A
week or so ago, the Prime Minister gave what was reported as a robust defence
of 'free market capitalism', extoling its virtues and claiming that it was under
threat from Labour. In her conference
speech on Wednesday, talking about capping energy prices, she laid out an
excellent exposition of why free markets don’t work, and why she is therefore
going to intervene in the way the energy market works. It was an interesting juxtaposition, to say
the least.
The
first thing to note is the way in which she conflated markets and
capitalism. This was either deliberate
obfuscation or else she really doesn’t understand either; it’s hard to tell
which in the case of Theresa May. But
they are not at all the same thing.
The ‘market’
is a product of human ingenuity and is the best enabler we’ve yet come up with
for the exchange of goods and services, but it in no way depends on the use of
a capitalist system for the production of those goods and services. I can easily envisage a post-capitalist economic
system which continues to use the market mechanism. And why not?
Why throw away something proven to work?
The second question is then not about markets per se, but about how ‘free’ they are.
Insofar
as there is an ideological dispute about markets, it is not about whether they
should exist, it is about how they are controlled. Very few people are calling for the abolition
of markets – but there are also very few who call for completely unregulated
markets. All markets run according to a
set of rules and regulations; the questions to be asked are what those rules
are, who draws them up, and whose interests they serve. Few people would argue that monopolies should
be allowed to distort markets in their favour, and as we learned on Wednesday,
even the Prime Minister recognises that markets with many small consumers and a
very small number of large suppliers can end up favouring the suppliers rather
than the consumers.
But in
saying that, she’s entirely conceded the ideological point which she was so
determined to defend only last week - markets need intervention and control to make sure that they work for the interests of all participants. Those calling for the removal of controls are invariably those who believe that they can benefit from such removal; but we need to remember that for some to benefit, others must lose. It's not as easy as the management mantra about win-win suggests to ensure that there are no losers - dividing the world into winners and losers is the norm. Making markets work fairly for everyone requires a degree of control and intervention - as the Prime Minister conceded on Wednesday.
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