For those who are interested in reviews, The Predator State has so far garnered three: Pedro da Costa in Reuters, Roger Gathman in the Austin American-Statesman, and Randall Wray in the Journal of Economic Issues. Kevin Horrigan of the St Louis Post-Dispatch also devoted a column to it, and Tom Frank gave it a mention in the Wall Street Journal. Last Friday and Saturday, it was the top seller on Amazon under "Economic Policy". All of this is not too bad, for a book published less than a week ago.

Gathman takes note of something important. The book originated, in part, as a challenge from my father, delivered in our last conversation, on Wednesday, April 26, 2006 in his room at Mount Auburn hospital. Dad seemed, at the time, to be recovering (slightly) from a bout of pneumonia, and had the energy to ask what I was working on. I told him of some recent lectures on predation. "You should write a short book on corporate predation," he said. "It will make you the leading economic voice of your generation." And then he added his typically modest, typically paternal touch, "If I could do it, I would put you in the shade."

But of course the ideas for the book had been germinating a long time. I came of age, politically, during the Reagan wars of the early 1980s. I was, then as now, a liberal Keynesian, educated at Kaldor's Cambridge and Tobin's Yale, but not yet thirty and very much on the losing side. By the late 90s, very few people even knew about the economics I was brought up on. I felt a bit like the last survivor of a Papuan tribe.

There is a tendency, seen in Jonathan Chait's book The Big Con and Paul Krugman's Conscience of a Liberal - good books both, by the way - to treat the conservative revolution of the 1980s as a pure fraud - a con game - put over on a gullible public by the paid agents of corporate and plutocratic power. There is of course something to this story, but I never felt that it was the whole truth. As I got to know the free-market, supply-side crowd, the hard money, low-tax, Wall Street Journal deregulate-and-privatize team, I came rather to like them. I never thought they were right. Far from it: on matters of economic policy they were in my view mostly nuts. But I did think - and do think - that they held their views in good faith. They were, by and large, willing to argue the merits of their ideas. And they had behind them the authority of a vast academic establishment, ranging from Friedrich von Hayek to Milton Friedman to such contemporaries as Gary Becker and Robert Mundell - all just as nutty in my view. (For those who would be amused by it, my 1990 debate with Friedman on his TV show, "Free to Choose" can be found here. )

The academic economics of the 1970s lined up behind the right-wing politics of the 1980s for a reason. Reaganomics had a logic. Each policy would aim at one problem. Tight money would cure inflation. Low taxes would stimulate saving and work effort. Small government and balanced budgets would 'crowd in' investment; free trade would make us efficient. Corporate executive pay should be tied to the stock market, as this would cure the "agency" problem and make the firm work for its owners; "market discipline" would instill a new competitiveness in the enterprise. Deregulation, above all, would substitute the invisible hand of the "efficient market" for the dead hand of bureaucracy.

This was a modern version of the economics of David Ricardo, of which Keynes wrote long ago:

That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely... to do more harm than good, commended it to authority.

Still, though the free-marketeers lost many battles, their propaganda machine remained very strong. And historians have so far largely accepted their story. Global events helped: the fall of communism in Europe reinforced Milton Friedman's argument that capitalism meant freedom (something that many Chileans and Argentines in those years found hard to swallow).

But liberals and Democrats also abetted the triumph of the right. They mostly stopped arguing over theory. "The age of big government is over!" Bill Clinton declared. Liberals accepted the virtue of balanced budgets, of low tax rates, and of deregulation in many spheres, of leaving the fight against inflation solely in the hands of the Federal Reserve. In alliance with big business, Democratic presidents became aggressive advocates of what they called "free trade" - though it was really just the use of diplomacy for political payola. Democrats and liberals won some policy battles and some elections, and they presided over a prosperous moment. But they did it by selling themselves as Reagan-lite, by overselling small social advances, pilot projects and placebos, and by riding the crest of a credit boom that could not be sustained.

The judicial coup of December 2000 that installed Bush and Cheney brought back some of Reagan's men and his most extreme policies - tax cuts for the wealthy, big increases in military spending, aggressive deregulation. But it didn't bring back the ideas. Instead, it became clear that Bush and Cheney had no real ideas, no larger public justification. They cut taxes to enrich their supporters. For the same reason, they outsourced to Blackwater and Halliburton and pursued military pipe dreams like Missile Defense. They were willing to have the government spend like a drunken sailor in 2003/4 to boost the economy before the election. They placed lobbyists in charge of the regulators, representing, in every case, the most extreme anti-regulation perspective. (Not so long ago, Bush's financial regulators showed up at a press conference with a chainsaw.) Under Bush and Cheney, oil and gas, drug companies and defense contractors, insurers and usurers control the government of the United States, and it does what they want. This is the predator state.

It was very interesting to me that some of the first to sense this loss of public purpose were the very conservatives who had swept in with Reagan. The nemeses of my youth, people like Bruce Bartlett, Paul Craig Roberts, the late Jude Wanniski, went over into hard opposition. This was compounded by their opposition to Bush's assaults on civil liberties and the war in Iraq, but at the core they felt that Bush had no conservative convictions. And so, at least as far as broad politics go, we were suddenly on the same side. As I put in on Marketplace on Thursday: "Had I gone crazy? Or had they gone sane?" Either way, there seemed to be a book in it and The Predator State is the result.

Of course, we have very different views of where to go from here. Reagan abandoned the free market in practice, and Bush abandoned it in theory. Why? Because it is a useless, romantic concept, with minimal real world application. In the world of arcane technologies, structured financial derivatives and a precarious global atmosphere, decentralized markets and "supply-and-demand" decide very little, and "market discipline" is a contradiction in terms The job of discipline belongs to governments. And they must act not only on behalf of today's citizens but of all those yet to come - of those who need clean food and water, of those who need safe cars, appliances and workplaces, and of those will be around the low countries when the ice caps melt. Dealing with problems means thinking ahead, from an independent, forward-looking point of view. This is called planning. It means providing stable, predictable rules for the private sector. This is called setting standards. And in the present international economic climate, it means giving the rest of the world a reason to finance the continuing prosperity of the United States.

The Predator State criticizes conservative economics, but that's not the big point. My argument is directed largely at liberals. And especially at those liberals who remain transfixed by the "logic" of markets, by the faded political clout of the Reagan rhetoric, and by the idea that respectability requires continuous genuflection at the shrines of the Chicago School. It is these mental habits that we, who are liberals, must break. The Predator State is aimed at the notion that the liberal formula should be "making markets work."

I have never accepted that the United States fits the mold of a "free market economy." If we ever did, that model collapsed in the Great Depression. What was built in its place was a remarkable mix of public and private. There was, of course, plenty of room for enterprise. But it came in a framework, of a government that was, at its best, competently concerned with research, infrastructure, national security, the workplace and the environment, that provided Social Security and a large share of education, health care and housing. Part of the accidental genius of the system was that the public-private mix in those three areas, especially, created "soft budget constraints" that caused higher education, the medical sector and the mortgage market to grow very large - far larger than they ever could have, under either the free market taken alone or under socialism. While many notorious problems remained (especially our lack of universal health insurance), this enriched the middle class and was an immense source of growth.

The Bush-Cheney years should have taught us that today's right wing understands this very well. They are not interested (if they ever were) in reducing government. On the contrary, they are perfectly willing to expand it. But the goal, in every case, is to expand government in such a way as to benefit, first and foremost, political friends and supporters at the expense, mainly, of the middle class. And while a rich country can survive a fair amount of this, it cannot withstand the complete control of government by predators. For what happens then, is a population crash of the prey. This, as a result of the sub-prime mortgage crisis and the systematic deregulation of securities and futures markets, we now confront in the financial crisis and the speculative commodities bubble. And if we do not reclaim and rebuild the capacity of our government to act, with purpose and on a large scale, we will eventually see far worse as the climate crisis unfolds.

What's required? Three despised ideas need to be re-thought and re-spoken. The first is planning. Markets cannot foresee the future, only human imagination does that. Corporations, of course, do plan. The question is, can you trust all the planning that needs to be done to the "planning" department of ExxonMobil? No? Then government needs to get back into that game. The job is not for the faint-hearted: there is no perfect plan, and the first thing predators do, of course, is shoot the planners.

A second is standards. In a world where interest rates are set by the central bank and the oil price is set by the Saudis, there's nothing wrong with guidelines for fair wages and to protect the living standards of the working poor and the middle class. (We already have the minimum wage, after all: it's just not high enough.) Standards are needed not just in trade agreements, but at home can give a more fair society, and also a more efficient and successful one: you need to be efficient to pay fair wages. Firms, on the other hand, that cannot pay decent wages or meet environmental and safety codes should not be coddled. They should be phased out, and the jobs transferred, in effect, to more productive and efficient firms.

The third idea is interdependence - as a financial fact. America can no longer justify its huge debts and the world role of the dollar through the security leadership we once provided, when people needed it, back in the Cold War. As a substitute, the war on terror is a dud. And the go-it-alone mentality that got us into Iraq is even worse: a path to financial disaster.

We can't escape debt or deficits, and any attempt to do so by cutting government - the old conservative "solution" - would just lead to depression. So what's the way out? How can we reconcile the imperative public challenges that face us (in particular) on the environment and energy fronts with the political and social imperative that the economy grow and provide jobs and decent living standards? What we must do, is get to work. We should be doing what needs doing, to change our transport system, our patterns of energy use, and to create and spread the technologies that will bring climate change under control. No other country could do as much, as quickly, as we can. No other country can contribute as much, as we could, to solving these crises. And if we can persuade the world to fund us, we could keep Americans fully employed for a generation or more, in this work.