Another of the genre of books about the causes of the financial crisis that’s been been released of late isÂ Capital Offense by Michael Hirsh, which I’ve recently finished reading. This is a book that focuses more on the broad array ofÂ personalities than the others I’ve read – in particular on the leading policy makers of the last couple decades.Â The authorsÂ primary cast of characters includes Milton Friedman, Alan Greenspan, Robert Rubin, Larry Summers, Joseph Stiglitz, with copious biographical information included for all of them.
I will readily admit that I’ve not been a student of economic history and as such don’t really know all that much about the individuals who have shaped it over the years. One of the things I found most interesting about this book was the discussion of how theÂ economic philosophies ofÂ Milton Friedman and Alan Greenspan were developed and shaped.
The basic theme of Capital Offense is the growth then dominance of free market thinking in US and global policy making, starting most powerfully in the Reagan era and progressing right through the intervening administrations and into the Obama presidency. Hirsh points to Friedman as the leading initial force of this movement, but seems to be hesitant about actually blaming him for what he calls the free marketÂ zeitgeist that created the financial crisis. He is not, however, shy about placing that blame firmly on Alan Greenspan, Robert Rubin, and Larry Summers for their attitudes to regulation and actions to reduce its impact on the markets.
Interestingly, Stiglitz is portrayed as the hero of the period because he had it right in terms of seeing what was to come, but was generally marginalized when it came to actually being a part of the policy mechanism. My one little issue with that is the implicationÂ he’d have been able to get the policy right given the opportunity. Maybe he could have done. We just don’t know.
The author leaves us with a critical view of the Obama administration in how it features many of the same individuals who were integral in theÂ way the free market mantra was so entrenched during the ClintonÂ administration and howÂ it’s missed opportunities to enact needed change to the financial system. He doesn’t leave the reader feeling very positive about future prospects.
Overall, I found Capital Offense a very informative and engaging read. I definitely recommend it to anyone looking to get a look at the underlying economic philosophies which brought us to the current point.
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