Along with multimillion-dollar bonuses, intellectuals too are undermining the case for liberalizing markets and limiting government that was so influential over the last thirty years. Left intellectuals have much further to go before they can restore the idea that government should be the lead change agent. They are, however, doing quite well in asserting the idea that democracy and the people were ripped off.
It’s appropriate that this counter-reformation is well-represented in Britain. Pro-market reforms started in Britain at about the same time they were launched in the US. But in Britain, they went much further. Last November, the Times Literary Supplement reviewed a book that may become the prevailing diagnosis of what was tried by the right and must be undone by the left. Alasdair Roberts’ new book, The Logic of Discipline: Global Capitalism and the Architecture of Government, argues eloquently that the reforms undertaken during the “era of liberalization” were designed to insulate key state functions from the “caprice and short-sightedness of the democratic process.” The reviewer, Jonathan Pearson, sums up Roberts’ thesis:
“In short, in order to protect the fledgling globalized economy, undisciplined voters and politicians were to be sidelined in favour of disciplined technocrats. The “logic of discipline,” as Roberts calls it, inspired the creation of an array of defences against the “vagaries” of democracy. Discipline found its institutional expression in the creation of independent central banks, independent regulatory agencies, the transfer of authority from governments to private industry and the emergence of fiscal rules designed to ‘restrain the sovereignty of democratic institutions.’”
As a participant in design of an independent regulatory and commercial structure for Ontario’s gigantic public electricity system, my heart races when I read again about the importance of discipline. However, the above thesis is wrong on three points. It doesn’t say for whom discipline was intended to benefit, how discipline was to be realized, and it makes democracy the adversary.
Investment bankers made a lot of money out of privatizations. But the idea of devolving numerous government businesses to the private sector would not have gone very far, anywhere, without aggressive support within both partisan and nonpartisan circles in government. Concern for discipline was paramount — but the culprit was hardly democracy. According to the review, “the world of discipline is staunchly amoral; here objectivity and efficiency always trump fickle notions of ‘right and wrong.’” Try selling that idea to a minister of any strip.
The discipline reformers we were looking for was to be found in competitive markets, and the beneficiaries were intended to be the people. Alfred Kahn, the American air industry deregulator, put it succinctly: “Whenever competition is feasible it is, for all its imperfections, superior to regulation as a means of serving the public interest.”
Public concerns—for instance, worker safety, fair dealing in the marketplace, the social safety net, and the environment—were never targets for privatization or deregulation. No matter what transcendent virtues entrenched interests used to clothe themselves, the reform aims were clear: if it can be made, bought, and sold in markets, then it is best that it operates in markets and not remain the ongoing business of public monopolies.
Yes, discipline—rigorous external threats and interests—is vital. Institutions that don’t have to account to others lose their way, don’t adapt, and waste resources. It is still theoretically conceivable that the old socialist ideal that community decision-making can serve both justice and economic efficiency. However, we know from experience that massive public monopolies operating in big democracies cannot be as effectively disciplined within the modern state as they can in competitive markets.