Wednesday, 8 October 2008

The end of an era?

'We shall look back on today as the end of an era. This is the end of the Thatcher-Blair period. Neo-liberalism has come to an end.' Thus proclaimed the business school professor.

Leaving aside the question of whether Thatcher and Blair's policies can be rolled together (and I would argue that there are some non-trivial differences), it may be a bit too soon to write off the market economy. Or at least I hope it is. Do we want to go back to the days when a visitor from the Soviet Union could ask the question, 'Who organises the bread supply for London?'

Markets have a lot of benefits as an economical way of transmitting large and complex amounts of information through the price mechanism. There are identifiable market failures, of course, but often when governments intervene to correct them, they can create government failures which are even worse.

Of course, an unregulated market economy can easily destroy itself. The trick is to have enough regulation to prevent this happening, but not so much that it strangulates the market economy so it cannot operate properly.

Politically, Gordon Brown is a beneficiary of the turmoil, as is Alastair Darling. There is a new spring in Gordon's step and apparently he was winking at the press at his press conference this morning. He was apparently more than usually effective at PMQs. Cometh the hour, cometh the man.

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