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In this article, Luigi Zingales asks whether democratic capitalism will continue to enjoy the undisputed legitimacy among the U.S. population that it had until today. Initial indicators are not —he says— encouraging. By reacting to the crisis like it has, in particular with masive government bailouts of banks and large corporations, the United States today risks moving in the direction of European corporatism and the crony capitalism of more statist regimes. In the long run, this would consolidate the same practices that caused the crisis in the past and have trapped capitalism in a vicious circle in most of the world. In the author’s opinion, the course of action imposed in the U.S.A. thus far could well be the most serious and detrimental consequence of the financial crisis.
To confront it, Zingales advocates taking an alternative road consisting of pushing for a series of truly pro market (and not pro business) reforms that would restore principles fundamental to the workings of a free, fair and well regulated market.