State of Change: Global Turmoil and Government Reinvention

Abstract

The current global credit crisis is unfolding in a context in which new dynamics in the engagement of the public sector and the market are taking shape. This article explores some of these dynamics, especially the reemergence of (re)nationalization initiatives, as well as the growing use of private methodologies for asset management on the part of some governments, which behave as both financial market players and domestic economic stabilizers. Hence, the article discusses the return of the state as a traditional “public leviathan” involved in financial regulation, as well as the work of sovereign wealth funds. The author concludes that at the heart of capitalism's endurance lies this diversity of public responses, which ultimately reveal governments' adaptable agendas and heterogeneous tasks. I think that capitalism, wisely managed, can probably be made more efficient for attaining economic ends than any alternative system yet in sight, but that in itself it is in many ways extremely objectionable. Our problem is to work out a social organisation which shall be as efficient as possible without offending our notions of a satisfactory way of life. —John Maynard Keynes, The End of Laissez‐Faire, 1926 The all‐powerful market which is always right is finished.…We have to have a new balance between the state and the market. —French president Nicolas Sarkozy, 2008