England, commented John Stuart Mill, the father of British liberalism, “is the ballast of Europe, France is its sail.” If that were true today, then Europe would be headed towards the end of laisser faire capitalism. Take Nicolas Sarkozy, the latest leader to toll the bell on principles that have delivered, over the past 30 years, unparalleled global prosperity – and now a tremendous bust. “The all-powerful market which is always right is finished,” Mr Sarkozy said. Even Hank Paulson has said “raw capitalism is a dead end”.

Before everyone dons Mao suits, let it be noted that it is not clear how raw this all-powerful capitalism really was. The market was fuelled by the central bank-filled punchbowl of cheap credit and underwritten by the existence of the Greenspan “put”. This promise of rate cuts in an emergency has now crystallised into a systemic bailout. The Paulson plan is not “trickle-down communism”, as some critics on the right suggest. No country has ever managed a serious banking crisis without government intervention. Even with a few nationalisations and creeping government by fiat, property rights remain largely secure.

Still, the financial industries of London and New York will inevitably shrink. The leverage – and profits – needed to sustain them have gone. But that does not mean financial capitalism is itself dead or that Mr Sarkozy, dirigiste by nature, should be seen as an impartial commentator. The French state’s role in the economy was hardly waning in the run-up to the credit crunch: the country’s budget deficit is again set to bust its Maastricht limits.

We have been here before. F. Scott Fitzgerald described the 1929 crash as “the most expensive orgy in history”. Yet, two years later, his belt pulled tight, Mr Fitzgerald felt nostalgic for the Jazz Age when people lived with the “insouciance of Grand Dukes and the morality of call girls”. It was 50 years before financial capitalism fully returned. The doctrine of laisser faire has survived worse and will again.

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