I think one of the key points to take away from Justin's indispensable book - and from this exchange thus far - is that we're too often peddled a phony choice between "big government" and "free markets." A wise society should be looking to find the right balance of both to serve its goals - and asking private and public sectors to focus on what each does (or could do) best. Government should set the right "rules of the game" in terms of creating incentives within which competition, greed and so forth work their invisible hand magic. Government is also good at cutting checks, so income supports like Social Security that serve social goals make great sense. And only government can make the public investments that support growth (via infrastructure, basic R & D, etc). The private sector is good at creatively optimizing financial outcomes whatever the rules may be, and at innovating endlessly to offer better products and services at lower prices. Most of our political life is the story of the fight over the proper balance between these forces in intelligent governance; Justin's book is the story of how a misguided idea was able, thanks to various factors, to acquire undue and ultimately dangerous influence in tilting this balance away from a sensible role for regulation.

But there's a risk that the pendulum could swing back too far now the other way. There's a great scene in the last page of Justin's book that offers an intriguing flavor of the big picture here. Robert Shiller, the Yale finance guru, notes that medicine passed the threshold of doing more good than harm to society around 1865. Justin asks him "what about finance?" Shiller's answer is that finance is way ahead, because even with the meltdowns we've seen, financial innovation in recent decades has been a huge net positive for the economy. And, he adds, we've still got a long way to go to develop the technology of finance to make its social contribution greater (and hopefully stabler).

It's a provocative thought - perhaps an unpopular one for TPM readers - but one that liberals should be open to, even as we do the work of reigning in the excesses of the period we've just been through. It's still about striking the best balance between markets and government to achieve the blend of social justice and economic growth that properly regulated capitalism can bring.