Challenging the free market

Issue 

Arguments for a New Left: Answering the Free Market Right
By Hilary Wainwright
Blackwell, 1994
Reviewed by Neville Spencer

Champions of the free market are on a wave of almost unprecedented self-confidence. Hilary Wainwright sets out to provide a basis on which to challenge free market ideology by attacking the philosophical assumptions on which it is founded. She also attempts to use the arguments she develops to suggest directions for the new post-Stalinist left.

Her original motivation for writing Arguments for a New Left was her encounters with the social and political movements which grew out of the opposition to the Stalinist regimes of eastern Europe. Those regimes have produced a popular association of state planning with the suppression of democratic rights. The converse is the association of individual freedom with freedom from state interference in the economy in a manner reminiscent of classical 19th century liberalism.

"Freedom and free market" have enjoyed currency in different regions throughout the 20th century. Austrian economist and philosopher Frederick Hayek has been its most thoughtful proponent. Hayek provided guidance to the government of Margaret Thatcher and now is influential in eastern Europe.

Theory of knowledge

Hayek is the main target of Wainwright's critique of the free market right, because he most ably articulates free market arguments with philosophical depth. Her challenge to Hayek is particularly on the grounds of the theory of knowledge on which he bases his defence of the free market as the only viable economic form.

Hayek's critique of any form of state economic regulation is based on the claim that the knowledge which is required to carry out centralised economic planning, or even the sort of social engineering championed by social democrats, is simply not possible for a single authority to centralise.

Much economic knowledge required is tacit and ephemeral; it is always fallible. Such knowledge can only be possessed incompletely and dispersed amongst individuals, never in its totality. Thus it cannot be centralised and used effectively to plan an economy. But the price mechanism provides a means with which to coordinate the dispersed knowledge of how to utilise resources most efficiently.

Wainwright sees Hayek's central error as his assumption that knowledge is essentially individual rather than social. For counter-examples of the role which centralisation of economic knowledge can play, one need look no further than the so-called free market itself.

Large and multinational companies pour enormous amounts of resources into gathering information about the economy in order to predict its future behaviour and intervene more effectively in it. In Japan leading companies and the government formed the Ministry for Industry and Technology precisely in order to share plans and information — to carry out something like the centralisation of knowledge which Hayek dismisses as impossible.

Wainwright also draws on instances more relevant to the left, in particular the social movements. Feminists, unionists and a variety of other activists have built networks which share their understanding of their needs and the situation which faces them in order to counter dominant social forces.

This can even happen on an international scale. The network which stretches from cocoa farming peasants in Brazil to factory workers at the Mars and Cadbury plants in Slough and Birmingham has used its shared knowledge to challenge the powerful reach of multinational companies.

At the same time, Wainwright grants a certain credence to Hayek's criticisms of socialism. The failure of the eastern European does illustrate the impossibility of the total centralisation of economic knowledge.

She does not, however, see centralised planning as the only possible alternative to the free market. She draws upon examples of the networks of social movements and cooperatives to illustrate the possibility of planning based on knowledge which is shared and cooperative.

Representation

Arguments for a New Left also uses the critique of Hayek to suggest possibilities for the left to organise against the free market. It draws on examples such as the women's movement, the anti-nuclear movement and parties such as the German Greens, the Dutch Green Left and the United Left of Spain.

While some of these parties have won parliamentary seats, their positive impact has not been in the parliamentary arena, but in using such positions to promote and support the extra-parliamentary activities of social movements.

Drawing on some of her experiences as a member of the socialist-run Greater London Council (before the Thatcher government disbanded it), Wainwright shows how use can be made of government authorities to support progressive community initiatives and social movements.

She counterposes this to left parties simply offering to "represent" social movements in government. "The problem for social movements in the West has been one of establishing the kind of relationship by which political representation amplifies and legitimises collective social and economic action, rather than substitutes for it, causing gradual asphyxiation."

In the move from a critique of free market philosophy to a positive account of a way forward for the left, the book has a number of problems and ambiguities. These stem in large part from the attempt to move directly from theory of knowledge to questions of political organisation without a thorough look at the practical subject matter of politics.

Left organisation

The central question which Wainwright poses for left organisations is how they can have and share effective knowledge. The need to understand the world and to know the best way forward are certainly critical and must be central to the manner in which the left organises itself. But also determining the way the left needs to organise is the nature of the society it has to combat. Knowledge alone is insufficient to defeat capitalism. As has been pointed out, the point is not merely to interpret the world but to change it.

A notable silence of the book is on the question of the state — the police and army as the final arbiters of who controls society. Failure to engage with this issue has led the left into its most bloody defeats in the past.

Though it is reasonable to presume that such a confrontation is not imminent for most of the western left, to which the book is addressed, it remains a critical question for left strategy and organisation. If the left brings about a situation in which the capitalist order is threatened, such a question will become far more serious.

The book is also ambiguous on how socialism could be built, as opposed to merely fighting for reforms and democratic space within capitalist society. Whilst it effectively marshals examples of the operations of cooperatives, networks of cooperatives and self-managed community-based schools against the arguments of Hayek, it does give the impression that these can form the embryo of a socialist society by increasingly crowding out capitalism.

Though not explicitly stated, and probably not even endorsed by Wainwright herself, this mistaken view of left social democrats may appear to be advocated in the absence of alternative strategies.

Another problem is the book's rejection of democratic centralism. Democratic centralism has long been the principle of organisation among parties of the radical left — essentially the idea that a party should use the ideas of all its members in democratically deciding its course of action but always act as a single entity even if some members have disagreements.

Rejection of democratic centralism has become increasingly commonplace since the demise of the regimes of eastern Europe whose Stalinist parties also claimed adherence to it. In rejecting Stalinism, many have also distanced themselves from democratic centralism without appraising how little the methods of Stalinism had in common with the principles of party organisation developed by Lenin.

Wainwright's rejection is from a slightly different angle, again based on the theory of knowledge. A democratic centralist party could be seen as something like a party acting as a collective brain. This she sees as a presumption of the possibility of "all-knowingness". Without going to the extreme of totally individualising knowledge as does Hayek, she points out that left parties have to work "on the basis of partial knowledge".

This somewhat misses the point of democratic centralism, which is to arrive at the best, albeit fallible, positions in order to act collectively, using unity to fight the forces arrayed against progressive social change. This does not guarantee a party against taking the wrong course, but it does mean that it can take a united course of action rather than dropping the fight against capitalism whilst its members try to reach unanimity about what to do. Any course of action can subsequently be revised on the basis of the best possible knowledge — that gained by having tested ideas in practice.