Wall Street did not simply drag Europe’s exchanges down in its fall. It also shattered the phony American Dream, the totally invented vision of “popular capitalism” and “share-owning democracy.” It did so by suddenly revealing the racket on which rested the fashionable ideology–private is beautiful, while public is wicked and wasteful–namely, the crooked game of privatization practiced for more than five years now in Britain and for roughly a year in France.

From the beginning, a country seeking to take part in the game had to have a solid inventory of public property and a willingness to sell it at bargain-basement prices. Naturally, only the most profitable items would go. The Thatcher government did not denationalize coal and steel; it sold British Airways, Rolls-Royce, British Gas and British Telecom. The French chose banks like Société Générale and Paribas, conglomerates like the General Electric Company and St. Gorbin. The system had plenty of advantages for the rulers. It provided several billions of dollars a year in revenue, enabling the government to cut taxes, most substantially for the rich, while insuring that the heights of the economy were commanded by capitalist friends. The French even invented a mechanism by which the controlling interest in each case went to the political pals of Prime Minister Chlrac.

But the ambition was greater than that. The aim was also to bribe a segment of the lower middle classes and of skilled workers, thus throwing the labor movement on the defensive. Assured of making a big profit by selling the shares outright, buyers lined up by the millions. Politically, at least, the operation was most successful. Neil Kinnock and the Labor Party in Britain, François Mitterrand and the Socialists in France, became at first discreet and then totally silent on the subject of renationalization. Only a month ago in Blackpool, Maggie Thatcher could triumphantly pretend, “There are more shareholders than trade unionists.”

It was a strange casino, in which the only losers were outsiders–that is to say, nongambling citizens, whose alleged assets were being disposed of on the cheap. The successful sale was supposed to last as long as assets were available. It didn’t. The system depended not only on deliberate under-pricing but also on an artificially booming market. When the bubble burst, most French stockholders discovered that their shares in newly privatized firms were not worth the price they had paid for them. In Britain, the collapse could not have come at a more awkward moment. Thatcher was about to sell the “crown jewel,” the state’s remaining stake in British Petroleum, in the biggest equity offering ever, at $12.4 billion. Black Monday altered the terms altogether. Instead of the 5 million investors originally expected, only 270,000 turned up. (Even this was proof of the power of advertising, since they were buying shares at well over the market price.) The underwriters of the offer, who stood to lose some $1.9 billion, were begging for the deal to be canceled. The British securities firms had at least spread their risks. The Americans had not.

Technical obstacles, however, could still be overcome. The Thatcher government finally decided that the underwriters, having made pots of money in the past, could take a beating on this occasion. But to prevent the B.P. shares from then being dumped and breaking the floor, the Bank of England, forgetting great liberal principles, agreed to buy them back at any time for the next one or two months at a fixed price. Meanwhile, the French simply put off the denationalization of Matra, the arms and engineering conglomerate, as well as of U.A.P., the biggest insurance company.

It is in France that the immediate political impact of the crash is greatest. Chirac must face a presidential election in six months. He and his Finance Minister, Edouard Baladur, were relying on privatization to provide both the funds for a pre-election bonanza and a semblance of political philosophy. They are now deprived of both. Chirac’s loss is a gain for Mitterrand, cleverly avoiding to say whether he will stand for re-election, and above all for Raymond Barre, his chief conservative competitor.

But the damage goes well beyond such electoral calculations. The myth of popular capitalism cannot be propped up like B.P. shares. With the collapse of the market and the international financial crisis foreshadowing a deeper depression, it is increasingly difficult to describe the free market as the best guide to rational behavior. The share-owning democracy can now be seen plainly as a fraud. The ruling ideology lies shattered. The snag is that the respectable left, itself converted to “enterprise culture” and the cult of the market, looks, for the moment, unable to offer a radical alternative.