History is littered with recurring themes of crisis, change and reinvention. Mark Twain said history doesn't repeat itself - at best, it sometimes rhymes. One such recurring lesson for the current global economic mess comes from the world of art.
When the camera made its mass-market debut at the turn of the 20th century, a debate raged within the arts community of what this would mean for the art of painting. Some feared the new technology would wipe out painting because painters would no longer be needed. Other artists believed photography posed no threat to painting whatsoever because photography could never be considered "art." Of course, we now know how wrong they were.
Yet, the camera did have enormous consequences on the art of painting. Photography set painting on a different course - one that was no longer preoccupied by capturing exact likenesses. A whole new era of modern, abstract art emerged. Photography didn't threaten painting - it liberated it.
Just as the art world was jolted by the camera, today's global economy is facing its own shocks. But rather than the invention of something new, the economy is convulsing at the collapse of something old: the 20th-century model of banking and credit.
There are two schools of thought as to what this current economic crisis means, and what's likely to come next.
One group, dominated by our political leaders and central bankers, says comforting words about how the old system will be repaired and restored. Once all of the stimulus packages kick in, the good ol' days of easy-flowing credit will return. Don't worry, they say, things will be back to normal in no time. (If "back to normal" means the greed-driven Wall Street model of capitalism circa 2005, it's doubtful anyone would want it.)
Others see this crisis as the death of capitalism. Greed got us into this mess. Like it or not, we're headed back to the days of socialism and state-controlled economies.
Well, they've both got it wrong. Far from being wiped out, capitalism will thrive in ways we cannot yet imagine. Just as artists in the early 1900s were set free to explore painting in a whole new way, capitalism - with luck - will be liberated by the demise of global finance as we knew it.
Of course, capitalism is not only about greed and deceit. In fact, we owe much of our high living standards and rising affluence to the virtues of capitalism. But rather than scheming to make a quick buck by "securitizing" bogus debt and rotten mortgages, what if those capitalist fat cats had channelled their considerable creative energies toward something that was useful?
For example, the extension of very small loans (microcredit) to those living in poverty in the Third World has shown great potential. Maybe a new brand of microlending could evolve to help North Americans without collateral, steady employment and a solid credit history. If you'd lend money to a blanket maker in Peru, why not an unemployed machinist from Windsor or a laid-off rig worker from Grande Prairie? Venture capital could take on whole new meanings and dimensions.
Or rather than trying to shout louder than the environmentalists, perhaps some capitalists could find new ideas for generating wealth, if they listened. It's not even necessary for the capitalists to agree with the environmentalists. All you need to do is watch for trends and capitalize on opportunities. Those who think there's no money to be made in green technologies would have been the same ones who thought the camera would spell the end of oil painting.
Governments around the world are vowing to reregulate the banking and financial sector, and this has raised serious questions for capitalists everywhere. Getting the regulatory regime right is important. But new structures will emerge, and new protocols will develop. Capitalism is neither dead nor going away, but it can be channelled in ways that lift our society and our global economy above what it's become today.
Long live the 21st-century capitalists!
Todd Hirsch is a Calgary-based senior economist at ATB Financial. The opinions are his own.
Todd Hirsch