The market: Against the state

The market: Against the state

I n t r o d u c t i o n : M a r k e t va l u e s a n d We s t e r n

c i v i l i s at i o n

Markets and the market order are central to neo-liberal thinking. Markets for neo-liberals and the rules of exchange are sacrosanct to the functioning of the economy and, by implication, to the existence of

capitalism; they exist as the only alternative to some form of rational organisation of economic life. They are part of a natural, ‘spontaneous’ order of ‘civilised’ values and mutual cooperation, which sustain capi- talism and freedom in Western societies. As Keith Joseph proclaimed: ‘Markets are a state of nature which has spontaneously evolved, and to disregard their rules is as pointless as attempting to ignore the laws of gravity.’ 1

In the last quarter of the twentieth century, neo-liberal free-market ideas were ascendant in national and international political economy. The 1970s and 1980s witnessed a radical move away from the Keynesian demand management of the post-war era, and free markets came to be seen as the ultimate instrument of economic efficiency in modern capitalist economies. Free trade found a new audience and restraints on global investment were slowly unbuckled. This neo-liberal policy paradigm makes the claim that the market economy is the superior economic system because it inextricably connects liberty and efficiency and enables free exchange and trade, which maximises the welfare of all parties by enabling each to specialise in their areas of competitive advantage. By implication, in neo-liberal orthodoxy the state is seen as inefficient and corrupt, dam- aging the performance of the national economy by taking on functions In the last quarter of the twentieth century, neo-liberal free-market ideas were ascendant in national and international political economy. The 1970s and 1980s witnessed a radical move away from the Keynesian demand management of the post-war era, and free markets came to be seen as the ultimate instrument of economic efficiency in modern capitalist economies. Free trade found a new audience and restraints on global investment were slowly unbuckled. This neo-liberal policy paradigm makes the claim that the market economy is the superior economic system because it inextricably connects liberty and efficiency and enables free exchange and trade, which maximises the welfare of all parties by enabling each to specialise in their areas of competitive advantage. By implication, in neo-liberal orthodoxy the state is seen as inefficient and corrupt, dam- aging the performance of the national economy by taking on functions

which are beyond its appropriate and proper role of offsetting market distortions. In this chapter, the concept of the market and its adjacent concepts such as evolution, spontaneous order, limited knowledge, individualism and entrepreneurship in neo-liberal ideology are examined. A succinct account of the ideas of the classical and neo-classical liberal economists is presented, and the relevance of these ideas to modern market processes is explored. The obstacles confronting modern market economies – monopolies of both labour and capital, regulation, and imperfect compe- tition – are considered. The chapter goes on to analyse the so-called dynamism and vigour of the free market, aptly demonstrated by the con- tinuing dominance of Western capitalist states and international finan- cial institutions such as the World Bank and IMF. The centrality of the market to neo-liberal ideology is presented in terms of its unqualified opposition to state-led or state-mediated economic strategies. This chapter points out that there may be several neo-liberal interpretations of the market and of its role in the economic process. However, regardless of these differences in interpretation, two themes emerge: the importance of guiding policy by a clear and credible set of rules determined by the market order, and the importance of keeping in check monopolistic, reg- ulatory and bureaucratic forces which hamper the spontaneous order of the market and economic growth. These two themes are at the core of the neo-liberal ideology espoused by Ludwig von Mises, F. A. Hayek and others.

The chapter argues that neo-liberalism is not an exclusive theory of the market order propelled by an insight into the proper functioning of the free market: it is a complex movement of economic, social and moral objec- tives. Its own objective is the intellectual coordination of the life force of the market, of the state and of society. It reaches beyond the supply and demand theories of classical liberal economics (Say’s Law), and represents values and beliefs that have their origins in the cultural and intellectual traditions of Western civilisation. Neo-liberals’ main contention is that free market processes, not the apparatus of the modern state, are at the core of Western civilisation and progress. The chapter concludes by point- ing out that the neo-liberal market order must be seen as an integral part of a Foucaultian social discourse. In neo-liberalismm, this discourse is centred on a particular conception of the individuals and their rights. The market order, however, is part of a wider, constructed, social order, which situates both the individual and the state at its core.

t h e m a r k e t : ag a i n s t t h e s t at e