The G20 has affirmed that state action can indeed solve our economic problems. For the past 20 years we were told small government and the market were all we needed. Moving economic power from politicians to independent central bankers promised stable, growing, low-inflation economies, free from state interference. But now the market is widely viewed as unfair, having generated ‘unacceptable inequalities’; and inefficient, having diverted ‘massive resources into financial activities whose contribution to the economy is questioned’. As the crisis deepens, politicians are seizing back the reins, with direct government intervention. Commentators have declared the end of ‘neoliberalism’ and the return of the state. Chancellor of the Exchequer Alastair Darling has invoked John Maynard Keynes, while Nobel Prize-winner Paul Krugman calls today ‘The Keynesian Moment’.

Is state intervention the solution, or will it create new problems? The scale of the increase in public-sector debt could well be a heavy burden that drags on future growth. The FT’s Martin Wolf warns, ‘escaping from huge and prolonged deficits will be very hard’. Ross Walker of the Royal Bank of Scotland is concerned that the private sector’s contraction in contrast to the public realm means ‘we are likely to end up losing entrepreneurial spirit’. Are we really seeing a permanent shift to greater state control, or are these merely temporary measures? How new is today’s state intervention? Is it a new version of Roosevelt’s visionary New Deal, or is Keynes’ name invoked to give a veneer of economic respectability to panicky state interference?

Professor Furedi’s speech will be responded to by Dan Lewis and Professor Rainert before audience questions.

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