From all sides, even from former Federal Reserve Board Chairman Alan Greenspan, that disciple of Ayn Rand, comes the cry that more regulation is needed of Wall Street finance.

"State and federal regulators, under the oversight of Congress, need to act now -- together -- to create enhanced underwriting standards for loans, ensuring that lending practices are commensurate with the risks, and that the lender and borrower are fully informed of these risks," argues Arthur Levitt, chairman of the Securities and Exchange Commission from 1993 to 1001.

"We must strengthen the licensing standards and oversight of mortgage brokers and originates, as proposed by the President's Working group on Financial Markets," he adds.

In short, capitalism is far too important to be left to the capitalists, and the U.S. establishment is being converted to the view that free markets can get far too expensive for their freedom to be unrestrained.

From the country where Margaret Thatcher launched the great wave of privatizations 25 years ago, now comes the nationalization of the failed British bank, Northern Rock. In the United States, Bear Sterns may not have been nationalized, but the risks of the rescue staged by J.P. Morgan have been underwritten by the Fed. The potential losses have been nationalized, as American taxpayers may yet learn their cost.

Moreover, the successful new model of enterprise appears to be the state-owned behemoth, whether it be Russia's Gazprom, China's Sinopec and China National Petroleum and State Grid or the state-backed national champions like Electricite de France and Deutsche Telekom.

The key new investors on the global stage are the Sovereign Wealth Funds, like those of Abu Dhabi (around $900 billion) and Singapore ($300 billion), which last week agreed to some broad guiding principles on their operations with the U.S. Treasury. The agreement may have come just in time, given the need of Wall Street and other big banks for new capital, even after the cash injections the SWFs have already made into Citigroup, Merrill Lynch and Union Banque Suisse.

This is the new world the financial crash has made, and it stands in stark contrast to the ruling ideology of the last 25 years that said free markets and free trade, privatization and deregulation were the efficient principles of the modern, post-industrial economy.

President Reagan and Thatcher were the standard-bearers of the new capitalist ideology. Its patron saints were the economists Milton Friedman and Alan Greenspan, and its classic institution was the World Trade Organization, a body dedicated to the spread of free trade.

But protectionism is back with a vengeance, most loudly in the campaigns of the two Democratic contenders for the presidency, Sens. Hillary Clinton and Barack Obama, who have pledged to renegotiate the North American Free Trade Agreement. The WTO's Doha Round project to slash tariffs further is effectively dead, and the chances are slim that the Democratic majority in the U.S. Senate will ratify the pending bilateral free trade agreements with South Korea, Colombia and Panama.

The key figure, Sen. Max Baucus, chairman of the Senate Finance Committee, said last week: "I simply cannot support or consider moving these trade agreements in the Senate, until we realize the goal of expanded and reauthorized Trade Adjustment Assistance." (This program seeks to retrain and give healthcare and wage insurance to U.S. workers who can claim to have lost their jobs through trade.)

Apart from the crisis that has overtaken the financial markets, there is plenty of ammunition for those new regulators who claim the free market ideology has not delivered the goods. The American Society of Civil Engineers claims that the country is suffering from a $1.6 trillion backlog in infrastructure, in the roads and bridges, ports and schools, power grids and water supply that the country needs, but the free market has not delivered.

The free market ideology was meant to save the world. Under the grand title of the "Washington Consensus" (coined in 1989 by John Williamson of the International Institute for Economics) it said what the developing world needed was the new orthodoxy of fiscal discipline, tax cuts, privatization, deregulation, free trade and freedom for foreign investment.

"It is difficult even for the creator of the term to deny that the phrase 'Washington Consensus' is a damaged brand name," Williamson has noted since. "Audiences the world over seem to believe that this signifies a set of neoliberal policies that have been imposed on hapless countries by the Washington-based international financial institutions and have led them to crisis and misery. There are people who cannot utter the term without foaming at the mouth."

Williamson sees it differently, arguing that "for the most part they are motherhood and apple pie, which is why they commanded a consensus." But for many developing economies the Washington Consensus has a rival in the Beijing Model of state capitalism planned and controlled by an authoritarian government.

The immediate trigger of the crisis in free market ideology was the Wall Street financial crisis, but its underlying cause is the shift in the world balance of economic power and in the terms of trade that has followed the stunning economic growth rates of China and India and the dramatic rise in the price of oil.

Of course, the eclipse of the free market ideology will not last, any more than the Keynesian orthodoxy lasted. Times change and fashions shift. There are already signs that the Chinese economic model is unsustainable and that the sky-high price of oil is breeding alternative energy competitors.

But for the foreseeable future, the apostles of free markets and free trade are giving way to the new high priests of regulation, protection and state intervention.

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