New name for a new economy?
Do we need a new name for the kind of economy we live in today? I ask because it's becoming a bit of an issue.
We started the week celebrating the 20th anniversary of the fall of the Berlin Wall. It was, everyone agreed, ironic to be marking the fall of communism, when less than a year ago capitalism itself had seemed to be on its knees.
Capitalism has survived. But it's not the capitalism we thought we had. When you consider the scale and scope of government involvement in most of the advanced economies right now, "free market capitalism" seems a bit of a stretch.
Today we had confirmation that the eurozone economy had moved out of recession in the third quarter. But the public sector was almost entirely responsible for the modest growth that the major European countries have achieved since the spring.
The last 20 years were supposed to be about the end of the era of big government. And yet, public borrowing in the leading "free market" economies - Britain and the US - has never been as high as it is today, outside times of war.
You might see that as the statistical counterpart to the intellectual journey that economists have been forced to make as a result of the crisis, which I discussed on my radio programme last week (Analysis: The Economist's New Clothes).
Mainstream economists didn't assume that markets - or their participants - were perfect. But for decades they did assume, in effect, that they were good enough: that markets were competitive enough, and people were rational and well-informed enough, for market-led outcome usually to turn out best. Especially in matters of finance.
Now, it turns out that real-life financial markets were much, much, messier than they thought - and much much worse at self-regulation. The biggest short-term consequence of that mistake is that the government has suddenly become responsible for most of our economic growth.
In the US, economists agree that without the federal stimulus package, the US would still technically be in recession.
We're getting used to this post-crisis landscape. But don't forget to be surprised that decades of the "free market" have ended up here.
John Cassidy tells the story in How Markets Fail: the Logic of Economics Calamities. There have been plenty of books about the crisis landing on my desk in recent weeks, but Cassidy's is the only one I've seen that pulls together the what and the why quite so clearly. He covers some of the same ground as my programme, but in much more depth.
As Cassidy comments:
"[T]he combination of a Fed that can print money, deposit insurance, and a Congress that can authorize bailouts provides an extensive safety net for big financial firms. In such an environment, pursuing a policy of easy money plus deregulation doesn't amount to free market economics: it's a form of crony capitalism."
The outcome, he says, it's not just unfair - it doesn't work.
John Lanchester, the London Review of Books' chronicler of the crisis, said recently that "bankocracy" might be a better name for the current system.
If you think that sounds inflammatory, remember that Mervyn King, Lord Turner and Martin Wolf of the FT have all made essentially the same point. Unless the rules of the game change fundamentally, it's not really capitalism that we have today. Especially not for banks.
Any other ideas for a new name?