This crisis is indeed far from being a pure failure of markets

Sir Leszek Balcerowicz writes “This has not been a pure failure of markets” May 14 and the most extraordinary thing about it is that there is a real need for his article.

If a bank regulator decided that the minimum capital requirements for the banks depended on how much some few specially designated fashion experts fancied the colour of the tie that the borrower´s chief executive officer wore; and that capital requirements so determined could then vary between a high of 12% of the loan and a low of 0.56% would you call this a free market? Of course not, not even if instead of the colour of ties what was used were the ratings of some vaguely defined credit-default risks.

But, if even Martin Wolf, the chief economics commentator of the Financial Times, almost two years into the crisis, can still write about “why free-market capitalism went off the rails” and that the “era of financial liberalisation has ended”, “Seed of its own destruction” May 12, when one could very well argue that free-market capitalism was actually placed on rails heading over cliffs, then clearly Balcerowicz’ article is still much needed and appreciated. Clearly those from Poland have a clearer or at least more recent concept of what state dirigisme really means.