“The policies of the U.S. Federal Government and its agencies are at the heart of the moral failings that came to light in the course of the 2008 [financial] crisis. Even when the misdeeds occurred in the private sector, they were encouraged by the interventionist policies of the government, which in turn reflects the perverse incentives faced by politicians and presidents in a system where the government has grown too large. State capitalism rather than laissez-faire capitalism is the primary source of the moral failings which are now the object of populist anger that is being fueled, ironically, by the very politicians who were the chief culprits in stoking the housing-price bubble that caused the financial crisis.”
—Charles K. Rowley and Nathanael Smith, Economic Contractions in the United States: A Failure of Government.Chapter 4, Page 61.
NOTE: The authors acknowledge that laissez-faire capitalism has not existed in its full fledged form in the United States for the last 90 years or so, and use it as a relative term. The heavily regulated mixed economy of the United States with governments at all levels using coercive measures against business in all its aspects is what they mean by state capitalism. The thesis of the book is that more laissiz-faire capitalism and less state capitalism is needed and would result in fewer and shorter-lived financial disruptions because the incentives of both politicians and business leaders would be more rational, both economically and politically. Without the interventions of the New Deal, as well as the anti-free trade policies of the Hoover Administration earlier, the financial crisis caused by the Federal Reserve’s tight money policies and the 1929 stock market crash probably would not have grown into the Great Depression. Foreign governments were less interventionist in their markets and their economies recovered more quickly.