What does the great credit crunch do to the case for competitive capitalism? Many revisionist left-of-centre politicians not only have risked their careers to make the case for market forces, but have also had to jettison their deepest lifetime convictions. Are they now to stand on their heads and say they have been wrong all along? And if they did so, where would they turn? Even if in the end we suffer no more than an average post-second- world-war recession it will still look like a narrow escape owing to the readiness of leaders such as Hank Paulson, the US Treasury secretary, not merely to jettison free-market principles but to take risks with prudence to bail out US corporate bodies. There will be no “glad confident morning” for free-market principles for a long time to come.

It is for such reasons that I welcome a short and well-written book, The Origin of Financial Crises (Harriman House £16.99) by George Cooper, which attempts to relate apparently esoteric financial issues to elementary economic theory. He quotes from Paul Samuelson, author of what was probably the best-selling economics textbook of the 20th century, Economics: An Introductory Analysis. Prof Samuelson provides a simple introductory outline of a competitive market system. If there is a flood of new orders for, say, shoes, their price will rise and more pairs will be produced. If there is a glut of tea, its price will be marked down, people will drink more and producers will supply less. “Thus equilibrium of supply and demand will be restored.”