There have been many parallels drawn recently between the current economic situation and the 1930s. It is easy to see how the collapse of over-leveraged financial markets and the painful recovery from a balance-sheet recession lends itself to comparisons.
But are we witnessing a crisis of capitalism or a crisis of confidence in the ability of western democracies to offer decisive leadership and rising living standards to their populations? I think it is the latter. In a much more extreme form, of course, this contributed to the most dangerous development of the 1930s. In the west we have to confront this self-doubt before it takes root.
Travel east and no one is talking of “capitalism in crisis”. The spread of free enterprise in Asia over the past 30 years has lifted hundreds of millions of people out of grinding poverty. The challenge for these countries is not stagnant incomes, but meeting the growing political aspirations that prosperity brings.