When the Berlin wall fell, and then the Iron Curtain, and then the Soviet Union dissolved into national tribes pursuing free market economies, the academic conservatives were gleeful. “The End of History” was the zeitgeist text and meme that Fukuyama penned. The metanarrative debate and power struggle about the role of government at “the commanding heights” was over. Government had little role in the economy. She could (and the female pronoun is very apt) nurture the children and clean up the messes, but had to stay in the private sphere of domestic concerns and stay out of the public sphere of productive work and economics.
With the tectonic shifts in the last two weeks, leading to today’s headlines about a massive bail out of the bad debt and paper by a government agency; with the infusion of something like $300 billion Treasury dollars into Bear Stearns, the FMacs, and AIG; with monetary policy at the bottom of the tool box with only a few thumbtacks left (the key T billrate dropping to essentially zero), I suggest its the end of history, again.
There are no Unicorns, and there can be no totally free markets. The Fed and Treasury had to step in and take direct action, in the spirit of Keynes, because they had no other choice to avoid a massive, 1932-esque economic collapse.
The debate is on again about the role of government, law, policy, and institutions in managing the economy and how to achieve a more just society.
I am not going to even respond to any neoliberals or other market ideologues until they acknowledge that the Reagan-Thatcher revolution has come to a grinding end. The overall governing philosophy that “markets are always better and government must be progressively marched to the sidelines of the economic game” is dead, dead, dead. When real people had to make real decisions over the last two weeks, that world view came up empty of ideas and solutions.