One of the oldest rhetorical tricks of
free-marketeers has been the appeal to unintended consequences; state
interventions, they claim - often reasonably - don't work out as intended. But
it's not just statist policies that are vulnerable to unintended consequences.
So too is neoliberalism, as Ed Miliband's speech
yesterday made clear.
That speech was an echo of Karl Polanyi. Back in
1944 he pointed
out that pretty much all industrial societies had seen a retreat from
laisser-faire and rise of statism since the late 19th century:
If [the] market economy was a threat to the human and natural components of the social fabric...what else would one expect than an urge on the part of a great variety of people to press for some sort of protection? (The Great Transformation, p150)
Miliband is betting on a repeat of this process.
His talk of "one nation Labour" and his claim that the rising tide of economic
recovery "just seems to lift the yachts" echo Polanyi's claim that market
economies undermine the "social fabric". And his promises to freeze
energy prices and strengthen the minimum wage are (mild) statist challenges
to a private enterprise economy.
In this sense, we're seeing two unintended
consequences of neoliberalism.
One, as Polanyi described, is that when market
economies undermine human concepts of reciprocity - when the rich seem to get
richer at the expense of the poor - they generate a backlash; Miliband's promise
to freeze energy prices is hugely popular
with focus groups.
The other is that this backlash is taking the
form of statist policies. But this need not, in theory, be so. Historically, one
alternative to statism has been the use of trades unions to protect workers; and
yes, these are alternatives because as Philippe Aghion and colleagues have shown, stronger
unions are associated with weaker minimum wage legislation. Sadly, the
combination of weaker trades unions and the global excess
supply (pdf) of labour rule out this alternative. Workers have lost power at
the point of production, but they still have it in the ballot box, and Miliband
hopes they'll use it.
Herein, though, lies a tragedy. In principle,
unions are a better way of protecting workers than the state, partly because
they represent "big society" virtues
of self-help and community, and partly because collective bargaining can be
sensitive
to local idiosyncratic market forces in a way that legislation is not. But
this healthy alternative is not available now.
In this sense, Miliband's rightist critics are
missing a point - that his statism is an unintended consequence of the
neoliberal policies they've supported.
