http://www.guardian.co.uk/commentisfree/2009/apr/10/financial-crisis-capitalism-socialism-alternatives

Whatever ideological logo we adopt, the shift from free market to public
action needs to be bigger than politicians grasp

Eric Hobsbawm
The Guardian, Friday 10 April 2009
Article history

The 20th century is well behind us, but we have not yet learned to live in
the 21st, or at least to think in a way that fits it. That should not be as
difficult as it seems, because the basic idea that dominated economics and
politics in the last century has patently disappeared down the plughole of
history. This was the way of thinking about modern industrial economies, or
for that matter any economies, in terms of two mutually exclusive opposites:
capitalism or socialism.

We have lived through two practical attempts to realise these in their pure
form: the centrally state-planned economies of the Soviet type and the
totally unrestricted and uncontrolled free-market capitalist economy. The
first broke down in the 1980s, and the European communist political systems
with it. The second is breaking down before our eyes in the greatest crisis
of global capitalism since the 1930s. In some ways it is a greater crisis
than in the 1930s, because the globalisation of the economy was not then as
far advanced as it is today, and the crisis did not affect the planned
economy of the Soviet Union. We don't yet know how grave and lasting the
consequences of the present world crisis will be, but they certainly mark
the end of the sort of free-market capitalism that captured the world and
its governments in the years since Margaret Thatcher and President Reagan.

Impotence therefore faces both those who believe in what amounts to a pure,
stateless, market capitalism, a sort of international bourgeois anarchism,
and those who believe in a planned socialism uncontaminated by private
profit-seeking. Both are bankrupt. The future, like the present and the
past, belongs to mixed economies in which public and private are braided
together in one way or another. But how? That is the problem for everybody
today, but especially for people on the left.

Nobody seriously thinks of returning to the socialist systems of the Soviet
type - not only because of their political faults, but also because of the
increasing sluggishness and inefficiency of their economies - though this
should not lead us to underestimate their impressive social and educational
achievements. On the other hand, until the global free market imploded last
year, even the social-democratic or other moderate left parties in the rich
countries of northern capitalism and Australasia had committed themselves
more and more to the success of free-market capitalism. Indeed, between the
fall of the USSR and now I can think of no such party or leader denouncing
capitalism as unacceptable. None were more committed to it than New Labour.
In their economic policies both Tony Blair and (until October 2008) Gordon
Brown could be described without real exaggeration as Thatcher in trousers.
The same is true of the Democratic party in the US.

The basic Labour idea since the 1950s was that socialism was unnecessary,
because a capitalist system could be relied on to flourish and to generate
more wealth than any other. All socialists had to do was to ensure its
equitable distribution. But since the 1970s the accelerating surge of
globalisation made it more and more difficult and fatally undermined the
traditional basis of the Labour party's, and indeed any social-democratic
party's, support and policies. Many in the 1980s agreed that if the ship of
Labour was not to founder, which was a real possibility at the time, it
would have to be refitted.

But it was not refitted. Under the impact of what it saw as the Thatcherite
economic revival, New Labour since 1997 swallowed the ideology, or rather
the theology, of global free-market fundamentalism whole. Britain
deregulated its markets, sold its industries to the highest bidder, stopped
making things to export (unlike Germany, France and Switzerland) and put its
money on becoming the global centre of financial services and therefore a
paradise for zillionaire money-launderers. That is why the impact of the
world crisis on the pound and the British economy today is likely to be more
catastrophic than on any other major western economy - and full recovery may
well be harder.

You may say that's all over now. We're free to return to the mixed economy.
The old toolbox of Labour is available again - everything up to
nationalisation - so let's just go and use the tools once again, which
Labour should never have put away. But that suggests we know what to do with
them. We don't. For one thing, we don't know how to overcome the present
crisis. None of the world's governments, central banks or international
financial institutions know: they are all like a blind man trying to get out
of a maze by tapping the walls with different kinds of sticks in the hope of
finding the way out. For another, we underestimate how addicted governments
and decision-makers still are to the free-market snorts that have made them
feel so good for decades. Have we really got away from the assumption that
private profit-making enterprise is always a better, because more efficient,
way of doing things? That business organisation and accountancy should be
the model even for public service, education and research? That the growing
chasm between the super-rich and the rest doesn't matter that much, so long
as everybody else (except the minority of the poor) is getting a bit better
off? That what a country needs is under all circumstances maximum economic
growth and commercial competitiveness? I don't think so.

But a progressive policy needs more than just a bigger break with the
economic and moral assumptions of the past 30 years. It needs a return to
the conviction that economic growth and the affluence it brings is a means
and not an end. The end is what it does to the lives, life-chances and hopes
of people. Look at London. Of course it matters to all of us that London's
economy flourishes. But the test of the enormous wealth generated in patches
of the capital is not that it contributed 20%-30% to Britain's GDP but how
it affects the lives of the millions who live and work there. What kind of
lives are available to them? Can they afford to live there? If they can't,
it is not compensation that London is also a paradise for the ultra-rich.
Can they get decently paid jobs or jobs at all? If they can't, don't brag
about all those Michelin-starred restaurants and their self-dramatising
chefs. Or schooling for children? Inadequate schools are not offset by the
fact that London universities could field a football team of Nobel prize
winners.

The test of a progressive policy is not private but public, not just rising
income and consumption for individuals, but widening the opportunities and
what Amartya Sen calls the "capabilities" of all through collective action.
But that means, it must mean, public non-profit initiative, even if only in
redistributing private accumulation. Public decisions aimed at collective
social improvement from which all human lives should gain. That is the basis
of progressive policy - not maximising economic growth and personal incomes.
Nowhere will this be more important than in tackling the greatest problem
facing us this century, the environmental crisis. Whatever ideological logo
we choose for it, it will mean a major shift away from the free market and
towards public action, a bigger shift than the British government has yet
envisaged. And, given the acuteness of the economic crisis, probably a
fairly rapid shift. Time is not on our side.

• Eric Hobsbawm's most recent publication is On Empire: America, War, and
Global Supremacy

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