With one ear cocked towards the television news last night, I heard a commentator describe the current economic hiatus as "the worst in a hundred years." That may well be the case in terms of the sheer sums of money involved but we have yet to see whether the social consequences will be worse than those of the Depression. The numbers now freely thrown around defy the imagination; whereas once politicians spoke of hundreds of millions and occasionally billions, we are now in the realm of hundreds of billions and even trillions. America is said to have committed $2 trillion (2 x 1012) to underwriting its financial institutions and the motor industry. Britain has similarly assured sums amounting to £1.3 trillion, equal to annual GDP, with a further £750 billion in reserve.
Reading the runes, one feels that we are almost at the end of the financial stage of this crisis; there cannot be many more banks left to go bankrupt - but don't hold your breath. As recriminations fly, comment in certain sections of the press has been directed against what is identified as 'the failure of free market financial capitalism'.
I contest this view. This is not due to the failures of the free market, but to the lack of free markets, at least, free markets as propounded by Adam Smith. Though Britain, like America, likes to present itself as an inveterate champion of free markets, a closer look at the facts tells a very different story.