capitalism's inner contradictions?

A banking friend of mine was shocked once when I pointed out in a sermon that money runs on faith. And I still stand by it: you have to believe that this token will be accepted (on faith) by other people when in turn you want to turn it into goods or services. The banking system is more so. If we lose faith in the system, it will collapse. So it's interesting to note, that herein, lies one of the contradictions of capitalism: it promotes self-interest but within a system that relies on others to maintain good faith. Perhaps it's another variant on the epistemological paradox that you have to believe something to know something.

I find some confirmation of this in the recent matter of the run on the Northern Rock bank following the blowback from the USA's bad debts problem. The fact is that the institutions that are often most gung-ho about the importance of private enterprise and not ruining markets by government intervention, nevertheless are happy to be bailed out when it suits. The irony is magnified when seen through the lens of particular protagonists like this: "When his libertarian business model failed, Dr Ridley had to go begging to the detested state. If the government and its parasitic bureaucrats had not been able to use tax-payers’ money to clear up his mess, thousands of people would have lost their savings. Northern Rock would have collapsed and the resulting panic might have brought down the rest of the banking system." Thanks to George Monbiot for the nice quote. The irony is that the business model the guy lived by says you go to the wall in such circumstances. The difficulty is that to allow them to do so could actually be bad for the economy more fully and there is a problem about letting financial institutions think that they can take big risks because they will be bailed out if they are wrong. We have to find a way to make sure that risk-takers in such influential positions get the feedback of failure to keep them from risking our futures and resources.
Monbiot.com � Libertarians are the True Social Parasites: