Simon Duffy

Thoughts, Bemusements & Arguments

Month: March 2014

Ideal Markets or Real Markets

In public policy we use the word ‘market’ in radically different ways and in fundamentally inconsistent ways.

For the liberal (or if you prefer, neoliberal) the word ‘market’ is used to describe a special kind of human interaction – the ‘free exchange of goods or services at an agreed price’. The beauty of this liberal vision lies in the market’s seemingly magical ability to achieve three wonderful things at the same time:

  • It is a place of freedom – free individuals come together to bargain and exchange
  • It is a place of community – people make promises to each other and bind each other by contracts
  • It is a place of productivity – time, energy and money flow into the places which have the most value.

Of course, this vision of the market is just a beautiful ideal. In the real world:
The starting point is not fair, and advantages accrue to those already advantaged, and so freedom turns into exploitation.

When relationships of power are radically unequal then the community we create is atomised and elitist.
The most productive is not always the best; commerce can destroy nature, community, industry and even politics itself (as we are finding out to our cost in the UK).

And most liberals do know this. The market is their ideal, but they accept that in many areas there will be what they call ‘market failure’ and – for various reasons – it is recognised that the ideal market cannot really exist. So they will – to varying degrees – accept that markets must be controlled or an alternative system offered in their place. The market is for the liberal a ‘Platonic ideal’ – it may not be fully realisable – but we should strive towards it and use it evaluate the real.

Thus economics becomes the measure of man, not man the measure of economics.

Of course there are those who do not worship the market. These anti-liberals include socialists and conservatives. This may seem a surprising alliance and we often forget that there used to be a very different kind of conservative (small c) philosophy – one that valued King, country, religion, the local and the small. But this kind of conservatism now has nothing to do with the UK’s Conservative party. The Conservative party is now the leading ‘liberal’ party and it is no longer in the business of ‘conserving’ anything at all – except perhaps the interests of the rich and the powerful.

The anti-liberal thinks of the market not as a space but as a force:

  • The financial market is a malevolent force selling fraudulent products or gambling with our savings.
  • The housing market is crazy bubble where our own greed drives up prices to the benefit only of those who can escape it at the right point.
  • Markets drive the growth of monopolies, big business and the industrialisation of almost everything – markets even seem to kill the possibility of markets.

Of course socialists and conservatives also will accept the need for markets. Only the most zealous want to control food production, everyday shopping or enterprise. But the market is, for them, not an ideal space, but a demon, to be controlled and harnessed. At best its energy provides other resources and so it can be taxed to support the things the anti-liberal really values.

Until the 1990s the battle between the liberal and the anti-liberal was largely fought on the margin of the sphere of public services. Markets were for private goods and services; when it came to public services it was the state that was in control. There was a disagreement about what should be nationalised and what should be left free – but no disagreement that nationalisation meant – ‘outside the market’.

But this has now changed radically. Today it is quite common to hear people talk about markets for public services: the social care market, the healthcare market, the market for social housing. However these markets rarely have any of the qualities that the liberal associates with markets. It is not people, making free decisions, who buy these services – it is commissioners or governments. Here the word ‘market’ takes on a third meaning – roughly – ‘the stuff we spend public money on’.

So we are left with three entirely different and contradictory meanings for the term market:

  1. A space within which free, contractual and efficient exchanges can take place – the idealised market
  2. A force which can redistribute, steal or exploit resources and power – the demonised market
  3. An array of objects, services or products, perhaps purchased by the state or its agent – the phoney market

Of course when a word is so used and abused it is easy to lose patience and to simply abandon the whole concept. What is the value of the word ‘market’ when it means three contradictory things?

However I would like to make the case for a fourth use of the term – I would like to make the case for the market as an ‘agora’ – a free, protected and public space where a whole range of human activities can be carried out. The agora is not primarily economic – it is simply the space the community needs to collaborate and to work together. Business can be done there, but it is not defined by business.

I was very struck a few years ago to find, on a visit to Athens, that the ancient agora had been marked off by sacred stones. The purpose of these stones was to protect the agora from the private – from the invasion of the sacred space by people’s desire to extend their houses or gardens. It was sacrilege to privatise the market – the market was public property – divinely blessed.

What is more the agora was not just for shopping. The agora was for every kind of public business. The school master taught his students; philosophers sat on the stoa, a shaded area on the edge of the agora (hence stoics); government officers worked and ran meetings; and temples operated. The agora is messy and human – lots of stuff goes on – out in the public square. The agora even housed the building for weights and measures – the system for checking on cheats – for ‘regulating the market’.

Interestingly the agora excluded the Acropolis (the centre of religious life), the assembly which met on the Pnyx (the centre of political power) and the Areopagus (the centre of justice). Each of these institutions was based on one of the hills looking down over the agora from on high.

Perhaps it is time to leave the idealised, demonised and phoney markets behind us. Perhaps it is time to work out how to protect and cherish real markets – the agora – those essential public arenas in which we do stuff together.

Today these place will not just be physical – they will also be virtual – but they are essential. Without the agora we cannot be fully human.

Keeping Money Fresh – The Ideas of Malcolm Henry

Nothing that could be got from the heart of the earth could have been put to better purposes than the silver the king’s miners got for him. There were people in the country who, when it came into their hands, degraded it by locking it up in a chest, and then it grew diseased and was called mammon, and bred all sorts of quarrels; but when first it left the king’s hands it never made any but friends, and the air of the world kept it clean. 

From the Princess and the Goblin by George MacDonald

I’ve just watched a brilliant film my Malcolm Henry on the creation of money and the case it creates for a basic (or citizen’s) income.

http://youtu.be/gue9Q6wgdjQ

I won’t summarise the argument he makes, other than to say that – like MacDonald – he distinguishes two kinds of money (a) the money in circulation in the productive economy which the air of the world keeps clean and (b) the money in savings or gambling which has become diseased. Henry then argues that we are locked into a toxic relationship with the latter; while a system of taxation for savings plus citizen’s income restores a healthy pattern of productive recirculation.

I do not know exactly whether this is the perfect solution to our problems; but it sounds compelling and intriguing to me. I will think more on this – and buy his book.

But it does strike me that in order to shift our thinking about social justice and to achieve a saner and fairer world we will need a new kind of economics. Henry seems to be doing exactly the right thing – offering us a way of picturing our situation which is true to our real challenges:

We are wealthy, but income is distributed unfairly; we are productive, but locked in debt.

It is worth remembering that the welfare state was partly the child of Beveridge – who designed some of its basic institutions – but it was also partly the child of Keynes – whose economic theory provided government with the confidence to act as the agent of growth. Today, while Beveridge and Keynes both have much to teach us, we re also suffering from the some of the limitations implicit in their models. In particular the Keynes-Beveridge welfare state tried to offer security of income through security of employment – but this model looks out-dated today.

Security is necessary, but the security we need must come from each other and not be linked to working as an ’employee’. Eventually we will find that freedom and security can be reconciled in a new economic framework.

So a big thank you to Malcolm Henry – a great innovator in the new economics we need!

The Cancer of English Anti-Semitism

The 200 year-old arrangement – by which the Jews rendered money-lending services in return for protection and freedom of travel around the kingdom – was torn to shreds. The first sign was the sudden enforcement of the wearing of the badge of difference, the ‘tabula’. Now they were marked people. Then, the towns in which they were allowed to reside, were limited; whole communities now moved elsewhere. When Edward got back from the crusade it got worse. A state on the Jews in 1275 forbade money-lending, the essential activity, whatever its odium and perils, that supported what would be otherwise indigent communities.

Simon Schama, The Story of the Jews, p. 323

This pattern keeps repeating itself – destroy a people by attacking their rights, their presence and their economic contribution. I explore this issue in more detail in The Unmaking of Man.

The same pattern can be seen in the lives of disabled people trapped in institutions. The same pattern was repeated in Hitler’s Germany.

As Arendt observes the final cruel blow is to rob people of any role – as either exploited or exploiter:

Persecution of powerless or power-losing groups may not be a very pleasant spectacle, but it does not spring from human meanness alone. What makes men obey or tolerate real power and, on the other hand, hate people who have wealth without power, is the rational instinct that power has a certain function and is of some general use. Even exploitation and oppression still make society work and establish some kind of order. Only wealth without power or aloofness without a policy are felt to be parasitical, useless, revolting, because such conditions cut all the threads which tie men together. Wealth which does not exploit lacks even the relationship which exists between exploiter and exploited; aloofness without policy does not even imply the minimum concern of the oppressor for the oppressed.

Hannah Arendt, The Origins of Totalitarianism, p. 5

We must protect each other’s rights – with no excuses, no exceptions. But we must also guard against segregation and special badges that mark some people off as ‘special’. And we must never allow anyone to be treated as if they have nothing to offer – we need everyone – everyone has something to offer.

Otherwise, horror awaits.

1275 was a particular low point for England. English anti-Semitism unleashed the trend towards the ghetto and the pogrom, a trend which spread across Europe in the centuries that followed. In turn this led to modern anti-Semitism and the death camps. We may warm our consciences by the fact that the worst excesses were not ours – but many of them started in England and spread outwards like cancer.

The Inquisition – A Truly Modern Institution

The Inquisition was its own dominion of judgement, a state within a state, answerable to no one other than the Pope, the Crown and its own array of imposing bureaucratic regulations. As well as the inquisitors and those who staffed the tribunals of interrogation, a huge array of ‘familiars’, who were responsible for handling the bureaucratic work that oiled the machinery of terror. So many carefully considered regulations surrounded the application of torture, for example, that those who oversaw it constituted the first systematically organised bureaucracy of pain. The Inquisition even had its own miniature armies of protection and intimidation. The Inquisitor General Tomas de Torquemada never travelled anywhere without his own army of horsemen, especially after an inquisitor had been murdered in Saragossa Cathedral by a desperate group of ‘conversos’. Notoriously, virtually unlimited powers of torture were granted to extract ‘full’ confessions from those suspected of relapsing or, worse, those who were impenitent, active Judaisers. Thus the snooping state made its way into history: servants, family members, neighbours frightened and cajoled into becoming informers and spies. Even in monasteries and convents, monks and nuns would report on brothers and sisters whom they suspected of looking down when the Host was raised, stumbling over the Paternoster or Ave Maria and saying who knew what in the solitude of their cells. Yirimiyahu Yovel is right to see in this the germ of a modern malevolent modern institution rather than a medieval relic. It was indeed something fresh in its inhumanity.

Simon Schama, The Story of the Jews, p. 405

Support for Yovel and Schama is found in Arendt’s The Origins of Totalitarianism and in Foucault’s account of the prison. The Inquisition may have been one of the first modern institutions, but the hospital, the prison, the asylum, concentration camps and extermination centres were to quickly follow. The religious and the anti-religious joined together in a barbaric assault on humanity.

Modern doesn’t mean better.

And as Arendt and Foucault noticed, the sign of a truly modern institution is that it refuses to accept merely outward signs of conformity. It is not good enough that we seem to be fitting in – we must really fit in – and if not we must be remade or destroyed.

What is the connection between this modern desire to invade the inner private sphere of the mind and spirit and the growing conviction that no such sphere exists? It is almost as if the declining faith in metaphysics (not just Christian, but any deeper metaphysics) leaves us exposed to the most extreme outrages by those who seek control.

Materialism leaves us naked, ready to be herded hither and thither.

Perhaps the Inquisition was the first sign of our declining faith – no longer do we trust in the Holy Spirit and the judgement of Christ – we presume to act on their behalf.

What is Neoliberalism Good For?

It would be fair to say that the world of politics seems to be dominated by an ideology that we in the UK call liberalism and which argues for the primacy of freedom and the pursuit of individual happiness. This is an influential theory; but one that is full of paradoxes and perversities.

The most obvious is that we can’t even agree what to call it.

On the other side of the Atlantic liberalism means, roughly, what we would call Left-wing.

On this side of the Atlantic we use the term either to describe the thoughts of the centrist political party we now call the Liberal Democrats, or the entirely different theoretical tradition championed by sections of the Conservative Party – which is also sometimes called Thatcherism.

How confusing!

Many on the Left now call it neoliberalism – although I’ve never been able to distinguish ‘new liberalism’ from ‘old liberalism’. Perhaps neoliberalism is just code for the version of completely batty extreme Right-wing liberalism that nobody could believe in.

Usually, if someone is talking about neoliberalism they refer to Robert Nozick’s Anarchy, State and Utopia. But when I studied this very interesting book I got the sense that the author himself didn’t really believe his own theory. The whole thing is an elegant reductio ad absurdam of his own position. It seemed to be designed half in jest; moreover a few years later he outlined a very different theory in The Examined Life.

Even those radical Republicans who use liberal arguments are only half serious. Take for instance the Republican satirist, P J O’Rourke, who summarises his position thus:

The other secret to balancing the budget is to remember that all tax revenue is the result of holding a gun to somebody’s head. Not paying taxes is against the law. If you don’t pay your taxes, you’ll be fined. If you don’t pay the fine you’ll be jailed. If you try to escape from jail, you’ll be shot. Thus, I – in my role as citizen and voter – am going to shoot you – in your role as taxpayer and ripe suck – if you do not pay your share of the national tab. Therefore, every time the government spends money on anything, you have to ask yourself, “Would I kill my kindly, gray haired mother for this?” In the case of defence spending, the argument is simple: “Come on Ma, everybody’s in this together. If those Canadian hordes come down over the border, we’ll all be dead meat. Pony up.” In the case of helping cripples, orphans and blind people, the argument is almost as persuasive: “Mother, I know you don’t know these people from Adam, but we’ve got five thousand years of Judeo-Christian-Muslim-Buddhist-Hindu-Confucian-animist-jungle-God morality going here. Fork over the dough.” But day care doesn’t fly: ”You’re paying the next-door neighbour’s baby-sitter, or its curtains for you, Mom.” 

P J O’Rourke, Parliament of Whores, p.100

In other words, neoliberalism is secondary to “Judeo-Christian-Muslim-Buddhist-Hindu-Confucian-animist-jungle-God morality” which is another way of saying that there are much more important and truthful ideas than liberalism.

The point is that even many of the extreme advocates of neoliberalism don’t really pretend to take their own theory that seriously. Nobody but a lunatic would think that just pursuing your own selfish goals is a sensible way to think about your own purpose or about the well-being of society.

So if neoliberals don’t believe in neoliberalism, who does?

I think the paradoxical answer is that only the opponents of neoliberalism really believe in neoliberalism – but they believe in it negatively. It serves the same rhetorical purpose on the Left as a term like communist does on the Right. It is also socially helpful; if you are of the Left then you are united by your opposition to neoliberalism. It is not so much a straw man as a straw enemy.

Now I need to be careful here.

I am not suggesting that there are not plenty of greedy or self-interested people in the world. There are plenty. There are also corporate bodies that behave in ways that are motivated by avarice and which are profoundly damaging to our society.

Greed is real and greed is not good. Corruption is very real.

And I know that there are a few people who believe in the ravings of Ayn Rand or the musings of Robert Nozick. Although I don’t think these people are the ones we really have to worry about.

In my view neoliberalism has never been a coherent or attractive theory. What it is, is a bag of rhetorical devices that can be deployed to protect the interests of powerful elites. It offers rhetorical tropes – phrases and concepts – which if unexamined – lend depth to the self-serving policies of the powerful. But these devices not really rooted in liberalism – instead they take genuine moral concepts but twist them into narrow concepts in order serve their own selfish ends:

  • Our desire for freedom is whittled down to consumerism
  • Citizenship loses its meaning and is reduced to vain individualism
  • Virtue is emptied of real content and just becomes responsibility – looking after your own
  • Community becomes a market, and a particularly uninteresting kind of market
  • Government becomes the state, not something we do together, just an external device to keep us all in order

The rhetorical device works because it is starts with in something valuable. But the valuable concepts are not the concepts of liberalism. Something good is being suggested; yet by the time we find out what the liberal means by freedom, citizenship or virtue we are left with something toxic.

In practice the rhetoric of liberalism is useful to those who use it because it encourages people to leave well alone:

  • Why would you want to rule yourselves? Leave that to us.
  • Why would you want a community or public goods? Private goods are good enough for you.
  • Don’t worry about freedom. Why not go shopping instead?
  • Don’t worry about virtue. Just pay your taxes; we’ll do the rest.

Don’t worry leave it to us, leave it to the market, leave it to our contractors – we know just the man for the job.

Neoliberalism is not neutral – it turns out there are a whole class of people who get the job of running the minimal state, the markets and the corporations.

Perhaps I should join in the attack on neoliberalism. I have certainly had lots of good people telling me that I am foolish for not understanding its power or the threat that it presents. Perhaps it is naive of me to think that I shouldn’t have to attack a stupid theory – one in which no one but a fool would believe.

But I can’t believe attacking straw enemies is good for us. It seems to me that we run the risk of giving life to a monster – wasting our energy fighting something which does not really exist. And gross enemies sometimes get in the way of really examining what we are fighting for.

Meanwhile we fail to notice the way in which power and control is centralised in the hands of political and commercial elites – not because they believe in neoliberalism – but because they are greedy and arrogant – and because we have let them get away with it.

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