E. J. Dionne Jr., washingtonost.com, July 11, 2008:

“The biggest political story of 2008 is getting little coverage. It involves the collapse of assumptions that have dominated our economic debate for three decades.

“Since the Reagan years, free-market cliches have passed for sophisticated economic analysis. But in the current crisis, these ideas are falling, one by one, as even conservatives recognize that capitalism is ailing.

“You know the talking points: Regulation is the problem and deregulation is the solution. The distribution of income and wealth doesn't matter. Providing incentives for the investors of capital to "grow the pie" is the only policy that counts. Free trade produces well-distributed economic growth, and any dissent from this orthodoxy is "protectionism"...

“This is the third time in 100 years that support for taken-for-granted economic ideas has crumbled. The Great Depression discredited the radical laissez-faire doctrines of the Coolidge era. Stagflation in the 1970s and early '80s undermined New Deal ideas and called forth a rebirth of radical free-market notions. What's becoming the Panic of 2008 will mean an end to the latest Capital Rules era.”

“The advent of ‘free trade’ as the prevailing ethos coincided with an economic boom, lasting from the early 1850s to the early 1870s. Contemporaries saw the first as causing the second; economic historians have been more sceptical. The removal of tariff barriers probably had only a marginal impact on the British economy, but the ascendancy of ‘free trade’, in its larger sense of national commitment to economic progress, was closely related to an entrepreneurial enthusiasm which all classes seemed to have shared... The free-trade movement accompanied rather than anticipated the commitment of the British economy to manufacturing, transport, and service industries with an urban base...” (Kenneth O. Morgan, editor, “The Oxford History of Britain”, Revised Edition, (Oxford, Oxford University Press, 1999), pp.528,520).

“The period 1892-1914 raises some difficult problems for liberal theories of foreign trade. The evolution of the European economy reveals a disturbing correlation. Grossly oversimplified this can be expressed in the following equations: protectionism = economic growth and expansion of trade; liberalism = stagnation in both... the return to protectionist trade policies undoubtedly coincided with a considerable change in the main economic trend, leading to a period of growth unprecedented in European history... foreign trade in the protectionist countries grew more rapidly than in the liberal countries...” (Paul Bairoch, “European trade policy, 1815-1914”, The Cambridge Economic History of Europe, Vol.8, The Industrial Economies: The Development of Economic and Social Policies, (Cambridge, Cambridge University Press, 1989, p.69-70).