BY NOW it is hard for authors to stand out in the growing library of books on the causes and consequences of the financial crisis. Anatole Kaletsky manages to do so, thanks largely to the breathtaking ambition of “Capitalism 4.0”, and partly to the unusual optimism that infuses it.
As the book’s subtitle suggests, Mr Kaletsky, an editor at the Times who worked at The Economist in the 1970s, argues that the financial crisis marks a transformation in modern capitalism, one from which a new, improved version will evolve. He regards it as a turning point equivalent to the Napoleonic wars, which augured the beginning of the classical era of laissez-faire (or Capitalism 1.0); the Depression (which spawned the government-heavy era of Capitalism 2.0); and the stagflationary 1970s (from which rose the free-market Capitalism 3.0).
Like the changes that have gone before, capitalism’s latest transformation will alter the relationship between markets and governments and between politics and economics. It is the ability to adapt that secures capitalism’s survival. Version 4.0 will be as different from the recent free-market fundamentalism as Reaganomics was from the New Deal.