The world was uncomplicated and easy to understand. Each side used the other as a scarecrow to keep its citizenry in check. Fear was the galvanising force.
And when, two decades ago, the Berlin wall collapsed and bedraggled souls emerged from behind the iron curtain looking like aliens from outer space, the West applauded, not so much because a significant part of humanity had at last thrown off its chains, but because the ideology of small government and untrammelled free markets had triumphed. We've won! We've won! they chanted, with Margaret Thatcher and Ronald Reagan leading the chorus.
Reagan bankrupted the Soviet Union by escalating the arms race. It was a Republican president and decorated war hero, Dwight D Eisenhower, who in his farewell address 50 years ago famously warned of the overweening influence of what he called the military-industrial complex.
"We must never let the weight of this combination (immense military establishment and a large arms industry) endanger our liberties or democratic processes. We should take nothing for granted," he warned.
'If the collapse of the Berlin wall signified the demise of communism, the death of Lehman Brothers was capitalism's own annus horribilis'
Reagan, a B-movie actor who'd never seen a shot fired in anger, was to use the military-industrial complex as a potent weapon in the Cold War. With the collapse of the Soviet bloc and its newly liberated satellite states' eagerness to embrace the capitalist system, Western goods gained new markets, thus giving globalisation a new fillip. The world became a free-marketer's dream. Some began to question the very existence of the nation state. Who needed a government when the multinationals could provide all we needed across all borders? Highly paid celebrity CEOs, not elected leaders, became cultural icons.
Reagan once remarked that the nine most terrifying words in the English language were: "I'm from the government and I'm here to help." Government was the problem, or a hindrance to human progress. Reagan is no longer around to witness the sea change of the past two years. Government is now the bearer of gifts to well-fed bankers, the very people whose actions destroyed, if not capitalism itself, then confidence in it.
Hank Paulson, George Bush's treasury secretary, tells how he held his nose as he doled out largesse from state coffers to his friends in Wall Street. They pocketed the gift but refused to lend and continued in their merry way, giving themselves huge bonuses as if there was no tomorrow. Money for jam.
The two dominant forces or ideologies which defined the post war world have now been unhinged. If the collapse of the Berlin wall signified the demise of communism, the death of Lehman Brothers was capitalism's own annus horribilis, its worst nightmare. Can it survive and get back on its feet again, or will it, like communism, die a slow but certain death?
While the West had crowed and danced on communism's grave, the Left has been rather muted in gloating at capitalism's discomfort. Some of the most trenchant criticism has come from within. Nicolas Sarkozy, the conservative French president, lambasted greedy bankers at Davos last month but insisted capitalism was not in crisis.
"We're not asking what we will replace capitalism with, but what kind of capitalism we want," he said.
Communism had no saviour. Western politicians came to capitalism's rescue, an act for which they seem set to pay dearly at the polls. Some form of capitalism, it seems, will survive, but it will be left chastened, and shorn of its swagger and arrogance.
Ranking the Analysts 2009
