It isn’t markets that failed us
When the first big books on what caused the great – and ongoing – financial crisis of 2007 came out, I read them reasonably carefully. I even reviewed some of the best ones for you in last week’s magazine. But I’m afraid I no longer read them with the same attention.
Why? Because they’re mostly much the same. They tell us in one way or another that the market has failed, that most accepted economic theory (based as it is on the idea that markets are efficient and self-stabilising) is a bit silly and that we need an entirely new theory to help us figure things out anew.
But I’m not sure we should get too hung up on how useless markets are. Sure, if you look at the last decade you might think they haven’t been working too well. The free market is supposed to make everyone better off.
But over the last decade the rich have become obscenely rich, while the rest of us have been lucky to hang on to our purchasing power at all. At the same time our banking system has all but collapsed and our stockmarkets made too many of us poorer instead of richer.
However, the point to make here is that none of this has anything to do with market failure. You see, markets can’t fail.
• Read the full editor’s letter here: It isn’t markets that failed us