What do Rockefeller, the present economic crisis and the global mafia have in common?

...They were all created and flourished because of lack of government oversight and periods of power vacuum.

John D. Rockefeller deserves credit for accelerating the development of the industrial age by discovering oil in the US and establishing an efficient production, refinery and distribution industry. However, he was ruthless in exploring government regulatory weaknesses and controlling the market himself. His life has become a focal point for debate regarding the proper role of government in the economy.

Lack of government oversight of the financial markets is the cause of the present economic crisis, too. The genesis of the problem goes back to the “hands-off” and “the market knows best” philosophy of the US and UK governments in the 1980s and 1990s. Rapid technological innovation and the introduction of many “sophisticated financial instruments” made it difficult for the government to follow the market, even if it wanted to. The “hands-off” philosophy acted as a further sleeping pill leading to the well-known results.

Creation and spreading of organized crime benefits from similar weaknesses of the government.

A fantastic book by the title McMafia, which was authored by Misha Glenny and was released recently, documents how the organized crime has spread globally as a result of power vacuum and lack of law enforcement in cases of rapid political, social and technological change. The details of the book are frightening; the lives of most of us are directly affected by such organized crime syndicates present in the most unexpected places!

Then, what is the solution? Eventually, Rockefeller’s dominance of the US market was partially controlled by Theodore Roosevelt in 1906. However, with globalization of financial markets and global trading, a government alone can not be effective. The same applies to the global organized crime, which has no nationality and is free to seek safe heaven every time one government gets serious about law enforcement.

Global oversight is needed for a number of global activities including finance, trade, etc.

I am not advocating micromanagement of the global system, but enforcement of some basic rules to avoid catastrophic consequences for the average citizen and ensure well-functioning global market. At the national level, governments need to strengthen law enforcement, as well as their capability to follow technological change and adopt quickly to avoid being left behind by sophisticated entrepreneurs and gangsters.