For us heartless capitalists, can be truly thankful we don’t live in North Korea or Cuba, where the free market is a demon to be slain with all due and undue haste. However, in the words of Ron Paul, “Capitalism should not be condemned, because we’ve never had it.”

The idea that we live in a fully-fledged market economy, abiding by capitalist principles, has been severely dented in recent times by the government’s reaction to the Northern Rock crisis. It started off with the government throwing £24bn at the bank in a misguided attempt to restore confidence, and has continued farcically for the past month.

In today’s PMQs, we had Gordon Brown refuse to answer a perfectly valid question by Lib Dem acting leader and Orange Booker Vincent Cable about whether the government had indeed spent £24bn propping up Northern Rock. And Brown astonishing refused to explain or justify such a massive expenditure of taxpayers’ money.

As far as Northern Rock is concerned, matters about what is actually happening within the company are obviously of commercial confidence. I gather that the stories in the newspapers this morning are about papers unrelated to the Treasury, the Bank of England or the Financial Services Authority, and only to Northern Rock itself. I cannot comment on those confidential papers.

But, since the government just paid Northern Rock £24bn - with the expectation that it’ll lose £2bn of it - the taxpayer would be quite justified in arguing that we own Northern Rock’s arse. If we want them to jump, they’d bloody well jump. And if we want to know how Northern Rock is getting itself out of trouble, the government had better tell us. Either that or the crooks should give us our £24bn back.

It’s another tale of the government being secretive about state business, following the disclosure that the government didn’t tell the public about the employment of illegal immigrants to guard Metropolitan Police sites because they didn’t think it would play well with the voters (the issue that David Cameron raised in PMQs today).

Equally bad for government-voter relations would be the collapse of a high street bank, so the government decided to do something fundamentally stupid by guaranteeing a business that frankly shouldn’t have been operating as it was. Mervyn King has said:

What we want to do is to give incentives for people to behave properly, so in judging the interest rate at which we lent to Northern Rock we asked ourselves the question: “At what interest rate would they have to pay in borrowing from us today that would make them regret not having taken out an insurance policy as Countrywide did before the 9th of August?”

But they should have asked, “How the hell can we make them regret it more than making them go out of business?” That would cost the taxpayer nothing, and create a pretty darn strong disincentive for companies to act that irresponsibly in future.

Instead, this government rewards irresponsibility by loaning them taxpayers’ money at below commercial rates. That is, they rob from those people that made the right decisions, and reaped what they sowed, and gave it to people that made the wrong decisions. They should have been made to reap the whirlwind.

Former astronaut Frank Borman said, “Capitalism without bankruptcy is like Christianity without hell”, and, as CEO of Eastern Air Lines - which itself went bankrupt - he should know. Capitalism can’t work without the incentives; if there are no incentives to succeed, no disincentives to fail, the market resorts to socialist lethargy: encouraging bad behaviour and cutting off the invisible hand in an orgy of Sharia retribution.

Here we have a government hell-bent on taking the ’sharp corners’ off capitalism, when it’s those ’sharp corners’ that are the cutting edge of capitalism, and its actual purpose. We need, instead, a government that doesn’t despise the free market. On that doesn’t rob taxpayers blind. One that isn’t afraid to take tough decisions or stand by as others make them for themselves. We need a government that’s open and honest. Sadly, in the vein of Ron Paul, we can barely condemn this government’s dishonesty, because we’ve never had one that has shown a shred of decency.

Despite not being a Lib Dem (who couldn’t tell?), I’m really excited at the prospect of the party’s leadership contest. Since Charles Kennedy dismissed the idea of returning to his old drinking hole, and the likes of Vincent Cable and David Laws ruled themselves out of running, it’s looked more and more like a two-horse race between the ever-stronger Nick Clegg and the ever-weaker Chris Huhne.

Both of these contestants are the new breed of Lib Dems that reject the social democratic premise upon which all the party’s election campaigns (and those of the Liberal-SDP Alliance) were fought. They were both contributors to the Orange Book, subtitled ‘Regaining Liberalism’, which is dedicated to espousing market solutions to the problems traditionally addressed by social democrats with unlimited and unjustified state interventionism.

The Orange Bookers, led by David Laws (the co-editor) and also including the likes of Cable, have flanked the leading Tories, who are afraid to speak against the socialist post-war consensus, and have sat themselves at the vanguard of classical liberalism in this country. Another notable author is Mark Oaten, who… well, the jokes write themselves.

I’m always irked by people that call the Lib Dems ‘the Liberals’, when they’re anything but. It’s been so long since the old Liberal Party was assassinated - 101 years since Herbert Asquith began the socialist reforms in a failed attempt to ward off the Labour Party - that we often forget what it’s like to have a party in this country that puts the ideas of liberalism, of liberty itself, ahead of all others. The Conservatives throw a lot of rhetoric in that direction, but little of it sticks in the form of policy, except when it comes to some details on tax.

If front-runner Clegg wins the leadership election, he will have the mandate to push forward a modernisation programme based entirely upon the Orange Book, with fellow Orange Book conspirator Vincent Cable remaining as Treasury spokesperson. His campaign launch in Sheffield Hallam was filled with the rhetoric and vision of an individualist, and signposted a ‘tough’ programme of reform to take the party out of its ‘comfort zone’ and to regain the mantle of liberalism.

By marrying the economic liberalism underpinning the Orange Book movement with the social liberalism traditonally associated with the Liberal Democrats, and coordinated with an intellectual consistency so clearly lacking in any Liberal Democrat policy to date, there may finally be a party in the United Kingdom worth calling a Liberal Party.