The financial crisis which is ricocheting worldwide and causing tremendous anguish and tremors. Governments in leading industrial countries have been forced to nationalize large chunks of their banking sectors and central banks have injected heavy amounts of liquidity in money markets for the sake of avoiding a financial meltdown. Some have hastened to say that this crisis indicates that capitalism does not work; others, from the opposite side, accuse governments that, de facto, they are bringing in socialism. Both these trains of thought are wrong.

Economic freedom and entrepreneurship, which lie at the root of innovation and economic advance, rely on and feed on free markets; this is indisputable and explains why communist economies fell down, eventually. In this regard Ludwig von Mises, Friedrich von Hayek, and others were quite right. But it is misleading to argue that free markets are synonymous with non-regulated markets, with the practical extinction of public sectors and public policies. Modern economies and societies do need regulations and public policies so that public goods be in adequate supply and negative externalities be prevented or constrained; this implies the functioning of public sectors against the backdrop of a free allocation of resources (at market prices) and vibrant economic competition. That one needs to streamline public sectors and make them run efficiently so that public resources be not wasted goes without saying.

Many accept nowadays the Asian crisis was caused, primarily, by a premature opening of the capital account in the economies of that region. Similarly, the rush to privatize public utilities is not warranted. In addition, there are public utilities which should rather stay in public hands. The oversimplification of "good practices" in governance and, not least, the hypocrisy which has, in not a few instances, ac