More Denmark, less Venezuela. Could there be a pro-market left in the UK?
Jeremy Corbyn’s resounding victory last Sunday has consolidated the dominance of paleo-socialism, not just over the Labour Party, but over the British left as a whole. There still is a non-socialist left in the UK, but policy-wise, we haven’t heard much from them in a while. The Corbynista movement has plenty of left-wing critics, but Corbynomics has almost none.
Detractors on the left are uncomfortable with the movement’s cultish character, with their fondness for witch-hunts and searching for ‘traitors’, and their unwillingness to reach out to the undecided. Limiting the critique of Corbynism to such strategic matters is a convenient way to dodge difficult ideological arguments, but it might ultimately harm the critics’ cause. It reinforces the message that the paleo-socialists represent the ‘true’ left, and that deviations from their programme can only ever be a necessary evil, a compromise grudgingly accepted for the sake of appealing to centrists. The critics’ implicit message to the Corbynistas is: in an ideal world, we would all get behind your agenda. But unfortunately, we do not live in that ideal world, so we cannot advocate full-on socialism, as much as we would love to.
But is this true? Could there not be a non-socialist left that is genuinely relaxed about, even appreciative of the market economy – not because they feel obliged to, but because they mean it? Or is hostility to the market economy part of the very definition of the left?
I suppose it’s none of my business. I am a fully paid-up member of the neoliberal cabal that secretly runs the world, so my agenda is to quadruple the wealth of the 1%, to impoverish the poor, to crush the working classes, and to commodify each and every aspect of life. Thus, if you are a disgruntled social democrat looking for left-wing alternatives to Corbynomics, I’m probably not the person you would turn to for advice. Nor is it really my job to muse about which economic policy combinations might work for people from other ideological tribes.
But then again: even though I am no fan of Chardonnay wines at all, I think I still have a fairly good idea about what type of food you would pair a Chardonnay with, and what combinations you would avoid. You can put together food-and-wine pairings that make sense on their own terms, even if they are not what you would choose for yourself. So here’s my – unsolicited and uncalled-for – attempt to do the same for economics. I think that while it would be difficult to imagine a ‘small-government left’, you can easily combine support for high levels of income and wealth redistribution with support for a laissez-faire economic policy. You can take the view that the state should redistribute wealth, but it should not get too involved in its creation. Related to that, you can take the view that the state should fund a generous welfare state, but that it should not itself be the main provider of welfare services. While not necessarily my cup of tea, that combination of ideas would be perfectly intellectually consistent.
After all, the economic policies of Denmark and Sweden are not a million miles away from what I’ve just described. (In a way, this also applies to Norway, Germany and the Netherlands, but we want to keep it simple here). For as long as I can remember, the left has been waxing lyrical about these countries, but their paeans have never been accompanied by much interest in what these countries actually do, in terms of economic policy. The left has used Denmark and Sweden as rhetorical trump cards, rather than economic policy models to be studied.
The Nordic economies are not highly regulated economies, they are not economies in which the state actively shapes investment decisions, they are not economies in which the state directs business activity, and they are not economies in which the state owns or controls productive resources. They are thus a million miles away from Venezuela, the economic model that leading Corbynistas (such as Seumas Milne, Owen Jones, and, of course, Corbyn himself) were praising to the skies until just a few years ago. They are not even particularly close to more traditionally corporatist economies like France or Italy.
The graph below compares the UK, Sweden, Denmark, France and Italy in terms of a number of important economic policy indicators, with higher scores meaning less government interference. We can see that the Danish state and the Swedish state are not generally more meddlesome than the British state.
Graph: Key economic policy indicators compared (10 = freest)
-based on the Economic Freedom of the World database
This goes to show that there is a difference between a large state and a meddlesome state. In the Nordic countries, the state is undoubtedly large, with public spending accounting for 50% of GDP or more. But it does not get actively involved in economic life. It gives the market sufficient freedom to generate wealth, and then redistributes a large chunk of that wealth to the poor and less well-off.
Table: The role of government in economic life: size vs intrusiveness
|Size of government|
(<40% of GDP)
(>50% of GDP)
A ‘National Investment Bank’ à la John McDonnell – that is, a plaything for politicians to redistribute resources from sectors they don’t like to sectors which they do like – would be alien to those economies. So are nationalisations, ‘People’s QE’, and all the other fashionable socialist nonsense currently doing the rounds. And while the Scandinavian states pay for a broad range of services, they do not generally insist on providing them themselves. Even in sensitive areas like education and healthcare, they are quite relaxed about purchasing services from independent sector providers. Indeed, there are proposals that would get you crucified in the UK, but that would be solidly part of the mainstream in Scandinavia.
A pro-market left would have to quit a few bad habits and knee-jerk reflexes, but it would not have to undergo any Damascene conversions. If the pragmatic sections of the left simply took their own rhetoric about their cherished Nordic model a bit more seriously, they would already be most of the way there.
‘Team Denmark’ would, of course, immediately come under fire from ‘Team Venezuela’, the paleo-socialist majority in their own camp. But those attacks would be very easy to fend off.
The paleos would argue that ‘light-touch regulation’ caused the financial crash of 2008, and all the misery that followed. This is nonsense. Regulation can only reduce risks when behaviours are known to be risky: laws against drink-driving make sense, because we know that alcohol impedes our ability to drive. But before the crash, the regulators were just as clueless as the bankers about the risks that were being built up in the financial sector. Giving them more power would have changed precisely nothing. And, of course, countries in which the state was more actively involved in the financial sector were just as badly affected as countries that practiced ‘Anglo-Saxon capitalism’.
A pro-market left would also have to abandon the idea that government is the natural ally of the poor, and always has their best interest at heart. Government power can also be harnessed by vested interests to protect their own privileges at the expense of the poor, and there are indeed plenty of government interventions that demonstrably fit that description. I suppose that unlike free-market liberals, the left will always see government as inherently benign, and I find it difficult to imagine a ‘government-sceptic left’. And that is fair enough – but it would not hurt them to take a leaf or two out of the Public Choice Economics 101 textbook. That could mean that before reflexively calling on the government to ‘do more’ about X, they could occasionally ask what the government is already doing in relation to X, and how that has been working out so far.
A pro-market left would also have to abandon the romantic fantasy of ‘public ownership’. There is no such thing as public ownership. As Arthur Seldon explained:
“What belongs nominally to everyone on paper belongs in effect to no-one in practice. Coalfields, railways, schools and hospitals that are owned ‘by the people’ are in real life owned by phantoms. No nominal owner can sell, hire, lend, bequeath or give them to family, friends or good causes. Public ownership is a myth and a mirage. It is the false promise and the Achilles’ heel of socialism. The effort required to ‘care’ for the 50-millionth individual share of a hospital or school owned by 50 million people, even if identifiable, would far outweigh the benefit; so it is not made, even if it could be. The task is deputed to public servants answerable to politicians who in turn are in socialist mythology answerable to the people. In this long line of communication the citizen is often in effect disenfranchised.”
The pro-market left described here would not be my cup of tea. Sure, I would rather live in Sweden or Denmark than in Venezuela or Cuba, but if I had to choose between Sweden and Switzerland, I know where I would go. Anyway – if I were a policy sommelier, I would tell you that, like grilled salmon and Chardonnay, the combination of redistribution and laissez-faire economics works on its own terms, even though it’s not the combination I would choose for myself. Corbynomics, too, is a pairing that makes some sense on its own terms, but it is more like pairing baked beans, several times reheated, with a bottle of the most headache-inducing Liebfrauenmilch.