I think that systems that are based on employment are illogical and attempts to meet them create all sorts of unnecessary complexities.

There is a bit of a problem with the match between derivative securities markets and the primary markets. We have long ago instituted principles, essentially high margin requirements, to prevent certain instabilities in the stock market, and I think they're basically correct. The trouble is that there's a linkage, let's say, between something like the stock market and the index futures markets, and the fact that the margin requirements are very different, for example, played some role in the October '87 crash.

I think the idea that a society has to be responsible for all of its citizens, those who do well and those who do not, is really a precondition of a good society.

Education is still, in spite of private education, a state matter.

There are all sorts of institutions in the economic world which depart from the simple price/market model which I worked on in an earlier incarnation and which has been sort of the mainstream of economic theories since Adam Smith and David Ricardo. There are all sorts of contractual relations between firms and individuals which do not conform to the simple price theory - profit-sharing schemes and so forth - and the explanation for these suddenly became clear. We now understand why these emerged and that they are based on differences in information in the economy.

The switch to the market in Eastern Europe, of course, has not exactly been one of the greatest advertisements for the market. There's no question the socialist system - and I hate to use the word 'socialist,' but I suppose some description of a system in which the state is in control - was breaking down, really collapsing. In these countries, most markedly in Russia itself and in a number of the others, it obviously was based on a tyranny, which is unacceptable even if it were producing good economic results, which it was not.

I think on the efficiency level, not only the distribution level, capitalism is a flawed system. It probably has the same virtues as Churchill attributed to democracy: It's the worst system except for any other. And I think that's right, but it cannot be thought that some unmitigated belief in free markets is a cure even from the efficiency point of view.