Since the credit crisis of 2008 and the economic recession that followed a year later, it has become fashionable to write booklets in which experts explain the crisis accessible to the general public. With the only 118-page 'Capitalism without brakes', the well-known historian Maarten van Rossem has now also jumped into this gap. Van Rossem's booklet bears the subtitle 'The rise and fall of market fundamentalism', and Van Rossem immediately puts his finger on the sore spot.
Maarten van Rossem is a historian, and the historical view distinguishes this book from many others on the subject. He speaks of neoliberal free market thinking as a fundamentalist religion.
He calls proponents of this ideology, influential economists such as Alan Greenspan and Milton Friedman, believers, even fundamentalists. Alan Greenspan, the chief executive of the US central bank, saw that the rampant culture of speculation and deregulation in the financial markets could go wrong. Yet he did not intervene, after all, the market could not fail.
To explain this curious behavior of economists and maddened markets, Van Rossem explains the economic history since the crisis of the 1930s. Somewhat surprising is his account of how it was not the great Republican hero Ronald Reagan, but the maligned right-wing conservative Democrat Jimmy Carter who started the neoliberal revolution. By the late 1970s, the idea that the government should achieve stable economic growth, with the successful construction of social security systems in almost all Western countries, had been definitively discarded.
Van Rossem does not know exactly how this happened, but he places the responsibility mainly on the organized lobby of the business community. Either way, government went from solution to part of the problem. President Carter, often accused by historians of weak and visionless policies, proved sensitive to the new ideology and began to privatize and deregulate.
Van Rossem has some difficulty in explaining how financial markets work. Perhaps it would have been better if Van Rossem had stuck to his own hobbyhorse, which is telling a beautiful historical story that places the present in a relevant context.
Interesting, for example, is the observation that President Reagan implemented a huge tax cut and at the same time made completely insufficient cuts, which could result in a huge budget deficit and a huge national debt. After all, poor Reagan was also such a 'believer', who was sure that the market - even in the event of mismanagement - would have a corrective effect.
All in all, a light-hearted book with an interesting look at the history of free-market thinking in America.