Mixed Economies: Efficacy Without Moral Narrative
Lee on Sep 09 2008 at 2:37 pm | Filed under: Domestic Politics, Economics, Lee's Page
(photo: Ian Murchison | website)
The nationalization of Fannie & Freddie is often presented as a crisis of faith for the political right, due to its manifest incompatibility with the advertised belief in the “free market.” However, Sunder Katwala at NextLeft cleverly recognizes that it also presents a challenge to orthodoxy on the left, given that the insisted purpose of the nationalization isn’t government ownership, but to rescue businesses for a stable return to the private sector.
What the Bush administration is doing with this move is acknowledging that there is no such thing as the ‘free market’. All markets depend on the framework of governance which makes market exchange possible in the first place – and which is also necessary to sustain the public support and legitimacy on which the licence to operate of market systems depend.
So the key question of political economy in the current downturn and credit crunch is about the legitimate and effective role of government. In concrete terms, that is recognised by the US Right and across the political spectrum, even though it contradicts the dominant strand of Anglo-Saxon business and economic analysis of the post-Reagan/Thatcher era.
The next left question for European social democrats is not how to make a ‘fundamental break with capitalism’ - but how to govern markets so that they meet economic, social and environmental goals. Indeed, the historic task of social democracy has frequently been to save capitalism from its own most fervent advocates.
(NextLeft)
This is a more sympathetic left which serves as a protector of capitalism, rather than its hardened adversary. It’s the impulse that is at the heart of the European “third way” and becomes the essence of Fukuyama’s rather more American argument for an end to history.
The mixed economy, the product of political compromise between the right and left, is a hated reality. It works and we all know it works, but people don’t admire it. While it’s natural that an unwanted compromise won’t engender partisanship by nature, the reason that despite its efficacy it finds so few passionate defenders is due to its essential moral impurity. The mixed economy doesn’t possess a comparable moral narrative to the virtuous liberated individual of the free market, or the altruistic community of the collectivist state economy. It’s this moral deficit in the economic debate that will always prove difficult for men to overcome.
What may need to be suggested, is that there is a moral narrative in concord. I can’t write it, but perhaps someone should. It is the soul of modern liberal democracy and it remains unsung in praise.
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