Yet, if this is a world economic crisis, it has been an astonishingly benign one so far. Today, The Independent offers an overview of the state of the global economy, and of the attempts by political leaders and world- class economists to make sense of it. Only a few months ago, western stock markets had taken fright at the domino-sequence of economic collapses around the world. It seemed the bubble had burst, that we had been living in a castle built on the clouds, and were hurtling towards the hard earth as memories of the Thirties flashed across our collective consciousness. And then - nothing happened. We woke up and found the Dow Jones and FTSE Index were back where they were before the vertiginous drop. Prompt cuts in interest rates by central banks - including the new European Central Bank, managing the successful launch of the new European currency - had enabled the western economies to adjust. It is not exactly business as usual: the British economy, for example, is still poised uncomfortably between `too hot' and `too cold', with the risk of a serious recession still casting a long shadow.
But the idea that capitalism is broke and needs fixing is far-fetched. Although all the distinguished economists who write in our pages today have their criticisms of the way international markets are managed, it is instructive that the focus of their efforts is on how to make the global market work better rather than how to insulate national economies from it. The possible exception is Paul Krugman, who last year appeared to recant on his free-market views by arguing that China had survived the Asian downturn because it maintained exchange controls. But it must be noted that China is a special case, with a huge internal market and relatively little dependent on world trade and foreign investment. No other developing economy - with the possible exception of India - is in the same position. Not even a country the size of Brazil can afford to cut itself off from foreign trade and investment.
That does not mean, however, there are no arguments to be had. The American triumphalists of the Chicago School, who attribute any of the worlds economic troubles to a falling short of the free-market ideal, make the mistake of overlooking the cultural and infrastructural differences between different economies. But they are more right than the new protectionists. No one can overlook the success of the US economy. And, just because the world economy is firing on only three cylinders at the moment, that does not mean we should go back to steam power.