Ben Chu is not alone. His conclusion that ‘free-market fundamentalism’ is to blame for the financial crisis is still sadly reflected in much of the media and public at large. Yet a glance at the arguments made in his article published in The Independent reveals an antipathy for government, not the free market.
So what are the traits of this ‘free-market fundamentalism’ that Mr Chu is condemning? Despite using the term, he is certainly not upset about anything ‘free’. He is annoyed that the UK government has been captured by baking lobbyists, that they and the Bank of England lent vast sums to these banks, and that despite this, banks are still in much the same state as they were last year. The real recipient of Mr Chu’s ire should be this corporatism and poor inefficient government, not free banking. A free market in banking has not been practiced in the UK (Scotland) since 1845, and even then arguably.
Although clearly used as a pejorative by Mr Chu and others, the fundamentalists – if by fundamentalism one means a strict adherence to principles – would agree with Mr Chu’s concerns, if not his solutions. Following the financial crisis, the ideas of the Austrian school have rightly undergone something of a renaissance across the globe. In the US, the work coming out of the Mises Institute, Peter Schiff of Euro Pacific Capital and Republican Congressman Ron Paul have redefined the terms of the debate. In the UK, the recently formed Cobden Centre has the potential to do the same over here.
The zombie that actually needs putting out of its misery is the model upon which we have built and allowed our economy to bubble and burst. Although the jewel in the crown, of the overturning fiat money, is unlikely to take place any time soon, the ideas may well set the groundwork for radical reform once the next financial crisis hits.