The state is back in fashion again

It is often said that the Iraq war shook up politics, with people on both left and right finding themselves agreeing with former enemies and falling out with former comrades.

But if that was a shake-up, the financial crisis seems to have turned politics upside down. In the space of a few weeks we have seen the end of the post-Thatcherite period.

Until recently, most politicians in the UK and the USA, and to a lesser degree in Europe, were broadly against regulation and in favour of free markets. Nationalisation was a thing of the past and even the EU had brought in rules limiting state ownership. The governing parties differed in terms of emphasis but all were in thrall to big business and, especially, global finance. If you went back to 2005 and told people that, within three years, governments would be nationalising banks, they'd laugh you out of the pub.

But that's  just what's happening, with the USA and the UK, the former cheerleaders of deregulation and free markets, leading the way. And conservatives are just as enthusiastic about it as liberals and social democrats. The Tories have been criticising the government for being slow to intervene and have called for closer co-ordination with the European Union. Even Ruth Lea has joined the chorus of those saying 'something must be done'.

Strange times indeed.

Or maybe not. As Bethany McLean said in Saturday's Grauniad:

[T]he most sobering repeat lesson of all. Most of the believers in the free market only believe in it when it is going their way. When it doesn't, it's someone else's fault.

Which is why they then demand state intervention.

But this is a typical response to government. People want the state to leave them alone until their houses are flooded and then, suddenly, they demand intervention in the form of rescue helicopters and flood defences. No-one wants to pay taxes but as soon as the ancient Victorian sewage system bursts and the streets are full of crap, there's no shortage of people wanting to know why something wasn't done earlier.

So it is with capitalism.  The executives who run large companies want to be left to make as much money as possible and government regulation gets in the way but, when their mistakes come back to haunt them, like everyone else, they want the government to step in.

Just as the state is the final guarantor of freedom and security it is also the only entity capable of protecting us from the uncontrollable weather systems, both natural and economic, that batter us from time to time.

Human beings created states to defend them from external threats. When things go badly wrong it is still the state we look to for protection.

Over the past twenty-five years it has become fashionable to disparage the state. Now, suddenly, everyone wants it to play again.

Comments

[Haw Haw Harry]

I don't think its quite as simple as that Stevie boy.

More than anything, this is more than likely a reaction to the fear of revisiting the Great Depression than anything else. The government's reaction most likely based on Milton Friedman’s theory that the Fed worsened the Great Depression by not pumping enough liquidity into the system following the market crash of 1929.

[H]

I heard a great comment recently: we are re-entering the cold war but this time the other way around. The West is committed to nationalisation and the Russians are now the world's greatest capitalists!