Left & right, state & power

Charles Moore’s revelation - “the Left might actually be right” - raises a challenge for the left as well as the right.
Take the challenge for the right first. Moore suggests that the Left might have been right to regard free markets as a “set up” in which “the rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour.”
Now “set up” is a crass simplification: capitalists do not have such sophisticated conspiratorial powers. But the rough point holds. “Market forces” are a domain in which power relations play out - and a combination of globalization and technical change in recent years has further enhanced the power of capital over labour. One of the great intellectual failures of classical liberalism has been the inability to see this, a failure to see that power exists in markets, as well as the state.
But there’s a challenge to the left as well. Moore rightly cites two examples of how money and power collaborate against  the interest of ordinary people: the way in which the response to the credit crunch and euro debt crisis entailed a bail out for bankers but austerity and redundancy for workers. But the thing about these episodes is that the state has been a key player in effecting this redistribution towards the rich.
The free market right and the statist left are, then, guilty of similar errors. Just as the right fails to see that “free markets” can be a means whereby capitalists exercise power over workers, so the statist left fails to see that the state can also be such a means. As Moore concludes:

One must always pray that conservatism will be saved, as has so often been the case in the past, by the stupidity of the Left. The Left’s blind faith in the state makes its remedies worse than useless.

The question for the left, then, is: what can be done to prevent capitalists from capturing the state? It is not good enough merely to win elections on a social democratic platform; New Labour merely reminded us of has the limits of this strategy. Instead, some forms of radical institutional change are needed to disempower both capital and the state.
It would, of course, be absurdly pretentious and hubristic of me to pretend to have answers here - though worker ownership and control (of which there are many types) must, surely, be part of the answer.  

Comments

[Paul0Evans1]

If I can play devils advocate here, surely the state only behaves in this way when capitalists are better at ideological warfare (and having the resources to conduct it helps here)?

Is the problem really the state, or the way that the state is coerced? Are you saying that an instrument like this should be weakened because it could be abused?

[Tim Worstall]

"One of the great intellectual failures of classical liberalism has been the inability to see this, a failure to see that power exists in markets, as well as the state."

A slightly strange statement when the major texts of classical liberalism are swathed in references to how business/capitalists/etc will attempt to create such power and that one of the major tasks is to make sure they don't achieve it. From Smith with his "businessmen seldom gather together" onwards....

I'm tending towards a fundamentalist classical liberalsim myself, along the lines of "they're all bastards so no one should have any power".

[chris]

@ Tim - the major texts might be so littered, but the glibber free marketeers often forget this.
@ Paul - yes, capitalists are better at ideology. But this might be no accident; the status quo bias, among others, inevitably works in its favour.

[Charles Wheeler]

"The Left’s blind faith in the state makes its remedies worse than useless."

But he doesn't suggest an alternative to a 'market' that doesn't result in: "a global system that allows them to accumulate capital and pay the lowest possible price for labour.”

[Larry]

Let me know when the "the major texts of classical liberalism" achieve the same levels of influence as the living, breathing, endlessly campaigning for deregulation & tax-cuts variety.

[Tim Worstall]

Let me know when the "the major texts of classical liberalism" achieve the same levels of influence

OfGen, OffEnergy, OffWater and all the rest are products of that very classical liberalism. Markets as much as you can, regulation on top with natural monopolies. Sounds very classical liberal to me.

And in exactly the way that you say: yes, markets are good but they're bastards so don't leave them be when they really do have power.

[Cahal]

Classical liberals like Tim seem to have forgotten that much of classical liberalism revolved around land taxes and economic rent, one of the most pressing problems in the UK economy, and something modern CLs don't often mention.

Classical economists were also effectively Keynesians - Say actually abandoned his own 'law' and JSM agreed. Evidently there was some rewriting of history between 1829 and 1929 as Keynes himself was considered anti orthodoxy by then, when Say most likely would have agreed with him.

[Paul0Evans1]

@Cathal,

"Say"? Thought it was a typo first time. Who s/he?

[BT]

The reality is that every advanced nation has government acting in a similar role.

Ideologies left and right are simply invented to justify the political interests of different groups.

Workers' Unions will always tend to promote an ideology of socialism.

Businesses will always tend to promote an ideology of free markets.

But both groups just want the government to do what they want.

[Dipper]

a capitalist system that is based on fractional reserve banking is subject to periodic crises of confidence that can only be stemmed by the people, in the form of the state, standing behind the banks. So the people are entitled to ask a price from capitalism for that collective support.

And a capitalist system based on non-fractional reserve banking would have us all still in mud huts.

[Dipper]

... and the more I see of the current system, the more important the implicit state guarantee that underpins many activities and industries seems, Whether this is in lower interest rates available to an activity or people being prepared to invest their time in a particular profession. So the "free market" is anything but.

As an example, NT observed the bonds of Fannie Mae/Freddie Mac trading with an implicit government guarantee, so funding for house purchasing was regarded by the market as government backed. And in the event, the guarantee was real.

[anon]

Paul0Evans1, http://en.wikipedia.org/wiki/Jean-Baptiste_Say of http://en.wikipedia.org/wiki/Say%27s_Law fame.

and JSM = http://en.wikipedia.org/wiki/John_Stuart_Mill (or so I assume)

[David Ellis]

I suppose the only place classical liberalism has ever existed or been tried out on any scale is in the Football Leagues where competition and a level playing field is enshrined in the rules but even there we now have the monopoly of the big four. Classical liberalism is idealised bourgeois political economy and it is through the football circus that the joys of `free markets' are sold to the masses even as their wages as reduced by it.

As for the state it will exist as long as classes exist. Certainly one way of the working class when it takes power to signal its determination to disolve the state will be to introduce workforce election of management in all enterprises. No more shareholder or state appointed/imposed managers.

[David Ellis]

I mean you can see with football how they have the physical resources to make their ideas the ruling ideas. It is not done through ESP.

[ortega]

From my (very far away) days of marxist readings, I remember that any marxist political analysis needs first of all a 'revolutionary class' (that is what defines marxism: class as an explanation model is a very bourgeois idea). It seems that no one of the today leading marxist thinkers (Negri is well aware of that, wich is not the case with Zizek) happens to find one. So, meanwhile they do, it seems to me a lot of talk about nothing.

[chris]

@ ortega - dunno about "first of all", but a revolutionary class is central to Marxism.
One of the strengths of Marxism as a political theory is precisely that it recognizes that change needs someone with both the power and incentive to bring it about. It doesn't happen simply because men of goodwill get together to discern the right policies.
Yes, we don't have the revolutionary class Marx hoped. But the thing is, the agents of change are missing in other theories. Who has the incentive/power to bring about libertarian change, for example?

[Jim]

Two observations:

1. We forget that the 'rich' churn relatively often. Sure, globalization allows folks like Bill Gates to become much richer now, but he is an incredible outlier.

2. If governments and institutions generally protected and nurtured free markets, as opposed to picking winners and losers in social policies and crony capitalistic avenues, I believe the poor would be a great deal richer.

The problem is not income inequality; it is the power of the political system to trend income towards the rich. Example: TARP may have been the worst legislation ever. There is no doubt that Main St. generally works in a kind of free market, while large corporations and connected professions have avoided that world, largely through regulation, for decades.

As another example, how can the auditing profession view itself as anything but an expensive tax when the FASB board of directors would not have been able to tell if Lehman was bankrupt? The financial meltdown tells us a great deal about the lack of value our professional class now adds to the economy. It is not just the bankers, lawyers and economists anymore. We are as far from a free market as we can get, and the useless overhead is driving us over the cliff.

[Grace]

Great post.

[Luis Enrique]

"Moore rightly cites two examples of how money and power collaborate against the interest of ordinary people: the way in which the response to the credit crunch and euro debt crisis entailed a bail out for bankers but austerity and redundancy for workers. "

I'm not sure this demonstrates what you think it does. If your objective was to minimize unemployment (shorthand for the interests of ordinary people) wouldn't you have bailed out the banks? I'm sure the bailouts could have been conducted in a more banker-hostile fashion, but remember they did turn a profit for taxpayers (on current estimates). So I think you are interpreting behaviour consistent with caring about ordinary people as evidence the system doesn't care about ordinary people.

At the same time, whilst we may know how to bail out insolvent banks, do we know how to avoid redundancies when a titantic financial crisis hits the economy? Do we know how to have a titanic crisis hit the economy, and not see deficits balloon as automatic stabilisers kick in with the consequent need for austerity? My point is that if we don't know how to handle recessions without them hurting ordinary people, you cannot cite the fact ordinary people are hurt by recessions as proof the system doesn't care about them.

I don't mean to argue for a second that the system has the best interests of ordinary people are heart and cares not for the rich and powerful. I just mean to moderate your position somewhat.

I don't think we want to build a state that sees its job as fighting against the interests of capital, becuase to a great extent the interests of capital and ordinary people are aligned. We need the state to avoid capture by any interest block, and to accomodate and balance the competing interests of all parts of society. I'm not sure we need radical institutional change to do that; a decent left wing government, unafraid to take on "capital" when needs be, would get us a long way, wouldn't it? Is such a thing really too much to hope for?

[Stephen]

Yes, a decent government may be too much to hope for! But then again, haven't you been listening? We don't want the state captured by anyone, either by capital, or by government. Might be easiest to just get rid of the state altogether. The separation of state and religion has come at the cost of making the state into a religion. Let's make all religion a private matter, including that of the statists.

[Chris]

I'm glad you raise these issues, because a lot of people ignore them nowadays, but surely most socialists accept that the state, as you put it, "can be a means whereby capitalists exercise power over workers".

As Marx and Engels said, "The executive of the modern State is but a committee for managing the common affairs of the whole bourgeoisie."

I know a lot of "left-wingers" scorn Marxism these days, but surely they know that much?

[bieber supra]

He is a good friend that speaks well of us behind our backs.