So the rise of Asia is set to take longer than many expect, and we will have plenty of time to adapt to a new world, economically and psychologically. And we will see how richer markets to sell to and more ideas and technologies to borrow from will benefit us as well, as long as we keep our markets open. The interesting thing from a Western perspective is that these changes will demand more pluralism and individualism in emerging economies, and suddenly that does not seem as threatening. If they want to “beat us”, they have to become us.

So it’s not you, it’s me. If a historical shift is about to take place it’s not so much because of changes somewhere else, but back home. And the financial crisis might lead to such changes.

The economic recession has led to an identity crisis for many western countries. We used to think that we have superior rules, norms and institutions, just look at our…well…our banks. The financial crisis has given a severe blow to the hope that we would be able to export ideas, institutions and services, for example financial services, in exchange for the manufactured goods we import. And the way in which our central banks, politicians and financial regulators inflated the credit bubble for popularity, for votes or just out of short-sightedness and incompetence, makes it difficult to be as self-congratulatory as we used to be.

But crises come and go. The capitalist system has been incredibly resilient and even though the weakness of banks and a new non-leveraged economy will lead to lower growth rates in the future, we should be able to get back fairly soon if we allow market forces to kill inefficiencies and allow capital to move from the uncompetitive to the most competitive sectors.

However, since the attempts to respond to the crisis politically has been so extraordinary, there is a risk that this process of creative destruction is halted this time. Attempts to bailout industrial giants hep the big and well-connected at the expense of companies that would have been competitive. Support for companies in one country leads to demand for protection from them in other countries. If governments retain part ownership of banks it won’t take long until we see how political interests begin to influence the distribution of credit. Big deficits take money from businesses that need them and put them in government projects.