The financial crisis of September 2008 was triggered by a chain of massive losses in the mortgage market that prompted the federal government to commit $700 billion to rescue several large banks whose failures would have led to a systematic death of our financial system.

Though it began in the banking industry, the crisis has spread to the rest of the economy, affecting jobs, home values and the retirement wealth of millions of Americans who reaped no gains from the reckless behavior of those who caused it.

Rather than focus more attention on the obvious villains of this historic disaster -- banks that grew too big to fail, shady mortgage brokers and greedy consumers -- a new book by Nobel Prize-winning economist Joseph E. Stiglitz points squarely at the battle of ideas that gave birth to the meltdown of the largest economy in the world.

The book is a stinging indictment of the failed government policies that brought us to this point and an emphatic criticism of the flawed idea that a free market will force businesses to protect consumers, provide superior products or services and create affordable prices for everyone.

If that were the case, Wall Street bankers would have taken advantage of the low interest rates that were available while Alan Greenspan was Federal Reserve chairman to improve homeownership opportunities. Instead, left to their own devices, they engineered poisonous mortgage products that put people in homes for a few months, then kicked them out on the street minus their life savings.

"Good regulations could have redirected innovations in ways that would have increased the efficiency of our economy and security of our citizens," he wrote.

Mr. Stiglitz uses the current economic crisis as Exhibit A to drive home his central point that the capitalist free market system that is supposed to be the answer to what ails less affluent economies around the world only exists as it does here because the government has rescued it every time it has crashed.

In his view, the current crisis has proven that the deregulation movement which began under the Reagan administration went over a cliff and took the global economy right along with it. Despite the conservative idea that the best policy toward markets is to leave them alone and let them self-correct, we have clearly seen that unfettered financial markets do not work and have great potential to harm society in general.

Mr. Stiglitz is a professor at Columbia University, former chief economist for the World Bank and winner of the 2001 Nobel Prize in economics. He is known for his critical view of free-market economists, and he partly blames them for the financial failure because they armed special interest groups with strong arguments in favor of efficient and self-regulating markets.

There are no easy solutions to the tug of war that characterizes the debate over what role both governments and markets play in any healthy economy and society. But we cannot go back to the way it was before the Great Recession.

This book is a must read for policy makers and captains of industry who will be part of the continuing discussion concerning changes to lending regulations, more oversight of the financial industry and crafting safeguards to protect taxpayers from ever again being used to this extent to bail out free market wizards when their concoctions explode.

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