"What can the public make of former FED chairman Greenspan's testimony that he no longer believes that the free enterprise system left to its own devices can function properly without causing structural distortions? In response to Waxman's questions about the assumptions the FED made regarding free markets, Greenspan admitted that he is partly to blame. He stated that for more than forty years he had always believed markets left to their own devices best serve the system and society of course. Are we now to assume that the former FED chairman is a born-again Socialist that suddenly "got religion" after capitalism is proving dysfunctional on a daily basis?
Greenspan along with others like-minded people throughout the world may finally be convinced that capitalism left to its own devices may not self-destruct as Marx believed and Keynes agreed, but it does contain within it the seeds of massive distortions that can only be fixed by the state. Of course there are still people in this world who see a solution to the current crisis other than state-directed capitalism. But the world economy is protesting to the tune of massive losses that causes fear and panic, to say nothing of 20 million people expected to lose their jobs as the so-called "recession" begins to unfold.
During the last Bush-Sarkozy meeting it was clear that the EU wants a much more interventionist role for the state to be discussed at the international conference of 15 November 2008, a position China supports as do most governments. Ironically, the US President, after throwing hundreds of billions into the financial system in bailout money, tried to calm the private sector and die-hard advocates of laissez-faire that markets must retain the role they have enjoyed historically.
Not Greenspan's testimony, not any 18th-century free-market ideology, nor any government regardless of how powerful it is, but the daily reports by major corporations that have sent world markets into a downward spiral will result in an institutionalized international structure of state-directed capitalism designed to stabilize markets and the economy. Heads of government, heads of corporations, investors, and former FED chairmen are the ones asking for state-directed capitalism because they see no alternative; certainly not because they are born-again Socialists who have found the light of the Lord amid the darkness of stock market losses.
There will be more high-profile former advocates of the laissez-faire (those believing in the illusion of laissez-faire) who will eventually become "born-again" advocates of state-directed capitalism, not because they will have any ideological commitment, but because the course of capitalism in its current historical phase is so debilitated that it cannot function without government as its partner and welfare safety net. In this respect, China is well ahead of the game, as in some respects are other Asian countries and even EU to a degree. It now remains to institutionalize the current phase of de facto state-directed capitalism so that international organizations like the World Trade Organization, IMF, World Bank, European Investment Bank, etc. adjust their policies accordingly."