Free market economics is on trial – governments must pass a guilty verdict

Thatcher and Reagan's neoliberalism orthodoxy is rightly being challenged. The new consensus must lead to a more active and effective role for the state

Free-market capitalism is on trial. In the UK, Labour party leader Jeremy Corbyn accuses neoliberalism of increasing homelessness, throwing children into poverty, and causing wages to fall below subsistence level. For the defence, the Conservative prime minister, Theresa May, cites the immense potential of an open, innovative, free-market economy. Similar "proceedings" are taking place around the world.

Just a quarter-century ago, the debate about economic systems - state-managed socialism or liberal democracy and capitalism - seemed to have been settled. With the Soviet Union's collapse, the case was closed - or so it seemed.

Related: Richard Thaler is a controversial Nobel prize winner - but a deserving one