So the British banks have gone, cap in hand, to Mervyn King at the Bank of England. These bastions of the British establishment and great supporters of the Tory party have been caught short. The very fault that Cameron is been attacking Brown for, not putting anything aside for the bad times, is what he friends in the banks have done.
I don't believe anyone thought that economically we would continue just to see growth with no downturns. There might be wishful thinking that the downturns can be moderate, but not that they will not come at all. So why were the banks not ready?
I think pure capitalism works on a very short term view of the future. Plans don't seem to be made for that far ahead. With socialism with see the attempt at long term planning with the disastrous Soviet five year plans. Up until the 1930s both America and the UK had almost pure capitalism. This probably explains why the Great Depression was so bad.
With Franklin Roosevelt's New Deal, the Second World War and the 1945 Labour Government we see the beginning of a mixed economy. This mix should give us hopefully a little more forward planning. To me Thatcher and Reagan represented one last throw of old style capitalism but even they couldn't turn the clock back that far.
So what's the answer? We live in a economic balance between capitalist growth and socialist planning. Getting the balance right should let us have a moderate growth with a lack of recession, but one thing that will be needed is reduce the power and independence worldwide of the banks and oil companies.