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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

the limits of market liberalism « Previous | |Next »
October 24, 2010

In his Progressive, like the 1980s in the London Review of Books John Gray introduces some ideas that build on the previous posts on the politics of austerity and rolling back the state in a deflationary global economy.

Gray explores what may happen if the consequence of fiscal orthodoxy is to exacerbate the fragility of capitalism. He says that if the coalition is a novelty in British politics, then there is nothing that is remotely new in its ruling ideas, which are those of market liberalism:

[Nick] Clegg’s synthesis of social with market liberalism makes no advance on the position taken by Michael Portillo when he launched his bid for the Conservative leadership nearly a decade ago, while Cameron’s much touted ‘big society’ is a recycled version of the civic conservatism advocated by David Willetts in the early 1990s.

These represent a movement away from Thatcher 's attempts to link the free market with social conservatism --a position that was also espoused by John Howard in Australia from 1996 to 2006.

RowsonMcutbacks.jpg Martin Rowson

Gray continues that the above amalgams:

were attempts to remedy deficiencies in Thatcherite thinking, with Portillo arguing that a free-market economy should be complemented by liberal social values and Willetts maintaining that the corrosive effects of market forces could be overcome by giving greater space to non-governmental institutions – neighbourhoods, churches, charities and the like. The difficulty they faced was reconciling the dynamism of the free market with the need for social stability. This is not a new conflict – it troubled Adam Smith – and in truth it cannot be resolved, but it is all the more acute now that market capitalism is itself in trouble.

The market ideology of the 1980s has been internalised across the British political class, so that it now seems no more than common sense.

However, Gray adds:

As a consequence of the financial crisis, the market-based globalisation of the past couple of decades is giving way to a model in which states are the principal actors... A roll-back of the state of the magnitude that the coalition[in the UK] envisages will leave people more exposed to the turbulence of world markets than they have been for generations. Inevitably, they will seek protection...But it makes little sense to talk about restoring traditional forms of family life while insisting on the necessity of adapting to a highly mobile and continuously changing labour market .... This is not an inconsistency peculiar to the coalition. It is a conflict inherent in capitalism, which none of its defenders has been able to overcome. Most economic liberals have tended to evade the fact that free markets work against traditional values, including commonly accepted ideas of fairness.

Gray argues that the market liberal agenda the coalition in the UK is promoting is a relic from the past that is unlikely to withstand a protracted economic downturn. The determination to scale back debt could itself create the conditions for a U-turn. If the result of the retrenchment projected in the comprehensive spending review is sharply increased unemployment and stubbornly feeble or negative growth, then the government will need to reclaim its role in protecting the population from the insecurity of the market.

| Posted by Gary Sauer-Thompson at 4:13 PM | | Comments (4)
Comments

Comments

Tony Abbott, the leader of the opposition Liberal Party in Australia, remains locked into Thatcherism: economic liberalism coupled to traditional social conservatism.

He cannot see the problem of restoring traditional forms of family life while insisting on the necessity of adapting to a highly mobile and continuously changing labour market

Is it possible that NBN might be an partial answer to mobility of the labor market?

From the post: "If the result of the retrenchment projected in the comprehensive spending review is sharply increased unemployment and stubbornly feeble or negative growth, then the government will need to reclaim its role in protecting the population from the insecurity of the market".

Why should it? It seems more likely to me that the objective here is to increase impoverishment and insecurity.

Here is a statement of what this might mean in Europe:

http://neweconomicperspectives.blogspot.com/2010/09/while-labor-unions-celebrate-anti.html

gordon
Michael Hudson in his post at New Economic Perspectives describes the a neo-liberal mode of governance well:

The reality is that every neoliberal “cure” only makes matters worse...The basic theory is that inasmuch as members of the euro cannot devalue their currency, they must resort to “internal devaluation”: slashing wages, pensions and social spending. So as Europe enters recession it is following precisely the opposite of Keynesian policy....So Europe is committing economic, demographic and fiscal suicide

What John Gray is arguing is that the political problem that emerges--ensuring social stability due to people being more exposed to the turbulence of world markets than they have been for generations--- needs to be addressed.

His reason for this is that the market liberal agenda that the Cameron/Clegg coalition in the UK is promoting is a relic from the past that is unlikely to withstand a protracted economic downturn.

The political problem is addressed in different ways. Clegg's position, Gray says, is that:

Clegg had signalled his firm rejection of this kind [social] of liberalism. The state was necessary to ensure proper funding of public services such as health and education, he allowed; but once it had done that, government should ‘back off’ and allow services to be supplied privately...Instead of the type of liberalism exemplified by Hobhouse and Keynes, which accepted that the market had to be curbed when it failed to benefit society, the[Liberal Democrat] party was sold a liberalism in which the market became the benchmark by which society would be judged. Rather than being assessed according to standards of freedom and equality, the market became the fundamental norm from which any departure would in future have to be justified.

That market liberalism is Malcolm Turnbull's position as well--a free-market economy should be complemented by liberal social values.

The questions becomes: how can the Cameron/Clegg coalition weather the hostility that is in store for it when the pain of the cuts begins to be felt? It will have to back off from its market liberal agenda is Gray's argument.