A Predator State – the worst bits of Capitalism, Communism and Feudalism
We live in a Capitalist country, right? We believe in the power of markets, don’t we? That’s what seperates us from the spectre of Communism that haunted us from the 1950s to end of the 1980s, isn’t it. And we understand the theory: a Capitalist country achieves the most efficient allocation of resources by facilitating trade & commerce by the practice of prices, and price only. No plans, no dictates, no sentiment. The market connects buyers and sellers, and the price mechanism is what determines appropriate supply and demand to achieve the economic nirvana of equilibrium.
But, just to soften the edges, we have a bit of a heart too. The Gvt still dictates certain aspects, but they are the there to help keep the country and economy moving. A national health service, education, a defense force and social security. A supportive collective spine from which hangs our supple private sector muscles allowing us to punch above our weight. So we actually have a lovely mixed economy with the best that Capitalism & Socialism can offer.
Sounds plausible doesn’t it. But hang on a moment. Following the crisis in 2008 it seems we took a slight detour from this.
In the face of bank collapse our politicians ennacted sizeable bailouts. A state bailout of a private sector business is not a free market solution. In fact quite the opposite. In this instance, the bailouts have protected the lending class (creditors / bond holders) at the expense of the public at large.
The consequence has been Austerity and Inflation. Measures that assure that the lender bears no responsibilty whatsoever for their faulty judgement in lending out in the first place. It is debt maintenance by any means necessary.
Yes we have a mixed economy, but one that is instead the worst of both worlds; privatised profits and yet socialised losses.
It is a form of Crony Capitalism, and a slipperly route back to the retrograde structure of Feudalism. It is what James K Galbraith calls a Predator State. The state as monopoly collector of taxes and corrupt distributor of the spoils to the private sector. This is not the free market vision of Adam Smith:
“What did the new class… set out to do in political terms? The experience of the past decade permits a very simple summary explanation: they set out to take over the state and to run it — not for any ideological project but simply in the way that would bring to them, individually and as a group, the most money, the least disturbed power, and the greatest chance of rescue should something go wrong. That is, they set out to prey on the existing institutions of the American regulatory and welfare system.”
But this message isn’t being voiced by any policitician, or even any economic or political commentator. The closest to this I’ve heard lately is from a recently elected Northern European party leader:
“In a true market economy, bad choices get penalized. Instead of accepting losses on unsound investments—which would have led to the probable collapse of some banks—it was decided to transfer the losses to taxpayers via loans, guarantees and opaque constructs”
Why can’t any major mass movement whether from the left or (especially!) the right, the Union’s, the Green’s, the NGOs, Anti-Globalisation or anti-cut movements use explanations such as this to tell the true story of this crisis?