Tuesday, 21 April 2015

Beware the right, especially when it talks about markets

Any of you who had the joy of hearing Nigel Farage, leader of the United Kingdom Independence Party (UKIP), on the BBC Election Debate last week, may have been struck by his frequent references to “the market.”

Maggie Thatcher: you can't buck the market. Yeah, right
Implicit in this kind of statement is the Thatcherite notion that “you can’t buck the market.” This is a recurring theme in the mouths of most right wing politicians, not just Farage, but those such as Cameron or US Republicans too. It’s untrue today as it was in Thatcher’s time, as indeed it was in the time of that great guru of market economics, the darling of today’s right, Adam Smith. What people tend to forget is that the only kind of market you can rely on at all is a free one. The problem is that a great many markets are firmly rigged – in other words, someone has bucked them.

Adam Smith knew that. He talked, for instance, of the market in labour, in which workers and “masters” strive against each other to set the price, i.e. a wage. Each side tends to pull together to form “combinations” – a word which doesn’t mean simply association, but something more sinister, with a dash of the conspiracy about it – but one of the sides has far more power than the other:

The masters, being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit, their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it.

For a time, from early in the twentieth century through to the eighties, the “combinations” of workmen did rather better than Smith suggests in The Wealth of Nations. Then Thatcher brought in serious anti-Trade Union legislation, just as Reagan did in the US, and the boot returned firmly to the other foot.

Adam Smith, darling of the right, guru of the market
Rather gives the lie to Cameron and Farage
There are times when I can’t quite work out whether Farage is as unintelligent as he likes to sound, or whether he’s just being disingenuous. I suspect the latter: he’s a knave, rather than a fool. He knows perfectly well that appeals to markets are empty if the markets aren’t free.

After all, he’s a stockbroker. One of those groups of masters, only too ready to combine to protect their own interests: we saw how they, and the rest of the financial services crowd, plunged the world into global recession in 2008 and then made sure they were rewarded for it with wonderful bail-outs, from our pockets.

So he presumably also knows why his jeremiads against migration have no place in an ideology of free markets. Again, at a time when European nations tended rather to block the free movement of labour and capital, Adam Smith lamented that:

… the policy of Europe, by obstructing the free circulation of labour and stock [capital], both from employment to employment, and from place to place, occasions in some cases, a very inconvenient inequality in the whole of the advantages and disadvantages of their different employments.

Workers moving freely, capital moving freely, are essential components of a free market. But then perhaps Conservative and UKIP politicians prefer a market they’ve rigged in their favour to a free one. Which reminds me of another fine sentiment in Adam Smith:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public…

Indeed. George Bernard Shaw expressed the same sentiment even more succinctly 130 years later, in The Doctor’s Dilemma, when he wrote “all professions are conspiracies against the laity.” Where the “profession” in question is right wing politics, we still today face a particularly toxic conspiracy.

Perhaps Farage and Cameron don’t know Smith and Shaw’s sentiments on the subject. But we do. And we should be on our guard.

No comments: