“This whole thing has been absolutely predictable,” says Joseph Heath. He’s talking about the global economic crisis, and he points out that unregulated markets always “exhibit some kind of glitch.” 

Of course, hindsight is 20/20, and many of the world’s leading economists failed to notice that “glitch” until it was too late. Heath – an associate professor of philosophy at the University of Toronto who specializes in economic theory – was caught off-guard as well. He had just turned in the final draft of his upcoming book – Filthy Lucre: Economics for People Who Hate Capitalism (HarperCollins Canada), which sets out to correct widespread fallacies about the capitalist system – when financial markets in the U.S. started to go haywire, rendering the manuscript prematurely obsolete.

“The way it was [originally] written, I was a little sanguine about the ability of government to manage economic crises,” Heath admits. Like many economists, he had thought that Depression-era bank runs were a thing of the past. But now, he says, “It’s like 1930 all over again.”

It seems likely, though, that all the doom and gloom will ultimately work in Heath’s favour. After the initial setback, which forced him to rework parts of the manuscript, the book is back on track for its April release date, and – like Margaret Atwood’s recent, fortuitously timed Payback – it seems assured of finding an appreciative audience.

One of the chief changes Heath made when revising the text was to expand his discussion of moral hazard, which he describes as “the missing piece of the puzzle in terms of understanding the current crisis.” Moral hazard, he explains, is usually invoked by politicians on the right to describe the evils of an overweening welfare state – the idea being that a cushy social safety net neuters the public’s sense of individual responsibility. (Thus unemployment insurance, for example, discourages people from actually going out and finding a job.) But Heath argues that rampant deregulation of the financial sector over the past 25 years has also eroded accountability, leading to a more acute crisis of moral hazard than the welfare -state ever did. 

“Banks went and lent billions of dollars to people who had no ability of repaying it,” says Heath. “The obvious question is, why did they do that? Did they lose their minds?” Heath suggests that the answer is not simply bankers’ greed. Rather, the problem stems from the creation of complex financial products that allowed banks to hedge their investments in risky mortgage-backed securities, effectively cushioning their sense of exposure and leading to reckless decision-making.

“Understanding risk-pooling is the key to understanding what the banks were doing,” he says. “Why were banks making these crazy loans? Moral hazard. Why were investors buying it? Moral hazard…. There was so much moral hazard that people stopped worrying about moral hazard altogether.”

Still, even though the last several months have delivered a massive blow to the defenders of laissez-faire capitalism, Heath – a born contrarian – hesitates to assign blame for the crisis to any one party or policy. “A kind of moralizing response … is not really that helpful, because everyone behaved badly,” he says.

And though the structure of Filthy Lucre is nominally neutral – debunking economic fallacies on both sides of the political spectrum – Heath says he is addressing the book more to people on the left. (If there was any doubt, just take a look at the book’s subtitle.) “I’ve always been struck by how there are these very … well-articulated left-wing theories that are extensively discussed among highly intelligent and educated people [that are] sometimes based upon outrageously fallacious economic claims,” he says.

Something of a lapsed radical himself, Heath has progressively distanced himself from the postures of his activist youth, when he was editor of the ultra-leftist student newspaper The McGill Daily. His last book, a rejoinder to Naomi Klein’s anti-branding bible No Logo, was 2004’s The Rebel Sell, in which Heath (and co-author Andrew Potter) made the claim that the counterculture is actually one of the driving engines of consumerism, not a viable alternative. This time around, Heath has gone one further, setting out to prove the heretical notion that globalization isn’t necessarily a bad thing.

Heath’s message: global, market-based capitalism isn’t going anywhere. In fact, it’s likely to emerge from the crisis in a more robust form than ever before. “Basically, the problems of global capitalism [today] are just the problems of 19th-century capitalism [returning],” he says, pointing to the fact that commercial banking wasn’t regulated until after the Great Depression. He adds, however, that today we have a blueprint for fixing the system – a victory for liberal economists, who have long advocated for more government intervention. “Free markets were allowed to work their magic, and it was an unmitigated catastrophe,” says Heath.

Heath worries that the perception that capitalism is somehow “at risk” could actually keep people on the left from picking up Filthy Lucre. “Part of what I was trying to do with this book was persuade people that capitalism is not going anywhere, so they might as well buckle down and do some economics,” he says. “And now, unfortunately, it’s going to be increasingly difficult to do that, simply because we’re experiencing a remarkable instance of instability.”

Still, there’s rarely been more public interest in the way that economic policy affects daily life. In his introduction to the book, Heath writes, “pretty much everything that the average person thinks he or she knows about the economy is wrong.” He may be right, but as his own experience demonstrates, misconceptions about the economy are more widespread than even he could have predicted.