Thursday, March 16, 2006

How to counter Market Leninism?

Especially in the Anglo-Saxon world there is a fairly vibrant school of thought that seriously believes that we have found the Ultimate Solution for the human condition, namely, supply and demand. The absolutely free market economy is for them the highest form of civilization: once this pinnacle is somehow achieved, all problems have been solved and all politics can end. This idea is then defended in the circular fashion that is very familiar for any person that has encountered Marxism-Leninism – there is a certain chilling disregard for the messy, contradictory polyphony of humanity, all exceptions from perfection are explained as deviations from the Absolute Model that of course does not exist, that never can exist. Humanity as a Theory of Exchange.

To counter this is not an intellectual problem at all. Exactly like Marxist-Leninists that were fairly annoying in their blind faith that was formulated to withstand all empirical observations and simple logic, the extreme libertarian-conservatives are not a serious philosophical challenge as they strictly speaking don’t really have a philosophy or only a very primitive, rudimentary one. The problem with Communism was not the correctness of the absurd doctrine, as it so obviously wasn’t correct, but the existence of actual hostile Communist power structures. Primitive or not, they certainly were there and once threatened to take over the Western world. Their very simplicity and undeniable power guaranteed a certain level of support, no matter any intellectual defeats and ridicule. Power and faith are sadly always more influential than reason and logic.

The faith in the absolute freedom of market forces is of course politically very limited: in no Western country does a major political party advocate it. In all Western countries a clear majority of the intellectuals are actually actively hostile to it. Nevertheless the liberalization of capital and the rapidly increasing globalization are leading all Western societies towards this direction. Why is that, given the little faith we actually have in it? Well, the defenders of the welfare society have one very significant disadvantage: the welfare state was based on the social democratic compromise with the market economy. It was the growth and dynamism generated by the markets that made the distribution of wealth and the building of safety nets and the guaranteeing the level playing field (by high quality public education and health care) so painfree. The very efficiency of capitalism ensured that we were also able to tend to its negative effects and were able fairly painlessly to control it.

In some ways we are then victims of our success. The market economy is indeed highly efficient, we grew very wealthy, we also grew fully integrated with market structures. Capital became the highest form of power – it generated very persuasive, very powerful organizational and mental structures. The desperate historical struggles were forgotten, the memory of the dark side of capitalism gradually faded in our comfortable and secure welfare conditions, finally even the Soviet Union collapsed and there were not very coherent and powerful counter forces remaining. The case for further liberalization was actually very persuasive: in the past higher growth had meant lessened social conflicts and the strengthening of safety nets – a minority supported the reforms ideologically, the majority pragmatically, not seeing the freedom of market as an absolute value in itself. Moreover, it has been done in small, logical steps, each leading to new ones.

So, here are we are then: successfully defeating market leninism intellectually and philosophically – but actually, historically, our societies are rapidly progressing towards more and more destructive forms of pure capitalism that are fundamentally hostile to the social liberal structures of civil society, democracy and equality. The sheer power and influence of the market structures will guarantee strong and shrill voices in favour of the change, the majority of the population is admittedly hostile but feeling powerless as no political choices seem to matter. The ideological and philosophical opposition is paralyzed: those that regonize the dependency of the welfare structures on a dynamic market economy are confused in the face of this recent and seemingly irreversible change, the radical minority is mostly living in a painless dream world or hoping for destruction and collapse.

The question then fundamentally remains unanswered: we can easily defeat intellectually and philosophically this blind faith in market forces many times over, but how do we do it politically when the enemy is not any coherent ideology or movement but the structure of historical change itself? It is easily predictable that unchecked this change will ultimately lead to its own undoing, but to wait for that is not a coherent political strategy, not for people believing in democracy and rational political action. Surrendering in the face of this challenge, is in effect surrendering any belief in rational political control of social change. A plan of effective, practical action is urgently needed: the old strategies and tools are not working, the old rhetorics are irrelevant.


wallace said...

I enjoyed your essay. "The messy polyphony of humanity"....How better to say it? But why end on the positive note?

You write, "Surrending in the face of this challenge, is in effect surrendering any belief in rational political control of social change. A plan of effective, practical action is urgently needed: the old strategies and tools are not working, the old rhetorics are irrelevant. "

I guess I really don't believe in the political process that much. And not only that, the criticisms that the Marxist-Leninist system yielded regarding the system are STILL valid. And Communism did not prove to be a great deal of fun, as you note.

stockholm slender said...

Well, that is a good point. I think there is a sense of a cul-de-sac as regards the progressive movements in the West. The mainstream politics don't offer real choices and the forces outside mainstream are either quite lightweight or sinister. But I am a progressive: I think the human condition is tragic and that we should use reason and political action to alleviate the suffering and waste. Therefore I see a need for a revitalized moderate and radical democratic left.

Gard E Abrahamsen said...

Basically, all major changes can only truly happen when embraced by the masses. You can easily reject globalization by buying local groceries and thus be an example for others to follow. Given enough momentum, such a "buy locally"-movement could be a good counter weight to the globalization paradigm and possibly even influence trade routes.

The question is, what would this do to you as a human. Are you more likely to buy a Chinese CD to broaden your cultural horizon, or do you avoid all Hollywood-made movies in order to prevent the globalization that Hollywood represents.

Speaking of which, I got an e-mail that the Bollywood-movies I ordered have been put in the mail. Can't wait! :)

stockholm slender said...

Bollywood will probably eventually inherit the world, along with the Chinese version...

Yes, grassroot action is very meaningful. I have been personally contemplating a change of lifestyle recently, and I know people who successfully live on the margins of this harsh and cold civilization. Still, I think that the mainstream will stay controlled by blind structural change which in the the current context is very likely to be destructive and dehumanizing. The outlook could be more positive.

helsinkian said...

These issues are very complicated. When we're discussing free markets vs. monopolies, I'm not sure the biggest businesses of them all would prefer free markets. Market regulations are there to insure that no foul play occurs. The proponents of absolutely free markets want no regulations whatsoever. But the belief in the invisible hand is just a belief and your point was that the issue is not so much that of beliefs but of power.´

But not many people are interested in becoming politically active. Political parties can also be quite undemocratic in their inner workings, even if the existence of many options guarantees the freedom of choice in the long run.

I think that a global perspective on economics also shows that the need for mass movements is not so large in say, Western Europe. Someone like Lula in Brazil is talking to people in need. Western Europeans are often heavily concerned with restricting the access of foreigners to their labor markets, which concerns are listened to in liberal, conservative and socialist parties. In places like Finland, it's the foreigners here who come into industrial jobs who might have a larger self-interest in politics than the natives. But recent arrivals seldom have time with politics, they're doing menial jobs to get by and they have a hard time of relating to these political parties who are more often than not restricting immigration regardless of political philosophy.

stockholm slender said...

Yes, certainly these issues are complicated. I am in no way a socialist, but nevertheless it is selfevident for me that markets make continuously mistakes, are often irrational and wasteful and that capitalism without strong regulation and significant redistribution of wealth is hostile to democracy and free civil society. The current disregard of these simple truths is quite worrying indeed.

Mikko Sandt said...

But actually, historically, our societies are rapidly progressing towards more and more destructive forms of pure capitalism that are fundamentally hostile to the social liberal structures of civil society, democracy and equality

These steps toward further liberalisations are being taken because they have been effective somewhere in the world. The opposite - a mix of social democracy and relatively free markets have created a bunch of problems which cannot be solved without introducing liberalisations. Considering the way Old Europe lies today there really is not a rational reason to oppose freer, US, Hong Kong or even New Zealand type, markets.

The market has worked as a cure for diseases created by welfare policies and economical planning. Objections to liberalisations have been largely moralistic and are therefore invalid.

The fact that there has never been a system of pure laissez-faire capitalism proves nothing. Pretty much every step that has been taken toward laissez-faire has been effective.

Do you have anything else, other than rhetoric, against the market?

stockholm slender said...

"Objections to liberalisations have been largely moralistic and are therefore invalid."

I think you quite prove my point: markets are amoral and can't even exist without structures that limit them. It is against the interests of free markets to try to make them absolutely free. Only a certain Nietzschean type of libertarianism can have credible counter arguments to this, but that sort of tradition does not think, can not think that the free market would be some absolute good in itself. If you are an economic libertarian, you will always be in an intellectual cul-de-sac. Well, at least circularity will excercise your scholastic skills...

Mikko Sandt said...

"I think you quite prove my point: markets are amoral and can't even exist without structures that limit them."

But here it seems that you try to see the free market system as some separate entity. However, in the end it's only about people making mutual agreements at wherever the market is. There's a moral base for all this - that all men should be free, which includes that they should be free to buy and sell however they see fit and that they're able to do that without restrictions, guidance or control. The very moral idea of free markets lies in liberalism which, in the end, is just a set of subjective moral values.

I try to avoid discussing about values since they're always subjective. I see both left-wing pinkos and religious extremists representing two sides of the same coin. The real discussion should be about pragmatism and results. Amoral markets have been effective, have created more equality than any other system, have liften more people out of poverty than any other system and continue to exist for the sole purpose of serving the consumer (and globalisation is a force that expands this set of consumers). The results have been so effective that there's neither moral nor societal case against liberalism - on the contrary, the way things are today there's a strong case for further liberalisations from China's countryside to Germany.

stockholm slender said...

No, I really can't agree here though your point does touch on the central issue: the way free market connects (and has historically connected) with liberalism. In reality it now seems to be that it is capital which has in effect found the most beneficial structures to enable its expansion (the blind structural change that all history consists of), and not the other way round, but for me, as a liberal, the meaning of market is a pragmatic question. Power concentrations, unequality of power is disastrous for liberty. When the free markets shattered the feodal elites and were in turn constrained by social democracy, I could see them as beneficial.

We need a certain mininum level of wealth to be free, and certainly the concept of private property and autonomy, but I do value liberty (which I see containing equality) over mere material production. The level of regulation and limitations to markets is a pragmatic question, but without this control they would, and will, endanger our liberty. There are many important areas of human activity where we absolutely should not tolerate market forces. Unfortunately these boundaries are now rapidly eroding.

wallace said...

I see value in talking about issues such as liberalized markets or monopolies from a broad historical and theortetical point of view. Unfortunately, I don't understand economics or history well enough to chime in. However, I can add my two bits from a very personal perspective.

I have always thought that it is impossible to think of the university amphitheatre or the the hospital with the MRIs and sonogram machines in a proper perspective without thinking of the Macdonalds restaurant in the foodcourt (I am Canadian). Put in a historical a book I read recently someone observed that if you look at Renaissance paintings, the person staring back at you is more often than not wearing silk carted back from Asia. All flourishing civilizations have traded vigorously to the disadvantage of the periphery civilization. The industrial revolution could not have occurred without the advanced scientific knowledge of the Chinese.

Having said all that, there is something kind of scary about greed. My son is going to have to be taught to share, but to put the whole banana in his mouth at the same time is instinct. The conclusion of this post is that I don't know what to think.

As an appendix. Stockholm, you criticize socialism. As someone not well-versed in topics that rage about such things, I thought gee isn't it interesting that no one in the last thirty years who hated capitalism for its exploitation held up communism for the joke that it had obviously become. We are not really geared to think in grand terms, are we.

stockholm slender said...

Well, actually I do see - currently - an important role to markets. Socialism would be suitable for a species more capable of rational control, but at the moment I would not trust such high power to any single organization. Markets do function, but they must be strictly controlled and barred from many important areas of human activity. Greed, aggression, shortsighted selfishness - you name it, we have been guilty of it. Especially as a collective. Absolutely free markets would free those distructive forces which will most certainly lead to the destruction of many valuable things, including the dynamic and innovative market economy...

Pekka Peitsi said...

On Liberty

It is a dazzling vision to ponder all those economic actions which have to happen before so simple product as an electric toothbrush has been producted and it is reached by a consumer. The dozens of subcontractors the world over have role in production and transportation. It is hard to imagine any other power than demand and supply which would make this action possible.

Three years ago new finnish goverment set a goal to "create" 100 000 new jobs during four years. One years ago, this goal seemed to be totally utopian, but now it has started to realize. This has sneaked up on among others the ministers of finnish goverment. This is simple example how difficult it is for goverment to control or even assess the development of near future.

We could imagine world, where small economy could make policy independent of outside world, but it would be unpragmatic and dishonest. It would be intelectually lazy to start to ponder how we should act in the ideal world, where we would not have the actual restictions of international competition. The restictions and possibilities of global competition are not just the structures of the language of elite (as marxists and existentialists could say). International trade is still Finland's instrument to success and wellfare.

So, it is an interesting and challenging question to try exactly determine, what should goverment be able to control. What would be the role of goverment in Finland?

It is axiomatic that the world has changed after the time of Adam Smith or John S. Mill and they can give us no pat answers. What would Adam Smith, who believed that invisible hand is divine providence, say about market legislation? The system of world trade has drastically changed in twenty years. How much it has changed after year 1776.

Many sociological theories represent that modern (open) society go toward more complicated form. I suppose that this will happen regardless of what is the degree of market-orientation which we will politically choose. To maintain sufficient competition in different markets we all the time have to develop legislation which for example forbid price agreements and try to prevent monopolies. There are not any way back to the society of simple men and simple rules.

The greatest faith of finnish social democrats is the blessing of taxes. Their confession is that high tax rate give us possibility to create good social services and high quality health care. Main question is whether it should be possible to get same or even better standard of social services and health care if the bigger fraction of people worked and standard amount of working hours in week were more. (Unfortunately, the aging of population makes problems more serious) Of course, proper political discussion about these kind of things is difficult, because of people's atavistic fear of future has became the most powerful political engine. It is easier to get political support with horror scenerios than with enlightened and open-minded arguments. If some politician dared represent the reform of job-market, he would become sometime politician.

The bounds of public and private sector and questions related to these bounds will always be under discussion. For example, international medical companies bring to market more and more expensive drugs and treatments. Should state always be ready to pay conpensation to patients?

UPM-Kymmene's way to treat its employees in factory of Voikkaa was rude. Anyway, a firm didn't shut down a factory if it would be profit-making in long term. I don't see that it would be generally possible that a company would manipulate the short-time share value and at same time would destroy prerequisites of long-term development. The shortsigned policy of company managers is possible in some special cases, but it can not be general principle. Stock value reflects the expectations of the development of company. The competence of business analysts really matters, because they assess how reasoble are the operations of managers.

What are the alternatives of market liberalism? We can find the dozens of alternatives: Be protectionistic and build trade barrier (as all big nations in the world), give mafia decide who product and who works (as in southern Italy), give Unions decide what is the wage rate (as in Finland), give goverment decide where is ethically best place to product (as in all EU countries). Anti-liberal actions could be reasonable and useful for some people or for some nations both in the short and in the long term. There is no any deterministic, predestinated development, which would lead to more liberal world trade and world economy. I am quite pessimistic about future development. It is too easy to any nation to start to pursue an anti-liberal policy for national interests regardless of ratified international free trade treaty.

stockholm slender said...

Very thoughtful points. Actually, I am quite indifferent towards the official SDP - they tend to be far too rigid and hostile to reform. Their defence of the welfare state is largely coincidental (they are more concerned about the structures than their effects). I was quite liking the Young Finns in the 90's who dared to propose structural reforms. However, I don't trust the wisdom and instincts of the free market fundamentalists. I'm afraid they will turn out to have been very short sighted. We can combine an open economy with welfare structures, indeed the open economy will require the welfare structures in order to prosper. Anti-liberal crusades might easily follow from these measures and this development - that is rather my point. We can only hope that the balance will be kept also in the future.

helsinkian said...

"I was quite liking the Young Finns in the 90's who dared to propose structural reforms."

Those Young Finns of the 1990s were the most libertarian force in Finnish politics since maybe the original Young Finns of the 1890s. Of course, there is Liberal Party today, but they are so small it's like they really weren't there.

stockholm slender said...

Well, I think they were quite cruelly misrepresented by the media and traditional parties: many of their proposals aimed to safeguard the functions of the welfare society by deep structural reform which was then resisted by the government and the left in a very conservative way. Also the Greens and especially Osmo Soininvaara have also made quite daring proposals. I don't like the heaviness and true inefficiency of the system and the WW1 tactics of the SDP. The tragedy then is that the playing field is left to those who simply would like to dismantle the welfare structures under the guise of "reform".