It's fashionable to lay the blame for all that is wrong in our economy on the state. But that's a mistake. The state is only failing because it is being run by politicians who have set out to undermine it. We need a properly functioning state and have been denied it for too long.
This is the audio version:
This is the transcript:
In 2025, we have to say yes to the power of the state.
Now, I am well aware that this will not be a popular claim on my part, but I'm going to make it nonetheless because if we are to rethink economics in 2025, and how it can deliver for us all, one of the things that we have to do is give up our paranoia about the role of the state.
There is no economy without the state. Those who claim otherwise, and that capitalism is the answer to everything, and that the state is not, are living in cloud-cuckoo land. That's because, without a state, there are no contracts, there is no enforceable law, there is no property right that can be defined, and therefore there is no claim to it, which is the whole basis on which capitalist thinking is based, and there is no market because there can be no money which is useful in exchange, and everything falls apart.
Capitalism literally cannot exist without the state, and yet it pretends it can. And it spends all its time protesting that the state must keep its nose out of everything.
Well, there are some good reasons, of course, why people are fed up with the state. The state has not used its power to redistribute income and wealth to combat the failures of the market system, which concentrates wealth in the hands of a few.
It has not used its power to combat market failures with regard to climate change, with regard to media power, and with regard to monopolies that exploit us all.
It has not used its power to regulate banks so that we have lower interest rates than we are suffering at present.
It has not used its power, in other words, to meet the needs of people.
And that is fundamentally where the state has failed. The state's failed, not because it is a state, but because it has been captured by the mentality of those who hate the state; who want to dismantle the state; who want to undermine the state; who want to use the state to ensure that companies can continue to loot us and the planet for individual profit; who want to ensure that we can be exploited; who are indifferent to the consequences that harm us. All of those things are true.
The state has been used against us, and not for us. And that is why people around Europe, the UK, the US, and beyond are fed up with the state. But they are blaming the wrong thing. They're blaming the state for these failures when they should be blaming neoliberal politicians who have sought office to undermine the state. It's they who are at fault.
Years ago, I wrote a book called The Courageous State - I think it was in about 2012 - and in it, I said that what we needed were politicians who believed in the power of the state to transform the well-being of people. I still stand by that. I think that is vital. That is what the state is for.
I'm not saying we can do without markets because, frankly, I don't know an alternative way in which we can combine some of the resources which are available within society to meet the needs which the state is not good at doing. For example, I always say I don't want the state to brew beer. I don't think it needs to make bread, to be totally honest, either. But, I do think it needs to provide education and a health service.
So, we know that there are things for which the market is well suited, just as we know there are things for which the for which the state is well suited.
But I want to have politicians who can spot the difference and who can also realise that in an imperfect world, which is what we live in after all, markets produce imperfect results and are open to abuse. And the consequence of both of those things is that power is concentrated by markets in the hands of a few individuals who own most of the wealth. And we're seeing the consequences. If you want to have two words that explain that, just look at Elon Musk. He has abused the power of markets to concentrate wealth to support the rise of Donald Trump. You really can't imagine a worse outcome than that.
So, what we need is not to reject the state. We need to reject the power of markets. over the state.
We need politicians who, when given the choice between prioritising the needs of companies or the needs of people, choose people.
We need politicians who can recognise that the economics of growth and of maximizing corporate profit and of reducing regulation are all playing into the hands of wealth concentration and therefore reject those processes and the consequences that flow from them for policy purposes and instead prioritise the redistribution of wealth to ensure that everybody can partake in markets, which will actually increase wealth overall because of course there will be more people with more power to spend as a consequence.
That's what we need.
I've already discussed in a video, already produced this year, the difference between economics as a noun, which is a definition, and economics as a verb.
Economics as an action has become economics of the neoliberal market. And politics has gone the same way.
Economics as a noun talks about the study of how we achieve the better allocation of resources within our society so that the needs of everyone are met. We fail miserably to do that now.
There are people who live with hunger.
They live in horrible accommodation.
They live with fear as to whether the money will run out.
They live in fear of the debt collector.
They live in fear of the next utility bill.
That is not a successful economy.
By the definition of economics as a noun, where needs are met, then we have a very poor economy.
By the definition of economics as a verb, as it has been defined by neoliberal economists and politicians, we have a successful economy where we're still aspiring to growth, irrespective of the consequences for wealth concentration, for the increase in poverty, and for the despoilation of our planet.
We have to, therefore, properly understand the role of politics and the role of the state in 2025. If we are to get the politics that we need to survive and do something more than that, which is to prosper, because we aren't prospering now. But if we follow the ideas that I'm suggesting, we could, and we will.
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Well of course voters will hate the state if they’re dumb enough to keep voting in parties that are full of grifters working for the rich who hate the state unless it does what they want!
Buyer’s remorse has set in particularly early with this current shower of a government who are dreadful at disguising they’re both grifters and incompetents:-
https://www.theguardian.com/commentisfree/2025/jan/05/start-rebuilding-work-keir-starmer-who-you-are-different-to-the-last-bunch-of-cowboys#comments
The State always wields power by definition, and the question should be, does it use its power for the good of society?
Over the last 40 years (since Margaret Thatcher), that power has been used for the benefit of the well-off.
There may have been some who thought that this would enable the wealthy to privately benefit the less well-off (due to the so-called trickle-down effect).
What the evidence shows us, is that this does not happen. While technology has improved productivity by around 80%, wages have risen by only 7%. Source: https://imgur.com/gallery/reposting-UjzF65v#/t/recession
This neoliberal policy has not finished, and can not while it is supported by the two main parties.
I would take your insight that ‘there are things for which the market is well suited, just as we know there are things for which the for which the state is well suited’ a step further: all the various organisational structures can find their optimal application. The market doesn’t have to be oriented towards investor profit extraction. Most small business isn’t – it’s people doing things they love and/or are good at to make a living. Many larger enterprises are suited to market-oriented but anti-capitalist structures like co-ops (if there is a stable and engaged membership constituency) or other forms of social enterprise.
For sure, where basic infrastructure and wide area networking is involved – utilities, public transport, health, education, etc – the state may be the best ownership and operating structure, but my belief – based on my professional life designing organisational structures for social enterprise – is that it’s perfectly possible in a great many cases to objectively match organisational form to function – as long as it’s based on a wholistic approach, because taking into account social and environmental impacts is what exposes the wide unsuitability of the investor profit-extraction model.
Thank you for a most perspicacious article, irrespective of its actual or media influenced popularity.
Might Michael Hudson’ s basic analysis of society’s basic power structure comprising 1) the government, 2) the rich/powerful/influential and 3) the regular citizenry, be relevant here?
Might 1 and 2, not least the main stream media, with few exceptions, be conspiring to increase their covert exploitation of 3, possibly assisted by attitudes of naive passivity encouraged/inculcated by the content and implementation of the National Curriculum?
“Standardised testing is at cross purposes with many of the most important purposes and benefits of public education. It does not measure or facilitate big picture learning, critical thinking, resilient lateral thinking, perseverance, problem spotting and addressing, creativity, curiosity or informed conversations with power; yet these are the essential attributes for and of a secure and well-living totality of the citizenry and their children.” (From Randi Weingarten)
Watching your earlier videos on this I wondered if, broadly speaking, the state should deal with needs and ‘the market’ or some successor should deal with wants. Of course, I realise this is very simplistic with a lot of room for caveats/overlap and sundry criticisms.
But would it work as a starting point? Perhaps I’m naive. But, after all, the NHS was built on the idea that everyone was entitled to health care for free at the point of need – and “what they did in Tredegar”, was it not?
I agree, our MPs are frighteningly ignorant in many cases. Maybe there should be some sort of MP training school (with a refresher course for the re-elected). Or a candidacy entrance questionnaire with questions like ‘What are the 3 biggest needs in your proposed constituency? If elected, how would you tackle them?’.
Yes, Musk of course, but for years we’ve been under the power of Murdoch, who was granted privileged access to UK prime ministers because he’d throw a hissy fit otherwise.
When I reviewed Calvert & Arbuthnott[s ‘Failures of State’ (2021) on Amazon about how Boris Johnson’s government made a complete horlicks of the Covid epidemic, I made the point that I objected to the title – it was not a failure of a State, rather it was those charged with running it (in this case, the god-damned Tory party) who had caused the problems and the excess deaths. I also felt that that betrayed the bias of the Sunday Times and its proprietor too who loves to bash the state over the head all of the time and amde that clear whilst also accepting that the story they told was well researched.
Of all my reviews on Amazon which get some reaction, this still has none even now, so I can only conclude that too many people have or will just simply lose faith in the idea of government and not realise that it is the people that they put into it is where the problem actually lies.
So to me at least, your point is a real and trenchant one.
This blaming of the state because crap, dishonest and incompetent people somehow get to run it is a serious and dangerous issue in democracy, and little understood. It is a conflation we can ill afford.
Thanks
And I think you are right
Thoroughly agree.
I found David Graeber’s Debt: the first 5000 years really illuminating on these points (and many others besides). The state could be the ally of and support for everyone, but is made to act in antagonistic ways. There’s always the most pressing question of how we transform it, that seems to be as elusive as ever. If only we had deeper pockets than the corporations, we could out-bid them for political allegiance!
Richard, this in similar vein from Abby Innes (who I hope won’t mind me quoting at length).
‘Why We Hate Politics.
Metaphors can be powerful. The exponents of the neoliberal revolution argued that there was a disease in the body politic to be cured – the disease of monopoly.’ (of the state) ‘But what if the metaphor was wrong? What if it was always a normative assertion by academic economists who worked from purely logical reasoning, rather than from any historically informed investigation into actual states? The colonising power of public choice theory in the social sciences and the spread of its assumptions into everyday political speech would go on to normalise attitudes and behaviours that British society would have viewed as shockingly amoral only a few years before. Here was a thesis that undermined real democratic institutions but offered only a materialist imaginary as their substitute. Apply the rule of self-interested calculation to the democratic state and you would nevertheless do violence to its integrity. As Andrew Hindmoor points out, liberal democratic institutions depend on the values of “public service” and this ethos is a long way from strategic calculation. As Colin Hay also noted in “Why We Hate Politics”, if you insist long enough and loud enough that elected politicians and the public servants who support them are in it only for themselves, then sooner or later voters might start to believe you. Over time, politicians may also start to behave that way, on the basis that you may as well be hung for a sheep as for a lamb.’ (Innes, A. 2023: 117, Late Soviet Britain: Why Materialist Utopias Fail).
As with your blog, this is spot on. Indeed, having taken my degree (Public Administration) as a mature student in the early 1990s (and then worked as an academic), when public choice theory and mathematization took over economics, and then went on to pollute politics – despite the best efforts of political science and policy studies academics such as Patrick Dunleavy, Christopher Hood, Colin Hay – I can personally attest to this. But once the think tanks and consultancies picked up on the prescriptions of public choice theory (and that is all that it is, a theory), and the fact that every policy issue, public management challenge and so on (see the vast literature on the so called New Public Management that arose at the time and was a mainstay of the Blair governments, for example) could be reduced to, and solved by, a specific set of actions (sold as ‘recommendations’) that applied – with slight tweaks- almost always and everywhere then the conquest by public choice theory, and thus the ushering in of neoliberalism, was complete. To take it back to Innes’s point, we’ve now suffered 30 odd years or so of the impact of a metaphor that is not only false, but dangerously so – witness all the failures Richard highlights in his blog. And yet, on we go, with the likes of Starmer, Streeting and Reeves unable or unwilling, or both, to see the nonsense that it is, and with Trump and his acolytes in the US even worse. God (if there is such an thing) help us all!!
Ivan
Many thanks
Very useful
I must read that book…
Richard
Ivan
Whilst thoroughly agreeing with Innes in the excerpt you quote, (and I’ve read her) have you read Nancy MacLean’s ‘Democracy in Chains’ (2017)?
MacLean managed to get access to Mr Public Choice Theory himself – James Buchanan’s papers at the University of Virginia. Her book is an explosive insight into one of the most hypocritical and fraudulent sects in the Neo-liberal millieu, that actually finds its genesis in the U. S. Deep South after the American Civil war. It is well worth a read and is quite shocking to be honest, considering just how made up public choice theory is. Neo-liberalism I am quite sure can be traced back to the U.S. deep South, the confederacy itself was set up to defend its way of life (slavery – the basis of its economy, its rigid social strata).
MacLean’s book is brilliant.
I let my eldest son borrow my copy. I am not sure I will get it back.
In a perverse way, the Tories are more honest (but wrong) about this.
Labour are DIShonest, pretending to hold on to ideals about social good, but refusing to accept responsibility for delivering them (“because we can’t afford it”).
So we have had a long list of pledges/promises/missions/milestones ALL of which have then been backed away from, renounced (with a ministerial sacking if necessary), or kicked into the long grass of 2028/9 for an inquiry to worry about…
Green new deal
Winter fuel payment
2 child Benefit cap
Social Care
Rape trial delays
NHS waiting lists
Great British Energy
Housing etc etc
The common factor being the REFUSAL of the government to govern and spend on the things we urgently need because even Labour have trapped themselves in this “State BAD, Private enterprise GOOD” cul-de-sac.
The Chinese are certainly using the power of the state. China is set to decimate the legacy western car makers (apart from Tesla) who have failed to pivot in time to electric vehicles and the state has failed to offer adequate support. China had a long term 10 year plan of investment in research on batteries and EV’s. China now builds 70% of all EVs and BYD, SIAC, Xpeng, Chery are the quickest growing car companies. Now nearly 50% of Chinese car production are EVs and they are starting to export. They will sidestep US and export to the rest of the world. Many legacy automobile manufactures used to make up to 50% of their profits in China selling combustion vehicles but this market is now evaporating as their EVs are better quality and often cheaper due to the cut throat competition. In 2025 the cost of production of EVs should be the same as combustion vehicles in China. Batteries are developing at breakneck speed with CATL selling 500Wh/kg batteries in 2025.
https://www.youtube.com/watch?v=q2KV8dc5Vtw
What are western neoliberal economically fixated countries doing?
Perhaps a pivot to building public transport tram systems for every large town in the UK as was the case for all the major towns and cities in England, around 190 up until the 1930s … But you have to get around the antiquated regulations and narrow Department for Transport WebTAG economic feasibility assessment.
https://en.wikipedia.org/wiki/List_of_town_tramway_systems_in_the_United_Kingdom
Mass production of EVs and batteries by China will boom as the Electric Viking video pointed out as long as the minerals and other rarer metals and minerals needed such as lithium can be mined cheaply. Once the richer mineral sources run down the expense of mining and refining will become prohibitive let alone the enormous environmental damage and over consumption of water in the mining areas thus making another crisis as bad as the one of the legacy car makers of internal combustion and hybrid vehicles in the US, Japan and Europe face now..
Although different shades of red – or different parts of the hymn sheet – you, Richard, together with Slavoj Žižek and Yannis Veroufakis could write an inspiring politics. https://open.substack.com/pub/slavoj/p/musk-against-bannon-welcome-to-the (with annoying pay-wall half-way…)
Marked to read
Thanks
Did you see Janis post on Twitter about Star Trek? He says it had a clear left vision from the beginning and offers a clear path forward. I lost the link just now, but certainly renewed my interest in the series!
Great post! Much to agree with.
And I find it intriguing that on the role of the state – and the split between what it delivers vs what private companies deliver – you and George Galloway, leader of the Workers party, are of the same mind.
Not on much, I suspect
Hi Richard
This analysis is quite obvious and very simple and I believe completely right. The fact that so few people seem to grasp this reality (although the numbers may be growing) is a testament to the great efforts of false-justification, disguise and obfuscation undertaken in our societies. Keep up the good work.
The problem is, as we know from the last fifteen years, and not least the last six months; you can vote, and you can vote for the State to act; but we know from current experience: you can’t actually trust the State either. The reason is political parties, typically representing vague, badly conceived ideologies know that the secret to success is to control the State; and that is what they set out to do, and will exploit the electorate, and deceive them, in order to succeed. All kinds of interests have controlled the British State, including systematic slave owners (for centuries).