Free Market Capitalism on Trial

Neoliberal, free market capitalism, has had a good run since it was ushered in by Reagan, Thatcher and Mulroney. There's been plenty of time to watch it in action and, now, there's plenty of evidence to gauge just how well it has served us.

Ngaire Woods, dean of Oxford's  Blavatnik School of  Government, says the case against free market capitalism is strong.

...some politicians are no longer defending free-market capitalism in terms of economic growth or the gains from globalization. Instead, they focus on individual opportunity. May, for example, has credited the system with reducing infant mortality, increasing life expectancy, driving down absolute poverty, boosting disposable incomes, expanding access to education, and slashing illiteracy rates.

But these claims aren’t in line with the facts. Start with maternal mortality. Much of the world has made great strides in making childbirth safer. From 1990 to 2015, Albania reduced its maternal deaths per 100,000 live births from 29.3 to 9.6. China, the poster child for state-led growth, reduced its rate from 114.2 to 17.7.

Meanwhile, the trend in the United States, the paragon of free-market democracy, has gone in the opposite direction, with maternal deaths per 100,000 live births actually rising, from 16.9 in 1990 to 26.4 in 2015. Equally shocking, the morbidity and mortality of white (non-Hispanic) middle-aged men and women in the US increased between 1999 and 2013.

The claim that free-market policies “slash illiteracy” is also misleading. In England, some 15% of adults (5.1 million people) are still “functionally illiterate,” meaning that they have literacy levels at or below those expected of an 11-year-old. Scotland’s most recent survey showed a decline in literacy, with less than half of the country’s 13- and 14-year-olds now performing well in writing. In fact, if you Google “successful literacy campaign,” the country with astonishing literacy gains that fills your screen is Cuba – hardly a free-market system.

The conservative case, eloquently articulated by May, is that a free-market economy, operating under the right rules and regulations, is the greatest agent of collective human progress ever created. If that claim is true, the only logical conclusion is that we are doing it wrong.

So what measures are needed to get it right? The practical solutions on offer seem to be fairly consistent across the political spectrum. Indeed, for all their furious positioning, the differences between left and right seem to have collapsed in this regard.

In the UK, the first suggestion is to ensure economy-wide investment and growth, which will require government intervention. Corbyn proposes a National Investment Bank and Transformation Fund to mobilize public investment and create wealth and good jobs. May, for her part, suggests an industrial strategy to promote “growth across the whole country,” helping to “turn local areas of excellence into national export champions.”

Second, private-sector leadership must change, in order to prevent short-term thinking, tax avoidance, and other forms of opportunism and personal enrichment. Here, Corbyn focuses on accountability in corporate boardrooms, while May calls for giving workers and shareholders a stronger voice in firms’ decision-making and ensuring that the largest companies have incentives to think long term.

A third corrective is to improve employees’ pay and working conditions. In Britain, even as the economy has grown, wages have been dropping – by 10% from 2007 to 2014. Corbyn promises to take action to stop employers from driving down pay and working conditions. For May, “all work should be fair and decent, with scope for development and fulfillment.” Both make the case for improving vocational training and technical education.

Fourth, in Britain, the government must address the public-housing crisis. In the 1950s and 1960s, an average of some 300,000 houses were being built every year; that figure has now dropped to less than half. Corbyn proposes a review of social housing, rent control, and regeneration for the people. May has announced the creation of a £2 billion ($2.62 billion) fund for building more council housing.

Finally, Britain needs more effective rules and regulations to ensure that privatized utilities deliver cheaper, more sustainable services. Corbyn accuses companies of handing out large dividends to shareholders, while infrastructure crumbles, service deteriorates, and companies pay far too little in taxes. May promises to end “rip-off energy prices.”

The orthodoxy established by Margaret Thatcher and Ronald Reagan in the 1980s – to roll back the state, after a decade of profligate and bloated government – is guilty as charged. A new consensus is emerging that more active and effective government is required to boost growth and expand opportunity. The jury is still out, however, on whether governments will be given the tools and support they need to rehabilitate the defendant.

The neoliberal era has been embraced by our political caste as an excuse to take them off the hook of governance. They freely offloaded much of their political responsibilities to the "markets" whatever that meant in any given situation. They chose to become petit fonctionnaires, technocrats, administrators, grey suits stuffed with wet cardboard. For them that meant all the trappings and privileges of power with only half of the responsibility, just not the half that mattered most to our nation and our people. That responsibility, the hard stuff, they shirked.

Caution. This May Make Your Jaw Drop.

The book opens with this mea culpa:

"I am a United States Army general, and I lost the Global War on Terrorism," Lieutenant-General Daniel Bolger begins his history of the Iraq and Afghanistan wars. "It's like Alcoholics Anonymous; step one is admitting you have a problem. Well, I have a problem. So do my peers. And thanks to our problem, now all of America has a problem, to wit: two lost campaigns and a war gone awry."

By placing the blame on the military, Bolger portrays presidents George W Bush and Barack Obama as woefully misguided. The mission was impossible from the outset. Announcing the 2007 "surge" in response to a Sunni insurgency, president Bush said that the US wanted to turn Iraq into "a functioning democracy that polices its territory, upholds the rule of law, respects fundamental human liberties, and answers to its people." 

The trouble, Bolger explains, is that majority rule in Iraq meant permanent war: "The stark facts on the ground still sat there, oozing pus and bile. With Saddam gone, any voting would install a Shiite majority. The Sunni wouldn't run Iraq again. That, at the bottom, caused the insurgency. Absent the genocide of Sunni Arabs, it would keep it going." 

Bolger prefers to fix most of the blame for the Iraqi and Afghan snafus on the military brass.  Others such as former commander now academic Andrew Bacevich put the fault at the feet of both the civilian and military leadership.

The judgment that those wars qualify as lost — loss defined as failing to achieve stated objectives — is surely correct. On that score, Bolger’s honesty is refreshing, even if his explanation for that failure falls short. In measured doses, self-flagellation cleanses and clarifies. But heaping all the blame on America’s generals lets too many others off the hook.

What's important is not who is right, Bolger or Bacevich, nor who is most to blame, the generals or the political leaders.  What is important is that Americans are finally having the conversation so long overdue, the post mortem of what went so horribly wrong without which they're bound to simply repeat failure again and again.  

Canada also needs this sort of discussion, some post mortem of how our mission to Afghanistan was lost.  Who got us into the mess?  Who kept us in it long after we had said we would go?  What, if anything, did we do right?  What did we do wrong and whose call was it?

We won't get that overdue soul searching.  Among the reasons is that the military genius who hatched this harebrained scheme is long safely retired.  Another is that the political leader most responsible for prolonging our failed mission, the prime minister who squeezed every last drop of political capital out of the dead and broken bodies of our soldiers before turning his back on them, remains in power.

Can You Learn to Love Uncertainty and Failure?

Most of us see uncertainty and failure as negative things, outcomes to be avoided wherever possible.  Yet, according to an item in The Guardian, learning to accept, even love, uncertainty and failure could be instrumental in the public understanding of climate science.

 Carlo Rovelli, a physicist at the University of Aix-Marseille, emphasised the uselessness of certainty. He said that the idea of something being "scientifically proven"   was practically an oxymoron and that the very foundation of science is to keep the door open to doubt.


"A good scientist is never 'certain'. Lack of certainty is precisely what makes conclusions more reliable than the conclusions of those who are certain: because the good scientist will be ready to shift to a different point of view if better elements of evidence, or novel arguments emerge. Therefore certainty is not only something of no use, but is in fact damaging, if we value reliability."

The physicist Lawrence Krauss of Arizona State University agreed.   "  In the public parlance, uncertainty is a bad thing, implying a lack of rigour and predictability. The fact that global warming estimates are uncertain, for example, has been used by many to argue against any action at the present time,"   he said.

"  In fact, however, uncertainty is a central component of what makes science successful. Being able to quantify uncertainty, and incorporate it into models, is what makes science quantitative, rather than qualitative. Indeed, no number, no measurement, no observable in science is exact. Quoting numbers without attaching an uncertainty to them implies they have, in essence, no meaning."

The Guardian report was based on an article from Edge which asked what scientific concepts would best improve everybody's cognitive skillset?  158 scientists, artists and philosophers weighed in.  They concluded we need a more discerning public, one capable of grasping the essential value in failure as fundamental to success and uncertainty as far more worthwhile than any supposed certainty.   They want a public able to understand the distinction between "average family income" and the "income of the average family."  What they want seems utopian - a far more sophisticated public awareness.  Unfortunately, public cognition appears to be trending in the opposite direction.

To those who reject the science of global warming as uncertain, they should remember this.   Global warming is a theory, but so is gravity.