Showing posts with label market. Show all posts
Showing posts with label market. Show all posts

Thursday, July 4, 2013

Changing from economic to political primacy: Why this is necessary


Recently many publications of economists and philosophers were released which question and want to contain the dominant role of the economy and the market in our societies of today (e.g. R. and E. Skidelsky, T. Sedlacek, L. Herzog, M. Sandel). They demand that the role of the economy has to be debated publicly. This corresponds basically to the demand for a primacy of politics over economy. But why is it important to contrast the primacy of politics with the one of economy?
 
First of all it is decisive to see that among all political views of a society also such exist according to which the economy and its material fruits indeed are not seen as an end in itself. In a society living the primacy of real democratic politics institutional conditions are in place which enable to include all (non-radical) political views and matters of a society. Of course, and this is fully clear, also in such case economy will play an important role simply because people want sustenance and wealth.
 
In a society in which the primacy of economy rules economic issues are basically considered as the most important ones. Principles like the market, growth or profit maximization become to end purposes of all existence. All forces which potentially constrain the forces of the pure market as the only regulative force will be fought. Factually (and although democratic institutions may still exist) this model of society shows fundamental and even totalitarian traits: everybody has to subjugate herself to the primacy of economy and its principles, if she wants or not.
 
Once established, to depart from this model is difficult: each concept of economy other than the one of a neoliberal economy acknowledges also other matters than pure economic ones to have a meaning or value on their own (e.g. stakeholders, society, environment). This of course endangers the economic primacy. But a society with e.g. a primacy of religion has similar problems: all its members have to subordinate themselves to religious principles if they want or not.
 
Only the primacy of politics which is committed to a democratic order can provide remedy: only in this way the full colourfulness of views of a society can be integrated. Despite this also caution has to be exercised: material power asymmetries between political actors e.g. can influence the formation of majorities. Moreover, it has to be acknowledged that politicians like R. Reagan or M. Thatcher which have contributed significantly to the primacy of economy were democratically elected.
 
Because today we know to what such primacy is able to do critic at it has become good form even in economic circles. But the voyage has not ended yet: the actual requirement is the return to the primacy of politics and also to stay there. To stay there it is also necessary to debate in Aristotelian manner what is good and hence moral. To think about the good helps preserving before leaving the primacy of politics: nobody will then voluntarily leave this primacy for a fundamental-totalitarian system, be it of religious, economic or of other character.
 
Claude Meier

Tuesday, August 7, 2012

Market-advocates demand state interventions: An ideological absurdity that is reality

End of July Mario Draghi, President of the European Central Bank (ECB) indicated quite vaguely the intervention that ECB will buy state bonds from crisis countries of the Eurozone. The stock market reacted promptly by increasing quotations. This is interesting because interventions from institutions close to the state normally are not what market-advocates (to which stock exchanges overall can be counted) put into a good mood.

But, since the sub-prime crises from 2008/09 and the following bail-out of many financial institutes by states all over the world, things have fundamentally have changed, one could mean. The state since was not only decent again, it was indispensable. The neo-liberal ideology of a pure self-regulating market solving (nearly) all economic problems and beyond as well as the ideology’s inherent state-critic was out of fashion suddenly. Draghi’s indication of a possible intervention by ECB shows that state related interventions today not only are accepted but even are demanded by market participants. If this is right or wrong or just a logical mechanism, is irrelevant. It is reality and that’s what’s relevant.

But how this new reality gets along with an ideology that sees things quite different? Already after the first shock of the sub-prime crisis the old apologists of the market ideology came back on stage. In their contributions in diverse newspapers, magazines and journals it was to read again what blessings a pure market-driven system would be able to perform, as long as there is no distortion through state interventions. In many contributions the new facts haven’t found any access to the thoughts of the authors. It seems that many want to preserve their ideology and its theoretical backgrounds as it is and defend it against the new realities. One of the latest of such market-purists seems to be the US presidential candidate of the Republicans Mitt Romney. Overall, he seems to believe that the less state intervention exist in the market-economy (taxes, regulations etc.) the better it performs. The state primarily handicaps economic freedom and is a threat in general. If things would be so easy we never had the sub-prime or other economic crises.

To stay ideologically fair, we can take a look to the ideologists on the other side of the continuum, the state-centrists. Indeed most of them learned at latest after the fall of the Berlin wall that a pure centrally planned economy does not lead to salvation and comprehensive well-being. But, there are still contemporaries who try to save as much as possible from this state-centric ideology by ignoring facts and reality. The latest example is the President of France, François Hollande, a Socialist. As soon as he was in power he reduces the retirement age back to 60 years although the public purse is nearly empty and the people’s life expectancy rises and rises.

Either market-purist or state-centrist both are ideologically conservative and therefore also structurally conservative: old and outdated structures (e.g. pension age 60 in France, the intention to prolong temporary tax reliefs for very wealthy citizens by Romney in the USA although also here the public purse is scarce) will be preserved with such bodies of thought. Ignored thereby is the reality. A reality in which capital investors demand state interventions. It is obvious: such realities need new and a more progressive and pragmatic political thinking and measures. It is very important to adapt the institutional structures to the new needs which are already here and recognizable in the daily life. Ideologies are principally ok as guidelines but they have to develop themselves by incorporating actual reality. The other way is fatal: to simply serve the ideological clients by trying to impose ideological purism in reality.

Claude Meier