Two or more years ago I coined the term ‘Assured Corporatism’ to describe the system that had replaced capitalism as we knew it. Under AC organisations are considered too big to be allowed to fail and are bailed out with public funds when they begin to sink. This has been most noticeable in, though not confined to, the banking system. I argued that Northern Rock et al should have been allowed to go down the pan, with the State guaranteeing depositors’ money, but not that of shareholders.
The fundamental error made by politicians and their advisors was to confuse banking as a function, with the organisations performing it. The function is critically important to economic wellbeing. That is not true of any organisation performing the function. When an organisation fails an opportunity is presented to other organisations ready to step in and fill the gap, having learned from the other’s failure. That is capitalism.
Now, at last, a deputy governor of the Bank of England has come round to that view. Hindsight, as they say, is a wonderful thing. What a pity that it was preceded by such muddled thinking.