FROM MERCANTILISM TO NEOLIBERALISM – CRISES AS INEVITABILITY IN THE LIFE OF CAPITAL

Abstract

Economic history of the last five hundred years contains many instances of financial crises that rose as a result of investor optimism – the insatiable human desire for gaining wealth. Favourable economic conditions seemed to guarantee a quick and easy profit. However, such conditions have often lead to economic booms and the bubble would grow until it burst. In this situation, comparable to natural disasters such as avalanches, earthquakes or tsunamis, an individual could hardly resist the temptation to make profit, regardless of their religious, moral or intellectual standards. Sir Isaac Newton (1643-1727), widely regarded as one of the greatest minds of all time, was himself caught in the frenzy of buying the shares of the South Sea Company. When he lost all the money, he was quoted as stating, „I can calculate the movement of the stars, but not the madness of men’. In most cases crises were the result of losing faith in the system that seemed promising. As a rule, crises never afflict an individual subject or location; in a domino pattern, they spread to other branches and spheres of economy and society as a whole. At first the crises were regional and continental; however, with capitalism becoming the global system, they too often reach global scales. The vast majority of players experienced the crisis as a sudden shock, which they never recovered from. On the other hand, a few cautious players saw the crises as probable and predictable, which brought them profit and easy money. This is the reason why Michael Douglas’ character in Wallstreet notoriously announces: ’Greed is good’.