The bankruptcy of the ideology of the free market does not date from 2008, says economist James K. Galbraith. We have to go back to the 1980s to understand how the American conservatives delivered the state to the appetite of private interests. An invigorating analysis, although not directly transposed to the French case.
The financial crisis that has plunged the world developed in the most serious economic recession since the 1930s has put defenders of absolute markets to the defenders. In fact, written the American economist James K. Galbraith in the predatory state, a work published in the United States in August 2008, their intellectual defeat was already consumed long before the fall of Lehman Brothers. For the author, the last thirty years have seen the dazzling ascent then the inexorable decline of what is called in France, for lack of a happier term, neoliberalism – and that Galbraith, followed by its translator, designates under the expression “ free market ideology ».
Life and death of an ideology
The American neoliberals, who came to power under Reagan, knew how to seduce the electorate with a simple speech praising the superiority of the markets and denouncing state interventionism, accused of having caused stagflation of the 1970s. But idealism Beginnings – which Galbraith looks with a certain desire – quickly broke in the face of the constraints of politics and the economy. Orthodox monetarism connecting inflation to the growth of the money supply was thus quickly abandoned by the American central bank. Similarly, the massive drop in taxes decided by Reagan in 1982 was followed by subsequent increases in levies, by the same Reagan in 1985 and by George Bush Father in 1991, and did not increase the rate of American savings. The promise of sound finance management has been similarly disappointed, the US state budget being in deficit almost permanent since the 1980s. Finally, the faith proclaimed in free trade has been denied by the protectionist policies put In place by Reagan to support the American automotive industry.
In reality, the weight of the state in the American economy has not decreased since the 1980s. But the action of the State was gradually subverted by private interests, the presidency of George W. Bush constituting the ‘Apogue of the process: in health, education, housing, defense, public policies have increasingly consisted in guaranteeing annuities to private companies close to power. The guarantor of the general interest has turned into a predatory state, subject to “ the systematic exploitation of public institutions for private profit ». If the United States has succeeded in avoiding an economic and social collapse, it owes it above all to the institutions inherited from the New Deal and Great Societythat the Conservatives have failed to dismantle: public pension and health systems have avoided a sudden fall in the Americans’s income despite the recurring crises of capitalism subject to the vagaries of finance.
The stranglehold of private interests on the state and the persistence of a discourse on the universal virtues of the markets threaten long-term the prosperity of the Americans and the leadership of the United States. They also observe the ability of public authorities to fight climate change, which endangers human civilization as it has been built since the start of the industrial era. To ward off these threats, Galbraith calls with a certain dose of provocation to rehabilitation of planning, which in fact means the implementation of what would be called in Europe structural policies, in the fields of infrastructure, of the energy and research. He also defends the return of regulations in the sectors where the free game of the market has not demonstrated its effectiveness, pronouncing for example for universal and compulsory public health insurance. Finally, he advocates energetic action to reduce wage inequalities, by an increase in the minimum wage and a cap in the salaries of managers.
Hers and misfortunes of heterodoxy
The book is actually infinitely richer, at the risk of being sometimes disjointed, than this analytical and programmatic canvas: the reader will find a jumble of the competitive structure of the consumer goods market in China, a detailed defense and vigorous theses exhibited by Galbraith Father in The new industrial statea particularly lucid description of the mechanisms of the current financial crisis which was still only in its beginning at the time of writing the book, a typology of the consequences of deregulation in various goods and services markets in the United States , an application of the theories of the sociologist Thorstein Veblen on the leisure class to the current American society, a presentation of the political economy of the regulations or an introduction to the economy of universities. These different subjects are most often discussed from an angle that contrasts with the ambient discourse. We may disagree with some of his analyzes, but it is difficult to deny the author his originality and his independence of mind.
In this regard, the French reader who would expect to regain a classic anti -liberal criticism, transposed to the American case, will be (fortunately) unarmeded: Galbraith certainly denounces with vigor the reign of the markets, the harmfulness of finance and what he considers Like the aporia of free trade ; But it also recognizes the virtues of competition, disputes the effectiveness of protectionism (however recommended by many democratic leaders) to fight against social and environmental dumping, rents European construction and even allows itself, in conclusion, an ode to the ‘American exceptionalism.
The reverse of heterodoxy is a tendency to contest any real contribution of economists “ orthodox », A little too quickly assimilated to frenzied defenders of deregulation. Galbraith thus criticizes the effectiveness of vocational training programs or the interest of an independent monetary policy without referring to the contributions of economic research on these subjects, when they have been abundantly treated by economists for twenty years.
This flaw is all the more regrettable since Galbraith does not hesitate, on occasion, to resort to economic demonstrations which are anything but rigorous. After having observed, on American data, that wage inequalities are on average less significant when the level of unemployment is low, Galbraith concludes that a policy in favor of equality of wages makes it possible to lower the unemployment rate. The possibility of reverse causality, by which unemployment at a low level would tend to promote the wage negotiation power of workers, is quickly evacuated. The counterattack of several European countries, where high unemployment and (relatively) low wage inequalities are combined, is also denied, more than rider: Galbraith says that Europe of 27 must in reality be considered as one and a Same country, and therefore the differences in wages between Romania and Luxembourg explain the high level of the average unemployment rate in Europe.
A roadmap for 2012 ?
Insofar as the author calls, in his introduction to the French edition, the European progress forces to repel the “ old ideas Neoliberalism, it is useful to question the character transposed to France of the observation and the recommendations that Galbraith establishes for the United States.
French progressives will certainly find in the Galbraith recommendations profitable lessons. Thus, the author recalls that the interest of competition depends on the characteristics of the market considered: it can be beneficial in the sectors where it pushes in innovation (as in telecommunications or air transport) ; But it can also generate additional costs. In the field of health insurance, for example, universal and compulsory public insurance is structurally cheaper than private insurers who mobilize significant resources to select the right risks. Similarly, Galbraith rightly stresses that the progress of the regulations, in social and environmental matters, can only be done by pressing the most advanced businesses, which have everything to get to oust competitors who bet on the Reduction of costs to compensate for their technological delay.
Exhortation which serves as a subtitle for the work (“ How the right has given up the free market and why the left should do the same ) And Galbraith’s economic program apply more difficultly to the French case. On the one hand, because the current French left, unlike the American Democratic Party, seems to suffer more from excessive skepticism in the face of the possible benefits of competition and free trade than an excess of confidence in utility Economic mechanisms to achieve progressive objectives.
On the other hand, because Galbraith treats in a rather summary way the question of the financing of public policies which he calls for his wishes, by largely recovering from the capacity of the State to borrow to cover his deficits. This solution can defend itself in the American case, given the “ Exorbitant privilege »Enjoyed by the United States to borrow from international markets, due to the status of the dollar. But it is hardly possible for France, even less in 2010 than in 2008, given the impact of the crisis on public finances. One of the major sites on the left, for 2012 and beyond, will therefore necessarily be to design a tax system which will guarantee the French social insurance system and better fight against inequalities while promoting sustainable growth.