More State and less market PM Rudd's remedy

From time to time in human history there occur events of seismic significance, when one orthodoxy is overthrown and another takes its place. Today, the scale of the global financial crisis demands that we re-evaluate the economic policy and philosophy which brought us to this point.

George Soros has said that "the salient feature of the current financial crisis is that it was not caused by some external shock the crisis was generated by the system itself". He is right. The current crisis is the culmination of a 30-year domination of economic policy by a free-market ideology that has been variously called neo-liberalism, economic liberalism or economic fundamentalism. The central thrust of this ideology has been that government activity should be constrained, and ultimately replaced, by market forces. In the past year, we have seen how unchecked market forces have brought capitalism to the precipice.

Instead of distributing risk throughout the world, the global financial system has intensified it. Neo-liberal orthodoxy held that global financial markets would ultimately self-correct - the invisible hand of unfettered market forces finding their own equilibrium. But as the economist Joseph Stiglitz has caustically observed: "The reason that the invisible hand often seems invisible is that it is not there."