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Die falsche Verheißung - False Dawn

The Delusions of Global Capitalism. By John Gray

John Gray: Die falsche Verheißung: Der globale Kapitalismus und seine Folgen, Alexander Fest Verlag, ISBN: 3828600867; False Dawn: the Delusions of Global Capitalism, Granta Books, ISBN: 186207237X


02.12.2000 · Reviewed by Richard Resch


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In the early eighties, John Gray belonged to the spearhead of the New Right revolution as one of Maggie Thatcher's chief conservative fore-thinkers. Given this, the title of his new book "False Dawn: The Delusions of Global Capitalism" sounds like a personal resume full of disappointment. The Professor for European Thought at the London School of Economics has become deeply skeptical about the neo-liberal political orthodoxy he helped to create. According to him, all went wrong when a justified policy reaction towards the specific case of crusty British corporatism became the world's universal doctrine of salvation.

"False Dawn" has received both high praise and sharp criticism. Unsurprisingly, the harshest reactions have come from economists, who are irritated by the way Gray's arguments challenge their orthodox convictions about the value of free markets. Yet, this may rest on a misunderstanding. Strictly speaking, the book is not primarily about economics. It contains little economic data and even less debate about economic models. The validity of orthodox economic theory goes largely untouched. The book just takes a wider perspective. From a purely economic point of view, productivity and efficiency are ends in themselves, and in economic measures, the belle époque of Victorian laissez-faire has been a golden age of boom. John Gray does not deny this, but he argues that there is an intolerable trade-off between unregulated markets and social stability and values.

By means of historical analysis, Gray attacks widespread neo-liberal commonplaces. According to him, it is a myth that free markets are natural states that start to show when "artificial" state interference is cut down. Quite to the contrary, they are deliberate political projects to rid economic activities from social responsibilities. They can come into existence only by strong state intervention and need strong political institutions to persist. The term "deregulation" is sort of an euphemism. In reality, it very rarely means less regulations, but only the exchange of socially orientated regulations for market orientated regulations that externalize social costs. Both during Victorian laissez-faire as well as Thatcherism, the free market was no natural development, but an artificial product of deliberate state action.

The second myth identified by Gray is that laissez-faire is a necessary condition for successful industrialization and economic growth. During the first wave of industrialization, the only case where laissez-faire and industrialization went hand in hand was England. All others were state-driven. Despite all its current problems, Japan has been the biggest success story of the 20th century. As the only country so far which has not been there before, Japan made it from nowhere under the top ten, and in a few decades became the second biggest economy, despite being not exactly an example of laissez-faire.

The third myth is that democracy and free markets are peers. In Gray's view, they are more a kind of competitors. Democratic societies automatically tend to tame markets. "At the time as the free market was created in England, the English state was pre-democratic, the majority of the population had no right to vote. ... Neither on a global nor on a local level does the free market foster stability and democracy. ... The Victorian experience with laissez-faire showed that social stability and unregulated free markets cannot be enjoyed at the same time for a longer period of time." When the social costs became too high, democratic counter-movements surfaced, ultimately leading to the demise of Victorian laissez-faire.

According to Gray, case studies of Britain, Mexico, New Zealand and Australia show already the questionable success of the free market experiment and what we have to expect from it in the future. There won't be any winners. The self-set goals have not been reached. After two decades of Tory rule under Margaret Thatcher, indirect taxes, government spending and unemployment rates were at the same level or higher than in 1979. At the same time, the policy of deregulation created new inequities and increased old ones. The logic of the free market commercializes all relationships, thereby exerting a destructive influence on all institutions that foster social ties and guarantee stability. There's no way back either. Social democracy no longer disposes over the means to reach its traditional goals. The externalization of social costs has been cemented through global competition.

The whole book does seem a bit over-pessimistic, but that does not impair its quality. If you are a connoisseur of profound and intelligent argumentation, lucid and distinguished style, this book is for you. That the author does not attempt to offer possible concrete solutions to the problems he analyses greatly adds to the impression of pessimism. However, Gray identifies the central political project for the future: to reconcile a deregulated market economy with the necessity of social solidarity. The book's bottom line thereby is that the economy has to serve the needs of the society and not the other way round.
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