That’s what Nicolas Sarkozy argues in the Washington Post today.
First he writes: “This crisis is not a crisis of capitalism but the breakdown of a system that drifted away from capitalism’s most fundamental values.”
I agree. What we have today is not capitalism but political capitalism. George Mason University’s Peter Boettke explained this point brilliantly back in October:
Political capitalism is not laissez faire capitalism; the hampered market economy is not the unhampered market economy. We are currently seeing the consequences of political capitalism and the hampered market economy. Economic science has been perverted, economic teachings has been perverted, economic policy has been perverted — all by politics. To continue down our current path is to reinforce the perverse folly of politics that has threatened the viability of the current economic system.
So, let’s go back to the fundamental values of capitalism: freedom and responsibility. Dream on, de Rugy. What Sarkozy means is:
This week we must attach the same sense of urgency to the regulation of financial markets. World growth will be all the stronger for being sustained by a stable, efficient financial system and by the kind of renewed confidence in the markets that would enable resources to be better allocated, encourage lending to pick up again and foster the return of private investment capital to developing countries.
We agreed in November that not one financial player, institution or product could be beyond the control of a regulatory authority. This rule must be applied to credit rating agencies, speculative investment funds and tax havens.
World bureaucrats telling small, low-tax nations what tax system and privacy laws they should put in place is the way to return to “capitalism’s most fundamental values”? Also, while he doesn’t give details in the editorial about the type of regulatory reforms he has in mind — apart from regulating everything — we know that he has threaten to walk out of the G-20 Summit if other countries don’t agree to put in place a global financial regulator.
For what I had to say about Sarkozy after he was elected President, go here.