President Nicolas Sarkozy declared the theory that the market "always knows best" is finished
Both France and Germany on Thursday (25 September) said the current financial crisis would leave important marks on the world economy, with French president Nicolas Sarkozy declaring that the under-regulated system we once knew is now "finished," and German finance minister Peer Steinbruck saying the crisis marks the beginning of a multi-polar world, where the US is no longer a superpower.
Speaking to an audience of some 4,000 supporters in Toulon, France, Mr Sarkozy said the financial turmoil had highlighted the need to re-invent capitalism with a strong dose of morality, as well as to put in place a better regulatory system.
"The idea of the all-powerful market that must not be constrained by any rules, by any political intervention, was mad. The idea that markets were always right was mad," Mr Sarkozy said.
"The present crisis must incite us to refound capitalism on the basis of ethics and work & Self-regulation as a way of solving all problems is finished. Laissez-faire is finished. The all-powerful market that always knows best is finished," he added.
He accused "this system that allows the ones responsible for a disaster to leave with a golden parachute" of having "increased inequality, demoralised the middle classes and fed [market] speculation."
A European response
The French president also criticised "the logic of short-term financial profit" and said risks were hidden "to obtain ever more exorbitant profits" — something which, he said, was not the true face of capitalism.
"The market economy is a regulated market ... in the service of all. It is not the law of the jungle; it is not exorbitant profits for a few and sacrifices for all the others. The market economy is competition that lowers prices ... that benefits all consumers."
The speech by Mr Sarkozy, who is also the EU's current president-in-office, echoes similar statements he made earlier this week, when he called for an international meeting to discuss the crisis before the end of the year.
On Thursday, he also called on Europe to "reflect on its capacity to act in case of an emergency, to re-consider its rules, its principles," while learning the lessons from what is happening worldwide.
Mr Sarkozy said: "For all Europeans, it is understood that the response to the crisis should be a European one."
"In my capacity of president of the Union, I will propose initiatives in that respect at the next European Council [15 October]," he added.
'The world will never be the same again'
Meanwhile, German finance minister Peer Steinbruck criticised the US for failing to act in the wake of the crisis and said it would now lose its status of "superpower."
"The US will lose its status as the superpower of the world financial system. This world will become multi-polar," with the emergence of centres in Asia and Europe, he told the German parliament on Thursday.
"The world will never be as it was before the crisis," he added.
Mr Steinbruck's criticism of the US has been amongst the sharpest yet made since the beginning of the crisis.
He notably blamed Washington for resisting stricter regulation, even after the crisis started last summer, and said this free-market-above-all attitude and the argument "used by these 'laissez-faire' purveyors was as simple as it was dangerous," the Associated Press reports.
He stressed that Germany had made recommendations last year for more rules, which Washington refused to consider.
They "elicited mockery at best or were seen as a typical example of Germans' penchant for over-regulation," Mr Steinbruck said.
Earlier this week, German foreign minister Frank-Walter Steinmeier also said the US should have listened to the advice coming from Europe, notably from Germany, that more control was needed.
"It is a discussion that we have had for a long time in Europe, that the completely unregulated parts of the international financial market must be more closely monitored and that we must try to reach an agreement on common regulations," he said during a visit to the New York Stock Exchange on Wednesday, according to Forbes.