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The Global Economic Crisis Essay

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Economics and Global Capitalism The problem with the kind of thinking that postulates that human nature is based on self-interest is that underlying this supposition is the assumption that human nature is completely rational and logical and would never do anything to harm itself. This is not the case and economic booms and busts indicate as much. Self-interest is not always aimed towards a positive end. Sometimes, for instance, short-term self-interest is detrimental to long-term self-interest and vice versa. Sometimes people are motivated not by self-interest (at least in a temporal sense) but by charity, kindness, selflessness, self-sacrifice, or altruism. It could be argued that people sometimes believe they will be rewarded in a spiritual sense for these actions, but the basic idea is that they are essentially unselfish acts. Thus, to assert that self-interest is the rational motivating force behind human behavior is to really not understand humanity: humans are just as capable of being self-destructive and irrational as they are of being rational and selfless. How this translates into economic issues can be seen in a number of ways.

First, there is the Global Economic Crisis of 2008, which was spawned by the short-term self-interest of various players in the markets. Their short-term self-interest inevitably gave way to long-term woes. Some of these players collapsed under the weight of their folly, while others were bailed out by taxpayers via government intervention....

Some of the effects of this crisis were masked by central bankers adopting a policy of unconventional monetary policy known as quantitative easing (QE). QE led to significant asset inflation (stock market at all-time highs, bond yields at all-time lows, the housing bubble re-inflated, precious metal prices soaring, food costs soaring, and so on). If this were rational self-interest, the argument could surely be made that those players who had adopted foolish strategies in the marketplace should be made to take it on the chin and accept the repercussions, even if it meant pain for the global economy as a result. What resulted however was not this but rather the prevailing of a concept known as “privatized gains and socialized losses”—i.e., the players who had friends in high places in government were protected, and the players who were not as well connected were simply given to shoulder a few extra trillion dollars of debt. If this is rational self-interest and capitalism at work, it could be argued that someone’s definition of self-interest should be better explained.
I believe that the global economy is formed of a mixture of positive and negative forces and that the concept of global capitalism or of a “free market” is largely deceiving because the global market more resembles a command economy than a free market economy. It is very much decided by states’ central banks (through the establishment of interest rates, set by Treasury…

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