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Tuesday 11 December 2018

IEA - Still Economically Illiterate.

As it continues to maintain the pretence that it is an educational charity, and not just another of those Astroturf lobby groups peddling right-wing propaganda, the Institute of Economic Affairs has once again put the ball in its own net as it brings forth an article that has an educational value not unadjacent to zero. Titled “Are capitalists afraid of socialist success?and is authored by Kristian Niemietz, IEA Head of Political Economy.
Here, he sniggers “even at its peak, Venezuelamania was always very much confined to Guardian-reading types. Venezuela was never a topic of pub conversations (unless you count the university’s in-house student bar as one). So the idea that factory workers in Sunderland would down their tools and start a revolt, because some place in Latin America (or wherever) has some success in some areas, is, to put it mildly, fanciful”. Tee hee hee!

One can almost hear his fellow IEA inmates simpering in agreement. But this picture of the world bears little relation to reality. As any fule kno, no large and successful economy is purely capitalist, and none purely socialist. Niemietz begins from a false premise; not even the USA does without a modicum of socialism. How, otherwise, would the Freeway Program have been undertaken? Or Amtrak come into being? Or the US postal service?

Did capitalism provide for the provision of money as a reliable means of exchange? Or the lender of last resort that is the Federal Reserve? Capitalism enabled by social programmes; the same the world over. Who runs the New York City Subway, and similar operations throughout the USA? So it is in London, where the Underground system was brought into public ownership in 1933 by a Conservative-dominated Government.
Niemietz talks of other European countries having “market based” healthcare systems, but misses the point: the NHS has been subjected to an amount of marketisation, but remains free at the point of delivery. He does not mention the NHS, as the IEA favours its abolition. It must therefore be A Very Bad Thing. So he exhorts us to “look over there” instead.

Did capitalism give Great Britain a national electricity grid? Sadly not. Nor, until London City Airport, which was built only after significant public subsidy - so the IEA should disapprove - did capitalism give us one major airport in the UK. Not one. All others have been the result of Government intervention, or they have origins as military facilities.

How many major roads in the UK did capitalism provide? Apart from the M6 Toll, and a number of river crossings, that cupboard is bare. Where was the market, which in the lexicon of the IEA and other inhabitants of like-minded Alphabet Soup will always provide? It wasn’t: our roads and, later on, motorway network had to be organised and funded by yet more of that Government intervention - more of that apparently failed socialism.
And who would have supported the UK’s rail network after World War 2, as the “Big Four” operators went, one by one, to the wall, if not the Government of the day, and indeed successive Governments to this day? Yet for our economy to function without all, or indeed any, of these examples is unthinkable. So Niemietz ignores them altogether.

Instead, he sits and sniggers “Venezuela tee hee hee”. Thus the lofty intellectual heights of IEA debate.
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Andrew Carey said...

In the UK we have Sefton, Chorley, and Stockport councils owning shopping centres. We have Rochdale council owning warehousing, and Warrington and Durham Councils owning business parks. We have the Welsh government owning an airport.
Because they are not owned by capitalists, they don't need to return 3% of their capital value in dividends every year, or whatever the going rate is for the return on capital. Whatever that margin is, it means that the government ownership has some margin to improve the offering, either for customers or workers or a combination of both.
By similar reasoning the not for profit Housing Association sector should be able to outcompete private developers - although the housing market is about as far from neoliberalism as it's possible for any sector to be with its subsidies, nimby protest groups, transaction taxes and planning restrictions.
What we need is to abolish the transaction taxes like SDLT and majorly liberalise planning, and then let the best system win. But what we don't need is to ban the capitalists, as unless they are more productive than the socialist system by that 3% margin ( or whatever it is ) then they will lose anyway.

Sam said...

In 2001 staying with a pal in New York who had lost his job because of illness I was shocked to see the quite large amounts in the welfare cheques he began to receive both State & Federal. The benefits were better than the UK. And then came the food stamps. It's been like that in the US since FDR whose "socialist" policies raised 10s of millions of Americans into the middle class.
Genuine Capitalists are fairly happy with large doses of socialism because they do understand the more money is circulated the richer they can become.
Of course the real problem is the Free Market Loons who operate in a vacuum and are in essence anti-Capitalists. And that's the IEU

Anonymous said...

There was nothing remotely "socialist" about the oligarch FDR.

And wherever welfare support has been introduced in capitalist countries its only aim was/is to save capitalism. But it was always done with extreme reluctance and against severe resistance from the ruling class, particularly in the USA. Hence current efforts by the more deranged righties to minimise or even eliminate it - Macron is the current most obvious example. FDR then and even now is accused of "fascism" by the worst of them!

Comparing welfare in the USA to the British method is worthless sophist nonsense. The fact is, across the West capitalism is in one of its phases of slow decay. Its end is inevitable. The only question is whether it will be allowed to turn this century into a repeat blood bath of the 20th century. So far the omens are not good.

nparker said...

'Not the subject of pub conversation'

And they would know... how? Have they bugged every pub in the country and listened to years of recordings?