doubt it. 

This is a very serious financial crisis and if mishandled could become a serious recession even a depression, but it is unlikely to be as bad as the Great Depression of 1929-40 as the authorities have learned to co-operate in crises.

More importantly, a capitalist system - or any social system - can only be brought down by an opposing system supported by a rising economic class. 

There is no such contender on the horizon right now to challenge capitalism. So, we'll continue to muddle along.

Still, it will be bad all around unless we change direction. An effective anti-depression strategy would help those with bad mortgages so that they will be able to make payments on their mortgages and keep their houses; such a policy would help the banks by allowing for a "trickle-up" effect.