Social Welfare for a Global Era by James O. Midgley

Author:James O. Midgley [Midgley, James O.]
Language: eng
Format: epub
ISBN: 9781412918022
Barnesnoble:
Publisher: SAGE Publications
Published: 2016-03-09T00:00:00+00:00

The Limitations of Markets and Commercial Provision

Despite the enthusiasm with which neoliberals extoll the virtues of markets, their limitations are widely recognized, not only by left-wing critics, but by some market liberals themselves. Markets, they concede, are subject to distortions, manipulation, and other imperfections, and they also experience periodic cycles of rapid growth followed by slumps that have serious economic as well as social consequences. As the Great Recession tragically demonstrated, market vicissitudes create mass unemployment, poverty, homelessness, and other social problems. For this reason, there is growing support for government policies based on Keynesian principles that not only remedy these effects, but create long-term stability. Although market liberals recognize that recessions have serious consequences, they reject Keynesian remedies and believe that recessions will be automatically corrected by the market. Also, Taylor (2009) argues that government interference only exacerbates matters.

Despite driving economic growth, markets have a destructive effect on traditional culture. In the Communist Manifesto of 1848, Marx and Engels argued that while rampant capitalism massively increases production, it also destroys the traditional economy. Although they thought this was a good thing, heralding the transition from feudalism to the capitalist mode of production, and ultimately to socialism, other writers lament the passing of traditional society. Some like Gandhi sought to preserve the traditional culture believing that India’s centuries-old way of life could be maintained by improving the village economy rather than adopting the Western industrialization policies favored by Nehru and the Congress leadership. In the United States, neoconservatives and communitarians, such as Kristol (1978) and Etzioni (1993) also worry that rampant capitalism undermines traditional values. They contend that individualism, the relentless pursuit of profits, and a culture of mass consumerism are weakening community bonds contributing to a decline in stability and increased social problems, such as delinquency and the breakdown of the family. Although they do not wish to abolish markets, they believe that commercial activities should be confined to economic exchanges and subjugated to social and cultural norms.

A related problem is that markets amplify inequalities that foster divisions between people of different occupational, income, ethnic, and religious backgrounds. Their polarizing effect was emphasized by Marx who argued that the owners of capital were becoming wealthier while the living standards of workers were deteriorating. This view has been restated by numerous scholars over the years, and most recently by Piketty (2014) in his analysis of income and wealth inequality in Western countries over the last three centuries. Inequality accompanying rapid economic growth in the Global South has also created a pattern of distorted development in which the benefits of growth accrue disproportionately to political and military elites, the business community, and the urban middle class (Midgley, 2014). In many countries, markets have exacerbated tensions between different ethnic and religious groups, and in many cases, ethnic and indigenous minorities have been left behind. Although these effects have often been tempered by redistributive policies as well as economic and social interventions that improve the standards of living of low-income families, these policies

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