The death of Alan Greenspan at the age of 100 marks not merely the end of a long life but the closing of a chapter in the history of economic thought. To those who remember the 1990s, Greenspan was not just a central banker; he was an oracle, a man whose every utterance moved markets and whose arcane pronouncements were parsed like scripture. To a later generation, he is the man who presided over the dot-com bubble and, more controversially, the housing mania that culminated in the 2008 financial crisis. His legacy, like the man himself, is a study in contradictions: a disciple of Ayn Rand who became the ultimate insider, a libertarian who wielded enormous state power, a believer in efficient markets who failed to see the biggest market failure of his era.
Greenspan's rise was quintessentially American, a story of immigrant ambition and intellectual voracity. Born in 1926 in Washington Heights, New York, he came of age during the Great Depression, a crucible that shaped his lifelong scepticism of government intervention. His early career as a jazz clarinettist gave way to a doctorate in economics and a reputation as a ferocious number-cruncher. By 1987, he had been appointed Chairman of the Federal Reserve by Ronald Reagan, and he swiftly proved his mettle by steering the economy through the Black Monday crash of that same year. For the next two decades, he was the undisputed maestro of global finance, his low-interest-rate policies fuelling an era of prosperity that the Victorians would have admired.
Yet it is precisely this prosperity that now invites a more ambivalent judgement. Greenspan's belief that markets could regulate themselves, that derivatives and securitisation were innovations that spread risk rather than concentrating it, now reads like the optimism of a Roman senator before the barbarians arrived. His famous 1996 warning about 'irrational exuberance' was ignored, even by himself, as he later admitted. The intellectual decadence of the era was such that no one in power wanted to hear that the party might end. The result was a crisis that shook the foundations of Western capitalism and left a trail of austerity and populism in its wake.
For the United Kingdom, Greenspan was a close ally, a fellow traveller in the project of Anglo-American financial dominance. The so-called 'Great Moderation' of low inflation and stable growth was his gift to the world, but it came with a heavy price. To criticise Greenspan now is not to engage in schadenfreude. It is to recognise that genius and folly are often two sides of the same coin. His death invites us to reflect on the hubris of economic modelling, the limits of quantitative easing, and the danger of turning a central banker into a cult figure. The Maestro has finally left the stage, and the applause is, as it should be, mixed.
