Bait and Switch

My complaint isn’t with the market. Try running a complex society without trade or money. My complaint is how so many never practice what they preach.

It’s a matter of bait and switch. That means promising something good but delivering something else. Economists are masters of bait and switch.

The bait of utopian capitalism is that perfect vision of free markets, where competition keeps everyone in line and keeps business serving the public selflessly. The switch comes when they use that as an excuse to set up a nasty free-for-all — where the unscrupulous amongst us siphon off all the capital to play their power games at our expense. “That’s not what I signed up for!”

But its not only capitalists who play bait and switch. Socialists have been no better.

The bait of utopian socialism is that perfect vision of the egalitarian society, where everyone puts out their best effort and takes only what they need, in a symphony of mutual benefit. The switch comes when the leaders decide they know the best way for us to get there, and they require mandatory compliance with their programme while they take all the best for themselves. “That’s not what I signed up for!”

The problem is — we need both evil capitalism and evil socialism, dysfunctional as they each are — if we want to build any kind of economy.

You can’t just say, when the private sector is screwing up the economy as they always do — well, just hand it over to the public sector and they’ll save the day. Nope, they’ll screw it up even worse.

And you can’t just say, when the public sector is screwing up the economy as they always do — well, just hand it over to the private sector and they’ll save the day. Nope, they’ll screw it up even worse.

The point is — there’s no escape from an economy that’s screwing up both capitalism and socialism simultaneously. We can’t fix it by declaring that utopian capitalism will save the day, nor by declaring that utopian socialism will save the day. We need to dump both crackpot ideologies. We’re stuck with a hybrid of capitalism and socialism that doesn’t work — and our only option is to make them both malfunction a little less dramatically.

We’re stuck in this pickle for two reasons. One, we haven’t put any real balances in place — any countervailing powers — because we’ve bought into the myth that the market will right all wrongs if we only give it free reign. Two, we live in a culture of obsessive greed, in which it’s impossible not to screw up any economic system we try to run.

First — I originally got the idea of countervailing powers from John Kenneth Galbraith, a renowned Canadian economist of the 50s and 60s (The New Industrial State). The public and private sectors will fail a little less spectacularly if they work to keep each other in check and prevent each other from getting too powerful.

Government regulates business excesses when they crop up on a regular basis. Business pushes government to respect the market when they get grossly impractical on a regular basis. Checks and balances can go wrong when both sides screw it up day after day. But no checks and balances will always go wrong.

I know it’s not very sexy to promote a boring old wishy-washy mixed economy with mutual accommodation. Its bland colours will never satisfy revolutionaries of left or right. Balance is too undramatic. But it’s the only game we’ve got in the drawer that won’t spill all over the floor.

So what is revolutionary? That’s my second point. If in a hundred generations or so, we graduate ourselves out of this greed culture — then everything will get turned on its head. Some hybrid of capitalism and socialism might just work if everybody stops trying to screw each other.

So be a revolutionary. Get out there and show what love looks like in practice. But don’t hold your breath.

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