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Market Schmarket

Entry 1523, on 2013-04-23 at 20:16:07 (Rating 4, News)

For the last 30 years New Zealand, along with most of the rest of the world, has been run according to a classic neo-liberal agenda. I use that word quite a lot so let me explain my interpretation of it. To me it means free markets uncontrolled by governments, all major assets in private hands, the smallest possible sized government, and increased trade and production efficiency.

These policies have been followed by parties traditionally from both the left and right, and the reality is that there has been little choice for anyone who disagrees with the whole idea. But who would disagree anyway? The aims I listed above all sound fantastic, don't they? I mean, who doesn't want freer markets, smaller government, greater freedom for business, more trade, and greater efficiency?

If it was as simple as that we all should want to pursue these aims but unfortunately only presenting a positive spin on them is misleading. The reality is that there are many negative aspects to these policies which their supporters fail to tell us about.

The key concept in neo-liberalism is letting the markets work to produce the best outcome, so the critical point is do they? Well of course they do. Free markets produce the best outcomes for the free markets, and many people also do very well when free market economics is in force, but the vast majority of people actually lose.

So when politicians, economists, and business leaders say we must look after the markets I want to know why. What have the markets ever done for us? I'll tell you what they have done: they have caused many industries to fail, they have taken jobs from one economy and replaced them with workers from lower paid workforces, they have made a small minority of people really rich while making the majority poor, they have pushed wages and conditions down, and they have increased the freedom of the rich and powerful while decreasing it for the rest.

So I can't see why markets should get any special consideration, which brings me (finally) to the point of this entry...

We finally have a significant divergence in policies for the two major parties here in New Zealand. The (vaguely conservative and neo-liberal) National Party wants to sell shares in the previously state owned power companies and the (vaguely left-wing) Labour and Green Parties disagree and want to control power prices at a government level.

Of course government control is a complete anathema to the neo-liberals, and the value of power companies has dived significantly after the power price control policy was announced, robbing hundreds of millions from the potential value of the companies. Naturally groups who support free markets (investment companies, share brokers, big business) are predicting the end of the world, and maybe they're right.

It is sort of like the end of the world to those who hope to make personal gains by exploiting the need for an essential commodity by those who already barely survive. It is like the end of the world to those whose whole worldview is based around free markets and to whom government control is the ultimate evil. It is like the end of the world to those who have got used to getting everything their own way just because they benefit from the market system.

But who (apart from the small minority those groups represent) cares? It's time to look at where the markets have really got us. Has the electricity market worked, for example? Well no, in many ways it hasn't. It has generated huge profits for the shareholders (the government up until now which at least meant the money went back to the people). It has pushed prices up at a rate many times greater than inflation. It has resulted in the loss of many skilled technicians while creating huge management and marketing bureaucracies.

The market has failed, and in reality almost every other market also fails to live up to the high ideals promised by the neo-liberals. And the pathetic excuse by market proponents that we haven't given it enough time should really be treated with the contempt it deserves. The market has been given a fair chance and has failed miserably. It's time to apply those neo-liberal ideals to the market itself: we need something more efficient and the "free market" of ideas should be able to give us something better.

It may seem like a backward step returning to policies we had before the neo-liberal revolution but should that even be a consideration? We should look at all possibilities, including those which have been out of favour, those which are scorned for no good reason, and those which disturb the currently accepted wisdom.

If the current system isn't working well for the majority then we should look at alternatives, even if those alternatives are branded a backward step by certain groups in society. And when people predict disaster look at why they might say that. Are they exploiting the free market for their own benefit? Are they ideologically attached to free markets and blinded to the possible alternatives? Have they committed to free markets politically and are they unprepared to accept the political damage of having to make a change?

I would suggest the vast majority of free market supporters are in those categories, or maybe in one other: the category of people who have never heard anything else for 30 years except the pro-market propaganda that the rich, the powerful, and the single-minded ideologs have fed them.

Well, according to Lincoln (or at least attributed to him): you can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time. The lie we have all been told about the magic of markets is becoming apparent. The fact that a significant number of people see a lot of merit in what many see as quite a radical proposal (but in fact isn't radical at all) should tell us that all of the people aren't being fooled any more!

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