To Market To Market

by Quinn

In a typically thought-provoking post a few days ago, Chris Dillow at Stumbling And Mumbling discussed why the “left” regards the market as a “right wing” device. His conclusion was that the left falsely equates markets with business, and that the depression in the 1930’s and the Keynesian methods subsequently employed resulted in socialists abandoning market-based theories such as guild socialism in favour of models based upon state intervention.

I am certainly not going to take issue with that analysis, but from a personal point of view I can’t help thinking that this is another issue over which Margaret Thatcher casts her malign shadow. During the ‘Eighties, the phrase “the free-market” in effect became co-opted into – for want of a better term – the Tory brand. Albeit perhaps it was a term that no-one else wanted at the time, but if you opposed Thatcher then it could seem that you had to oppose markets; in becoming synonymous with the free market, I think Thacherism may have given markets a bad name. I certainly suspect that this had a large effect on me personally; although I have never considered myself a socialist, and I have always valued the effectiveness of markets in the economy (well not always, not when I was at nursery), I still used to roll my eyes, either metaphorically or literally, when a Tory, or my Dad, “went off on one” about the unalloyed virtues inherent in the free market.

Antipathy towards Thatherism itself is one reason, but I also think part of the fault lies in the behaviour of certain unthinking Thatcherite drones. Chris says that “much of what (the left) object to about markets shouldn’t be (and isn’t) markets as such but the same things rightists object to – market imperfections”. Fine, but viewing from the sidelines in the ‘Eighties it didn’t look that way to me, and still doesn’t at times. Many “rightists” seem oblivious to and blissfully ignorant of any possible drawback to markets. Particularly when I learned a bit more about economics at school and then at university I found it all to easy to dismiss the pro-market, scratched-record ramblings of some Tory spokesmen; perhaps unfairly. I was and remain far from being an expert in economics, that much should be clear, but many Tories seemed to have gleaned their entire knowledge of the subject from the first page of Lipsey’s “Introduction to Positive Economics” where it discussed the benefits of perfect competition; if only they had turned to page 2 they would have learned that perfect competition is a rare beast indeed, that we are more likely to get imperfect competition, monopolistic competition and oligopolies, and that there are such things as externalities and market failures. Many Tories may indeed be conscious of some market imperfections, but it was hard to tell that under Thatcher when all the simplistic rhetoric was about market forces being able to solve everything.

If, during the ‘Eighties, the Tories had presented me with a realistic view of markets, rather than an idealised one, then perhaps I would have viewed the free market more positively. As it was I think my appreciation of markets was more grudging, like admiring Eric Cantona when he worked wonders in a United shirt. I think it is hard to truly admire something that you see as being a weapon in your opponent’s armoury.

No doubt many people became opposed to the free market because of the Great Depression, but for others I think the matter was up for grabs until Thatcher forced the issue; perhaps in opposing the Tories an appreciation of the free market was thrown out along with the baby and the bathwater, and I may be as culpable as many others in this. As ever, an open mind on matters is to be welcomed.

Chris ends his post by saying it is time for the left to “update their Bayesian priors” and although I am reluctant to claim membership of “the left” I suspect others are less reticent in deciding where I stand. No doubt this is very good advice and I will look into doing some updating right now; just as soon as I find out what “Bayesian priors” actually are.