The Market State vs The Good Society

The market state is antithetical to the good society. The market has always been with us. But what has changed in the last three decades is the relationship between the market and the state. What has instigated this change is itself the changed relationship between capital and labour brought about by the technological revolution and, its concomitant, globalisation. Whereas, under industrial capitalism, the tension between capital and labour was mediated by the state through social policies that alleviated the inequalities generic to capital, under electronic capitalism, capital, freed from the exigencies of time and place and the strictures of organised labour, has the world for its playing field and the state as its servitor.

Already, in 1987, Margaret Thatcher had unwittingly (or with the instincts of a marketeer’s daughter) defined the chief characteristic of the emerging market state when she declared that there was no such thing as society, only individuals. And the corollary followed that there was no such thing as social welfare, only individual achievement, no state mediation to ameliorate the depredations of capital, only the workings of the market, let the cards of social deprivation fall where they may.

The theorisation of the market state, however, appeared much later in Philip Bobbitt’s path-breaking (albeit neoliberal) tome, The Shield of Achilles, wherein he argued that ‘whereas the nation justified itself as an instrument to serve the welfare of the people (the nation), the market state exists to maximise the opportunities enjoyed by all members of society’. Which, in practice, meant the abolition of regulations that interfered with the free play of the market, therein granting the individual the opportunity to sink or swim by his/her own efforts, irrespective of whether they were stranded on the shores of unemployment, disability, old age or just poverty. Unemployment, in fact, is built into the market society as ‘the actual number of persons employed is but one more variable in the production of economic opportunity and has no overriding intrinsic significance’ because ‘it would cost more to the society to train them and put them to work at tasks for which the market has little demand’. Jobs are a commodity. And money itself is only ‘one more commodity’ for the market state, whereas, for the nation state, it is ‘a medium of exchange’.

The function of the state, therefore, is to unfetter the market through a raft of neoliberal policies such as deregulation, denationalisation, financialisation and the like – and get out of the way. And a market thus freed will offer up efficiency, growth and widespread prosperity. The tectonic plates beneath the state had shifted from serving the nation to serving the market – which, in effect, meant serving big business and the banks. Or, as Bobbitt puts it, ‘such a state depends on the international capital markets and, to a lesser degree, on the modern multinational business network to create stability in the world economy’. In sum, the market drives society, and global capital that drives the market drives the state.

‘Welfare’ in the New Labour version enters the equation only as a makeshift, finger-in-the dyke exercise when social disorder threatens the political order. Except that under PM Gordon Brown, it was ‘an implicit deal’, as Paul Mason points out in his brilliant survey of ‘the new global revolutions’, Why it’s Kicking off Everywhere. ‘Taxes from the bloated financial sureties section’ (Brown had promised ‘a new golden age’ for the City) ‘were placed at the disposal of a welfare system that allowed 9 million people to become dependent on state hand- outs.’ ‘5.4 million were dependent on out-of-work benefits’, which, though diminishing poverty ad hoc, also popularised the ‘benefit scrounger’ thesis which the coalition government used to justify welfare cuts ‘by a colossal £18 billion … safe in the knowledge that public support is behind its brutality’.

The dependency on the financial sector and its quick-fire profits at the expense of the manufacturing sector and growth – the failure, that is, to walk on two legs, as the Chinese saying goes – produced a lop-sided economy which, when the banks collapsed, did not have an industrial base to fall back on. Hence, bailing the banks out at any cost was the only option and leaving them untouched by regulation its natural corollary. With the result that the country’s manufacturing sector was further neglected, its manufacturing towns made derelict, its skilled workers cast upon the slag heap of unemployment, and what remained of manufacture itself outsourced to the cheapest foreign bidder – even when a skilled British workforce was waiting in the wings starved of investment (as in the government’s decision in 2011 to ask a consortium led by the German company Siemens to build new carriages for Thameslink trains instead of Bombardier in Derby, the UK’s last train factory). As Bobbitt asserts: ‘In the market state the marketplace becomes the economic arena, replacing the factory. In the marketplace, men and women are consumers, not producers (who are probably offshore anyway).’

Thirty years of neoliberalism and financialisation have de-based and disaggregated the working class, enlarged the middle class (consistent with a service economy) and further enriched the upper class – in the ratio of roughly 3:5:2. The working class has itself been broken up into semi- and unskilled manual workers living on the edge of existence (the ‘precariat’) and ‘the casuals’ who have fallen off the edge into the ‘underclass’ (or Social Group ‘Residuals’, to use the official classification) of the never-employed, estate denizens, inner-city youth, refugees, asylum seekers – the flotsam and jetsam of market society, the waste product of market economics, now rendered a worldwide phenomenon by globalisation. The middle 50 per cent consists of the lower middle class and the skilled working class (Social Groups C1 and C2) and accounts for a ‘squeezed middle’ (in Miliband parlance), who are ‘often too poor to benefit from the full range of opportunities provided by the private markets but too rich to qualify for substantial state support’, and are therefore electoral fodder, aka the floating vote, that can make all the difference in a general election. Whereas the precariat and underclass – one an aspiring working class whose aspirations are never met, and the other a despairing workless class whose despair turns to riot – are not only surplus to electoral needs, but a potential danger to the state and need to be kept under strict surveillance and subjected to ‘heavy manners’.

Inequality is structured into the market society, hardships of the recession fall unequally on the poor, and cuts in benefit cut the ground from under their feet. The ‘widespread prosperity’, which the free market promises, stops with the middle classes. The market society is virtually a two-thirds/one-third society of haves and have-nots. The only thing that trickles down is poverty. And nothing ‘trickles up’ because the infrastructure of education, housing, jobs, social assistance is being steadily eroded. Thus, in education – the sine qua non of social mobility – schools are more and more geared to achievers rather than to those who need help to achieve, universities for those who can afford it (even as debt cripples the family), curricula geared to jobs that slot you into the system rather than to a liberal education that might question it, teachers who are reduced to technicians who set out a free market garden rather than letting a thousand flowers bloom – wildly. (Market education produces functionaries, a liberal education produces visionaries.) In housing, owner occupation is beyond reach and the lack of social housing, combined with a cap on housing benefit, means councils are beginning to ‘decant’ people away from their communities into areas of cheaper housing. And now that manufacture is gone, the jobs that are available are mostly in the service sector where migrant labour divides the ‘class’ even further.

It is a half-truth, more deceptive than a lie, that the neoliberal state is a ‘small state’ in the sense that it is a hands-off state (as opposed to a nanny state) that allows individuals the freedom to make what they can of them- selves – on the basis that the least governed is the best governed and therefore non-interventionist. It is that, for the unemployed, the poor, the disabled, the old, the single parents and all those who need the state’s helping hand to lift them out of deprivation and hardship. But what is it if not hands-on and inter-ventionist when it removes regulations that limit capital’s excesses, privatises public assets and permits the financialisation of every marketable thing, from mortgages and loans to insurance and industries, and so gives free rein to multinational corporations and global finance?

And the ‘big society’ is another con, for the voluntary sector and social enterprises are not going to solve, as the PM held out in his inaugural speech on the ‘big society’, ‘our deepest social problems, whether it’s drug abuse … poor housing … deep and entrenched poverty … children in care’. On the contrary, they are the very areas that require nationwide strategies, co-ordinating local government initiatives and central government finance, to be able to make even a dent in the problems. Voluntarism and social enterprise, besides, may have the resources to tackle minor social problems, but are not given the power to make laws or raise taxes to alter things or pursue policies that are geared to the needs of the community. Genuine local government, government from below, not government by minister, does. It is there that people learn to take an effective hand in their own affairs; where the issues on the ground, on which they stand, bring them together as a cohesive community (as opposed to the social cohesion that the government tries to impose from above); where you can see the vote making a tangible difference; where the pyramidal structure of authority from parish council to county council resonates with democracy. Local government is the kindergarten of democracy and a corrective to the market fundamentalism that corrupts it.

But the Localism Act of 2011 has put paid to all that. Under cover of the rhetoric of decentralisation and empowerment, it has gutted local authorities of their existing powers, turned their duties into ‘services’ and opened them to competition from the highest bidder, on the grounds that local government is bureaucratic and inefficient and does not give value for money, the last being the key to the Tory something-for-nothing localism: responsibility without power, local government without the power to govern. Except that under the Act’s ‘general powers of competence’, local authorities ‘will still have the legal capacity to do anything that an individual can do that is not specifically prohibited; they will not, for example, be able to impose new taxes, as an individual has no power to tax’[!]. ‘And just like individuals they will need to comply with the duties placed on them.’ And, if that is not power enough, ‘the new general power’ gives local councils ‘more freedom to work together with others in new ways to drive down costs’. But if they impose ‘unnecessary restrictions and limitations’, the secretary of state has ‘the power to remove them’.

What decentralisation means, then, is not devolving power from central government to local government, but from local government to private enterprise. What empowerment means is to hand over the running of local services to voluntarism and social enterprise and private firms, with local authorities playing an enabling role. That is the best-case scenario, but often social enterprise makes businesses of voluntarism and private enterprise makes businesses of social enterprise.

Or, as Professor George Jones says, the coalition’s policies on decentralisation and localism are in reality a form of ‘sub-localism’. ‘Power is being decentralised to entities below local government, thus eroding the responsibilities, power and relevance of local government.’ And if that isn’t enough, central government, in the shape of Communities Secretary Pickles, ‘claims he knows better than elected authorities how they should deal with refuse collection, how they should make data available to their citizens, how surveillance and CCTV should be carried out, and what salaries to pay to their employees.’ His latest wheeze, though, is to get local authorities to appoint ‘trouble-shooters’ to ‘turn around troubled families’ (i.e. ‘families who are ruining their lives … their children’s lives … and their neighbours’ lives’), currently numbering 120,000 at a cost of £9 billion per year, whereas the turnaround scheme would cost around £10,000 per family.12 If, how- ever, the families refuse to sign up to the scheme, they could be subjected to benefit sanctions or eviction – or just decanting (see above)? Clearly, the quickest way to abolish poverty is to abolish the poor.

Neither small state (spurious) nor ‘big society’ (bogus), then, but both state and society driven by the categorical imperatives of global capital, and breeding in the process a political culture of individualism, greed and venality, which in turn legitimises the market state and endorses market morality till people become inured to grand larceny in high places, petty thieving in low and corruption as a fact of life. So debased has public life become that MPs fiddling expenses, banks fiddling rates, the media fiddling with people’s lives and the private sector fiddling public services have all become par for the course – and fobbed off with managed outrage, affordable fines and prophylactic changes in the hierarchy so that the system stays in place – unaccountable and unashamed. Barclays’ recent scam is a case in point: fiddling interest rates in order to put up the cost of borrowing for billions of customers around the world only to be met with a derisory (but officially ‘enormous’) fine of £250 million for ‘trying to manipulate a £350 trillion market for almost half a decade’. And, of course, there was also the obligatory apology from Barclays’ CEO, Diamond Bob, who, in the current spirit of noblesse oblige, passed the buck to the lower orders. He was sorry, he said, ‘some people acted in a manner not consistent with our culture and values’. In the same vein, he had, referring to the banking crisis of 2008, decided last year that ‘the period of remorse and apology for banks … needs to be over’. (Even the language is twisted to make remorse abstract and blame unaccounted for.)

The hubris, the mealy-mouthed apology, the self-righteousness, the risible ‘punishment’ – they leave no room for accountability or shame from which at least some justice could spring and act as exemplar. Instead, non-accountability and brass are seeping through our business culture, especially among the firms that have grown fat on the privatisation of public services. Characteristically, David Taylor Smith, the head of G4S, the multinational security firm that runs the core functions of the security services (amidst allegations of abuse of asylum seekers, including the death in custody of an Angolan deportee), has declared that ‘it is an insulting notion [to think] that the public sector has an exclusive franchise on morality’ – or on efficiency, he might have added, after the firm’s abject failure to produce the promised security for the London Olympics and the army had to stand in.

Banks and transnational corporations set our standards of conduct now, the market sets our values and the state sets them in stone – with false dogma, economic shibboleths and social stereotypes, which, in an information society, are the soft currency of popular culture. Thus, individualism, under the guise of personal freedom, militates against the solidarity – social and political – necessary to confront the inroads that the state makes into a free and egalitarian society. Nothing in the market state is as it seems. By the same token, deregulation and privatisation, under the guise of being the cornerstones of the non-interventionist state, are, in reality, the cornerstones of capital in its global phase. For without the active intervention of the state to remove the national shackles that bind it, capital cannot roam the world at will. Deregulation and liberalisation, in particular, are vital to the operations of finance capital, the depredations of which have thrown the whole world into recession and disarticulated society, while leaving the culprits untouched. Privatisation of public services, under the guise of efficiency and cost-effectiveness, has taken the service out of public service and put profit in its place, with dire consequences for efficiency (for example, the Olympic security shambles of G4S), ethics (for example, claiming money from the government for putting people into jobs that do not exist by A4E) and expense (for example, charging the local council £378,000 for the care of one child by Baird Capital) and so on. So scandalous and widespread are the failures of the private sector that local authorities are having to think twice before outsourcing. But the government, driven by ideological frenzy, proceeds to build in powers with every bill for outsourcing services in every government department. Meanwhile, the gradual denationalisation of the NHS, in the name of ‘the small state’, has put another basic need beyond the reach of ‘the small people’ and further entrenches inequality and poverty, while the promiscuous denaturing of Education seizes up social and economic mobility for a whole generation. And, lest ‘the underclass’ should revolt against their condition, a subculture has grown up in the interstices of the market culture that demonises them – as benefit scroungers, problem families breeding problem youngsters, wilfully homeless, false disability claimants, feckless single mothers – and so turns public opinion against them.

The struggle in the first place, then, is against the market state and the political culture that gives it legitimacy, not against an abstract capitalism that does not come into focus except in times of crisis, but against its concrete expression in the policies and actions of the enabler state. But so much of policy is now conducted through administrative edict and legislation rushed through parliament without the time for public scrutiny or debate that we wake up too late to their consequences. The opposition itself accepts the market as a given, and parliament is becoming known more for its TV appearance rather than the light it sheds on the goings-on of government. ‘The British House of Commons today’, observes Tony Judt, ‘is a sad sight: a parlour of placemen, yes-men and professional camp-followers – at least as bad as it was in 1832, the last time it was forcibly overhauled and their representatives expelled from their sinecures.’ It is a characterisation made that much more credible by the recent revelations that powerful lobbies (organised on corporate lines), rather than the electorate, influence policy.

But parliament is only one site where the loosening of standards has given a fillip to market morality. More opaque, though, is the way that the tenets of neoliberalism have been translated into popular culture so as to make market values acceptable. Thus, individualism, presented as personal freedom, not only undermines a sense of solidarity and gives trades unions a bad name, but also militates against any sort of collective action or social movement. In exchange, neoliberalism offers a feel-good voluntarism, a do-good social enterprise and a make-good private enterprise.

Privatisation has already taken over crucial functions in policing, criminal justice, education, health, welfare, asylum, immigration and the military – and, aided by further denationalisation, will soon have taken the running of the country out of the hands of the people and put it in the ‘care’ of transnational corporations. In exchange, neoliberalism offers a ‘we are all in this together’ patriotism, an anti-scrounger patriotism, an anti-immigrant patriotism. And deregulation, under the guise of liberalising the economy, has set the banking and financial systems free to ruin the nation’s economy through ‘speculation, predation, fraud and thievery’, while demanding, at the same time, that they themselves be saved from ruin by the people’s money. In exchange, neoliberalism offers to keep fattening the goose that lays the golden eggs so that the poor will have eggs for breakfast one day. Or, as the feudal doggerel goes: ‘The law locks up the man or woman / who steals the goose from off the Common / But lets the greater felon loose / who steals the Common from off the goose.’

In sum, neoliberalism has engendered a political culture acceptable to the majority of the electorate and given (electoral) legitimacy to the market state. And the changes in the education system, that the government has set afoot, promise to reinforce and reproduce that culture for the foreseeable future. The fact that the government has a recession to sell its wares in and, more importantly, only a few years to live, makes the changes it wants to bring about in every aspect of society that much more urgent. Besides, Cameron sees himself (with Thatcher and Blair) as part of the triumvirate that completed the neoliberal revolution and trans-formed the state from welfare to market to accord with the demands of global capital. ‘TINA’ (there is no alternative), they kept drumming into our consciousnesses till it became the accepted wisdom of our day, and compounded Left inertia.

But the green shoots of an alternative have already begun to sprout: in the Occupy movement that has taken on the banks and financial systems; in the less spectacular resistances right across the country, among the rank and file, in health, education, welfare, housing, community services, etc.; in the protests against the cuts, against the corporatisation of key services, against the increasing criminalisation of the unwanted and the encroachments of the state into civil society. Such a variety of struggles, protests, demonstrations may not as yet have a programme or goal beyond the immediate. But what they signify is the awaken- ing of the public from the political lethargy into which three decades of neoliberal ideology and TINA had cast us: thirty years in which ‘the state … transformed into a neoliberal set of institutions becomes a prime agent of redistributive policies reversing the flow from upper to lower classes that occurred during the era of social democracy’; thirty years in which governments have become autocratic and arrogant. ‘Recent decades have shown us’, laments Deborah Duffin in a letter to the Guardian, that ‘we are powerless to affect the decision of those who govern … the system is controlled, exploited, manipulated and used for personal benefit by the rich and powerful … all we can do is get on with our lives as best we can.’ It is that sense of helplessness that the 101 protests have lifted from us and instigated a culture of resistance that points to the rejection of the neoliberal order as a prerequisite of the good society.

My own reading is that the neoliberal state is no longer viable, precisely because global capitalism has entered a phase of uneven development whereby, this time, it is the ‘advanced’ countries of the West that have been ‘underdeveloped’ by their dependency on finance capital, while the ‘backward’ countries of China, India, Brazil have grown in leaps and bounds through production and development. They are now the bread and butter countries of the world, while the West is living off the froth of monetary economics.

Neoliberalism has failed. Deregulation and privatisation cannot deliver prosperity across the board. Cuts cannot get the government out of debt. Further dependency on the financial sector can only lead to government of the banks, by the banks, for the banks – and end in social dislocation and rebellion. To break out of the thraldom of finance capital would require the state’s intervention on behalf of productive capital till we learn to walk on two legs. Equally, on the social front, it might be necessary, in the short term, to return to the principles of the welfare state as they were envisioned (and not as they turned out) to get a perspective on where we should be going and what is to be done – while the social movements of our time socialise global capitalism as once the labour movement socialised industrial capitalism.