DUTCH TULIPSA AND EMERGING MARKETS

After the Cold War, everyone believed the world was going capitalist in a hurry. Developing countries followed America's advice to them--''free your markets and strengthen your money.'' In fact, the gains from both free trade and sound money were overstated. But the force of conventional wisdom ostracized cautious voices. The result was a speculative binge in emerging markets. With the Mexican crisis, the bubble has burst. Politicians in developing countries could continue their reforms only so long as investment poured in. Sooner or later, a reality check was inevitable. Disappointing growth and statist retrenchment may lie ahead.