September 2008 was less than a year ago. Lehman Brothers collapsed. AIG got nationalised. Merrill got taken over. Washington Mutual disappeared. Fannie Mae and Freddie Mac got nationalised. Most large US banks became subsidiaries of the government. Stock markets crashed. Credit markets froze. And as everyone admitted, the US plunged into the greatest economic crisis since the Great Depression. Where is the US today? Certainly not out of the woods. Unemployment is still climbing as the real economy feels the effects of the financial crisis with a lag. But guess what, things don’t seem to be all that bad. Credit markets are thawing; stock markets are a bit more buoyant; and wonder of wonders, three of the biggest institutions (JP MorganChase, Goldman Sachs and Morgan Stanley) which were in hock to Uncle Sam have repaid or are repaying the billions that they had borrowed. By all appearances, the worst seems to be over and the abyss into which the American economy could easily have fallen (30 per cent unemployment during the Great Depression, for instance) has been avoided.

When the Great Depression happened, it was fashionable for leftwing academics to predict the demise of capitalism. Instead,

the US got the Securities and Exchange Commission, the Federal Deposit and Insurance Corporation and Social Security, all institutions that were crucial to ensuring that the Crash of 2008 did not result in a repeat of the ’30s. This time round too we have had any number of gleeful commentators arguing that the US model is finished. If an economy can start to recover from such a massive shock in less than a year, surely it is by no means “finished”. In fact, one might make the case that such a model is pretty robust. Market capitalism may be messy and prone to excesses. Democracies may be messy and not efficient in their decision-making like the Politburos and High Commands of totalitarian states. But because they are inherently humble and they look at each crisis as an opportunity to learn, to correct course and to move on, they seem to emerge stronger rather than weaker from the setback.

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