There is a lot of gloom and doom around today. Even very optimistic people are understandably shaken when they see George W. Bush, one of the most conservative presidents in the history of the US, presiding over the effective nationalisation of the banking industry. And now it looks as if the same may occur with the automobile industry.
We face what could well be one of the most sustained and deep economic recessions since World War II.
The past 300 years is the story of the rise of two interlinked systems: the global capitalism system and a geopolitical structure resting on the power of first Britain and now the US.
And those 300 years have been marked by one financial crisis after another.
Even before the English began to dominate global markets, the Dutch suffered though the tulip bubble of the 17th century. There was the South Sea bubble of the early 18th century. There were the panics of the Napoleonic wars, followed by successive and intensifying panics and crashes during the 19th century. Financial crises have continued throughout the 20th century and now into the 21st.
And none of those panics and crashes interrupted or fundamentally altered the liberal capitalist path of development.
It is possible, of course, that this time is different, but history gives us sound reason to believe that this kind of economic crisis does not mean the system is failing or has failed. Indeed, economic crisis is intrinsic to the capitalist economic system. It's not pleasant, but it is a regular and inevitable part of our lives.
This is because the essence of capitalism is change. Capitalism constantly forces us to innovate, to do things differently, and as the economy changes we no longer understand it as well as we once did.
In the past 25 years we have seen a series of revolutionary changes taking place in financial markets. We have seen extraordinary progress in the way information technology has been harnessed for the purposes of market trading. There have been new kinds of securities developed. The crisis occurred because market participants and regulators no longer fully understand how the toe bone is connected to the foot bone in an international financial crisis.
But none of this means capitalism has failed; it means capitalism is succeeding. The history of the world economy shows us that crisis and panic have been our teachers. It is only through the study of past crashes that we have been able to understand risks and trade-offs in markets. We will come to grips with our past failures and figure out ways to protect against the problems that have landed us here, at least until markets develop a new level of complexity that defeats us and leads to yet another meltdown.
Of course, this is not a very consoling message for those trying to figure out how to retire.
But there are many reasons to be optimistic in this grim world.
There is the catastrophic failure of Osama bin Laden and the movement he leads. No doubt there will be more terrorist attacks; the war on terror is not yet won. But the more Muslims have seen of al-Qa'ida -- its religious tactics, its military tactics and its political aims -- the more they have turned their backs on the movement.
There is the geopolitical rise of Asia. Relations between the US and the key Asian powers -- India, China, Japan, Indonesia, South Korea, even North Korea -- are all much better than they were in 2000. Asia is an emerging multi-polar system so rich, so big and so diverse that no country can realistically hope to dominate it in the way Germany, the Soviet Union or France tried to dominate Europe.
Then there is the enduring quality of American soft power. Certainly, you can't enter a university without hearing about the end of American soft power, or open a book on foreign policy without reading about the fatal damage that Bush has done to US prestige across the globe.
Yet when Barack Obama was elected, Der Spiegel magazine in Germany plastered Obama's smiling face on its cover with the caption "The President of the World". One little election turned around a lot. That the US had a very open election and elected an African-American critic of the Bush administration had a powerful impact across the world.
Each generation has to reinvent the way it understands the world. It has to take old values and transform them. Indeed, if we aren't building a world that is more complicated and challenging than the world we were born into, then we are not doing our jobs.
But I think one thing we can say about the English-speaking world after the past 300 years is that, by and large, we get the job done.
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