Customer Reviews

The End of Laissez-Faire: National Purpose and the Global Economy After the Cold War

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After a brilliant and extensive analysis of the history of the world economy after World War II and the US-Japanese trade war, Robert Kuttner sketches the challenges facing the US and its economy after the fall of the Berlin Wall. The end of the Cold War was not only the end of Soviet dominance in the East, but also of US dominance in the West.

Laissez-faire, a doctrine saying that market economies, when left alone, are essentially self-regulating, is not the solution, because world economies are heavily influenced by state intervention. Governments have foreign-policy goals that are inextricably intertwined with economic ones, have strategic trade policies intended to assist their national industries and have national social contracts that cannot be left to markets.

Even the US system is seen as ad hoc mercantilism with weapons procurements, farm price subsidies, quotas and various restraints extracted from trading parties.

The US call for free trade is made a mockery by the 'socialist' huge US military and intelligence budgets (now 50% of the total US budget).

A policy of laissez-faire would ultimately lead to the (real) impotence of a (would-be) omnipotence.

The problems facing the US are multiple and deep: low savings rate, spotty educational and training system, decaying infrastructure, military bias in governmental research and technology, speculative capital markets, dysfunctional system of labor-management relations, corporate manager's short run consciousness, ideological confusion about military and economic security.

Robert Kuttner's proposed remedies seem obvious: a higher savings rate, capital markets for the long run, a competitive workforce, public investments (not military), regulation (not deregulation), healthcare for everybody, more government instead of no government.

But what are we seeing today: the savings rate is catastrophic (as well as foreign debt); the short run perspective in capital markets is more stressing than ever; the cost of education is prohibitive; corporate loyalty is seen as a weakness (Jack Welch); military investments are higher than ever; the Kyoto protocols were rejected; the number of US citizens without healthcare protection is at an all time high; the credo of the free market became a State religion.

Robert Kuttner's very sensible propositions were a call in the desert.

Will would-be omnipotence become real impotence?

A very necessary book and a must read.