As Greenspan said:
I made a mistake in presuming that the self-interest of organisations, specifically banks and others, was such that they were best capable of protecting their own shareholders.
So farewell to the mythical 'invisible hand' of Adam Smith.
And let's not be flippant about this: all our banking regulation, our economy, our society has been built on the basis of this assumption of the invisible hand. Smith only used the phrase three times (I'm told: I have not counted) but the inappropriate use of his is assumption that an individual pursuing their own self interests would simultaneously, and without their knowing it, promote the best interests of society as a whole has been the basis on which economists have promoted greed as the basis of well-being.
Those economists did, of course, ignore the fact that Smith believed that there were ethical constraints to which humans were subject which would limit the impact of this process. Economists removed those limits. Greenspan was at the forefront of this process. Gekko was made in his image. And now Gekko and Greenspan are wrong. Greed is not the solution: it has created the problem. It is the problem.
The era of 'more is better' is over.
The era of 'enough' has arrived.
It will have profound impact upon our society, our communities, the way we live and the quality of our life. We should never ignore the last. In the era of enough we will seek to balance those conflicting claims that are an inevitable part of living. The stress, the anxiety, the social failure, the lack of meaning with in our world of work, most of them have their current route in one thing: the irrational pursuit of material well-being that greed motivates.
When we seek balance we will, of course, have to meet material need. But need is not the same as want. Most of our wants are artificially created by the advertising industry whose one and only objective is to create a sense of deep dissatisfaction within us: to put it bluntly, to create unhappiness with our current state so that we buy more to supposedly alleviate that hurt.
The reality is that we have found that the hurt does not go away if we follow this path; it just gets bigger by the day. And we see that hurt around us: in lives wasted inside the advertising and other industries, in the destruction of our environment, in the stress writ large on faces and within the lives of so many adults, which is then transferred to their children.
Greenspan's admission is not just the clearest signal that we need more regulation (although it is that). It marks the end of the destruction created by this perverted philosophy of greed, of which he has been a principal exponent. It is the point at which we say more is not better, the world can provide us with enough to sustain our well-being if we manage ourselves appropriately, and if we do we can all in the developed and developing worlds alike can and will live better lives.
Of course it will be a challenge to make that progress, but make it we must.
This is the first day of a new economy.