Indian Prime Minister Manmohan Singh's assurance that the nation's economy will grow 9 per cent promptly saw the stock market surge to a new high. The prospect of growth and the creation of new markets upon which growth depends has produced, not for the first time, a heady elixir. It is market mania and underpinning it is the belief that markets are the solution to India's considerable problems.
In Britain, the recession has induced a gradual return to forms of state control. But, during a recent visit to my native Calcutta, I found people of all professions, castes and classes gambling on the stock market. A great leveller, the market also poses great risks.
The risk can be gauged by the impact of what former US president Ronald Reagan eulogised as 'the magic of the marketplace'. It turns out to be alchemy and it duped the greatest proponents of the marketisation of the world - the Anglo-Saxon world.
The doctrine of unregulated free markets undermined the British and American economies, leaving them in the grip of the deepest recession since the 1930s. The response to the crisis was to undo in a matter of weeks an economic system constructed over decades, though which still dominates their society. The replacement? Something approaching India's state-led economy.
Ironically, as societies in the grip of market mania learn the errors of their doctrine, India looks set to embrace it. Of course, markets are beneficial but the Anglo-Saxons mistook harnessing markets for becoming functionaries of markets. Correcting that confusion is contingent on developing a political system attuned to managing markets.
The history of market mania in the Anglo-Saxon world best explains the danger of subsuming a society to market principles. At the heart of the rise of the market is a fundamental gap between theory and application. The theory states that market logic ensures the efficient allocation of resources and meets essential needs.
Furthermore, the market is supposed to turn the vice of greed into an instrument of public good. In other words, the market mechanism converts personal consumerism, however conspicuous, into productive and innovative activity beneficial to the entire social spectrum.