Every few days I seem to end up with an argument where I
comment [1] on economics & politics about socialism and
what it’s done to the world over the last 30 years.
1945 until early 1970s
After the Second World War we had an informal agreement
between capital and labour of what was the called the post war consensus which
was really a social democratic system, yes tax rates for the richest were very
high around 90% and above in some countries but it worked we had good growth and
an acceptable wealth gap.
Company directors etc worked with a reasonable 6-12 times
general workers salary.
Keynesian lite policies were used and the western nations
become very prosperous and generally fair places to live unlike the communist
east at the time. Full employment was the accepted norm although has to be said
that was for men but this was a different time.
It would be
unfair to say that it wasn’t without problems but what system is
perfect?
Early 1970s onwards
The oil shock of the early 70s caused some severe
push/cost inflation, with full employment at the time this then caused
demand/pull inflation with a wage price spiral leading to the famous stagflation
[2] of those years. Keynesian lite policies didn’t
seem to provide an answer to these problems.
The rise of the right
Into this mix come along Milton Friedman and the Chicago
school [3] of free markets and dislike of the state who
stepped up a campaign to get their policies adopted. They were lucky enough to
find Ronald Reagan for the republicans and Margaret Thatcher (already a big
admirer of the free market economist Freidrick Van Hayek) for the conservatives
who would listen to their ideas and put them into practice. This gave rise to
the movement of Neoliberalism[4] (also known as Neocon in the US)
Into the 90s
The Neoliberals took over more and more as we moved into
the 90s and even into the late 90s when Clinton for the Democrats and Tony Blair
for “new” Labour come to power there really wasn’t much difference, you really
couldn’t if you looked at the policies closely actually find much difference
between the parties. They may have been a bit fairer but that was really it. The
deregulation started by Reagan and Thatcher was carried on with even less
particularly in the FIRE (Finance, Insurance, and Real Estate) sector after all
the Neoliberal mantra that markets are self regulating and tend towards
equilibrium, globalisation and movement of capital across borders, jobs off
shoring for higher profits. At no point was there a socialist government who
said stop lets have a look at what’s going on.
A completely free market &
free capital movement is total anathema to a socialist so I am always very
confused at the accusations or is something more sinister at work?
More on that next time.
Andy
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