For the best part of three decades, policymakers in the developed world followed Ronald Reagan and Margaret Thatcher in seeking to roll back the frontiers of the state. The triple mantra of privatisation, liberalisation and deregulation held sway.

Yet the problems that began in credit markets a year ago now cast a cloud over the strong market orientation of western policy. After the collapse of banks such as Bear Stearns in the US and Northern Rock in the UK, and against the current background of mounting speculation about the viability of mortgage giants Fannie Mae and Freddie Mac, the Anglo-American approach to capitalism appears badly flawed.