Aditya Chakrabortty describes well the huge size of the corporate welfare state. What he leaves out, however, are the colossal economic and political forces that give us such crony capitalism.
Of course, there's nothing new about state support for business: remember the East India Company? But it could be that there is especial need for it now. In a time of slower technical progress (pdf) and a dearth of monetizable investment opportunities, capitalism cannot generate sufficient profits under its own steam. Instead, it needs the state to create them by outsourcing, privatizations, bailouts and tax credits wage subsidies.
What's more, there are huge pressures on politicians to give business what it wants:
- As Kalecki pointed out, in a capitalist economy, growth and jobs depend upon business confidence, which governments must maintain.
- Politicians want money; bosses want political power. And when one person wants what another has, guess what - there'll be a trade.
- Politicians believe that the private sector has managerial skill. It thus outsources functions on the grounds of "efficiency". However, such skill might be partly illusory. Belief in it might instead be just the latter day manifestation of what Adam Smith called the "disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition*."
- It would eliminate the need for wage subsidies partly because a decent citizens basic income would allow workers to reject exploitative jobs, and partly because wages would be topped up by a share of profits.
- The maintenance of full employment via jobs guarantees and sane macroeconomic policy would reduce capitalists' ability to demand handouts and tax breaks, because "confidence" would no longer matter quite so much.
- Greater pre-tax egalitarianism - as workers' control enables them to restrain bosses pay - would reduce politicians' tendency to defer to the rich. And it would also reduce their incentive to give companies favours in exchange for high-paying jobs when they leave office.
Now, I say this tentatively as I'm deliberately vague about the precise nature of market socialism, vaguer still about how to achieve it, and because I'm not at all sure it would eliminate all the many pressures towards cronyism. I'm merely raising a question: could it be that, if you are serious about wanting a genuinely free market economy, then you must advocate not capitalism but socialism?
* Theory of Moral Sentiments I.III.28