When Edward Miliband, the current the leader of the Labour Party in Britain, recently announced that his goal is to make markets and banks more competitive, investors were not pleased but spooked. Why? The answer is in this neat post on Stumbling and Mumbling.
Ed Miliband's promise to introduce more competition into banking has faced some intelligent criticism. But it also raises some fundamental tradeoffs we face in thinking about states and markets. These are:
1. Shareholder value vs a vibrant market. Jonathan points out that the fall in bank shares after Miliband's speech is just what we'd expect to see as investors anticipate lower monopoly profits. This highlights the fact that a truly healthy market is not good for shareholders, simply because it means that profits are low and risky. If you want to see a well-functioning market, look at the fruit and veg traders on Leicester market. None of them goes home in a Bentley. For this reason, any attempt to introduce genuine competition will be resisted by fierce lobbying.
My form of Marxism does not emphasize the conflict between the classes more than that between the state and the market. Capitalism does not arise from the latter but the former. Here I agree with this line of Manuel De Landa's thinking: capitalism is anti-market. But unlike De Landa, I see in this fact, which is backed by the research of the Annales School, the opportunity to combine Marxism not so much with anarchism but the insights of Karl Polayni, who is mentioned in the post on Stumbling and Mumbling...
Anti-statism vs pro-markets. Miliband's call for state action to increase competition isn't as paradoxical as it seems. It's consistent with Polanyi's claim that the emergence of a market economy requires all sorts of state interventions. Insofar as this is the case, supporters of a free market economy cannot be anti-statist.
Marxism is above all a critique of capitalism, and capitalism is above all an economic system imposed and supported by the state. Anyone who studies the history of the American suburbs will not find the market at work, but the state. Therefore, the explanatory power of Marxism would be greatly improved if it separated the state from the market.