Reading a premature obituary of himself, Mark Twain remarked
that reports of his death had been greatly exaggerated.
The same is true of free market capitalism.
Politicians have been quick to blame “deregulated” financial
markets for the cash crisis.
That is the very opposite of truth, which is that, far from
being “deregulated”, the financial markets are the most tightly regulated
sector of the world economy, but the regulators – including the politicians
themselves – were about ten years behind the game.
More importantly, it is free enterprise which will
eventually drag the world out of recession, if and when we are allowed to do so.
Entrepreneurs have a natural drive to create wealth. Banks
can finance that drive, but, where that drive does not exist, banks, especially
nationalised banks, can do nothing to initiate growth.
So it is a failure of state regulation that got us into this
mess and the free markets are our best hope of getting out of it.
Those who have always been reluctant to accept that they
were on the wrong side of the Cold War should not be too quick to resume their old allegiances.