Tuesday, 23 September 2008

Sod the markets

Reading through my (occasional, but often furious) daily output commenting on political blogs, I can detect in myself a continuing disappointment with left-wing thought.

In the last couple of days, the outpourings of leftists over at Open Democracy have been attracting my ire. Here’s a few reasons why.

First, Open Democracy seems rarely if ever been interested in finance. Now, however, we have daily comments, all of them from the same ideological standpoint. This is hardly long-term, or unbiased, reporting. It rather smacks of joining the party late, and with little to say.

Ann Pettifor is one of the most frequent commenters on the site, and her contributions are disappointing. Pettifor has been one of the few (only?) left-wing writers to focus on finance (as opposed to fantasies about the subject) over the last decade. It is, therefore, a let-down to find that she has little or nothing more interesting to say than the ignorant and confused types that make up the bulk of leftist finance commentary.

State and market, according to these reactionary folk, are distinct ideological entities operating at either end of the ideological spectrum. Therefore, they say, you are either ‘for’ one or the other, and events are understood as a zero-sum game between these two.

Therefore, recent events have seen the state ‘win’ and the market ‘lose’, heralding the commenting classes to write a plethora of redundant articles about the end of markets and the rise of socialism.

This is complete nonsense, but it has the worrying potential for traction. However, actual political programmes currently appear rather unlikely, as these market critics seem to lack any sense of what to do, or have such ideologically loaded recommendations as to be a total nonsense.

Amongst Pettifor’s recommendations are ‘a week long bank holiday’ (ie stopping the dreaded market from operating) and allowing state-mandated regulators to step in to value assets, thus restoring power to the state over the market.

This is a fantasy version of price discovery and human behaviour. Prices can’t be set by government fiat – that’s what markets do. Fantasy market prices devised by over-worked and under-skilled bureaucrats, amidst panic brought on by abrupt bank shutdown – this is policy-making of the type that Argentineans have grown sadly accustomed to.

In reality, we do need the left, but we need one that currently seems not to exist.

A consistent voice that highlighted areas where market penetration is unhelpful is needed. A perspective that realises that markets do not automatically allocate fairly is also needed. But this view also needs to recognise that the market is just a process, and the ideological baggage attached to it by both left and right is downright unhelpful.

Such views will not come from Cold War era antagonism and ideological grandstanding.

Edited to add: interestingly, FT columnist Martin Wolf puts forward a number of similar recommendations to Pettifor in his piece today. Doesn't mean I've changed my mind though!

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