"So amid all the doom-mongering and recanting, I have an assertion to make. The market has not failed. The present collapse is evidence that the market is working. Confidence bubbles are an inherent feature of a free market system. Panics — confidence vacuums — are an inherent feature too. The test of the theory of market capitalism is whether the system provides from within itself the means to prick both.
It does. The first — a confidence bubble — has been pricked. We are now sucking ourselves the other way: into a confidence vacuum. In time this too will be pricked. The market will steady."
Matthew's right, of course - bursting bubbles are a feature of free market systems. It's an undeniably sad fact, too, that those bursting bubbles entail a human cost - in the form of job losses, insolvencies and the rest - as we're seeing now. Even so, it's churlish to suggest that free markets have failed, and dispiriting to watch confidence in them falter. Putting aside the question how much state action is to blame for the current crisis, free markets and competition are - as the Telegraph's Iain Martin wrote in an important article last December - the "most powerful engine of human improvement" that we've yet come across. That's why they need defending, and that's why we need to refine, rather than rubbish, them.
Hence we at the Spectator have launched our own inquiry into the causes of this latest downturn, which we're asking for your help with. If we can understand what went wrong this time round, then there's every chance that capitalism can motor along stonger and fairer in future.