State capitalism

The proposal that dog-owners should be forced to buy insurance against their mutt attacking someone encapsulates pretty much all that is most wrong with New Labour. There’s the over-reaction to media scare stories; the use of the law to “send a message”; the further empowering of the police to bully law-abiding people; and the inability to see that the people most likely to own truly dangerous dogs will regard this law as just another one to ignore.
There is, though, another feature of this crack-brained idea. The enforced transfer of cash from people of modest incomes to insurance companies represents another way whereby the state is used for the enrichment of capitalists.
This continues a trend which has been pronounced under New Labour. We can put it alongside the private finance initiative; the spread of management consultants; inflated prices of weapons procurement; state support for arms dealers; bank bail-outs; under-priced privatizations; and, indeed, government borrowing generally.
This is awkward not just for the statist left, but for vulgar libertarians. The idea that business would thrive if only the state shrank is mistaken; indeed, it could be that capitalism would have collapsed entirely without state help.
Quite simply, big government is very often the friend of capitalism.

Comments

[Mark Wadsworth]

I think it's fairer to refer to this as 'corporatism' to distinguish it from proper small government free market 'capitalism'.

Interestingly, there is common ground here, both the hard lefties and the libertarian right oppose e.g. the bank bailouts (or export subsidies, whatever) for, frankly, broadly similar reasons.

[Gerard O'Neill]

I don't think vulgar - or even mildly ribald - libertarians will have a problem with this. A smaller state would almost certainly mean a smaller economy, and therefore a smaller pie for capitalists to share.

Which is why I often think it's a pity the greenies and climate alarmists went down the statist route: if they had adopted a more robust laissez faire/no bailouts approach to the business of adjusting to climate change they might have had more success (a smaller, more needs based economy with lower emissions) than they have had to date.

Or ever will, come to think of it.

[McGazz]

"if they had adopted a more robust laissez faire/no bailouts approach to the business of adjusting to climate change they might have had more success (a smaller, more needs based economy with lower emissions)"

Ignoring the Greens' commitment to social justice, which is incompatible with laissez faire - would relaxing a lot of the regulations on business just lead to more different types of pollution (and possibly nastier types)? The smaller economy you're predicting might lead to less CO2 output, but at the cost of putting up with arsenic in the air and sewage in your drinking water.

[Innocent Abroad]

A smaller economy means one of two things:

either a smaller population, or

a lower standard of living.

Whilst the "deep green" in me thinks it supports the latter, the rest of me doesn't like it one bit, not least because I am one of the great (and more or less unwashed) majority that doesn't have the economic resources to ride out such a storm.

As far as the relationship between business and capitalism is concerned, I think we can learn all we need to know from the fact that the Institute of Directors was set up prtecisely because the CBI wasn't up for demanding the abolition of every last government measure that at least tries to deliver social justice.

[Tristan]

The term capitalism is so disputed its next to useless.
Some of us can garner intent from context, but others are so enraged by the term (or criticism of it) that they cannot listen to anything actually said.

Personally I tend towards the pre-Misean use of the term and view the term's rehabilitation to mean free market propertarianism to be a retrograde step - its enabled the statist right to claim that anything that isn't the statist left to be 'free market' and therefore good.

Corporatism is merely the latest form of capitalism.

[Tristan]

Several fallacies in the comments here:

First - a smaller state does not imply a smaller economy. The state impedes the economy by seeking to direct the proceeds into the power elite's hands.
A smaller state would probably lead to smaller corporations, but it would also remove the barriers which prevent us ordinary people from becoming entrepreneurs and being able to put our various talents to the best uses we see fit (and weakening dependence upon selling our labour).

This leads directly to the second point - laissez-faire is not necessarily opposed to social justice - true laissez-faire (rather than what is claimed as such) does not mean giving corporations power over workers (as vulgar libertarians and statists like to think) but freeing people from the constraints which enable that.

Thirdly - economic progress does not imply environmental degredation.
If it weren't for the state supported the oil and motor industries we wouldn't have the massive use of the car. The whole development of industry has been distorted by state action to favour big business - its thanks to state subsidy of business and roads that we have the motor and oil industries polluting to the extent they do.
The massive, polluting manufacturing industries are only sustainable through a myriad of state subsidies ranging from subsidised transport to barriers put in place to prevent competing methods and products.

[botogol]

I don't think it's right to say that these initiatives support capitalism - they support big businesses, which is not the same thing at all.

State-enforced insurance is hardly capitalist. It's socialist.

(I DO quite like the idea of compulsory chips, though, makes it easy to see who the owner of a dog is and - if the dog isn't chipped - to simply destroy it)

[Neil]

Come now. Anyone even *remotely* Libertarian recognises that there's a massive difference between the crony corporatism currently practiced and actual free market capitalism. The fact that the state arranges the transfer of funds from private individuals to favoured corporations has been one of the biggest complaints by Libertarians for decades. Even Ayn Frickin' Rand went on about it for a few hundred pages.

Maybe the insurance business would suffer if the government didn't force people to patronise them. But you know what? People would spend that money on other things! The total output of the economy wouldn't shrink; the *distribution* of capital would.

If you're going to call Libertarians vulgar, you could at least try to avoid being so yourself, by looking beyond the first order consequences of a change. Sheesh.

[Tim Almond]

"The idea that business would thrive if only the state shrank is mistaken; indeed, it could be that capitalism would have collapsed entirely without state help. "

But libertarians aren't interested in "business", except when they help people. We don't care if particular sorts of businesses disappear.

And business will always survive. Get rid of the businesses we don't need and we'll just buy more Ferraris.

[chris c]

Botogol:

"State-enforced insurance is hardly capitalist. It's socialist."

No, state provided insurance is socialist. Where the state would hold a monopoly on the provision of insurance services.

Asking your mates in the insurance industry, who've been lobbying you for ages anyway, to provide a new scheme designed to turn the screws a little bit more is a capitalist-serving state.

[Tigerphilosopher]

Ages ago John Kenneth Galbraith wrote that 'Capitalism' was a shunned term and that 'Free Market' had come about to replace it. Nowadays the term 'capitalist' is used freely alongside free market to mean laissez-faire , and I have even heard 'capitalism' be used interchangeably with 'democracy'.

I am almost offended. The concept of the 'big-government' as a friend of capitalism continues to strike up a vision of a man in a canoe paddling TOWARDS a waterfall.

[pablopatito]

You could add the Child Trust Fund to the list. I think ours is currently worth less than it was when we first got it, so the only winner is the fund manager and their 1% pa fee.

[RH]

Very forthright piece, yours.

[Paul Sagar]

Chris,

I think you've been uncharacteristically short sighted here.

Look out for a piece at my place early tomorrow entitled "Dillow, Dogs and Death"...

[Neil]

The best interests of certain favoured capitalists should not be confused with the best interests of capitalism.

It is in the best interests of Manchester United that they win every game they play, but if the Football Association were to change the rules to force all the other clubs to subsidise Wayne Rooney's salary, it would be (a) monstrously unjust and (b) immensely damaging to the game in the long run.