[This piece was prompted by Has the Left Surrendered? by Richard Eskow on Campaign for America’s Future, a good source of sensible US commentary.  His article was in turn prompted by Nothing Left: The Long, Slow Surrender of American Liberals by Adolph Reed Jr in Harper’s magazine. ]

The political parties of the Left, in the US, UK and Australia, lost their way when they swallowed the free-market mantra.  They became merely neoliberalism-lite.  They implemented the market-fundamentalist program, and then applied bandaids to the wounds thus inflicted.  They yielded the initiative, became defensive and reactive, and were steadily pushed, dragged and wedged ever-further to the right.  They are now well to the right of the conservative parties of four or five decades ago.  The former-left parties are now a huge impediment to real progressive politics, entrenched in that political space but betraying it on a daily basis.

Despite continuing soul-searching among those who recognised and deplored this process, there has yet to emerge any unifying alternative, beyond a catalogue of the many disparate social and environmental causes and groups that attempt to continue, with diminishing success, the old Left’s concern for ordinary people and their world.  Indeed no alternative can emerge unless and until the core meme of neoliberalism is confronted.

The core meme of neoliberalism is that free markets are best.  This meme has by now become the ocean in which we swim, and therefore don’t even see.  A whole generation has grown up enveloped by this memetic ocean.  Our oblivion concedes, by default, Margaret Thatcher’s infamous TINA proclamation: There Is No Alternative.  Well hogwash and horse feathers!  TAWAA: there always was an alternative.  There still is and still can be.

No, I don’t mean socialism.  I mean simply that free markets, unfettered markets, markets left to themselves, are not best.  Markets are like wild horses:  powerful, but there is no reason to expect them to deliver a desirable or beneficial result, or to deliver it efficiently.  Markets can do good things, but they are just as likely to do bad things, especially if we are naive enough to allow rich and powerful people to dominate and manipulate them.  It is up to us to manage markets so they deliver what we want.  It is up to us to decide what we want.

Neoliberalism did not triumph because it was founded on a compelling truth.  It triumphed through long and careful preparation, well-financed marketing, buying candidates, and smart tactical politics.  Neoliberalism was in fact built on the sands of a preposterous theory and sordid self interest.

The preposterous theory is what economists know as the neoclassical theory.  This theory concludes that free markets will bring about a general equilibrium, in which all supplies balance all demands.  Even better, it purports to prove the general equilibrium is the most efficient conceivable economy.  That is a grand claim, an absolute claim, a seductive claim.  And it is horse manure.

The neoclassical theory is preposterous nonsense because it is built on preposterous assumptions.  We are all supposed to be able to foresee all future contingencies and their probabilities.  We are supposed to rationally calculate our optimal life course.  We are not supposed to be influenced by fads or fashions, nor by altruism or compassion.  There should be no economies of scale beyond some ill-defined point of diminishing returns;  just pretend Henry Ford and Bill Gates never existed.

The neoclassical theory’s central prediction, the general equilibrium, is also preposterous.  During a financial crash, the markets are far from equilibrium.  New technologies emerge all the time, upsetting any possible equilibrium of market sectors.  The rich getting rich is an instability.  The need for perpetual growth reflects an underlying instability.  Modern market economies do not gently oscillate around a balance point like a rocking horse.  They are cauldrons of change, dynamic and far from equilibrium, more like wild horses.

Such systems are well understood in other fields of knowledge, where they are called self-organising systems or complex systems.  There can be no pretence, in such systems, of an optimal general equilibrium.  It follows there can be no assurance that free markets are best.  Free markets are best only in an abstract fantasy world.  There is no general conclusion we can reach about free markets in a real modern economy:  they may be efficient, or not, and they may be beneficial, or not.

As one pillar of neoliberalism crumbles, the other is exposed for what it is:  the blatant self-interest of the rich.  The neoclassical theorists told the rich the best thing they can do is make money as fast as they can.  Naturally the fat cats loved this message, and rewarded the messengers with money and influence.  But the real message of neoliberalism is the age-old message of the powerful:  we know best and you’re here to serve us.

The way forward, for progressives, is to recognise that markets can and should be managed, for the general benefit.  We already have the tools to manage markets: incentives and disincentives.  Just eliminating many perverse incentives, such as subsidising polluters, would already make us better off.  Judiciously rewarding beneficial activities will be far more effective than retroactive penalties for bad behaviour.

We can re-assert the pre-eminence of society over the economy:  we can choose the kind of society we want to be, and tailor the economy to support that aspiration.  Democracy can prevail over the subversive rich.  In a sensibly run economy there will be no conflict between “the economy” and social welfare, nor will there be any conflict with “the environment”, because a healthy society and a healthy planet are essential for healthy and fulfilling lives.

This path is not Left or Right, it transcends the old left-right divide.  We can leave behind the clumsiness and abuses of an economy run by giant government bureaucracies.  We can leave behind the clumsiness and abuses of an economy run by giant corporations. We can achieve the social justice goals of the old Left by different and more effective means.  We can cultivate the initiative and self-reliance cherished by conservatives, but not at the expense of others, and we can do it with smaller, more effective government.