It’s a common misconception that propaganda must be consciously created. The campaign posters for this year’s poppy appeal show how good intentions can have deeply ideological consequences.
The simplest form of propaganda is omission. How can you not feel sympathy for someone who has had their legs blown off? How can you not pity the war widow left to struggle on a pittance? The easiest way of course is not to know about them. That's exactly how our pity and sympathy for the victims of our invasions are kept in check. We’re not told much, so we don’t care much.
With the noblest of intentions, one consequence of the poppy campaign is to elicit selective sympathy. It focuses our grief on one specific group of casualties – no surprise, our own. Meanwhile the victims of our invasions slip further from view, perhaps further despised for bringing this tragedy upon 'our boys'.
Exclusive focus on our own soldiers is of course the current media method of dealing with the hell we have made of Afghanistan and Iraq. For those who supported these invasions reporting their true horror and failure would mean admitting complicity. So roll on the squaddies, let the tragedy be theirs. Rather than the criminality of the invasion all attention turns to the plight of Tommy Atkins. Rather than failed states and piles of civilian corpses, the tragedy becomes one of shoddy equipment and shitty living conditions.
It’s Vietnam all over again. You rain hell down on civilian populations and then paint the whole thing as a tragedy sustained by your own side. Hopefully, you eventually withdraw.
For Tony Blair's sake wear a Poppy?
Which brings us to a second sphere of unintended propaganda. Another awful consequence of wearing a poppy is that it may assist the ambitions of those who send armies off into immoral adventures.
The danger is of a sort of morality by association. By honouring all soldiers of all wars, immoral wars are given a boost. While clearly there is something noble about risking your life to save others, it’s far more questionable whether it is noble to risk your life for a lie – even if you sincerely believed the lie. It is simply not true that Iraq or Afghanistan were invaded to bring democracy, or find weapons of mass destruction, or save western civilisation. The fact that many of the invading soldiers believed these lies has no bearing on the matter.
By honouring all soldiers of all wars the line between moral and immoral wars is blurred. Leaders who wage war out of avarice and ego are falsely associated with those who fight and die for more noble reasons. At worst, perhaps the next immoral adventure gets a boost, and more civilian and military lives are extinguished.
Of course it is truly shameful that those who sacrifice so much are treated so badly on their return home. If we do ‘owe our freedom’ to these people then why is this begging bowl approach necessary, why doesn't the state cover the cost? If these invasions are carried out for moral reasons, why doesn't the moral responsibility extend to the dead and injured?
The awful but obvious answer is that governments don't really care about soldiers. They need them for protection of property, and to assist with the acquisition of other peoples’ property, but they are as expendable today as they were to the Duke of Wellington. Sadly there's usually plenty more cannon-fodder to hand.
Friday 6 November 2009
Sunday 6 September 2009
How to avoid the next monetarist consensus IV
Celestial Monetarism
It has long been a dream of leftists that the market might one day be eradicated. Not because state control of production is itself desirable, rather that with the right state planning we might reach a point in history where self-interest evaporates from productive relations and renders both state and market unnecessary. Rather than struggling to outdo each other materially we would employ our skills to sustain and nurture each other. Selfless supply would service legitimate demand: From each according to their ability, to each according to their need.
For the monetarist however this is nothing but a seductive fantasy, a hollow but dangerous sound-bite: The chaos and uncertainty of unfettered supply and demand is not an impediment to social freedom but its core. While harsh and painful, the market is the bedrock of wealth, innovation and liberty.
Of course the left don’t hold the monopoly on idealism. We could similarly distil pure monetarism down to something like:
From each according to their desires, to each according to their desires.
As with the previous adage this has an appealing purity. Demand becomes nothing more than the desire to own something; supply becomes nothing more than the desire to meet those demands. Nothing unwanted gets made (well, not for long anyway) and given a large enough demand (to make it worthwhile for the producer) everything feasible is available for purchase, state of the art, and at the best possible price.
As with collectivist nirvana, the belief is that given the right relations of production the state would eventually disappear, or at least shrink out of all recognition. Get production right and we won’t need unemployment benefit or income tax or the NHS, or so many policemen to bash people over the head for not wanting to join in. Society would be more attuned to individual human needs and wouldn’t require the constant tinkering and bullying of a central overseer.
Feasibility is another matter. Clearly this does not describe the current order. Like collectivist nirvana, monetarist nirvana would have to be actively engineered over a period of time. It would require a wholesale transformation of human nature (or the release of the true human nature currently trapped in the social-democratic lie, if you prefer.)
Interestingly, while collective idealism suggests that economic equality would require minimal policing, monetarist idealism makes the same claim for economic inequality. The supposition is that the benefits provided by the unfettered market would be enough to secure the compliance of those who fare less well: No income tax would mean more pay for the lowest earners. No sales tax would mean cheaper living costs. No welfare would mean everyone would have to work, so less devilry from idle hands. Instead, a fully productive society consisting of a multitude of social strata – with all necessary incentives and human fulfilment provided by the possibility of social mobility.
Terrestrial Monetarism
For all its purity this vision does not have evidence on its side. There is nothing to suggest that the unfettered free market can produce a free, just, or stable society. While it has long been is a mantra of the right that “socialism is all very nice on paper but it doesn't work in practice”, we now have three decades of accumulated proof that while Monetarism is all very horrible on paper, it doesn’t work in practice either.
The monetarist promise of social and industrial peace is a fiction. As long as some people live by wages the same tensions will remain – pay, conditions, workloads, hours, leave. Working people will always have good reason to combine and campaign for a decent living. It’s class-struggle as usual, and we can expect the usual response from the state.
The monetarist response of course is to ‘limit’ the scope of the idealism. Withering the state is reinterpreted as the more modest withering the welfare state. Meanwhile coercive state apparatus mushrooms. The invisible hand is reliably accompanied by the iron fist. Rather than becoming an anachronism, ministries of surveillance, incarceration, torture and murder are the hallmark of the 'free'-market economy.
This violence is usually excused as a temporary phase, a necessary evil during the transition to the peaceful stateless society – a Dictatorship of the Bourgeoisie to lead us to free-market nirvana. Interestingly, as with the Dictatorship of the Proletariat, it seems that the only way to secure an end to state coercion is through increased state coercion: the only way to rid ourselves of the police and army is through more police and army.
In truth these means are the end. For many free-market advocates violence is a regrettable but necessary means of maintaining the natural human hierarchy. Rather than a crime, many see the juxtaposition of opulence and grinding poverty as the natural order of things, a reflection of differing human skills and capabilities. Consequently those whose poor aptitude leads them to be materially poor are likely to thieve and connive and form unions and labour movements, and so skew this natural hierarchy. Consequently, a powerful coercive state apparatus is a justifiable evil, a regrettable waste of resources, but necessary to keep the dogs at bay and maintain human freedom in other spheres.
If profound inequality is the natural state of being, so be it. For many free-market advocates the natural order of humanity seems to be a super-rich elite, a modest-sized middle class, and a mass of dirt-poor. And, of course, a formidable ministry of violence to keep everything from boiling over. It sounds harsh, and indeed it is harsh, but it’s nothing new. Throughout human history the wealthy have been dreaming-up justifications for inequality, and justifications for using violence to maintain their status. It’s just the latest excuse for business as usual.
What is to be done?
The most important weapon in the fight against the next monetarist consensus will be honesty. The honest truth is that unfettered capitalism does not lead to wealth and freedom. It only further entrenches inequality and powerlessness. Equally however, the left need to be honest about the problems that arise from collective organisation of economics.
The first truth is not something you would deduce from the corporate friendly media. The economic ‘miracles’ reported in Time and Newsweek were just miraculous accumulations of profit for global corporations, and came at terrible cost to domestic populations. From Chile to Russia to Poland to South Africa the story was the same. A monetarist controlled World Bank and IMF blackmailed desperate countries into privatising their economic and social infrastructure; the booty was divided up between multinationals, Mafiosi, and the stooge governments of the host countries. (For the awful details see Naomi Klein’s Shock Doctrine.)
It’s been a funny game when you pan out a little. Monetarists campaigned to convince every country in the world that it would face ruin if it didn’t embrace the free-market. Thatcher insisted that if we didn’t slash state spending at home we would be out-priced in the global market. And indeed, as long as we were funding good health and welfare how could we possibly complete with the unit cost of production in Taiwan, Malaysia, Mexico and the new China?
The darkly amusing thing is, the reason those other countries had such high rates of productivity was because they had been bombed and bullied out of their own hopes of decent welfare by the very same ideological clique imposing their plans at home. Reagan and Thatcher at one and the same time set out to smash welfare domestically and in the developing world.
Clearly for monetarists the fear is not that any one country that allows welfare will make itself uncompetitive, but that if the whole world adopts minimal welfare standards the general level of exploitation will fall, that is, corporations will make less money out of us as a species. Clearly the national interest of neither first nor third world country is being served by monetarism; it is a third entity, the global corporation that benefits.
Monetarists have contrived to keep the whole world desperate, every nation, business and worker in a state of perpetual fear of the other, for the sake of corporate profit. But we can find hope in this policy of despair. If destroying welfare in one county helps to destroy it elsewhere, we must conclude the opposite is also true: Any country that refuses to treat its population as corporate fodder is cutting slack for others to do the same. The greatest threat to monetarism is the threat of a good example.
Free-market thinkers are certainly aware of this fact, hence the desperate measures taken against any country that falls out of line. Only by insuring that most workers get paid peanuts can they ensure that most workers get paid peanuts.
It’s a counter intuitive after decades of being set at each other’s throats, but it is nonetheless the case. Refusing to participate in the monetarist game is the best way to help other countries to refuse. Every victory for a particular labour movement is a general victory for the entire labour movement. The best way to fight for a better deal globally is by fighting for lower productivity globally, and higher public spending globally.
The second point about honesty relates to the credibility of this fight. One of the most powerful weapons in the monetarist arsenal is the perceived idealism of the left. Just as the ideal total market economy has been discredited, the same must be admitted for collectivist idealism. Wilfully naive monetarism is unlikely to be defeated by an equally naive belief in the collective.
If the left have nothing to offer in place of monetarism but equally dogmatic demands for wholesale common ownership then the prospects for change seem bleak. While it is easy to condemn the capitalism of Haliburton and Walmart, there is little to be gained by lumping all forms of private enterprise in the same bin. A credible political alternative will require careful consideration rather than blanket condemnation. It will involve picking between good and bad examples of market forces.
Consequently we can also forget about setting anything in stone. There will be no end of history, left or right. Progressives will, as ever, push for greater collective action and collective ownership. But we can forget about finding a permanent solution to economics.
It shouldn't really come as a surprise. Economics is such a complex network of interests and desires. There are managers, owners, workers, unions, competitors, products, resources and the environment to consider, and that's before you even get to the desires and ambitions of politician and party. You can see the temptations of idealism – the idea that if you could only lop-off one or more of these heads you might create something stable. But like the hydra, they just keep growing back.
The end of The End of History
Both monetarist and collectivist idealists strived for a pure application of their beliefs. Each dreamed of a world washed clean of the ideology of the other. Accordingly any concession was seen as deadly contamination, the thin end of the wedge, the first steps on the road to defeat. Nothing less than the pure market economy, or the pure market-less economy would do.
Reality, however, flatly refused to conform to the ideal. However harshly market forces were imposed people still combined to get a better deal. They still struggled and protested and campaigned for social justice. Similarly, as fast as the state tried to smother the free-market, the black market thrived. People persisted in selling their goods and services to each other at the going rate, regardless whether the state approved the deal. The market can never really be eradicated, it just moves underground.
The oppressive nature of Chilean-style capitalism and Soviet-style communism can be seen as a response to this refusal. For all the efforts of the state, Soviets still conceived of themselves as individuals, with individual motives and desires. Likewise, Chileans still conceived of themselves as comrades, compassionate social beings with a stake in each others lives. The only means of maintaining the pretence of purity was fear and violence.
Both monetarist and collectivist absolutisms are doomed to failure because both deny the rational basis of the other. The inconvenient truth is that human allegiance is a complex and unpredictable thing. There are legitimate social desires and legitimate individual desires. There are times when we want to co-operate and times when we want to act as individuals. Some of us may veer more in one direction than the other, but we each posses both impulses. The fact that certain people find one or other of these impulses abhorrent has no bearing on the matter.
Without massive oppression, it seems the mixed economy is the only game in town. The only set-up that stands a chance of sustaining democracy is one that tolerates the desires of both the individual and the collective. This is not to say that massive oppression cannot also occur in a mixed economy, only that it is bound to occur in a society that aims to stamp out either collective or individual will.
Of course we will argue forever about the composition of the mix – perhaps that’s what politics is – deciding what we do and don't want to co-operate over? But we can forget about dispensing with the mix.
It has long been a dream of leftists that the market might one day be eradicated. Not because state control of production is itself desirable, rather that with the right state planning we might reach a point in history where self-interest evaporates from productive relations and renders both state and market unnecessary. Rather than struggling to outdo each other materially we would employ our skills to sustain and nurture each other. Selfless supply would service legitimate demand: From each according to their ability, to each according to their need.
For the monetarist however this is nothing but a seductive fantasy, a hollow but dangerous sound-bite: The chaos and uncertainty of unfettered supply and demand is not an impediment to social freedom but its core. While harsh and painful, the market is the bedrock of wealth, innovation and liberty.
Of course the left don’t hold the monopoly on idealism. We could similarly distil pure monetarism down to something like:
From each according to their desires, to each according to their desires.
As with the previous adage this has an appealing purity. Demand becomes nothing more than the desire to own something; supply becomes nothing more than the desire to meet those demands. Nothing unwanted gets made (well, not for long anyway) and given a large enough demand (to make it worthwhile for the producer) everything feasible is available for purchase, state of the art, and at the best possible price.
As with collectivist nirvana, the belief is that given the right relations of production the state would eventually disappear, or at least shrink out of all recognition. Get production right and we won’t need unemployment benefit or income tax or the NHS, or so many policemen to bash people over the head for not wanting to join in. Society would be more attuned to individual human needs and wouldn’t require the constant tinkering and bullying of a central overseer.
Feasibility is another matter. Clearly this does not describe the current order. Like collectivist nirvana, monetarist nirvana would have to be actively engineered over a period of time. It would require a wholesale transformation of human nature (or the release of the true human nature currently trapped in the social-democratic lie, if you prefer.)
Interestingly, while collective idealism suggests that economic equality would require minimal policing, monetarist idealism makes the same claim for economic inequality. The supposition is that the benefits provided by the unfettered market would be enough to secure the compliance of those who fare less well: No income tax would mean more pay for the lowest earners. No sales tax would mean cheaper living costs. No welfare would mean everyone would have to work, so less devilry from idle hands. Instead, a fully productive society consisting of a multitude of social strata – with all necessary incentives and human fulfilment provided by the possibility of social mobility.
Terrestrial Monetarism
For all its purity this vision does not have evidence on its side. There is nothing to suggest that the unfettered free market can produce a free, just, or stable society. While it has long been is a mantra of the right that “socialism is all very nice on paper but it doesn't work in practice”, we now have three decades of accumulated proof that while Monetarism is all very horrible on paper, it doesn’t work in practice either.
The monetarist promise of social and industrial peace is a fiction. As long as some people live by wages the same tensions will remain – pay, conditions, workloads, hours, leave. Working people will always have good reason to combine and campaign for a decent living. It’s class-struggle as usual, and we can expect the usual response from the state.
The monetarist response of course is to ‘limit’ the scope of the idealism. Withering the state is reinterpreted as the more modest withering the welfare state. Meanwhile coercive state apparatus mushrooms. The invisible hand is reliably accompanied by the iron fist. Rather than becoming an anachronism, ministries of surveillance, incarceration, torture and murder are the hallmark of the 'free'-market economy.
This violence is usually excused as a temporary phase, a necessary evil during the transition to the peaceful stateless society – a Dictatorship of the Bourgeoisie to lead us to free-market nirvana. Interestingly, as with the Dictatorship of the Proletariat, it seems that the only way to secure an end to state coercion is through increased state coercion: the only way to rid ourselves of the police and army is through more police and army.
In truth these means are the end. For many free-market advocates violence is a regrettable but necessary means of maintaining the natural human hierarchy. Rather than a crime, many see the juxtaposition of opulence and grinding poverty as the natural order of things, a reflection of differing human skills and capabilities. Consequently those whose poor aptitude leads them to be materially poor are likely to thieve and connive and form unions and labour movements, and so skew this natural hierarchy. Consequently, a powerful coercive state apparatus is a justifiable evil, a regrettable waste of resources, but necessary to keep the dogs at bay and maintain human freedom in other spheres.
If profound inequality is the natural state of being, so be it. For many free-market advocates the natural order of humanity seems to be a super-rich elite, a modest-sized middle class, and a mass of dirt-poor. And, of course, a formidable ministry of violence to keep everything from boiling over. It sounds harsh, and indeed it is harsh, but it’s nothing new. Throughout human history the wealthy have been dreaming-up justifications for inequality, and justifications for using violence to maintain their status. It’s just the latest excuse for business as usual.
What is to be done?
The most important weapon in the fight against the next monetarist consensus will be honesty. The honest truth is that unfettered capitalism does not lead to wealth and freedom. It only further entrenches inequality and powerlessness. Equally however, the left need to be honest about the problems that arise from collective organisation of economics.
The first truth is not something you would deduce from the corporate friendly media. The economic ‘miracles’ reported in Time and Newsweek were just miraculous accumulations of profit for global corporations, and came at terrible cost to domestic populations. From Chile to Russia to Poland to South Africa the story was the same. A monetarist controlled World Bank and IMF blackmailed desperate countries into privatising their economic and social infrastructure; the booty was divided up between multinationals, Mafiosi, and the stooge governments of the host countries. (For the awful details see Naomi Klein’s Shock Doctrine.)
It’s been a funny game when you pan out a little. Monetarists campaigned to convince every country in the world that it would face ruin if it didn’t embrace the free-market. Thatcher insisted that if we didn’t slash state spending at home we would be out-priced in the global market. And indeed, as long as we were funding good health and welfare how could we possibly complete with the unit cost of production in Taiwan, Malaysia, Mexico and the new China?
The darkly amusing thing is, the reason those other countries had such high rates of productivity was because they had been bombed and bullied out of their own hopes of decent welfare by the very same ideological clique imposing their plans at home. Reagan and Thatcher at one and the same time set out to smash welfare domestically and in the developing world.
Clearly for monetarists the fear is not that any one country that allows welfare will make itself uncompetitive, but that if the whole world adopts minimal welfare standards the general level of exploitation will fall, that is, corporations will make less money out of us as a species. Clearly the national interest of neither first nor third world country is being served by monetarism; it is a third entity, the global corporation that benefits.
Monetarists have contrived to keep the whole world desperate, every nation, business and worker in a state of perpetual fear of the other, for the sake of corporate profit. But we can find hope in this policy of despair. If destroying welfare in one county helps to destroy it elsewhere, we must conclude the opposite is also true: Any country that refuses to treat its population as corporate fodder is cutting slack for others to do the same. The greatest threat to monetarism is the threat of a good example.
Free-market thinkers are certainly aware of this fact, hence the desperate measures taken against any country that falls out of line. Only by insuring that most workers get paid peanuts can they ensure that most workers get paid peanuts.
It’s a counter intuitive after decades of being set at each other’s throats, but it is nonetheless the case. Refusing to participate in the monetarist game is the best way to help other countries to refuse. Every victory for a particular labour movement is a general victory for the entire labour movement. The best way to fight for a better deal globally is by fighting for lower productivity globally, and higher public spending globally.
The second point about honesty relates to the credibility of this fight. One of the most powerful weapons in the monetarist arsenal is the perceived idealism of the left. Just as the ideal total market economy has been discredited, the same must be admitted for collectivist idealism. Wilfully naive monetarism is unlikely to be defeated by an equally naive belief in the collective.
If the left have nothing to offer in place of monetarism but equally dogmatic demands for wholesale common ownership then the prospects for change seem bleak. While it is easy to condemn the capitalism of Haliburton and Walmart, there is little to be gained by lumping all forms of private enterprise in the same bin. A credible political alternative will require careful consideration rather than blanket condemnation. It will involve picking between good and bad examples of market forces.
Consequently we can also forget about setting anything in stone. There will be no end of history, left or right. Progressives will, as ever, push for greater collective action and collective ownership. But we can forget about finding a permanent solution to economics.
It shouldn't really come as a surprise. Economics is such a complex network of interests and desires. There are managers, owners, workers, unions, competitors, products, resources and the environment to consider, and that's before you even get to the desires and ambitions of politician and party. You can see the temptations of idealism – the idea that if you could only lop-off one or more of these heads you might create something stable. But like the hydra, they just keep growing back.
The end of The End of History
Both monetarist and collectivist idealists strived for a pure application of their beliefs. Each dreamed of a world washed clean of the ideology of the other. Accordingly any concession was seen as deadly contamination, the thin end of the wedge, the first steps on the road to defeat. Nothing less than the pure market economy, or the pure market-less economy would do.
Reality, however, flatly refused to conform to the ideal. However harshly market forces were imposed people still combined to get a better deal. They still struggled and protested and campaigned for social justice. Similarly, as fast as the state tried to smother the free-market, the black market thrived. People persisted in selling their goods and services to each other at the going rate, regardless whether the state approved the deal. The market can never really be eradicated, it just moves underground.
The oppressive nature of Chilean-style capitalism and Soviet-style communism can be seen as a response to this refusal. For all the efforts of the state, Soviets still conceived of themselves as individuals, with individual motives and desires. Likewise, Chileans still conceived of themselves as comrades, compassionate social beings with a stake in each others lives. The only means of maintaining the pretence of purity was fear and violence.
Both monetarist and collectivist absolutisms are doomed to failure because both deny the rational basis of the other. The inconvenient truth is that human allegiance is a complex and unpredictable thing. There are legitimate social desires and legitimate individual desires. There are times when we want to co-operate and times when we want to act as individuals. Some of us may veer more in one direction than the other, but we each posses both impulses. The fact that certain people find one or other of these impulses abhorrent has no bearing on the matter.
Without massive oppression, it seems the mixed economy is the only game in town. The only set-up that stands a chance of sustaining democracy is one that tolerates the desires of both the individual and the collective. This is not to say that massive oppression cannot also occur in a mixed economy, only that it is bound to occur in a society that aims to stamp out either collective or individual will.
Of course we will argue forever about the composition of the mix – perhaps that’s what politics is – deciding what we do and don't want to co-operate over? But we can forget about dispensing with the mix.
How to avoid the next monetarist consensus III
Each of the following responses is rooted in the same observation: There are more important things in the world than economics. Even if everything depends upon economics, it remains the means not the end goal. Even the most hard-bitten monetarist would not argue that the purpose of individual freedom is to maintain the free-market (well, not publicly anyway).
The Limits of Lassez-faire
This in itself places a clear limit on lassez-faire. The market cannot be allowed such freedom that it infringes more basic freedoms. If the cost of maintaining a free-market is fascism, or economic meltdown, or ecological breakdown and the termination of the species, we can safely say that the price is too high.
While there might be sound arguments for ‘letting do’ in some spheres of the economy in many other areas intervention remains essential. Of course it will often be difficult to call, and hellishly difficult to implement. It will never be easy to decide when a company has become too big or powerful to be socially tolerable, and it takes a suicidally brave administration to challenge the corporate beast. Even modest regulation of the worst abusers will be portrayed as arbitrary punishment of ‘wealth creators’. All the power of corporate propaganda and military might will be levelled at those who dare to try.
But such resistance cannot be defended on the grounds of freedom. If the choice is democracy or corporate serfdom, sustainability or ecological breakdown, then the free-market must take second place. If non-intervention is enslaving us or killing us we must intervene, and damn the market.
Productivity
Similarly, we might ask, why do we work? Surely not for the sake of work itself. While one might believe that wealth and liberty are rooted in high rates of productivity, it remains the means not the end. Even Milton Friedman wouldn’t argue that the purpose of human existence is to produce cheap goods, only that the end goals – wealth and liberty – are best served by high productivity.
Consequently, if the high rates of productivity and profit supposedly obtained in a free-market stubbornly refuse to trickle down to the masses then here too the monetarist appeal evaporates. If high productivity just means more wealth and power for the rich then the free-market cannot be sold as the protector of democracy and freedom.
And indeed, experience bears this out. For all the propaganda, the hallmark of a free-market economy is widespread poverty and lack of social mobility. If you are born in the gutter beneath a monetarist sky then odds-on you will die there too. Social democracies with workers-rights and good welfare provision have a far better track-record for nurturing talent and allowing the materially impoverished to advance.
The reasons are obvious enough, once we challenge the oversimplified economic picture painted by monetarists. For one thing, while higher productivity could translate to higher wages there is no evidence to believe it does. The last thing capitalists tend to do with excess profits is distribute them amongst staff.
Less obviously, while it is true that any benefits to workers amount to lost productivity in the short term, an economy is not a closed loop. While taxes certainly do increase unit costs, if those taxes are spent wisely they have the potential to free-up productivity elsewhere. Education, urban renewal, affordable public transport – all have the potential to enhance productivity by releasing wasted resources.
Of course this is an anathema to the free market purists: By definition, if no capitalist is interested in investing in something then it can’t be worth investing in – we must be throwing money away. But again, experience does not bear this out. Indeed history shows that if the collective doesn’t invest responsibly then nothing will. Left to their own devices capitalists tend to see no further than short-term profit. Health, education, leisure, sustainability and economic diversity are their last concern. Everything the mass of us benefit from has had to be throttled out of capitalism by collective action.
Quality of What?
When is it wise to assist a struggling enterprise? Awful as bankruptcy and redundancy are, no responsible government can bail-out a failing business indefinitely. The mere existence of a particular product or company or workforce cannot serve as an automatic justification for its continued existence. Sometimes, the monetarist cries of ‘propping-up dead wood!’ and ‘throwing good money after bad!’ are a fair assessment of intervention.
To paraphrase Marx, production cannot boil down to, from each according to existing infrastructure, to anyone who’ll have it. However cherished, sometimes businesses need to fail. However painful, sometimes people have to be laid-off. How else could the quality of goods and services be maintained?
Much the same, one can see the potential threat to quality posed by state monopoly. In terms of manufactured goods, particularly, it is hard to deny the advantages of a multitude of private producers competing to cater to a multitude of tastes, rather than the state producing one or two items to fit all. With the best of intentions, no government really knows what people want. Better that demand brings products into being, and lack of demand kills them off.
Nevertheless these arguments have their limits, and any attempt to morph them onto the whole economy is quite groundless. The fact of the matter is that some goods and services actually function better when state-owned or state-subsidised. The privatisation of rail and demutualisation of building societies have been unmitigated disasters. The deregulation of mortgage provision has led to global financial collapse. Are any other examples necessary?
And even where private competition does show merit we must remember that there are more important things than state-of-the art products. The human desire to make things and own things may be limitless, but the opportunity to do so is not. We have lost the luxury of this delusion. The sky is not the limit, the limit is terrestrial, and far more humble. Natural resources are not endless. Sustainability is not guaranteed. The environment is not impervious to our schemes. Quality of product cannot be allowed to trump quality of life, let alone possibility of existence. Nor can it be allowed to trump human liberty.
Whose Liberty?
The more apocalyptic warnings of monetarists are born of a mixture of hysteria and cynicism. While there certainly is a navigable route from the planned economy to the planned society, and on to the planned individual, the full journey is not inevitable.
The Soviets certainly travelled a long way down this path, but then that was the expressed intention. The plan was to plan society and transform the outlook of the individual (or if you prefer, release the true human nature trapped inside capitalist false consciousness.) But this is not a necessary consequence of state control and ownership. The more modest industrial intervention and welfare projects of Western-Europe certainly didn’t end in the gulag. At worst they ended in sluggish production and eventual capitulation to private ownership. Meanwhile social and economic freedom in these states remained as good as any in history.
In fact if liberty is the goal there can be few greater impediments than an idealistic interpretation of lassez-faire. Removing economic rules may sound like a libertarian act, superficially. You can cry ‘liberty!’ as you abolish taxes, and restrictions on trade, and the movement of capital and labour, but the consequences of such freedoms can be far from liberating. In an unjust, unequal world, rules are the only means of ensuring a fair competition. For individuals and nations alike, if the pitch is steeped so unfairly in the favour of the rich, simply removing restrictions will only further entrench inequality. The liberty of the poor can only be secured through restrictions on the wealthy. Freedom for all rests upon limiting the liberties of the few.
All said there is some fire beneath the libertarian smoke. State-ownership of production undoubtedly is a concentration of power. To take an extreme example, if you want to work in a car plant but the state owns all the car plants then you will have no choice but to work for the state. If you want to buy a car but the state owns the monopoly, then you will have to buy a car from the state. These are not small or inconsequential limits on freedom.
Similarly, state control over taxation and public spending, housing, health, education and transport are formidable concentrations of power. Even after decades of monetarism, central government still controls the contributions and spending of millions of us. Just who are they to spend on our behalf?
Unsatisfying as it is, the answer comes down to lesser evils. For all the dangers of collective control, if not the collective, then who?
The Limits of Lassez-faire
This in itself places a clear limit on lassez-faire. The market cannot be allowed such freedom that it infringes more basic freedoms. If the cost of maintaining a free-market is fascism, or economic meltdown, or ecological breakdown and the termination of the species, we can safely say that the price is too high.
While there might be sound arguments for ‘letting do’ in some spheres of the economy in many other areas intervention remains essential. Of course it will often be difficult to call, and hellishly difficult to implement. It will never be easy to decide when a company has become too big or powerful to be socially tolerable, and it takes a suicidally brave administration to challenge the corporate beast. Even modest regulation of the worst abusers will be portrayed as arbitrary punishment of ‘wealth creators’. All the power of corporate propaganda and military might will be levelled at those who dare to try.
But such resistance cannot be defended on the grounds of freedom. If the choice is democracy or corporate serfdom, sustainability or ecological breakdown, then the free-market must take second place. If non-intervention is enslaving us or killing us we must intervene, and damn the market.
Productivity
Similarly, we might ask, why do we work? Surely not for the sake of work itself. While one might believe that wealth and liberty are rooted in high rates of productivity, it remains the means not the end. Even Milton Friedman wouldn’t argue that the purpose of human existence is to produce cheap goods, only that the end goals – wealth and liberty – are best served by high productivity.
Consequently, if the high rates of productivity and profit supposedly obtained in a free-market stubbornly refuse to trickle down to the masses then here too the monetarist appeal evaporates. If high productivity just means more wealth and power for the rich then the free-market cannot be sold as the protector of democracy and freedom.
And indeed, experience bears this out. For all the propaganda, the hallmark of a free-market economy is widespread poverty and lack of social mobility. If you are born in the gutter beneath a monetarist sky then odds-on you will die there too. Social democracies with workers-rights and good welfare provision have a far better track-record for nurturing talent and allowing the materially impoverished to advance.
The reasons are obvious enough, once we challenge the oversimplified economic picture painted by monetarists. For one thing, while higher productivity could translate to higher wages there is no evidence to believe it does. The last thing capitalists tend to do with excess profits is distribute them amongst staff.
Less obviously, while it is true that any benefits to workers amount to lost productivity in the short term, an economy is not a closed loop. While taxes certainly do increase unit costs, if those taxes are spent wisely they have the potential to free-up productivity elsewhere. Education, urban renewal, affordable public transport – all have the potential to enhance productivity by releasing wasted resources.
Of course this is an anathema to the free market purists: By definition, if no capitalist is interested in investing in something then it can’t be worth investing in – we must be throwing money away. But again, experience does not bear this out. Indeed history shows that if the collective doesn’t invest responsibly then nothing will. Left to their own devices capitalists tend to see no further than short-term profit. Health, education, leisure, sustainability and economic diversity are their last concern. Everything the mass of us benefit from has had to be throttled out of capitalism by collective action.
Quality of What?
When is it wise to assist a struggling enterprise? Awful as bankruptcy and redundancy are, no responsible government can bail-out a failing business indefinitely. The mere existence of a particular product or company or workforce cannot serve as an automatic justification for its continued existence. Sometimes, the monetarist cries of ‘propping-up dead wood!’ and ‘throwing good money after bad!’ are a fair assessment of intervention.
To paraphrase Marx, production cannot boil down to, from each according to existing infrastructure, to anyone who’ll have it. However cherished, sometimes businesses need to fail. However painful, sometimes people have to be laid-off. How else could the quality of goods and services be maintained?
Much the same, one can see the potential threat to quality posed by state monopoly. In terms of manufactured goods, particularly, it is hard to deny the advantages of a multitude of private producers competing to cater to a multitude of tastes, rather than the state producing one or two items to fit all. With the best of intentions, no government really knows what people want. Better that demand brings products into being, and lack of demand kills them off.
Nevertheless these arguments have their limits, and any attempt to morph them onto the whole economy is quite groundless. The fact of the matter is that some goods and services actually function better when state-owned or state-subsidised. The privatisation of rail and demutualisation of building societies have been unmitigated disasters. The deregulation of mortgage provision has led to global financial collapse. Are any other examples necessary?
And even where private competition does show merit we must remember that there are more important things than state-of-the art products. The human desire to make things and own things may be limitless, but the opportunity to do so is not. We have lost the luxury of this delusion. The sky is not the limit, the limit is terrestrial, and far more humble. Natural resources are not endless. Sustainability is not guaranteed. The environment is not impervious to our schemes. Quality of product cannot be allowed to trump quality of life, let alone possibility of existence. Nor can it be allowed to trump human liberty.
Whose Liberty?
The more apocalyptic warnings of monetarists are born of a mixture of hysteria and cynicism. While there certainly is a navigable route from the planned economy to the planned society, and on to the planned individual, the full journey is not inevitable.
The Soviets certainly travelled a long way down this path, but then that was the expressed intention. The plan was to plan society and transform the outlook of the individual (or if you prefer, release the true human nature trapped inside capitalist false consciousness.) But this is not a necessary consequence of state control and ownership. The more modest industrial intervention and welfare projects of Western-Europe certainly didn’t end in the gulag. At worst they ended in sluggish production and eventual capitulation to private ownership. Meanwhile social and economic freedom in these states remained as good as any in history.
In fact if liberty is the goal there can be few greater impediments than an idealistic interpretation of lassez-faire. Removing economic rules may sound like a libertarian act, superficially. You can cry ‘liberty!’ as you abolish taxes, and restrictions on trade, and the movement of capital and labour, but the consequences of such freedoms can be far from liberating. In an unjust, unequal world, rules are the only means of ensuring a fair competition. For individuals and nations alike, if the pitch is steeped so unfairly in the favour of the rich, simply removing restrictions will only further entrench inequality. The liberty of the poor can only be secured through restrictions on the wealthy. Freedom for all rests upon limiting the liberties of the few.
All said there is some fire beneath the libertarian smoke. State-ownership of production undoubtedly is a concentration of power. To take an extreme example, if you want to work in a car plant but the state owns all the car plants then you will have no choice but to work for the state. If you want to buy a car but the state owns the monopoly, then you will have to buy a car from the state. These are not small or inconsequential limits on freedom.
Similarly, state control over taxation and public spending, housing, health, education and transport are formidable concentrations of power. Even after decades of monetarism, central government still controls the contributions and spending of millions of us. Just who are they to spend on our behalf?
Unsatisfying as it is, the answer comes down to lesser evils. For all the dangers of collective control, if not the collective, then who?
Monday 18 May 2009
How to avoid the next monetarist consensus II
1% Truth?
For some people ‘capitalism’ will always be a dirty word – synonymous with greed and exploitation. In more mainstream discussion the term pulses between negative and positive, in step with history: Good for the first decades of the twentieth century, bad after the depression of the thirties; resurrected by the Thatcherites at the end of the seventies, and all set to be reburied by the current financial crisis.
Notice it’s only the term ‘capitalism’ that has fluctuated in favour. Capitalism itself has remained the dominant mode of production the whole time. But the relative esteem of the term is telling in terms of what is expected of it, and how it is assumed to work. Those who use ‘capitalism’ unabashedly are most likely to be champions of free-market economics. Those squeamish about the word are far more likely to favour state intervention and regulation.
Similarly, while increasing numbers of people are calling themselves ‘anti-capitalist’ this can mean very different things. It doesn’t really matter when you’re protesting. All that matters is the knowledge that the current system is wrong. Being united in opposition is far from being united in alternatives.
‘Anti-capitalists’ vary widely, from those who simply want to rein-in corporate power to those who want complete abolition of property relations. Some fight for a class-free, property-free future, perhaps within this life – a quick revolution followed by a lasting peace. Others have a similar end goal but see it taking centuries – a quick revolution followed by slow trudge to Jerusalem. Five paces forward, four paces back, or worse.
Then there are some who see state-control as the end goal in itself. Some just want state direction of industry and commerce; others go further and want the state to be the major or even monopoly owner of production.
And some simply oppose incorporation and corporate power. They have no problem with a genuine market economy, only with the abuses that arise from conglomeration.
While the goals vary one thing that unites all these schemes is the desire for some sort of democratic control over production. Whether by regulation, intervention or full-blown nationalisation, those calling themselves anti-capitalist demand that government take responsibility for the economy. Or to put it in more positive terms, they want democracy to be extended into the economic sphere. They want business to be accountable to the electorate and the state to protect us from voracious capitalists, rather than sell us to them.
For monetarists this is the key heresy – ‘collectivism’. All evils spring from this supposedly naïve desire. As discussed in part one, the better part of this horror and indignation is in fact cynical, inconsistent and hypocritical. But for the sake of argument let’s assume an idealist monetarist and an idealised model. Here are four points monetarists employ to win hearts, minds and elections. Even if you find them repellent, you will need to have a good answer to each.
1. The Limits of Collectivism
None but the blindest monetarist (there are still a lot about) would deny that privatisation of public utilities has been a disaster. Outside the boardroom and the stock market we are all victims of this theft. Given the impending environmental crises things couldn’t be worse. At a time when it is vital for energy supplies to be in the hands of elected bodies they are instead run as cash cows for international corporations. The last thing these owners have in mind is a reduction in output, or a more equitable distribution of energy resources.
But what about the other end of the scale? How far should collectivism extend into the micro-economy? Some anti-capitalists would answer ‘all the way’, but we have to seriously consider what this might mean.
Does anti-capitalism mean the dissolution of all market relations, right down to micro-transactions? Does it mean the dissolution of even the petit-bourgeoisie? Should independent green-grocers be chased out of town by state-monopoly green-grocers? Should every window cleaner, builder and gardener be paid a set wage by the state rather than negotiate costs with the person employing them?
If your answer to this is yes, fair enough, but you have a lot of explaining to do. Aside from issues of individual freedom, the necessary bureaucracy would make the EU seem like a well-oiled machine, and the necessary monitoring and penalising of those who transgress would make the Stasi seem like the neighbourhood watch.
Then again if you do assent to this level of market relationship you also have to accept that you are in some sense pro-capitalist. Like it or not, if your politics permits this level of market economy you are advocating something on the capitalist continuum. It doesn’t mean you endorse Rockefeller, but it is an endorsement of market economics, and not a superficial one. It’s a concession with deep implications.
Complex questions become unavoidable: How widely should the free-market be allowed to operate? How big should a company be allowed to get before it is deemed antisocial, ripe for dissolution or state absorption? Is it right, sane, or even probable that the state would intervene to dissolve or break-up a business that was booming, punish it for booming?
Moreover, who is in a rightful position to make such judgements? Who is qualified to judge whether a business is still small enough to be socially safe, or has grown so large that it endangers liberty? Some medium-sized businesses are run by model employers and some small businesses are run by tyrants. Why should the moral player in these instances be penalised for their success?
Note that in the monetarist model these problems do not arise. In the idealised free market you strive to become as big as possible through any possible means. Nothing decides the size of your business other than your success in business.
2. Productivity
All capitalism is exploitation. For the self-employed this needn’t be as bad as it sounds. To exploit your own talent and labour for your own profit is respectable enough. The negative connotation only wakes-up when you employ others to labour on your behalf.
In this sense large businesses with large profits can be seen as places where large numbers of people are exploited at the same time. A thousand workers in an office or factory can be simultaneously squeezed; the surplus labour drained off for re-investment, bonuses and enhanced share-value.
Even when a company or organisation is supposedly non-profit-making the same is necessarily true. You are employed for the bit of extra value you produce on top of your wages – clearly no company would want to employ someone whose productivity only broke-even against their wages, let alone someone whose output failed to even cover their wages.
This fact gives rise to what Marxists call class struggle and monetarists call productivity. They really are the same thing. While it is in the interest of bosses to keep wages low, it is in the interest of workers to keep them high. Low unit prices and high profits are in a perpetual battle with fair pay and good working conditions.
There’s no such thing as a free lunch, as monetarists, Marxists and physicists say. Every extra day’s holiday a union secures for workers is a loss in profit for the bosses. The price of the product must rise, or wages be suppressed, or suppliers be squeezed to cover the extra cost of non-productivity. Something has to give.
Success in business is then intimately linked to success in the class struggle. Profitable companies, those that undercut and outsell their competitors, are those that squeeze their workers the hardest, or employ subcontractors who squeeze their workers the hardest. This is the hideous truth behind the astonishing bargains at Primark and Poundland. Treating people badly can be highly profitable. Paying people peanuts allows you to sell your products for peanuts, and thus bankrupt your competitors.
Given this irreconcilable class-struggle it is easy to see the monetarist case against state intervention in industry. Any government taking over control of a business will face a persistent dilemma: Whose side are you on? Whose corner are you fighting? Are you there to ensure workers’ rights at the cost of productivity, or are you there to maximise profits at the cost of workers’ rights? Or are you there to mediate between the two?
Any government assuming the role of boss will find itself torn in two – desperate to balance company books and keep the business afloat, desperate to keep the workers happy.
Workers are, after all, the majority of the electorate. Furthermore any government attempting to run business is likely to be on the left, and likely to be reliant on the votes and support of trade unions. This was certainly the case for the post war British Labour governments. Every attempt to maintain the profitability of nationalised industries was taken as a kick in the teeth by the very people who got Labour into power.
Conversely every government concession to the workforce is a loss in productivity, an increased unit price in a world where other firms and other countries are making their units cheaper, and perhaps better.
3. Quality
In a perfect world quality and demand would be intimately linked: We would desire and choose the best products to suit our needs and our pockets.
In the real world of course demand is no guarantee of quality. Advertising skews demand to sell trash. It turns mundane objects into religious icons. It manufactures false choices like Coke v Pepsi, and Daz v Persil. It encourages us to assess the quality of identical products and then feel good with ourselves for choosing the ‘better’ one.
Less cynically, perhaps, collective ownership and control of industry has its own distorting effect upon demand, and its own negative impact on quality. In both cases there is pressure to sacrifice quality for a higher goal. With advertising the higher goal is profit. With collective ownership the higher goal is social good.
Recent events in the US car industry illustrate both distortions perfectly. Over the last decade marketing was employed to sell preposterously oversized and overpowered vehicles at premium prices. The worst possible vehicles for the 21st century were transformed into sexy necessities. Now, with the economy shrinking and sales plummeting the US government is bailing-out the manufacturers. Subsidies are being injected to keep the factories open and maintain production of these beasts.
Clearly some intentions here are good. The subsidies are intended to protect jobs, stop people being thrown out of their homes. But equally clearly product quality has been compromised. Already an unwanted unit is being pushed onto the market. But more importantly, in the long term there is now less pressure for these producers to maintain standards.
While subsidies do not guarantee a drop it quality, clearly they do create room for it. If the money keeps rolling in regardless of whether a product sells there is more opportunity for quality to drop. After all, what’s the worst thing that could happen? More subsidies?
And note here that a drop in quality is not merely an inconvenience for the consumer, it’s also a very slippery slope for the producer. Outside strictly protected markets (like those once enjoyed by Lada and Trabant) it is unlikely that the fortunes of such producers will improve. If better quality is available elsewhere custom will follow it.
When a business is run for any goal other than making good quality products product quality will be at risk. If pay keeps rolling-in regardless of how well you do your job what’s the incentive to do it well? If your company stays solvent regardless of whether there is demand for its products why fret about quality? If contracts are guaranteed regardless of whether you innovate, what’s the point in innovating?
In the idealised monetarist model this is not an option. Quality is constantly maintained by the invisible hand of demand. Innovation is spurred-on by the threat of bankruptcy. The only products that get made are products that sell. If they don’t sell the business doesn’t get subsidised, it goes under.
4. Freedom
Everybody wants to be free, it seems, but both left and right claim the monopoly on achieving it.
In part this is due to the different emphasis people place on different, sometimes mutually contradictory, freedoms. One person’s liberty is often another’s bondage. An increase in the highest band of income tax is simultaneously an assault on the freedom of the wealthy and a means of liberating the poor. One person’s freedom to unionise is another’s restrictive working practices. Freedom to choose private healthcare and private education is the flipside of poorly funded social medicine and state education.
But things run deeper than interpretation. The difference between collective and individualist methods for gaining and maintaining freedom signal a profound disagreement about the relationship between production and liberty.
Left collectivists tend to see production as something that needs to be tamed, democratised, regulated, if we are to enhance freedom in other spheres of life. The belief is that if we can liberate ourselves from economic exploitation we will be free to enjoy being human.
But to the monetarist this is completely cart before horse. The attempt to introduce ‘democracy’ into economics would in fact render social liberty impossible. The logic runs as follows: The more the state intervenes in production the more power it inevitably places in its own hands. However benevolent its intentions, if the state owns and controls production it does just that. The power to decide what is made is taken away from the producer. The power to decide what to buy is taken away from the consumer. Supply and demand are divorced from human desire and handed over to experts or committees or dictators who decide for us what we want to make and buy.
Given the economic stagnation monetarists see as an inevitable consequence of state intervention, even minor attempts to steer the economy will set us on the slippery slope to serfdom. As the economy falters the collectivist government’s reflex response will be more of the same. It will further crank-up its grip on the economy and on society in general, spiralling on towards totalitarianism. Inside every Tony Benn beats the heart of Erich Honecker. Or so we are told.
Those then are the arguments. I’ll save my own answers for a third post.
For some people ‘capitalism’ will always be a dirty word – synonymous with greed and exploitation. In more mainstream discussion the term pulses between negative and positive, in step with history: Good for the first decades of the twentieth century, bad after the depression of the thirties; resurrected by the Thatcherites at the end of the seventies, and all set to be reburied by the current financial crisis.
Notice it’s only the term ‘capitalism’ that has fluctuated in favour. Capitalism itself has remained the dominant mode of production the whole time. But the relative esteem of the term is telling in terms of what is expected of it, and how it is assumed to work. Those who use ‘capitalism’ unabashedly are most likely to be champions of free-market economics. Those squeamish about the word are far more likely to favour state intervention and regulation.
Similarly, while increasing numbers of people are calling themselves ‘anti-capitalist’ this can mean very different things. It doesn’t really matter when you’re protesting. All that matters is the knowledge that the current system is wrong. Being united in opposition is far from being united in alternatives.
‘Anti-capitalists’ vary widely, from those who simply want to rein-in corporate power to those who want complete abolition of property relations. Some fight for a class-free, property-free future, perhaps within this life – a quick revolution followed by a lasting peace. Others have a similar end goal but see it taking centuries – a quick revolution followed by slow trudge to Jerusalem. Five paces forward, four paces back, or worse.
Then there are some who see state-control as the end goal in itself. Some just want state direction of industry and commerce; others go further and want the state to be the major or even monopoly owner of production.
And some simply oppose incorporation and corporate power. They have no problem with a genuine market economy, only with the abuses that arise from conglomeration.
While the goals vary one thing that unites all these schemes is the desire for some sort of democratic control over production. Whether by regulation, intervention or full-blown nationalisation, those calling themselves anti-capitalist demand that government take responsibility for the economy. Or to put it in more positive terms, they want democracy to be extended into the economic sphere. They want business to be accountable to the electorate and the state to protect us from voracious capitalists, rather than sell us to them.
For monetarists this is the key heresy – ‘collectivism’. All evils spring from this supposedly naïve desire. As discussed in part one, the better part of this horror and indignation is in fact cynical, inconsistent and hypocritical. But for the sake of argument let’s assume an idealist monetarist and an idealised model. Here are four points monetarists employ to win hearts, minds and elections. Even if you find them repellent, you will need to have a good answer to each.
1. The Limits of Collectivism
None but the blindest monetarist (there are still a lot about) would deny that privatisation of public utilities has been a disaster. Outside the boardroom and the stock market we are all victims of this theft. Given the impending environmental crises things couldn’t be worse. At a time when it is vital for energy supplies to be in the hands of elected bodies they are instead run as cash cows for international corporations. The last thing these owners have in mind is a reduction in output, or a more equitable distribution of energy resources.
But what about the other end of the scale? How far should collectivism extend into the micro-economy? Some anti-capitalists would answer ‘all the way’, but we have to seriously consider what this might mean.
Does anti-capitalism mean the dissolution of all market relations, right down to micro-transactions? Does it mean the dissolution of even the petit-bourgeoisie? Should independent green-grocers be chased out of town by state-monopoly green-grocers? Should every window cleaner, builder and gardener be paid a set wage by the state rather than negotiate costs with the person employing them?
If your answer to this is yes, fair enough, but you have a lot of explaining to do. Aside from issues of individual freedom, the necessary bureaucracy would make the EU seem like a well-oiled machine, and the necessary monitoring and penalising of those who transgress would make the Stasi seem like the neighbourhood watch.
Then again if you do assent to this level of market relationship you also have to accept that you are in some sense pro-capitalist. Like it or not, if your politics permits this level of market economy you are advocating something on the capitalist continuum. It doesn’t mean you endorse Rockefeller, but it is an endorsement of market economics, and not a superficial one. It’s a concession with deep implications.
Complex questions become unavoidable: How widely should the free-market be allowed to operate? How big should a company be allowed to get before it is deemed antisocial, ripe for dissolution or state absorption? Is it right, sane, or even probable that the state would intervene to dissolve or break-up a business that was booming, punish it for booming?
Moreover, who is in a rightful position to make such judgements? Who is qualified to judge whether a business is still small enough to be socially safe, or has grown so large that it endangers liberty? Some medium-sized businesses are run by model employers and some small businesses are run by tyrants. Why should the moral player in these instances be penalised for their success?
Note that in the monetarist model these problems do not arise. In the idealised free market you strive to become as big as possible through any possible means. Nothing decides the size of your business other than your success in business.
2. Productivity
All capitalism is exploitation. For the self-employed this needn’t be as bad as it sounds. To exploit your own talent and labour for your own profit is respectable enough. The negative connotation only wakes-up when you employ others to labour on your behalf.
In this sense large businesses with large profits can be seen as places where large numbers of people are exploited at the same time. A thousand workers in an office or factory can be simultaneously squeezed; the surplus labour drained off for re-investment, bonuses and enhanced share-value.
Even when a company or organisation is supposedly non-profit-making the same is necessarily true. You are employed for the bit of extra value you produce on top of your wages – clearly no company would want to employ someone whose productivity only broke-even against their wages, let alone someone whose output failed to even cover their wages.
This fact gives rise to what Marxists call class struggle and monetarists call productivity. They really are the same thing. While it is in the interest of bosses to keep wages low, it is in the interest of workers to keep them high. Low unit prices and high profits are in a perpetual battle with fair pay and good working conditions.
There’s no such thing as a free lunch, as monetarists, Marxists and physicists say. Every extra day’s holiday a union secures for workers is a loss in profit for the bosses. The price of the product must rise, or wages be suppressed, or suppliers be squeezed to cover the extra cost of non-productivity. Something has to give.
Success in business is then intimately linked to success in the class struggle. Profitable companies, those that undercut and outsell their competitors, are those that squeeze their workers the hardest, or employ subcontractors who squeeze their workers the hardest. This is the hideous truth behind the astonishing bargains at Primark and Poundland. Treating people badly can be highly profitable. Paying people peanuts allows you to sell your products for peanuts, and thus bankrupt your competitors.
Given this irreconcilable class-struggle it is easy to see the monetarist case against state intervention in industry. Any government taking over control of a business will face a persistent dilemma: Whose side are you on? Whose corner are you fighting? Are you there to ensure workers’ rights at the cost of productivity, or are you there to maximise profits at the cost of workers’ rights? Or are you there to mediate between the two?
Any government assuming the role of boss will find itself torn in two – desperate to balance company books and keep the business afloat, desperate to keep the workers happy.
Workers are, after all, the majority of the electorate. Furthermore any government attempting to run business is likely to be on the left, and likely to be reliant on the votes and support of trade unions. This was certainly the case for the post war British Labour governments. Every attempt to maintain the profitability of nationalised industries was taken as a kick in the teeth by the very people who got Labour into power.
Conversely every government concession to the workforce is a loss in productivity, an increased unit price in a world where other firms and other countries are making their units cheaper, and perhaps better.
3. Quality
In a perfect world quality and demand would be intimately linked: We would desire and choose the best products to suit our needs and our pockets.
In the real world of course demand is no guarantee of quality. Advertising skews demand to sell trash. It turns mundane objects into religious icons. It manufactures false choices like Coke v Pepsi, and Daz v Persil. It encourages us to assess the quality of identical products and then feel good with ourselves for choosing the ‘better’ one.
Less cynically, perhaps, collective ownership and control of industry has its own distorting effect upon demand, and its own negative impact on quality. In both cases there is pressure to sacrifice quality for a higher goal. With advertising the higher goal is profit. With collective ownership the higher goal is social good.
Recent events in the US car industry illustrate both distortions perfectly. Over the last decade marketing was employed to sell preposterously oversized and overpowered vehicles at premium prices. The worst possible vehicles for the 21st century were transformed into sexy necessities. Now, with the economy shrinking and sales plummeting the US government is bailing-out the manufacturers. Subsidies are being injected to keep the factories open and maintain production of these beasts.
Clearly some intentions here are good. The subsidies are intended to protect jobs, stop people being thrown out of their homes. But equally clearly product quality has been compromised. Already an unwanted unit is being pushed onto the market. But more importantly, in the long term there is now less pressure for these producers to maintain standards.
While subsidies do not guarantee a drop it quality, clearly they do create room for it. If the money keeps rolling in regardless of whether a product sells there is more opportunity for quality to drop. After all, what’s the worst thing that could happen? More subsidies?
And note here that a drop in quality is not merely an inconvenience for the consumer, it’s also a very slippery slope for the producer. Outside strictly protected markets (like those once enjoyed by Lada and Trabant) it is unlikely that the fortunes of such producers will improve. If better quality is available elsewhere custom will follow it.
When a business is run for any goal other than making good quality products product quality will be at risk. If pay keeps rolling-in regardless of how well you do your job what’s the incentive to do it well? If your company stays solvent regardless of whether there is demand for its products why fret about quality? If contracts are guaranteed regardless of whether you innovate, what’s the point in innovating?
In the idealised monetarist model this is not an option. Quality is constantly maintained by the invisible hand of demand. Innovation is spurred-on by the threat of bankruptcy. The only products that get made are products that sell. If they don’t sell the business doesn’t get subsidised, it goes under.
4. Freedom
Everybody wants to be free, it seems, but both left and right claim the monopoly on achieving it.
In part this is due to the different emphasis people place on different, sometimes mutually contradictory, freedoms. One person’s liberty is often another’s bondage. An increase in the highest band of income tax is simultaneously an assault on the freedom of the wealthy and a means of liberating the poor. One person’s freedom to unionise is another’s restrictive working practices. Freedom to choose private healthcare and private education is the flipside of poorly funded social medicine and state education.
But things run deeper than interpretation. The difference between collective and individualist methods for gaining and maintaining freedom signal a profound disagreement about the relationship between production and liberty.
Left collectivists tend to see production as something that needs to be tamed, democratised, regulated, if we are to enhance freedom in other spheres of life. The belief is that if we can liberate ourselves from economic exploitation we will be free to enjoy being human.
But to the monetarist this is completely cart before horse. The attempt to introduce ‘democracy’ into economics would in fact render social liberty impossible. The logic runs as follows: The more the state intervenes in production the more power it inevitably places in its own hands. However benevolent its intentions, if the state owns and controls production it does just that. The power to decide what is made is taken away from the producer. The power to decide what to buy is taken away from the consumer. Supply and demand are divorced from human desire and handed over to experts or committees or dictators who decide for us what we want to make and buy.
Given the economic stagnation monetarists see as an inevitable consequence of state intervention, even minor attempts to steer the economy will set us on the slippery slope to serfdom. As the economy falters the collectivist government’s reflex response will be more of the same. It will further crank-up its grip on the economy and on society in general, spiralling on towards totalitarianism. Inside every Tony Benn beats the heart of Erich Honecker. Or so we are told.
Those then are the arguments. I’ll save my own answers for a third post.
Wednesday 13 May 2009
How to avoid the next monetarist consensus
If capitalism survives this crash one thing is certain. The corporate classes will again lobby for the same rules that brought us here. History will be rewritten and it won’t be the unregulated market to blame but the remnants of government intervention. As always with the monetarist religion all errors boil down to the same failing – we didn’t believe hard enough. Again we will be assured that the only root to freedom and economic security is through the economic free-for-all.
Resisting this resurgence will not be easy, any more than last time. The bitter fact is that wealth usually has the power to usurp truth. While it is plain as day that privatisation and deregulation have been disastrous for democracy, liberty and security, the elites that benefit have much louder voices than those who suffer. Monetarist ideology is 99% lies, but its advocates are well connected and have endless resources at their disposal.
The other problem is the remaining 1% - the grain of monetarism that is true. The rational kernel of free-market ideology may be minuscule in comparison to the propaganda that hangs off it, but its logic is potent and appealing. Those who wish to prevent free-market madness from returning would do well to understand that logic.
99% Lies
The first point is plain enough. While monetarism is sold to us as freedom it is in fact a strategy to neuter democracy. All the talk of liberty and free competition is propaganda. The real objective is to keep politics and economics out of the hands of the citizenry and in the hands of the super rich – and it’s worked a treat.
It is bitterly comical to recall that Thatcher won power in 1979 as the champion of the small business. Thirty years on and every high street is reduced to the same cluster of national or global chains. Thirty years of ‘free competition’ culminates in us all being fed by four supermarkets; independent butchers, bakers and greengrocers outnumbered by homeopaths and palmists.
The monetarist might argue, well that’s the free market. There was a fair contest and these four won. But of course the competition never was fair. Obviously those with huge cash reserves can buy and sell cheaper, and bankrupt smaller competitors. But this shows no talent in business only a talent for ruthlessness. And the end results are the antithesis of freedom and competition.
If the consequence of a competition is four indistinguishable businesses and no real choice then clearly there was something wrong with the rules of the game. Any government truly interested in the benefits of the free market would break these behemoths up and run the competition again, with rules to protect the smaller retailers from such vast accumulations of capital (that’s any government truly interested in the benefits of the free market.....)
Similarly the privatisation of public utilities was nothing but corporate theft of public property. Such a grand heist required a thick smokescreen. The propaganda version was that this was a democratic extension of share ownership. A portion of shares were sold, undervalue, to the general public. Those lucky enough to afford a few then saw the share price rise sharply and so sold them on – to the usual suspects. So a tidy profit for those members of the public who already had a few quid handy, and a swift transfer of ownership and control to unaccountable multinational corporations. If you see Sid, tell him.
Similarly, how can a market be free when some of the competitors are lobbying government or bribing government, or actually serve in government? Corporate propaganda, or as it re-branded itself, ‘Public Relations’ is an immense industry with tentacles in every corner of business and politics. No string is left un-pulled to ensure wealth stays with the wealthy, and that democracy never poses a threat to profit.
The central plank of monetarism is that government should keep out of business. For this to have any useful meaning the opposite must also be true – business must keep out of government. Politics cannot be democratic when wealth is allowed to skew opinion and skew elections. A market cannot be free when ministers awarding contracts end up on the boards of the companies that win them. (For the whole horrific history of back-scratchers, businessmen, lobbyists and politicians see Miller and Dinan’s A Century of Spin.)
Finally, the lies that triggered the current crisis, a deceit transparent enough for a child to see through: It doesn’t matter how bad your credit record because property prices just go up and up indefinitely. And no one ever loses their job. What can possibly go wrong?
How ever did such lies and idiocy become the orthodoxy? It all comes down to self-interest, self-delusion, and a wilfully naïve interpretation of ‘laissez-faire’. This monetarist slogan roughly translates to ‘let do’, specifically, ‘let the economy do’; let business run itself, with minimal state intervention. Monetarists argue that this is the key to prosperity and security, and indeed the only way to protect individual liberty.
The validity of this belief will be the subject of part-two. To finish here, it can be seen that the lies and chaos of the past thirty years can be traced back to this naïve interpretation. To mix the Frenchisms, ‘laissez-faire economics’ was translated as ‘carte-blanche for capitalists’. Everything for sale to the highest bidder. From bin-collection to building societies, the only relevant qualification to own or run anything was money.
And should anyone query this wisdom a reflex answer was to hand: Stop interfering. The market will provide. Anything else will lead to low productivity, un-competitiveness, perhaps even lead to another Stalin or Hitler.
Although the lie was vacuous and transparent, as long as enough of the right sorts of people were doing well out of it there was nothing to stop it spreading. To the last minute government and media were still nosing it along. As calamity loomed dissenting voices were still labeled heretical, part of any problem, snuffed out.
Only when the banks failed did the expressions change. Brows once fixed in certainty now feigned surprise: Who would have thought unrestrained corporate slash-and-burn could result in economic disaster?
Overnight, heresy became necessity. Suddenly it was fine for governments to intervene in business, essential in fact. All talk turned to checks, balances, interventions and bailouts.
The monetarist ‘consensus’ was just a confidence trick. The scam held as long the economy could bear it, but the game is well and truly up. The artists and their shills are laughing on the beach. The mugs, the great mass of us, prepare to meet the costs in tax, employment, housing, public services, health, hunger, warfare, ecological breakdown and a swathe of other uncertainties.
The free market promised wealth, security, and liberty and then led us to the abyss. But all will be forgotten should the economy ever recover. We’ve been here before, after all. Monetarism will re-emerge, probably under a different name, but making the same demands. It will be advocated by the same self-interested parties and have the same financial backing. That’s the self-generating power of privatisation. It makes some people very rich. They can then use those riches to campaign for more privatisation.
Nevertheless there’s one weapon in the free-marketeers arsenal with more to it than wealth and power. Mention of it is likely to prompt more cries of heresy, this time from the left. It’s the 1% of monetarist ideology that is merits examination, and that’s the subject of part two.
Resisting this resurgence will not be easy, any more than last time. The bitter fact is that wealth usually has the power to usurp truth. While it is plain as day that privatisation and deregulation have been disastrous for democracy, liberty and security, the elites that benefit have much louder voices than those who suffer. Monetarist ideology is 99% lies, but its advocates are well connected and have endless resources at their disposal.
The other problem is the remaining 1% - the grain of monetarism that is true. The rational kernel of free-market ideology may be minuscule in comparison to the propaganda that hangs off it, but its logic is potent and appealing. Those who wish to prevent free-market madness from returning would do well to understand that logic.
99% Lies
The first point is plain enough. While monetarism is sold to us as freedom it is in fact a strategy to neuter democracy. All the talk of liberty and free competition is propaganda. The real objective is to keep politics and economics out of the hands of the citizenry and in the hands of the super rich – and it’s worked a treat.
It is bitterly comical to recall that Thatcher won power in 1979 as the champion of the small business. Thirty years on and every high street is reduced to the same cluster of national or global chains. Thirty years of ‘free competition’ culminates in us all being fed by four supermarkets; independent butchers, bakers and greengrocers outnumbered by homeopaths and palmists.
The monetarist might argue, well that’s the free market. There was a fair contest and these four won. But of course the competition never was fair. Obviously those with huge cash reserves can buy and sell cheaper, and bankrupt smaller competitors. But this shows no talent in business only a talent for ruthlessness. And the end results are the antithesis of freedom and competition.
If the consequence of a competition is four indistinguishable businesses and no real choice then clearly there was something wrong with the rules of the game. Any government truly interested in the benefits of the free market would break these behemoths up and run the competition again, with rules to protect the smaller retailers from such vast accumulations of capital (that’s any government truly interested in the benefits of the free market.....)
Similarly the privatisation of public utilities was nothing but corporate theft of public property. Such a grand heist required a thick smokescreen. The propaganda version was that this was a democratic extension of share ownership. A portion of shares were sold, undervalue, to the general public. Those lucky enough to afford a few then saw the share price rise sharply and so sold them on – to the usual suspects. So a tidy profit for those members of the public who already had a few quid handy, and a swift transfer of ownership and control to unaccountable multinational corporations. If you see Sid, tell him.
Similarly, how can a market be free when some of the competitors are lobbying government or bribing government, or actually serve in government? Corporate propaganda, or as it re-branded itself, ‘Public Relations’ is an immense industry with tentacles in every corner of business and politics. No string is left un-pulled to ensure wealth stays with the wealthy, and that democracy never poses a threat to profit.
The central plank of monetarism is that government should keep out of business. For this to have any useful meaning the opposite must also be true – business must keep out of government. Politics cannot be democratic when wealth is allowed to skew opinion and skew elections. A market cannot be free when ministers awarding contracts end up on the boards of the companies that win them. (For the whole horrific history of back-scratchers, businessmen, lobbyists and politicians see Miller and Dinan’s A Century of Spin.)
Finally, the lies that triggered the current crisis, a deceit transparent enough for a child to see through: It doesn’t matter how bad your credit record because property prices just go up and up indefinitely. And no one ever loses their job. What can possibly go wrong?
How ever did such lies and idiocy become the orthodoxy? It all comes down to self-interest, self-delusion, and a wilfully naïve interpretation of ‘laissez-faire’. This monetarist slogan roughly translates to ‘let do’, specifically, ‘let the economy do’; let business run itself, with minimal state intervention. Monetarists argue that this is the key to prosperity and security, and indeed the only way to protect individual liberty.
The validity of this belief will be the subject of part-two. To finish here, it can be seen that the lies and chaos of the past thirty years can be traced back to this naïve interpretation. To mix the Frenchisms, ‘laissez-faire economics’ was translated as ‘carte-blanche for capitalists’. Everything for sale to the highest bidder. From bin-collection to building societies, the only relevant qualification to own or run anything was money.
And should anyone query this wisdom a reflex answer was to hand: Stop interfering. The market will provide. Anything else will lead to low productivity, un-competitiveness, perhaps even lead to another Stalin or Hitler.
Although the lie was vacuous and transparent, as long as enough of the right sorts of people were doing well out of it there was nothing to stop it spreading. To the last minute government and media were still nosing it along. As calamity loomed dissenting voices were still labeled heretical, part of any problem, snuffed out.
Only when the banks failed did the expressions change. Brows once fixed in certainty now feigned surprise: Who would have thought unrestrained corporate slash-and-burn could result in economic disaster?
Overnight, heresy became necessity. Suddenly it was fine for governments to intervene in business, essential in fact. All talk turned to checks, balances, interventions and bailouts.
The monetarist ‘consensus’ was just a confidence trick. The scam held as long the economy could bear it, but the game is well and truly up. The artists and their shills are laughing on the beach. The mugs, the great mass of us, prepare to meet the costs in tax, employment, housing, public services, health, hunger, warfare, ecological breakdown and a swathe of other uncertainties.
The free market promised wealth, security, and liberty and then led us to the abyss. But all will be forgotten should the economy ever recover. We’ve been here before, after all. Monetarism will re-emerge, probably under a different name, but making the same demands. It will be advocated by the same self-interested parties and have the same financial backing. That’s the self-generating power of privatisation. It makes some people very rich. They can then use those riches to campaign for more privatisation.
Nevertheless there’s one weapon in the free-marketeers arsenal with more to it than wealth and power. Mention of it is likely to prompt more cries of heresy, this time from the left. It’s the 1% of monetarist ideology that is merits examination, and that’s the subject of part two.
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