Tuesday, April 20, 2010

Keynes on Casino Capitalism

In the Times, Roger Lowenstein considers "How Wall Street Became a Giant Casino," which, yet again, reminds me of ch. 12 of the General Theory, in which Keynes says:
Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism - which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object.

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