This is the fifth book by Richard Posner (law professor at the University of Chicago and a long-time judge on the 7th Circuit Court of Appeals) that I've read, in addition to many legal opinions.There is no question that he's brilliant and an excellent, clear, and precise writer.There is also no question about his credentials as a libertarian-leaning conservative.Until now, that is."A Failure of Capitalism" departs consciously from the prevailing libertarian take on the current recession (or, as Judge Posner argues it should be called, "depression").In short, he believes that the depression was not mainly caused by government meddling.Rather, it is a "market failure" -- i.e., a crisis that market forces alone could not have prevented.And, given the size of this market failure, government should instead have used regulations to prevent it.
Before I got the book, I had read some indications that Judge Posner was taking this line.But in the book itself, he is crystal clear about his view that deregulation in the financial industry was a major culprit, and his recognition that he is going against the conventional wisdom of both libertarians and conservatives.
The book is well argued and much more thorough than I can convey here.One of the great things about Judge Posner's style is that he anticipates all of the reader's objections and tries to address them in good faith.Whether you agree or disagree, he is always worth reading.
The book also includes a narrative of how the depression developed, descriptions of the systemic problems in the financial industry that made the depression possible, and recommendations for government action.
Although the material may be a little difficult for those with no knowledge of finance, it has been intentionally written with non-specialists in mind.As always, Judge Posner repays the attentive reader.
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