Home > Uncategorized > Beyond market vs. state

Beyond market vs. state

from David Ruccio  MT

At one time, from the late-1970s until the last couple of years, Britain—or at least the British ruling class—was in love with neoliberalism.

Neoliberalism was the common sense of both major political parties—the Tories and Labor (plus, the Conservative coalition partner Liberal Democrats)—as well as most large corporations and wealthy individuals.

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As Andy Beckett explains,  

In the early years of the 21st century, the inevitability of an ever more competitive, deregulated, internationally orientated market economy, to which both government and society were subordinate – a doctrine often called neoliberalism – was accepted right across the mainstream of British politics: from the Thatcherites who still dominated the Conservative party; to the increasingly pro-business Liberal Democrats, who would soon form a coalition government with the Tories; to the Scottish National party, whose then leader Alex Salmond praised Ireland and Iceland for their low corporate taxes; to the Blair cabinet itself, where, I was told by a senior Labour figure in 2001, “You won’t find a single member with anything critical to say about capitalism.” It was assumed by the main parties that most voters felt the same way.

Much the same was true in the United States, from the presidency of Jimmy Carter onward.And British neoliberalism worked, at last for the tiny group at the top. The share of income captured by the top 1 percent more than doubled, rising from 5.7 percent in 1978 to 15.4 percent in 2007.

Just as the worst set of crises of capitalism since the first Great Depression broke out.

It’s taken a decade but now, as Beckett explains, Britain has fallen out of love with neoliberalism.

Here’s the problem: the rejection of neoliberalism, at least among the elite, seems to follow the same market-versus-state logic as previous crises of free-market capitalism.

If Mariana Mazzucato—”favourite contemporary economist” of Labor’s John McDonnell—is any guide, the pendulum is shifting once again toward the state.* Free-market capitalism is being challenged by a more state-enabled form of capitalism.

Once again, they’re sticking to the market-versus-state terms of debate we’ve seen since capitalism first emerged. When forms of capitalism oriented around private ownership and free markets are declared to have failed, they turn to more government intervention and more state-regulated forms of capitalism.

Back and forth. Between market and state, the individual and society. Between micro and macro, neoclassical economics and Keynesian economics.

As I wrote just about this time last year,

The fact is, capitalism has been governed by many different (incomplete and contested) projects over the past three centuries or so. Sometimes, it has been more private and oriented around free markets (as it has been with neoliberalism); at other times, more public or state oriented and focused on regulated markets (as it was under the Depression-era New Deals and during the immediate postwar period).

However, in both cases, the goal has been to extract surplus-value from workers, within and across countries. While criticisms of neoliberalism tend to emphasize the problems created by individualism and free markets, they forget about or overlook the problems—at both the micro and macro levels—associated with class exploitation.

Once we direct our focus to those problems, concerning the conditions and consequences of appropriating and distributing the surplus, the issue is not what kind of better capitalism we can put in place, but what alternatives to capitalism can be imagined and created.

The challenge right now, in Great Britain as in the United States, is to break that market-versus-state dichotomy and use all that we know about forms of noncapitalism to create more equalizing, democratic, and sustainable forms of economy and society.

*See also Mazzucato’s 2016 Prebisch Lecture, on “The Entrepreneurial State: Implications for Market Creation and Economic Development.”

  1. lobdillj
    August 9, 2017 at 5:52 pm

    A very good description of what has been happening not only in Britain, but also in the EU, the US, and wherever the IMF, WB, and associated agencies like USAID have an oar in the water. IMO the very best tutorial on this is Michael Hudson’s “Killing the Host”. The problem has been that until recently there has been no alternative to the Friedman theory. But now there is a new proposed economic system that can reverse the inequity of the parasitical system that the 0.1% have in place. It is described by Stephanie Kelton and other Modern Money Theory economists. It is based on the three sector approach of Wynne Godley. Check it out.

  2. Craig
    August 9, 2017 at 8:11 pm

    We need an economic philosophy that clearly benefits both the individual and enterprise and whose policies enable a saturation of the economy with a paradigm other than solely debt in the form of loans. The paradigms of Debt and Loan themselves are not the problem, but rather Debt and Loan ONLY.

  3. robert locke
    August 10, 2017 at 10:23 am

    A Chinese Historian, who taught at the University of Hawaii, told me once that there are two sources of oppression, one is the state, the other is civil society. He added that Americans are super sensitive about state oppression of individual rights (the government), but they do not pay much attention to the oppression that exists in civil societies, i.e., anarchy on the streets, where people cannot safely leave their houses, or in civil societies where certain groups are disadvantages by legal systems (workers have no voice in companies where they work, or the legal systems favor the rich.

    I think in America, the civil society, not the government, is the great oppressor, which means that American freedom requires a more democratically organized civil society; otherwise, as one other Chinese living in Hawaii told me, “only rich people are free in this country” (she was rich).

  4. August 10, 2017 at 1:18 pm

    This struggle is so violent and unforgiving because it’s a fight among siblings. Ronald Reagan told the world something important during his second term as President. He said, “We’re all liberals now.” He is correct. Although few paid much attention at the time he said these words, or understood their significance. The mark of modernity is that moderns are liberals. This means their primary focus and goal is to protect and expand individual human rights. But there’s always been great disagreement about what this means and how to accomplish it. Neoliberals identify a path to achieve this goal. As do libertarians. And, republicans and democrats. Also, fascists, Nazis, communists, and capitalists. They all claim their way is only sensible and effective way to protect and expand individual human rights. No matter where debates and disputes of the time take them, liberals always return to this guiding principle. You contend, “The challenge right now, in Great Britain as in the United States, is to break that market-versus-state dichotomy and use all that we know about forms of noncapitalism to create more equalizing, democratic, and sustainable forms of economy and society.” I have another solution in mind. Perhaps it’s time we give up liberalism and look for another set of ideas and practices around which to shape our lives? Is the era of liberalism over?

  5. Blissex
    August 11, 2017 at 10:41 pm

    «The fact is, capitalism has been governed by many different (incomplete and contested) projects over the past three centuries or so.»

    Well, this discussion and this quote are based on using the usual very loose terms which obscure the topic.

    Capitalism is a form of government, and cannot be governed: it is the form of government where the owners of capital have paramount political power. Capitalism strictly defined existed only in the 19th century.

    What has been “governed” is the industrial-based economy: most “advanced” countries have some flavor of the industrial mode of production dominating the economy, regardless of the dominant “project”, that is the dominant political faction.

    «break that market-versus-state dichotomy»

    That is just a propaganda device used by USA conservative to fight downward redistribution: they seem to reckon that the state as organized today redistributes downward because it is controlled by the lower classes, so they want to shrink it. They also seem to guess that the unregulated markets redistribute upwards, so they are in favour of more unregulated markets and less state. If the markets redistributed downwards and the state upwards, as it happens in some polities, they would be against the markets and for a bigger state.

    «and use all that we know about forms of noncapitalism to create more equalizing, democratic, and sustainable forms of economy and society.»

    That seems hand-waving to me, beneath the confused terminology.
    Using better terminology I suspect that should be rewritten as:

    Given that the industrial mode of production is still the best, what kind of distribution system and political system result in the most sustainable better lives, both material and metaphysical, for the bulk of workers (and others)?
    Would distribution systems more based on planning than markets work better? Would governance based on cooperatives or smaller companies work better? Would freer trade and migration give more opportunities, or would less free trade and migration result in more stable societies? Would more elitism and less democracy result in better governance, at least for a while?
    Perhaps one day the mode of production will need changing too. But for now there are big discussions to do on the modes of distribution of effort and products, and the modes of governance for production and distribution and social interaction.

    • August 13, 2017 at 1:08 pm

      The market vs. state dichotomy can be used for lots of purposes. Certainly, it can move wealth and income around. Conservatives, as we see playing out now in the US Congress prefer the state be in charge of this distribution so long as they control the state. But otherwise favor the market since their better starting point in terms of wealth provides them greater control over markets. In either case, the basic goal remains the same – control the distribution of income and wealth.

      I don’t accept your assumption that the industrial mode of production is “the best.” The answer to that question depends on what our goals are. If we want maximum growth and development, in the sense of GDP, then the industrial mode has so far shown itself superior. If we want economic flexibility and democracy along with psychological and sociological welfare of the society then some form of the Nordic economic model has proven most effective. Anthropologists pointed long ago that the form of life that provides the best balance of wealth and societal welfare was the first organized by humans – hunting-gathering. Societal members had sufficient food, shelter, and other resources, while enjoying the benefits of sufficient time for family life, recreation, and resting. For 90% of its time on the planet humans lived this way. Only about 12,000 years ago did this change. It changed to address the secure access to resources concerns that hunting-gathering could not. So, the question before us is how do we get back to the hunter-gather balance while providing for humans’ greater need for resources to support complex technologies, recreation, and work? Futurists from the last 100 years have put the finger on AI and automation (e.g., robots) as the way to do this. Now that both AI and intelligent automation are within reach will the futurists turn out to be correct?

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