The Backlash Begins
July 25, 2011
One of the striking features of the banking crisis was the way in which the Left utterly failed to capitalise upon it. A casual observer would’ve thought that worldwide financial calamity brought on by the mismanagement by the private sector of the planet’s finances would provide the perfect prop to those demanding more state intervention. But this failed to happen – across Europe, right-wing parties cemented their grip on power, in the US a tidal wave of populist anti-statism arose, and in South America the previously leftist governments reached their high water mark.
The populace of the West did not demand revolutionary change. In the Anglo-Saxon world, the ideals of Thatcher and Reagan remained dominant, and libertarianism – the belief in the moral worthiness of the unrestrained entrepreneur – rose in prominence. The reason for this may simply be the absence of an alternate model; with the failure of socialism, what remains? The Left remains mired in a quagmire between infeasible socialism and an economic model – the Third Way – that shackles social concerns to the cyclical nature of capitalism.
There are signs that this may change, however. The third of the UK’s Transparency Crises, the hacking scandal, has reinforced a point that was not made opaquely in the first two. The banking crisis revolved in part around the mis-selling of financial products complex to the point of opacity. An information failure in the banking system – the inability to know whether the people borrowing money were able to pay it back – led to the freezing up of credit. The MPs’ expenses scandal involved the revelation that the complex mechanisms by which MPs were paid for ‘expenses’ were in fact de facto wage hikes concealed in paperwork. The hacking scandal has demonstrated that individuals in possession of a great deal of power and influence are apt to abuse it.
For this is a crisis not just of the relationship between media and Government, but of individualism itself. Markets perform inadequately when their participants have insufficient information. If the power structures of a given market lead to the concealment of information, then that market fails to perform effectively. The post-Thatcher society of individuals maximising their net worth lends itself to the creation of these power structures, as we have seen. If individuals cannot be trusted, then a political and economic system based on that requirement is cast into doubt.
It is notable that the first response of Government to this latest crisis has been to reach for the regulatory toolbox, which stands in contrast to the way in which regulation was only dragged out of the Government in the previous two crises. There is an implicit recognition that individualism has failed, and some form of collective regulation is necessary. Even The Telegraph begins to accept this.
This is a tremendous challenge to libertarians. Socialism failed not because it was perceived as immoral, as they would have you believe, but because it failed to deliver sufficient benefit to those living within it. It failed because individuals are selfish, and best motivated by that. But if that selfishness is so extreme as to necessarily subvert the restricted power structures endorsed by libertarians with ones born of money, then libertarianism fails for the same reason. Morality doesn’t come into it; practicality trumps all.
Chris argues that this failure of individualism requires that some mechanism is set up by the left to prevent capitalists capturing the state in the way in which the hacking scandal has illustrated. I would disagree. These are transparency crises, and the way to overcome transparency crises is to provide more information. I would argue instead for a General Right of Information, giving any member public the right to see any document held by any corporation or similarly legally constituted entity, as well as the public sector. As a liberal, one would think this challenge to individualism is a challenge to my political beliefs. Not a bit of it. At the centre of liberalism has always been the understanding that education – information provision – is necessary for the effective state. It is now our task to extend it.