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?
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