The Open Door Dispatch

Richard, Homer...Phil and Don...

In an interview published in the February 13-14 Wall Street Journal, Stephen Green, the chairman and former CEO of HSBC, described the economic crisis of 2008 and its aftermath as

"[T]he working out of a market fundamentalism that became increasingly to characterize the past 20 years or so, whose basic proposition was: the market is sufficiently efficient that you can rely on it to smoothly allocate resources and properly value all assets and liabilities and you don't need to ask other questions.   In its most extreme form, it was an assumption that it [the system] is self-policing.  We now know that that's not correct. "

 Could it be said that, for a while there, the rule was: expediency trumps principle?

Mr. Green defends the markets: 

"I don't myself believe that there's any alternative to the market as the basic engine of economic and social development.  This is not about finding some radically different mode of organizing human affairs rather than the market.  There is no alternative to it.  Or rather, the alternatives have been tried.  We know what they look like.  That' s the stark lesson of the twentieth century [with, The Journal helpfully adds, its murderous experiments in totalitarian communism and corporate fascism].  So at the end of the day, I do stand by what you might call a Churchillian defense of the markets." [ Where, again, The Journal completes Mr. Green's thought: The Free Market is the worst form of economic organization, except for all the others that have been tried.]

Recent experience suggests a rewording:  Reasonably regulated, the Free Market is the worst form of economic organization, except for all the others that have been tried.

The most important thing about the free market is that it is free.  In the May 1990 issue of The Atlantic, John Lewis Gaddis concluded an article entitled "Coping With Victory" with these paragraphs: 

"What happened in the revolutionary year 1989 was that liberty suddenly found itself pushing against an open door.  The balance swung away from power with breathtaking speed: the authoritarian alternatives that have dominated so much of twentieth-century history were revealed to be, for the most part, hollow shells.  We have good reason to hope that liberty will flourish in the next few years as it has not in our lifetime; and it is in that context that the real nature of the West's "victory" in the Cold War becomes clear.  For it was authoritarianism that suffered the real defeat, and in that sense all of us - including our old Cold War adversaries - have won.

     “But history will not stop with us, any more than it did with all the others - Marx and Lenin among them - who thought they had mastered its secrets.  The triumph of liberty will certainly be transitory; new forces will eventually arise that will swing the balance back to power once again.  It is not clear at the moment, though, where they will come from, or when they will arrive.  It would be prudent to be on the lookout for them; it would be wise to be prepared for their effects.  But the fact that the forces of resurgent power are not yet in sight - that we have the luxury of at least some time to savor the liberties that all of us, Russians included, have won - ought to be an occasion for ecumenical, if wary, celebration."

Pictures: Berlin Wall Comes down 1990, Argh