As the cacophony of calls grows for a new, highly-regulated form of capitalism which encompasses much greater state intervention, Vaclav Klaus, president of the Czech Republic and current holder of the European Union presidency, provides a refreshing antidote. "Our historical experience gives us a clear instruction," he wrote recently. "We always need more markets and less government intervention. We also know that government failure is more costly than market failure." More than 40 years of living under communist rule gives Klaus first-hand knowledge of what overbearing government can do to society. Yet with the markets accused of plunging us into possibly the worst global recession since the 1930s, a backlash is under way against the previous orthodoxy of economic liberalisation.

Once taxpayers' money is applied to bailing out the financial system on the monumental scale now being seen, a crushing increase in regulatory control and state interference becomes almost inevitable. It's the politicians' quid pro quo for coming to the rescue.

Such a regulatory crackdown is both unnecessary and wrong-headed. Certainly, without a degree of regulation, markets tend towards chaos, corruption, abuse and monopoly. Without standards and policing, they self-destruct. Capitalism works because markets and governments have learned to regulate themselves. Yet the idea that the present crisis is down to decades of Thatcherite-style deregulation of the capital markets is largely a myth. No sector of the economy is more subject to intrusive regulation than banking. Indeed, the quantity of box-ticking has grown exponentially over the past ten years and little good it did.