Tuesday, 4 July 2017

States, corporations and people

I have a simple view of the world as divided into three great groups of actors: states, corporations and people. The balance between the three fluctuates in the long term and the short term. Neoliberalism – the doctrine that state power is too pervasive and the state needs to be “shrunk” as far as possible – arose from the experience in the mid twentieth century of the rampaging Nazi and Soviet states and the violence and bloodshed caused within and around them. The aim of the prophets of neoliberalism – Hayek, Friedman and others – was to prevent states from ever being able to do such things again. The key thrust in the process was to reduce the regulatory capacity of the state, thereby increasing the freedom of markets. Their assumption was that increasing the power of markets would enable ordinary people, however they are conceived – citizens, consumers, human beings – to live more free lives. Neoliberalism came to the fore in the developing world in the 1970s and 1980s as the great creations of the Bretton Woods settlement – the IMF and the World Bank – began to insist on its principles as conditions of their loans. It came to the fore in the developed world during the 1980s with Thatcher in the UK and Reagan in the USA.

At the same time as the spread of neoliberal practices in the developed world, globalisation began to bite. The increasing connectedness of everything everywhere created conditions in which corporations and financial elites could become footloose and hence beyond all but the most rudimentary state control. At the same time the financial elites have worked to capture the people in control of many state apparatuses to ensure that their interests are always given priority. This shift in the balance of power means that citizens are as far as ever from taking control of their own destiny. Given these circumstances, perhaps the old definitions do not apply in the same way as they used to. It used to be the case that state control of productive industry was (for some) self evidently less efficient and effective than private control. Given that private control is so far beyond the capacity of governments or consumers to regulate, it becomes more tenable, perhaps, to work back to state control of monopolies, like water supply, and near monopolies, like railways.

We have seen clearly how badly state control can go wrong, and we should not forget the lessons of history. We now see clearly how badly commercial control can go wrong, and how far commercial interests have subverted state regulation, from taxation to the health and safety of the population. Perhaps it is time to work towards a new settlement, involving any combination of state action, citizen power, and other forms of organisation, such as the mutualisation of therailways suggested by David Boyle. The old opposition of markets and Marxists is no longer sufficient for the new world order, so a new way of thinking about the relations between states, markets and people must emerge. (Perhaps that is what some people mean by radical centralism – I have no idea.)

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