Goodnight, Chicago!

We're watching the death throes of thirty-odd years of Chicago School neo-liberal economics. The death of the ideology that the market can be allowed to decide how, or indeed whether, certain types of social provision will be made. The death of unbridled capitalism and the Thatcher and Reagan Darwinian philosophies of self. Perhaps we're even witnessing the death of growth as a means of providing some kind of illusory trickle-down economic effect. (In fact, the effect is more trickle-up than trickle-down.)

For the next generation or so, we will being living in a more socialised economy, where the governments will control the banks once more, where we will all be more risk-averse and where we will have to learn to trim our expectations and learn to live on less, but with a little more security. In the UK, we're all going to become more "European," much as that may grate with many. Even my Lord Mandelbrot thinks we might have weathered the storm better with the euro than with sterling.

So can we let the market decide? If we are to learn anything from recent events, we have to say both "Yes" and "No." Where there is no national interest at stake, let the market decide. Where there is a national interest at stake, then no. If we had let the market decide what to do with the financial system, we would be seeing much more blood on the carpet than we have seen so far. Remember that even old-school Tory Michael Heseltine resigned over the Westland affair precisely because he felt that national interest took precedence over Thatcher's privatisation ideology.

But even now you will hear the same old mantra from politicos about how we can't interfere in the market. Some of them are simply hoping that this current madness is simply a temporary nervous breakdown. The patient is undergoing treatment for a while, but will eventually emerge to carry on in exactly the same old way, as if nothing had happened, addictions and compulsive behaviours intact, "back to its old self" again.

However, if we are to live in a free-wheeling financial system which has an elaborate casino at its core, and the "real" economy only existing as a kind of afterthought, then we are all going to have to become each-way punters, rather than staking everything on the nose, doubling our bet each time we lose, and borrowing to pay the gas bill.