Private-Public Divide in Cyclical Neoliberalism

In this, the third return to the new laissez-faire which began in 1980 with Reaganomics and Thatcherism, I want to consider an article in Dagens Nyheter (DN) published on Sunday 31st March 2013 (Nyheter p. 9), by DN Political Commentator Maria Crofts.

She presents public expenditure on health, education and care for the Reinfeldt years of the Moderate-led Bourgeois Government from 2006 to 2011. Public provision has grown from SEK 71.7 in 2006 to SEK 109.7 in 2011, while provision by private companies grew from SEK 41.8 to SEK 71.1 in the same period. The title of her article is that the debate over private welfare companies has gone on for over thirty years, that is since around 1980, when the third ideological return to the new laissez-faire had just begun.

Because Sweden has such a small population but with significant natural resources, and so is export-dependent it has little choice to follow the trends.

The article concludes with an argument that it is difficult to turn the clock back. This is true within one Polanyi cycle but not in terms of the double movement that Polanyi described. Fred Block in his article “Polanyi’s Double Movement and the Reconstruction of Critical Theory” (Revue Interventions économiques: Le renouveau de la pensée polanyienne, 38, 2008) puts it like this by way of introduction:

“Karl Polanyi argued in The Great Transformation (2001 [1944])that the development of market societies over the past two hundred years has been shaped by a double movement. On one side is the movement of laissez faire–the efforts by a variety of groups to expand the scope and influence of self-regulating markets. On the other side has been the movement of protection–the initiatives, again by a wide range of social actors, to insulate the fabric of social life from the destructive impact of market pressures. What we think of as market societies or “capitalism” is the product of both of these movements ; it is an uneasy and fluid hybrid that reflects the shifting balance of power between these contending forces.” (p.2) 

At the end of the article, Block concludes:

“When he wrote The Great Transformation, Polanyi anticipated that the era of the double movement might finally have ended since much of the world had come to recognize the folly of organizing human society around self-regulating markets. He imagined a new era in which humanity collectively chose to subordinate markets to political control. Bretton Woods and the system of “embedded liberalism” did represent a sharp break with the logic of the Gold Standard, but we now know that the break proved to be only temporary. In the 1970’s, the global rules of the game shifted sharply in the direction of market sovereignty and the theorists of self-regulating markets suddenly regained the influence that they had lost in the 1930’s and 1940’s. Friedrich Hayek, one of Polanyi’s antagonists in theoretical debates in Vienna in the 1920’s, survived to become the favored theorist of Margaret Thatcher and Ronald Reagan.” 

Maria Crofts concludes that it is hard to wind the clock backwards, and this is true given that this is the third cycle of the new laissez-faire. But in the wider picture this will change, because there are new circumstance – as is always the case. US global hegemony is under threat and is likely to be in long-term decline. US intervention in Syria is a case in point, with opposition both in Washington and in the face of diplomatic initiatives from Russia.

Dagens Nyheter is independent liberal, which in Swedish terms places it to the right of centre.

In any event, I would not expect DN to even consider Karl Polanyi or his successors  worthwhile to take up as an issue. Like all media, DN is concerned with issues of the day and not with longer-term analysis such as Margaret Somers and Fred Block take up.

See the following articles:

Fred Block and Margaret Somers “In the Shadow of Speenhamland: Social Policy and the Old Poor Law” Politics and Society Vol. 31 (2003).

Margaret Somers and Fred Block From poverty to perversity: Ideas, markets, and institutions over 200 years of welfare debate – American Sociological Review, Vol. 70 No. 2 pp. 260-287 (April 2005)

Karl Polanyi and the writing of the Great Transformation: F Block – Theory and society, Vol. 32 No. 3 (June 2003)

Fred Block delivers the 2010 Ted Wheelwright Memorial Lecture. For a summary see: I remember Ted Wheelwright, as he published a paper of mine in Australia and World Capitalism (Pelican, 1980).

There are many more articles by Fred Block and Margaret Somers on the transition from Polanyi’s one-off Double Movement to the long-cycles of return to the original laissez-faire ideology, too many to list, as a search in google scholar or other long author CV list of publications would show.

My own work tangents this problematic in an important way, in that monotenural home ownership acts as a major factor in deepening recurring bubble crises, with the usual proviso that no situation is a simple duplication of earlier crises: nation states are too different from one another. Although at the time I began publishing on home ownership the significance of monotenural housing policies was little understood. That has been changing rapidly as with each major housing bubble awareness has grown.

See also my draft article “Society versus the State: the social construction of explanatory narratives in social policy research” in Housing, Theory and Society 2002 Vol. 19 pp.185-195 on my home page. The abstract follows:

Abstract“Following Margaret Somers, the paper explores the implicit metanarrative that underlies and informs basic concepts in the social sciences and hence also basic concepts in housing research – of “society/market” and “state”. Somers shows how the Hobbesian thesis that society is impossible without the state was countered by the Lockeian project of making a conceptual distinction between them that redefined society/market as “natural” and as existing prior to the creation of the artificial state as a means of controlling and distorting society. She then shows how and why this abstract model became historicised into a storyline (“once upon a time”…) involving a struggle between good (society) and evil (the state). Somers argues that modern anglo-american social science is predicated on this confrontational conceptual distinction and its accompanying narrative of good versus evil, natural versus artificial, voluntarism versus coercion, spontaneity versus regulation and other “great dichotomies”.

The paper illustrates how this conceptual distinction has been adopted by housing researchers from Donnison through Castells, Harloe and Saunders, but that the narrative that is recounted varies from one housing researcher to another. The paper concludes by arguing for an abandonment of the simplistic Lockeian thesis of “society/market versus the state” and for developing a conceptual framework that does not polarise them.”

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