I was born in 1989, just as history, according to American political scientist Francis Fukuyama, ended. The Berlin Wall fell when I was six months old. Liberal democracy and free market capitalism were triumphant. And, according to Fukuyama and friends, that was that.
In Britain, the ideology of free market supremacy had swept the floor a decade earlier. In 1980, Margaret Thatcher defended her economic policies to a group of American journalists with the words “there really is no alternative.” For 35 years, in at least one sense, she has been absolutely right. The last time Britain had a government that was sceptical about the worship of free markets, not only was I not born, but my parents weren’t yet old enough to vote.
I’m voting Labour on Thursday because I’m ready for history to re-start. We’ve been governed by free market fundamentalists for 35 years. I think it’s high time we found out what it’s like to be governed by free market sceptics (or at least agnostics).
The evidence against the fundamentalists’ ideology is mounting. In the last few years, the critique of free market capitalism has come from all quarters – not just politicians and economists, but also moral philosophers, historians, environmentalists, and even public health specialists.
Here are a few of their best arguments.
1. In 2008, free market capitalism failed even on its own terms. The collapse of Lehman Brothers (and the subsequent implosion of pretty much the entirety of Western financial capitalism) was the defining crisis of our times. Not because the cost in human terms was that high – compare it to 9/11, or the 2004 Christmas tsunami that killed 230,000 people who happened to be unlucky enough to live next to the Indian Ocean, or what’s happening in Syria today, and it scarcely looks like a crisis at all. It was a defining moment because it exposed the intellectual bankruptcy of free market ideology. Free markets do not, it turns out, produce never-ending growth. If there are no controls, greed will eventually get the better of good judgment. Frankly it’s a testament to the inherent goodness of human nature that it took as long as it did for this to become apparent.
2. Austerity is based on a flawed logic. Call me an old-fashioned Keynesian, but I’ve never understood the logic of implementing a regime of public sector austerity during a recession. My economics is pretty basic but I know this much… Our economy is divided into a public and a private sector. The fundamental goal of all governments’ economic policies, at least since the War, has been to keep the whole economy growing. When the private sector contracts very rapidly, as it did in 2007-8, if you then on top of that decide to also shrink the public sector, where exactly do you expect the growth to come from? Austerity did (and was always going to) deepen the recession and slow the recovery.
Yes it’s true that New Labour should have seen the crash coming and built up a surplus in the good times so that we could better afford to raid the public coffers when the bad times came. But their hubristic stupidity pales into insignificance compared to the idiocy of austerity.
But it’s worse than that. Austerity’s consequences stretch far beyond a few percentage points off GDP. It’s infected our national consciousness. We’ve convinced ourselves we’re a poor country. We’re not a poor country. According to the latest stats from the IMF, our GDP per capita is $39,511, making us the 27th richest country in the world (out of 187). We weren’t too poor to bail out the banks to the tune of £500 billion in 2008. Yet today, after five years of austerity politics, most of us have simply swallowed whole the notion that we can’t afford to pay for good schools and hospitals, let alone cheap and efficient public transport, or, god forbid, the arts!
This is dangerous nonsense. Deficit or no deficit, if we’re not careful we’ll end up not with a country overrun by immigrants, but with a country that nobody in their right mind wants to live in.
3. Inequality matters. I’m generally a pretty mild-mannered chap. I don’t get enraged easily by politicians being duplicitous. But this video clip, despite the fact that it’s 25 years old and I’ve seen it many times before, makes my blood boil every time I watch it. Margaret Thatcher deliberately misconstrues poor old Simon Hughes’s argument. She equates a concern for inequality with a desire to make the poor poorer, so long as the gap between the rich and the poor is smaller.
This was pretty obviously nonsense at the time. But, 25 years later, we actually have the economic data to prove it. As Nobel Prize-winning economist Joseph Stiglitz showed in his 2012 book, The Price of Inequality, the facts run exactly counter to Thatcher. Far from being an unfortunate by-product of growth and a reasonable price to pay since all benefit from the pie getting bigger, inequality has actually reached a point where it is starting to choke off growth. Inequality today is costing almost all of us, not just those at the bottom of the pile.
And it’s not just our wallets that suffer. According to Richard Wilkinson and Kate Pickett’s 2009 book, The Spirit Level, so does our health and wellbeing. By comparing outcomes across a range of more and less equal countries, Wilkinson and Pickett convincingly demonstrate that there is a strong correlation between high inequality and higher crime rates, lower life expectancy, higher obesity, more violence, more teenage pregnancies and more mental illness. Basically, pick any social or health problem you like and there’s a pretty good chance that inequality is lingering somewhere in the background of the picture.
4. There are some things that shouldn’t be for sale. This is the argument of Harvard political philosopher Michael Sandel’s 2012 book, What Money Can’t Buy. He’s not anti-markets per se. He acknowledges that there are many areas where free market capitalism has won stunning advances that have benefited civilisation. But there are limits. Market thinking has encroached into some spheres where it is not only inappropriate but actively corrosive, undermining our efforts to create a moral, democratic society.
Perhaps tellingly, his biggest gripe is about the “skyboxification” of his beloved baseball. The segregation of sports fans along economic lines is part of a more general breakdown of our common life, or what Robert Putnam famously refers to as “social capital”. And without social capital, how can we function as an inclusive, democratic society?
But even if you don’t agree with Sandel’s critique of the moral degradation caused by the unstoppable spread of markets, most Britons have started to wake up to the limitations of the keystone Thatcherite policy: privatisation. In many areas, privatisation hasn’t delivered better service at a lower cost as was promised, but quite the opposite.
I remember studying the history of the post-war Attlee government at a time when New Labour was still in power. Back then, nationalisation felt almost otherworldly. We found it hard to believe that anyone had ever thought public ownership of large swathes of industry was a good idea. How times have changed. According to a 2013 YouGov poll, 68% of Britons now think that the energy sector should be re-nationalised, and 66% would do the same to the railways. As it happens, I only agree with the majority about the latter, but the fact that these numbers are so high is testament to the abject failure of privatisation to deliver the benefits for end-users we were promised by the free marketeers.
5. Free markets won’t save us from environmental catastrophe. As you can probably tell, my free market scepticism has been festering for a while. But the final nail in the coffin came when I recently read Naomi Klein’s 2014 book about climate change, This Changes Everything.
For a long time I’ve assumed that market solutions are integral to the battle to save our planet from civilisation-ending levels of warming. But now I’m not so sure. Klein makes a pretty compelling case that fossil fuels and free market capitalism have become so deeply intertwined that we won’t be able to wean ourselves off one without also going cold turkey on the other.
What’s more, she reviews the various market solutions that have already been tried – such as carbon trading schemes – and finds them to have been woefully ineffective. Similarly, she takes the self-appointed poster boy of enlightened capitalism, Richard Branson, to task for his failure to match deeds to words when it comes to climate action. The only hope for the future of our species, argues Klein, is a major revitalisation of the public sphere and strict regulation of market activity. I tend to agree.
I don’t have high hopes for a potential Labour government – especially a precarious minority Labour government, which looks like the best that can be hoped for. The 2008 high water mark of “yes we can” left-wing optimism has long since passed (and in any case never fully crossed the Atlantic). I don’t believe that Ed Miliband is the messiah sent to transform our economy and society for the better. But I do believe he at least shares my scepticism of the free market ideology that has dominated British government thinking for my entire life and most of his. And that’s more than I can say for any of the others.
So that’s why I’m voting Labour on Thursday. How will you vote?
The free market sceptic’s essential reading list
I have necessarily only scratched the surface of each of the arguments listed above. For those interested in exploring free market scepticism further, I can highly recommend the following foundational texts:
- The Spirit Level: Why Equality is Better for Everyone by Richard Wilkinson and Kate Pickett (2009)
- Ill Fares the Land by Tony Judt (2010)
- The Price of Inequality by Joseph Stiglitz (2012)
- What Money Can’t Buy: the Moral Limits of Markets by Michael Sandel (2012)
- This Changes Everything by Naomi Klein (2014)