There is a danger that the title of this chapter will be read as ‘markets versus governments’. There is also a risk that any hint that the writer favours markets will result in his being placed firmly in one camp, while any hint to the contrary will place him equally firmly in the interventionist camp. But there is certainly at least one reasonable intermediate position, that which allows regulation to play a positive part in promoting the market, and governments to play an essential role in providing the setting within which markets can work most effectively. While for some this role might be limited to an effective legal system, others would extend it further, and some much further. The problem then becomes where to stop. How much regulation should there be, and how much freedom? There is the story of the Soviet military parade with weapons of increasing potential for mass destruction processing past the leaders. Finally, there came a small van with a few men in suits. ‘Who are they?’ asked a guest. ‘Economists’ was the reply. ‘Why?’ ‘You should see the havoc and destruction they can cause.’ In our discussion we can substitute ‘regulators’ or ‘free-marketeers’, according to taste.

This essay sets out some perspectives and summary statements on markets, governments, and the City during the twentieth century. It outlines briefly the economic case for and against the market in general, and for the City in particular.