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The Progressive Economics Forum

Beyond Defending the State

PEF member Tom Slee sends this missive challenging the Left:

The recent blog post by Robert Chernomas and Ian Hudson is a wholesome read. It reminds us that markets and private enterprise deserve less credit than they receive for our current prosperity, such as it is; it lays out the contribution of the state to innovation; it reminds us that unregulated markets are hazardous and often crooked; and it points out that cornerstone social democratic policies such as a healthy minimum wage don’t have the dire side effects conservative economics would have us believe they do.

And yet it makes depressing reading.

I’m not here to pick a fight with Chernomas and Hudson (it was a short excerpt from a bigger piece, after all), but it touched a nerve because for all my adult life (ie since the late ’70s) I’ve been reading the same defensive tone from left-wing economists and after thirty years it’s getting a little stale. Is defending the role of the state the best we can do? I hope not because it’s not enough.

Just to get back to basics, how many of us became left wing because of a belief in the beneficent power of the state per se? Not me and almost certainly not you. Most of us are left wing because we believe that, left to itself, economic wealth is used to exploit the poorer and weaker in society and that the best response to such exploitation is, the the words of Pete Seeger, to stick together. I don’t see the word “state” there. Yes, a democratic state has the potential to be a levelling instrument in an unequal society. But it’s not the only such instrument and it’s not always a reliable one.

The non-economist left is not always so cozy with the state. I look on my bookshelf and see titles from the UK in the 1970’s like Pluto Press’s In and Against the State, and Ralph Miliband’s The State in Capitalist Society. They both have harsh words for the institutions of the capitalist state and they identify forces that cause those institutions to act on behalf of the economically powerful. Once you move away from economic policy, most of us on the left are decidedly ambivalent about the state. State institutions have oppressive tendencies; nuclear-armed states are dangerous; the state defends the interests of the powerful. So why, when it comes to economics, are we so tied to the state?

I think it’s because the left is a victim of its own successes. The structural achievements of the post-war world are the great social democratic institutions rooted in the state: the construction of social security, the provision and expansion of public schooling and post-secondary education, public healthcare. We’ve identified with these achievements, so ever since Thatcher & Reagan we have stood as conservative (small c) defenders of the state against the market-populist radicals.

Unfortunately a siege mentality does not encourage adventurous ideas or internal debate, and as a result unorthodox economic ideas on the left, at least the public expression of them that I’m aware of, has been stifled. As a non-economist, it seems to me that our attitude to economic ideas that don’t stem from the state-driven social democratic tradition is too often one of suspicion. I’d love to be proven wrong…

Statist social democratic institutions are not the only tradition that we have. We have traditions of self-government from the co-operative movement, we have traditions from the trade union movement of course, from community-focused movements and small-scale economic organizations, and from social protest. The feminist movement has a far more ambivalent relationship to the state than the traditional left. So maybe we can look at some of these for non-state driven left-wing economic ideas too.

What’s more, the world has changed in the last thirty years. It need not be defeatist to say that the policy prescriptions of 1970 may not make sense today. After all, would we expect the policies and goals of socialists and social democrats in 1948 to be the same as those of 1910?

Here is a scatter shot list of policy areas, mainly micro-economic, in which left-wing innovation seems possible, but is happening slowly if at all in Canada. I do hope that I’m missing things. Can readers can put me right?

  • Corporate ownership  The left has a long tradition of supporting worker ownership. A successful example is the John Lewis Partnership that has a prominent position on Britain’s High Street. It’s commercial, it’s a business, and it’s worker owned. Have we seen any policy initiatives that encourage and promote this kind of corporate governance?
  • Corporate taxation In one blog comment I asked Erin Weir whether the Scandinavian model of low corporate taxation makes sense in Canada. He thought not, but it makes sense to me that in looking at progressive taxation we should direct tax efforts at the owners of corporations, not necessarily the corporations themselves.
  • Innovation  Is there a left-wing innovation policy that goes beyond university research to industrial development, and if so what would it look like? The most interesting idea I’ve seen recently is the suggestion of replacing pharmaceutical patents by prizes, supported by Stiglitz and others (short PDF here). Has this idea been followed up in Canada?
  • Post-secondary education  Historically, the left has been opposed to means testing. But historically we didn’t have computers. Stephen Gordon at Worthwhile Canadian Initiative recently argued that the best way to increase the accessibility of post-secondary education is not through cutting tuition fees for all, but through targeted subsidies. When I challenged him on means testing he replied that “if we can handle the GST credit, why not use the same data for tuition subsidies?” Makes sense to me (even though I am forking out too much money for my son’s university).
  • Microfinance and community initiatives  How does the left feel about the Grameen Bank and its emulators? The movement has been praised and damned from both left and right. Surely there is something there that has relevance to the Canadian experience? I know I dislike the focus of microfinance organizations like kiva.org on “entrepreneurs”, but perhaps that is just a generational linguistic shift I am not prepared to make. There is also a sense of solidarity in such movements, and a direct approach to providing support for powerless people to take control of their own lives – surely a left-wing goal.
  • Public health The debate on health is always phrased in terms of a public system versus a private system, but one of the most successful social health initiatives of the last few decades was sparked by efforts outside both these spheres. The building of a network of sexual assault/rape crisis centres in many of our cities came from feminist activists (see here (PDF) for example) and remains, if I understand it right, at arms length from government. While government funds have been used (and more could be needed) these have not always been state institutions. Are there ways to emulate the success of this movement in other areas of our society, and what policies would promote this kind of emulation?
  • Small Business  Our relationship to small businesses is ambivalent. We support them when we talk about communities and worry about the impact of big-box stores coming to town, but we don’t see them as a partner in an economic sense. What kinds of small-business economic initiatives have come from the left?
  • Cities and towns  The Jane Jacobs tradition of diversity and small-scale thinking is one that many on the left love, even while some on the right think she’s a great thinker too. She was no fan of central planning of course, but she’s also no fan of letting cities just grow according to commercial dictates. Why has the left’s adoption of her ideas has been piecemeal? Initiatives at the city level (especially in transit/traffic and housing) seem small-scale, but have the potential to spread from country to country in a remarkable way as activists and planners search for inspiration. The London traffic congestion charge and the bike-friendly initiatives of places like Lyons (now spreading to Paris) act as experiments that can be modified and built-on by others.

Well, that’s probably a confused list. What initiatives have I missed? Is the Canadian economic left less hidebound than I give it credit for?

Enjoy and share:

Comments

Comment from Stuart Murray
Time: January 23, 2008, 11:29 am

I think the unionization of private-sector jobs is a pretty big deal, and it has almost nothing to do with the importance of the state. What I find most interesting coming from private-sector unions is when they develop a sophisticated critique of productivity initiatives. Whereas public sector unions will often oppose any initiative that could potentially eliminate jobs, private sector unions are pretty keen to ensure that the businesses where their members work are still competitive and able to sell good products to consumers. Getting a class analysis of productivity initiatives, without getting obsessed with making all solutions public-sector, is a worthwhile addition to the list.

I would say also that civic society and the “third sector” (i.e. the non-profits and volunteerism) is an area where the left needs a stronger role. But by “stronger role” I mean we need to learn what the third sector has to offer, rather than teach them how to become traditional public-sector unionized large scale institutions, which is our default setting.

While we’re at it, let’s listen to what anarchists have to say about hierarchy and large-scale institutions. I think a lot of left-wingers are totally in bed with the right and the corporations in the bigger-is-better mindset and the encouragement of the supreme rule by the top person in every organization. Party, labour, and charismatic leaders rarely tip their hand to this critique, and it’s pretty obvious why.

Comment from tom s.
Time: January 23, 2008, 11:41 am

I had not thought of the distinction between the positions of public and private-sector trade unions. I absolutely agree with you about the “third sector” role and small-scale institutions (see a post of mine at my personal blog for something on that). I find the ideas of Erik Olin Wright in pieces like this (PDF) a bit wordy, but with some challenging content.

Comment from Larry Gambone
Time: January 23, 2008, 2:55 pm

Good posting! Historically statism has only been one aspect of socialist thinking, and for most of the time a minor part of it. (Marx and Engels had no use for “state socialism.”) Self-management, coops, mutual aid societies, municipal government are all part of socialism and I should add, the most important part. Indeed, German and Austrian Social Democracy had a vast counter-culture built of coops and other non-statist associations before they were destroyed by the Nazis.

Comment from Paul T.
Time: January 24, 2008, 7:25 am

Greetings Tom,

You stir the pot with your thoughts. These are quite interesting micro questions you raise. There are a few more that should no doubt be included within that realm.

Before getting to them or potentially concurrently, I think there is a macro dimension that requires an answer from the left in response to your argument about defending the state.

It essentially goes to the core of why we have collective action. On a daily basis the economy and society and culture require maintenance and regeneration. Labour is allocated to assets and tasks are performed on both the shop floor and the home floor. Somewhere in that mix is the means of production and who owns and controls it. Be it public, private, a combination of both or volunteer based. I guess the questions you raise on the micro level is asking at the macro level are there alternatives to these modalities in the ownership and thus the social relations of production and also what shape and form will society allocate resources towards these production modes. What mix of public, private, and so on.
On the macro scale it comes down to defining and solving the collective action equation. i.e. what tasks are allocated to what groups and who owns these means of production. Throughout history the mode of production and the relations therein come in a wide variety, from hunter gathers as some suggest as the most egalitarian and most community and ecologically focused but least productive on a material output level, to nomadic, to early agriculturalists to feudal and on through the centuries to capitalism and socialism.

Where are we headed next at the macro level. Will capitalism survive the ecological crisis. Will its apparent innovative strength in producing material wealth save it. Or will its inability to account for the social and environmental costs that run like a web through the fabric of our being, strangle, through its alienation and destructive power the very lifeblood of its existence, i.e. profit making abilities.

Can the future, given the outposts of capitalism under its current incarnation, deliver the needed outputs of an eco-friendly and eventually socially sustainable future in a manner that profits can be made.
Within the space of innovation that will be required to transform the current productive capacity, will the enormity of the task attract the private capital to undertake such tasks? Many draw parallels between the ecological changes and resource requirements needed to those of wartime production. I think it was Adam Smith himself that agreed that no one private interest would ever undertake such an endeavor as say war, as the return on the outlay of assets would never justify such investment. So with that logic guiding my thinking, one could argue that the future must entail a shift towards publicly backed initiatives. Or at least funded. Moving forward into the topic of how these new societal and individual needs are met from the production process is the challenge. A starting point on this would engender a quite lengthy debate on what exactly is progress, from an individual and a social perspective. It would seem that given the Risk Society we have moved into, that even a question such as progress is relatively difficult to measure. Hence the debate surrounding climate change.

Once these question are asked and answered then I would argue you can move forward at the micro level. I am not saying that a concurrent discussion cannot be entertained, but a final micro scenario cannot be entertained until some of these macro dynamics play themselves out.

So I would add onto your interesting questions with a few macro questions.

Paul T.

Comment from tom s.
Time: January 29, 2008, 5:43 pm

Larry – Thanks for the pointer; I know a little bit about the German-Austrian socialist movements in the ’20s but I’ll now talk to my brother, who knows much more.

Comment from tom s.
Time: January 29, 2008, 5:51 pm

Paul T. – To take up just one of your points, I obviously agree that the modern economy has many aspects to it that will not be satisfied by the market and private industry and require public commitment of some sort. I recognise that most of my items are on the micro scale, both economically micro and socially micro, but I think these things can be talked about and acted on in parallel.

Comment from Ralph
Time: February 2, 2008, 1:37 pm

I want to encourage everyone reading this blog, that a great many points made on this, wing, let’s say, of the blogosphere, have close mirror images way over on the other extreme, where I spent most of my life, politically.

Please pardon this aside, which explains why I’m visiting this blog:
There is a war going on in the “Republican Party”, “conservative”, sphere in the U.S. right now, as a great many people are disgusted and fed up with a system that they vaguely realize has been a big lie. Most, though (I admit probably including myself) can’t formulate exactly what is wrong, and they don’t push the argument as far as in my opinion it should be pushed (Republicans=Democrats=One World Machine).

About the original post and statism: Through these decades during which I’ve been politically aware, I can assure you that it was the threat of *statism* from the “left” that most motivated our votes. While I guess others were manoevering for whatever they could get (in an unprincipled way), as ordinary voters, we simply were opposed to creeping dictatorship. So, believing the lie that the other party was for small government and individual liberty, we unwittingly elected a statism of the other side. (This is easy to understand: we were taught from the earliest age in school to love and believe in the goodness of our government. Naturally, we projected onto “liberals” that they loved and believed in a different (Soviet style, of course) government, and that was terrifying.)
We did not dream that the political system of our beloved country offered no option. Well, many believe it now, and we see it ultimately descending over the entire world.

Small government, plus cooperative self-governance as described in your post, sounds good to me. It preserves the self-respect and motivation of well-meaning free individuals to make the contributions they value.

Lastly, I hope you take care not to dismiss people you might think are ignorant or provincial or hopeless. Millions are listening who weren’t before, and some kind of “movement” is possible. Keep talking. Thanks for your blog.

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