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The myth of the market

Over the past 32 years, Britain’s political leaders have lectured us with their mantra of disaster, “Let the markets decide!” Though the personnel in Downing Street have changed (from Thatcher and Major through Blair to Brown and now Cameron), the message has remained obsessively constant as our leaders seem cloned to the same way of thinking, always eager to spin that there is no alternative to the worship of free markets.

Since the late 1970s, a myth has been promoted that prosperity was dependent on scaling back government, having the private sector dominate the economy and establishing freedom from regulation. The pitch was that the invisible hand of capitalism’s markets is the best mechanism and will transmute individual acts of economic self-interest into socially desirable collective outcomes. How this would happen was never addressed or spelt out.

With hindsight the claim that free markets generate good outcomes for working people is now seen as utterly risible. Not even Adam Smith, the 18th century’s foremost advocate of markets, took such a benign view of their workings, as he envisaged the necessity of society intervening to ensure protections and safeguards. Needless to say his contemporary followers tend to overlook the caveats of the founder.

So what has been the effect of this dogma being unleashed as an economic policy? What have three decades of financial deregulation and dizzying privatisation actually produced? They have hatched a bleak world of economic slump and growing poverty for workers.

Capitalism tries to fog its workings. It clothes its operations in mystique, portraying the market as some irresistible, almost godlike, objective force performing exchanges throughout an economy. But there is no mystery for those who care to see; markets are social constructs, not impersonal forces. They are controlled by real people – capitalists – who exercise control over exchanges in the economy, at each stage of which they seek their own benefit and extraction of profit, not the interests of society.

The market is merely a convenient euphemism to shade the murky, greedy processes in which various sets of capitalists are making a killing at our expense in each individual process of the economy – in finance, commerce, the labour market, merger and takeover of companies, public services contracts, etc.

Deference to the whims of the market has held sway too long. The market has failed. We must rein it in under capitalism and eventually abolish it under socialism. Under capitalism for instance, export of capital should be ended and banks must be compelled to reinvest in British manufacture; whereas socialism’s arrival will allow a working class to control society’s economic exchanges as the visible hand of progress.