Guardian columnists are wrong. This is a crisis of social democracy not neo-liberalism
By far the most powerful player in modern western economies is the state. The notion that our lives are being ruined by free markets is simply incompatible with the realities.
The 2011 Index of Economic Freedom put out by the Heritage Foundation is a document well worth studying. (For Guardian columnists and BBC reporters it should be required reading. But don’t hold your breath.)
It contains many little gems of information, among them the following which you should print out and pin up on your office wall. (It’ll help you win arguments against the Left.)
Here are some figures from several leading Western countries on the percentage of the economy that is flushed through the state in the form of government spending.
Government expenditure as a percentage of gross domestic product (GDP) is 47.3 percent in Britain, 52.8 percent in France, 43.7 percent in Germany, and 48.8 percent in Italy. Even in the United States it’s 38.9 percent.
The vast influence of the state on the shape and, inevitably, the behaviour of the modern Western economy is thus clear for all to see. It overshadows any single company, indeed any single sector (including banking), like an elephant standing over a flea.
But the sheer folly of describing the economic status quo as anything remotely approaching the neo-liberal, free-market, capitalist ideal is easily demonstrated by a whole host of other things too: the vast network of taxation and regulation, limiting and obstructing business at every turn, first among them.
The banking sector in particular is subject to huge regulation and, of course, is always responsive to the most powerful financial institution of all, the state central bank.
Now, we are not saying that taxation and regulation should be abolished or that central banks and currencies should be privatised (though there are some interesting arguments on the latter), but we are saying that the broad economic context in which the current crisis arose was plainly more proximate to the social democratic, statist model than to neo-liberalism – even in America.
That certainly runs against the received wisdom. But that’s not all that surprising when you think about it, because the received wisdoms in Britain and many other countries are largely generated by left-leaning media outlets such as the Guardian and the BBC which are committed to an ever greater role for the state in our social and economic affairs.
They set the agenda and define the discourse, meaning, in this case, that the “free market economy” gets the blame for a crisis that arose in a social democratic environment. This then leads to the obvious conclusion that we need more of the state not less. Mission accomplished.
If you want to see this in action just read today’s piece in the Guardian by Seumus Milne (praising, not incidentally, Labour leader Ed Miliband’s abysmal speech this week as “the most radical speech by a Labour leader for a generation”.) Or read more or less anything by leading pseudo-intellectual of the social-democratic Left, Will Hutton.
Over in la la land, also just listen to the godfathers of the eurozone blaming the markets for the problems of the single currency – a social democratic project if ever there was one. The latest crazy idea is for a “Tobin Tax” on financial transactions. After all, if the neo-liberal, free-market economy is to blame, more state intervention must surely be the answer.
It is that sort of response that we must guard against while policy makers around the world plan coordinated action that may have ramifications for decades.
The lies and distortions about the economic crisis are easy to expose. It is vital that those who really would like us to move to a free-market economy expose them loudly and clearly, and do so now.
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