I am bored by politicians who pretend that they are from the left and right, and who either worship markets or pretend that the state can do nothing of value. The reality is that we live in a mixed economy where both the state and private sectors are essential. Why is it so hard to admit that fact?
This is the audio version:
This is the transcript:
What if we dropped the dogma about economics in politics and dealt with reality instead?
What am I talking about? I'm talking about the fact that most of the time, most of our politicians want to talk about the fact that they either believe that their opponents are total free marketeers or are socialists. And let me be totally honest, there aren't any such things as total free marketeers and socialists inside the UK political economy.
Why? Because we live in a mixed economy. And that mixed economy is one where, as a matter of fact, the state and the private sector have to cooperate to deliver the well-being that we all need and want and enjoy.
So why don't politicians actually talk about the fact that what is really important when it comes to economic management is to work out how to best mix the state and the private sector, and the voluntary sector, and the owner-managed sector, and the cooperative sector together in a way that delivers outcomes that are of benefit to everyone, because this is what we really need to talk about.
And the fact is that we all know that there are some things that are best done by the state in the UK. We have proved that the NHS works, not perfectly, but incredibly well. It's also highly cost-effective. We get imperfect healthcare, but better healthcare per pound spent than just about anybody else in the world.
We have an education system that is not perfect because of the market dogma that is laid over it, but which is better than many other systems in the world and could be better still if only it was freed to deliver what the people of this country really need.
We have state services that work.
For example, there is a state old age pension. It's not perfect, but it does deliver.
All of these things have to be done by the state.
But the state does not. need to bake bread; it does not need to brew beer; it does not need to make cars; it does not need to provide a whole range of things which are quite essential to our well-being.
On the other hand, the state does need to provide electricity and gas because there can only be one gas pipe into your house, and competition is therefore not possible in the gas market, and again there can only be one set of wires delivering electricity into your house, and therefore, to pretend that there is competition in the electricity market, is simply absurd.
The same is true for water. Water can only come through one pipe, and therefore for it to be privatised makes absolutely no sense at all.
I would suggest the same is also true of the internet, because frankly we only have room for one real internet network within the UK, because the cost of that infrastructure is too high, and therefore to pretend that there's a massive range of competition between providers is quite absurd, because all that they're really doing is provide a range of account options which could be provided by a single supplier if only they were properly regulated.
And I could go on and on. The point is we need to decide which services and which goods belong in which sector and then we need to work out how they can work well together So, whilst it is true that I am suggesting that the internet should be provided by one company, obviously, the services supplied over the internet do not need to be provided by one company. They can be provided by a multitude of entities who are using the internet to sell their own services.
It is this mix that is vital if we are to truly understand the way in which the economy works. So, the pretence that we have, that politicians put forward, that there are state and non-state solutions to the problems that we face, and the two don't mix together, is completely wrong. Of course, they mix together.
What I want are politicians who can recognise reality. Instead, we have people like Wes Streeting at the NHS, who seems to think that whatever is supplied by the state is no good, and whatever is supplied by the private sector is wonderful.
And we have the same with regard to so many other activities.
We're seeing it when we come to Great British Energy, which is actually a private equity fund investing in private sector operators to supposedly solve the problems of energy supply in the UK which have largely been created by the privatisation of our energy industry.
And we can see it with our National Wealth Fund, because if we truly invested a National Wealth Fund in the way that society now needs, most of that money would be going straight back into infrastructure, which should be state-owned, because it's there that there has been massive under-investment in our economy. But instead, the state is choosing to invest in the private sector.
We need to get over these dogmatic divides. And talk about what we really need as a whole. If we did that, and if we also understood that the private sector can't operate without the state, and the state will never be able to provide things that the private sector does, we would end up in genuine partnership relationships that will build on the strengths that the economy has, the strengths that people have, the needs that must be met, and to deliver again the needs that people really do have, which in combination both state and private sector can supply.
I wish our politicians could talk about that reality. When they do, we will have a better politics. Until they do, we won't have that better politics, and the cost will be to us all.
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Agree totally. We also need the state to provide the regulatory framework within which the private sector and people as individuals operate to deal with externalities, ensure goods and services are of the right standard, to provide a fair system of earnings etc.
Its quite simple really!
Monetarism, was thought to be broken 20 years ago, as stated by its architect, Milton Friedman.
William Keegan writes (in 2003) that “Thatcher and her close colleagues arriving in office as fully paid-up believers in a half-baked economic doctrine known as monetarism.”
“[..] At its extreme, this theory was broadened into the view that, if governments simply left the economy alone, and instructed the central bank to control the money supply, inflation would be banished, entrepreneurial activity would thrive, economic growth would deliver the goods, unemployment would disappear, and so on.”
“[..] This was always a far-fetched theory – and indeed it had been fetched all the way from Chicago, Illinois, where Professor Milton Friedman was Professor of Economics,”
“[..] Milton Friedman now admits: ‘The use of quantity of money as a target has not been a success.’ He added: ‘I’m not sure I would as of today push it as hard as I once did.’ (FT, 7 June 2003).”
Source: “So now Friedman says he was wrong”, William Keegan, The Guardian, Sat 21 Jun 2003
https://web.archive.org/web/20240706104714/https://amp.theguardian.com/business/2003/jun/22/comment.economicpolicy
Bill and I had a long convesatioin this week – and he is in very good form at 86. It would be great if I am as good as he is at that age.
You need to go back to the Victorian period to see this in action, Joseph Chamberlain during his Mayoralty in Birmingham is a good example.
The Victorians realised that you can only have one set of water mains, gas pipes or tram lines and that competition in these services is nonsense.
Correct
A somewhat refreshing point of view.
Mind you, dogma has been around for rather a long time and has now become some sort of ‘received wisdom’ in a de-educated polity that continues to rule the roost, boosted by party political funding which itself helps the rich to get richer.
Therefore the ‘dogma’ acts as a wealth transfer enabler. The ‘dogma’ therefore delivers nothing for the likes of ordinary people and is surely dogmatic. But the dogma is very effective for the rich and their mates in politics who benefit from their client’s largess. Thus we arrive at the only reason why dogma is policy.
Add in the pauperisation of the public services, a bit of Blairism (people don’t really care who funds a service as long as it is there apparently) to help things along and we have this long running nightmare that we seem unable to wake up from.
Our only hope paradoxically enough is the greed of the new owners. They cannot help themselves because of greed but also the inequality that propels them forward simply stops them from understanding the lives of others. People may not care who runs a service; but they care about its price.
And even here, Neo-liberal dogma has an answer – debt, on the never-never. But what do we know about debt cycles? Boom & bust. So when that happens, the whole dogma machine starts up again beginning with promises that it won’t happen again.
And then it does.
Only an obvious abuse of power by capital enables this charade to continue. Thatcher was only really a poster girl for some deeply greedy and acquisitive thinking which was developed in the Mont Pelerin Society.
The ancient Chinese rulers writing the Guanzi, Frederic Bastiat and Adam Smith all knew what markets and their monopolists were capable of.
All that wisdom and we still end up with THIS!
Depressing, isn’t it?
for people wanting to know more, I found Daniel Stedman-Jones “Masters of the Universe” quite good.
The irony is you never stopping slapping down those from the “racist right” or the “neoliberal right”… your dogma is as bad as it gets.
Go on then, tell me precisely what about what I say – in favour of the mixed economy – is as bad as it gets. Precisely please. No tropes. Just arguments. Try and explain why, taking known economics into account, a more equal society would be worse than what we have.
Alistair
That is not fair is it?
Richard has said that he is fed up with both Left and Right. Not just the Right.
Both have failed us and indeed, delivered the same thing – the outcomes of Soviet policy (in the East) and so-called Western democracy have killed a lot of people, enriched the few, encouraged environmental degradation and have institutionalized corruption
If we here emphasis Neo-liberalism and the ‘racist right’ (read your history Alistair will you?) – well, that is because that is what in the name of freedom and democracy we have been living under in the West mostly for the last 40 odd years. So, we are being consistent.
And for the record, in Britain at least we have never been under the yolk of anything remotely hard Left. Anything Attlee created for common society in 1946 was with a lot compromise and a lot of liberalism.
It is under Neo-liberalism – a concocted and false intellectual basis for nothing more than enabling the acquisition of common goods and services by rentier capitalism – that our problems have increased to the point of being unsolvable.
And even the the ‘unsolvable’ bit is a bloody lie.
I look forward to your response.
When I read blogs of yours such as this one Richard, I think “in a same world this man would be PM”.
Hey ho.
We do not live in a sane world
And I do not have the temperament to be PM
Seeing the election of the orange faced criminal and the infestation of COP29 by fossil fuel lobbyists certainly proves your first point Richard.
As to the second, I assume you mean you have a very low tolerance of (a) fools, and (b) bullshit.
Correct on a and b.
The reason why we live with insanity is for no other reason than that the unreason, partiality, irrationality and bias that dominates us has all been bought with money – lots of money. That is the only reason why we are where we are – brute financial force, not subtle argument or democracy.
We who come here to propound a different, inclusive and sustainable rationality should never forget that. We have nothing to be ashamed of.
If we do not dream of a better system, if we do not talk of that other form of rationality then the alternative cannot exist, and the hope that goes with it vanishes also.
Somehow, I think that time is on our side, even if this ‘time’ is beyond the scale of a normal human lifetime. The time on our side is actually the time for the human species as a whole. So the question is for individuals is how to spend that time.
As Bill Hicks said, ‘We are the imagination of ourselves’.
FWIW, I like what we imagine here, enabled by our generous host.
Thanks PSR and much to agree with.
Permit me a personal observation? I welcome your plea to drop the dogma from politics, Richard. Why? Because I’m a dogmatist. I am a fairly resolute democratic socialist. My entire adult life has witnessed the intentional destruction of democratic socialism by its usurpers, ‘third way’ neoliberals (whom I now see as entryists (enterists?) to ‘broad-church left wing parties, like my beloved SPD, Labour and the Democratic party in the US).
LESS stealth neoliberal dogma, more scientific socialism dogma. Let’s stop seeing reprobates like Olaf Scholz, Keir Starmer and Jo Biden as ‘the left’. They kinda aren’t..
Left vs, right, State vs, private, overlooks another factor in contemporary life: the role and power of the civil service. Who feeds the government with its ready-made “solutions”? The civil service.
Starmer was captured by the civil service when he ran the Crown Prosecution Service. We have a civil servant heading the government, doing whatever the mandarins prescribe.
What does that comment mean?
It makes no sense as it stands
It means nobody trusts Government, politicians, Political Parties, Parliament or Civil Service any more. It means there are no political Parties that are not either already bought, or utterly spineless; it means that Trump has established a precedent in ‘taking down’ what people believe is the established order. The consequences do not take down power in the digital world, or the money that buys everything; or the endless deceit of the public. It doesn’t change anything; except the dissolution of trust.