Gravity's Rainbow

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If voting changed anything they’d abolish it

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I’m really enjoying Ha-Joon Chang’s Bad samaritans: the myth of free trade and the secret history of capitalism. In a chapter discussing some serious tension between free markets and democracy, he discusses typical neoliberal policies and how they actually undermine democracy. He’s talking about developing countries and writing from 2008, but I’d argue that neoliberalism undermines democracy in all countries – just look at the last 10 years in North America and the EU.

Neo-liberal economists worry that politics opens the door for perversion of market rationality: inefficient firms or farmers may lobby the parliamentarians to get tarrifs and subsidies, imposing costs on the rest of society that has to buy expensive domestic products; populist politicians may put pressure on the current central bank to ‘print money’ in time for ecection campaign, [etc] …

The neo-liberals solution to this problem is to ‘depoliticize’ the economy. They argue that the very scope of government activity should be reduced – through privatization and liberalization – to a minimal state. In those few areas where it is still allowed to operate, the room for policy discretion should be minimized. … Such restraints can be provided by rigid rules that constrain government choices – for example, a law requiring a balanced budget ….

This next paragraph channels my personal political economist hero, Karl Polanyi.

The first problem with this argument for de-politicization is the assumption that we can clearly know where economics should end and politics should begin. But that is not possible because markets – the domain of economics – are political constructs themselves. Markets are political constructs in so far as all property rights and other rights that underpin them have political origins. … [W]hen neo-liberals¬† propose de-politicizing the economy, they are presuming that the particular demarcation between economics and politics that they want to draw is the correct one. This is unwarranted.

More importantly for our concern …, in pushing for the depoliticization of the economy, the Bad Samaritans [developed countries like the US and EU members] are undermining democracy. Depoliticization of policy decisions in a democratic polity means – let’s not mince our words – weakening democracy. If all the really important decisions are taken away from democratically elected governments and put in the hands of unelected technocrats in the ‘politically independent’ agencies, what is the point of having democracy? In other words, democracy is acceptable to neo-liberals only in so far as it does not contradict the free market…”

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