"Citizens of Gettysburg, before I give my address today I would like to say a word about our sponsor, Richard Jordan Gatling of Gatling Guns. I think it goes without saying that without the financial help provided by Mr. Gatling, this speech would not be taking place. Now, as I was saying, four score and seven years ... "
Progressive politics in the 1860s did not require then US president Abraham Lincoln to grub around for corporate sponsorship. It is unlikely that either Lincoln or the mayor of Gettysburg was savvy enough to think of decorating a cemetery in Pennsylvania with corporate logos. Poor old Abe, he really didn't get it.
These days when British Prime Minister Tony Blair, former US president Bill Clinton and chums meet to discuss the future of globalization they ask British Airways and Citigroup, PwC and KPMG to pony up cash for their progressive governance conference. Not forgetting, of course, that great supporter of progressive causes, the sultan of Brunei.
Does it really matter that big business is bankrolling Blair's four-day talkathon with his third way pals? Not at all. It means there are unlikely to be any papers discussing how the exemption of tax on aviation fuel damages the environment, or whether conflicts of interest between the consultancy and auditing arms of the big accountancy firms encouraged companies such as Enron. But let's face it, these issues would not be discussed even if it was the taxpayer, rather than big business, picking up the tab. The basic premise is that there is really not a lot wrong with the global economy that the good offices of baby boomer progressives cannot put right. A surfeit of jargon will disguise the fact that the third-wayers are free-marketeers who have learned how to play the chords to Stairway to Heaven. Blair's political guru, Anthony Giddens, said last week that the third way is not a dead duck. Like Monty Python's parrot, presumably, it is just resting.
Sick capitalism
The old third-wayers -- Clement Attlee, Nye Bevan, Franklin Roosevelt and Lyndon Johnson -- had a different take. They believed in managed markets and controlled capitalism, which was why it was not the Coca-Cola Bretton Woods conference and why, far from sponsoring Roosevelt's fireside chats, JP Morgan's staff used to cut the president's pictures out of the papers in case the great financier had a seizure.
A truly third-way analysis would conclude that capitalism is sick and, funnily enough, the participants at Blair's third-way love-in represent countries that display the symptoms of the disease. German Chancellor Gerhard Schroder could speak about how the enthusiasm for deflationary policies has left his country with nearly 5 million unemployed; Clinton and Blair could explain how they have only avoided the same by pumping so much liquidity into their economies that they are sodden with debt. New Zealand Prime Minister Helen Clark could wax lyrical about how the Dr. Strangeloves of the economics profession took over New Zealand in the 1980s. Brazilian President Lula da Silva is the man to talk about the three percentage point drop in forest coverage in the Amazon basin in the past decade. President Thabo Mbeki presides over a South Africa where the spread of HIV/AIDS means life expectancy is six years less than in the early 1970s. Some success.
The first signs of the sickness emerged at the extremities of the global economy -- in the speculative financial crises of Thailand, Mexico, Indonesia, in the robber baron capitalism of post-communist Russia, in Africa's debt crisis. But in the past five years it has spread ever closer to capitalism's heart -- to Japan, western Europe and the US.
Now to the diagnosis. Victory in the Cold War carried with it the germs of capitalism's sickness. Battling a rival ideology kept the market economy in some sort of order, but defeating communism validated not just the policies of the new right in the 1980s but also prompted the new left in the 1990s to go further than former British prime minister Thatcher and former US president Ronald Reagan ever dared. Market "efficiency" required that all controls were therefore removed from capital. The result? Regular and violent speculative crises. Trade rules supposedly establishing global free trade were blatantly rigged to favor Western countries and companies.
The result? A widening of the gulf between rich and poor, as illustrated by last week's UN development report which showed 54 countries had lower living standards in 2001 than in 1990.
The new third-wayers believe in individual choice, but, as those with the misfortune to be living under the new flightpaths planned for southeast England will find out, only so long as it doesn't interfere with the need to be internationally competitive. Commitment to environmental protection also ends there.
The cure
Finally we come to treatment. One suggested remedy is to "let nature take its course." This is the answer of the right, which says the real problem is that the state is preventing capitalism's recovery. Heroic surgery is the way ahead -- put the patient under the free-market knife so taxes and public spending can be cut and trade barriers torn down.
The third-wayers are scornful of this quack remedy, but in truth their solution is not much different, more like the same medicine in a more attractive bottle. They promote market-based solutions as "modernization" -- in effect, a value-free, technical matter about which we have little choice. In this "third way vision," fairness and capitalist efficiency are declared to go hand in hand. In practice this means an uncritical belief in the superiority of the private sector, with occasional blasts of "fairness" mood music aimed at fat cat directors or fox hunts.
Third-way economics boils down to this. First, the market is a natural state of affairs, a bit like the weather. Second, it is neither possible nor desirable to control the market in any meaningful way. Go learn to live with globalization.
Third, governments should strive to make their respective nations as "business friendly" as possible by gearing monetary, fiscal, environmental, educational, transport and social policies to the needs of large corporations. Finally, working people must fit in to the new "market agenda." The must show "flexibility," work harder for longer and be prepared to shoulder the burden of "adjustment," whether that be migrating to where jobs are or making good the holes in their endowment policies or pensions due to the misjudgments -- or malfeasance -- of the financial establishment.
An alternative third-way treatment would concede that markets are useful but that there is nothing "natural" about the market system.
The globalization of financial markets was not an act of God but of governments. Likewise, the limited liability company is a privilege granted by governments to business, not a right. The same applies to fractional banking, the means by which the state allows private banks to create money unsupported by their reserves.
Given that the state creates the modern market and not the other way around, the second premise of the new third wayers is nonsensical. How can you not control something that depends on you for its existence? The third premise is equally wrong-headed, a classic example of what Oscar Wilde called the tyranny of the weak over the strong. The fourth is morally indefensible and a reflection of the political cowardice of "progressives," choosing soft targets for "adjustment" programs rather than tackling the real cause of the problem.
For too long third wayers have got away with the fiction that theirs is the only game in town. It isn't. We need to try a different set of drugs. Preferably not sponsored by Pfizer.
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