Confessions of an Ideologue

Alan Greenspan today conceded the limits of his free-market ideology in his testimony before members of the House Committee of Government Oversight and Reform:

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.

“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

This is an impressive acceptance of fallibility from one of the most prominent free-market ideologues of our time. As the article posted below suggests, we shouldn't let the apparent failure of one ideology result in an intensified embrace of its opposite. Greenspan's comments shouldn't fuel a potentially misguided crusade against deregulation in all its forms, but rather invite a more thoughtful consideration of the limits of economic ideology in general.