I have always voted left of centre – never Conservative. I stood as a parliamentary candidate in 2005, opposing a Liberal Democrat MP.
However, in my views on economics you could say I am a centrist.
Does this mean I stand somewhere between the Tory chancellor, Philip Hammond, and the Labour Party’s John McDonnell? No, my opinions on economics are much closer to McDonnell’s.
I have reported on financial markets and studied both economic development and the USSR – I visited it for the first time in 1971. I saw that the complete repression of markets there was obviously excessive, even though central planning had produced remarkable results in industrialising the country between about 1930 and 1960. But it was accompanied by gross inefficiency, poor quality, a lack of innovation – in short, pretty well everything that market evangelists say of state control in the economy.
So I do think that markets are best?
No. Market evangelists make the same mistake as the Bolsheviks and Stalinists did – or a mirror image of it. Their economic policies over the last 40 years have not been crowned with success either.
For the old dichotomy of ‘state v. market’ is false. A good economic policy makes use of both the state and the market. It is futile to try to make one do what the other is better at. The difficulty often lies in knowing which is better for a particular purpose, or what combination is best. But ever since at least the 1980s, the balance in both domestic British and international policymaking has swung far too far towards the market.
It seems to me that there are in fact three guiding principles of economic organisation:
• Hierarchy, or a pyramid of command which takes authority from above. Typical of state structures, especially undemocratic ones like the Soviet Union, it is also how most companies are organised.
• Horizontal, democratic structures, taking authority from below or alongside – cooperatives and mutual societies, as well as decisions made by elected councils and governments.
• Decentralised monetary exchange, operating through markets. Relations of economic power are mediated through changes in price.
Each of the three has its place, and more than one of them often combine effectively: education was traditionally organised on a mixture of the horizontal and vertical principles, to which the market idea has been increasingly added recently. All three principles must be described and analysed on equal terms, if economics is to lay any claim at all to scientific objectivity and rigour.
Rather laughably, conventional economists do make that claim; but their actual language does not bear it out. Mainstream economics only takes a serious interest in one of the three elements but, more or less explicitly, presents that element as the ideal. Non-market methods are called ‘distortions’ or ‘interventions’ in the proper working of the economy. That language is not impartial and cannot be called scientific. Do orthodox economists ever tell us of the financial markets ‘intervening’ in democratic processes? Yet they do so every day of the working week.
This failing is true of the basic theory underlying nearly every school of economics, except Marxism. It is truest of all in the neo-classical school, which has been dominant since the 1980s. But in 2008 the economic policies of that period, based on neo-classical ideas, brought us close to catastrophe.
And that is why I’m a centrist. I do not believe in the market or the state. I don’t think it is the job of a serious thinker to ‘believe’ in any such principle. The economic analyst should appraise their advantages and disadvantages, and determine where one is fit and where another is. We need an economics which will appraise things as they are, and not start from loaded concepts such as the ‘perfect market’, ‘perfect competition’, ‘general equilibrium’ (where is equilibrium less apparent than in financial markets?), ‘natural prices’, narrow economic ‘rationality’, economic ‘welfare’ and so on.
But to achieve that, economic theory probably has to be rebuilt from the ground up.
30/5/18
This is a revised version of an earlier piece which you can find at https://tomlines.org/wp-content/uploads/2018/04/Lines-Why-I’m-a-centrist-rev.pdf.