Dr Sushmita Pati

This is the fourth piece of LSPR’s Blog Symposium on ‘From Free to Fair Markets’.

Rosalind Dixon and Richard Holden’s book From Free to Fair Markets: Liberalism after Covid (Oxford University Press, 2022) is a timely book when we are probably dealing with the aftermath of one of the worst crises that we have faced as a civilisation – the Covid 19. The authors, with this book have also thrown their hat into the ring into all the ongoing conversation- what really went wrong, what systems are broken, what we could repair but broadly what could be the way ahead for us. And as most of these “What is to be Done” conversations are, this debate too is deeply ideological. 

Covid 19 irrespective of our location exposed the deep problems with our existing systems. Post the rollback of the welfare state, our public health systems are broken, our growth-based economies have little to offer to its workers beyond a living wage and mostly, not even that. Irrespective of which side of the ideological battle we may be on, there seems to be an emerging agreement that we have reached, as a society, a point where something has to change. Covid 19 is perhaps the first of the many crises that the world will see. The speed at which climate change is taking place, there is little protection in being a ‘first world’ country, just like in the case of Covid 19. 

But then maybe not everyone. In fact, the policy makers of the world continue to behave and work as if nothing is wrong. For most politicians and policy makers, democratic decision making is subject to constraints of the market. One look at the crisis in the UK shows us precisely this- that there is a tension between interests of the market and public welfare. For the Elon Musks and Jeff Bezos of the world, Covid 19 was an ‘opportunity’ that made them several times richer than they already were. Ben Bernanke’s controversial Nobel Prize in Economics for ‘handling the 2008 financial crisis’ has also come at a time when this could be read as a clear indication that economists and policy makers are not necessarily ‘rethinking’ at this particular moment. 

In this scenario, Dixon and Holden’s book is a welcome response. They acknowledge that something deeply wrong has gone down with the markets for us have landed in this situation. They are clear on the fact that the markets need to be fixed.  They identify three issues that needs to be corrected on an urgent basis—First, the decline in work, wages, and entitlements; second, the rise of the mega-corporation and income and wealth-based inequality; and third, the failure to tackle social cost including climate change.[1] They make bold claims on how to make markets both “free and fair”. 

Dixon and Holden in this book, make an argument that if we do have to adequately respond to this crisis, the answer lies within the market itself. Surely, the market has to change from what it is currently. But it is clearly only the market which has the solution. Liberalism has to revise itself to create ‘free and fair markets’. They strongly argue that liberalism need not be ‘neoliberalism’ where the market has a free run and corporate profits determine policies. Dixon and Holden do not support an unregulated market.  They bring back the argument that we actually need humane markets, markets that are regulated by the state in favour of its people. They make an emphatic argument in favour of democratic liberalism – generous social minimum, equality of access, systems that address market power and the social costs.  They make a case for welfare, but they are careful not to walk the same line of Welfare Economics that J.M Keynes did in the 1920s. They recommend state security and welfare but argue for the Australian model where beneficiaries do not get welfare ‘free of cost’. They also make a case that Universal Basic Income is not necessarily the way forward. Their suggestions are far more conservative than what Keynesian economics suggested. Maybe that is because we are probably still far away from the devastations like the Second World War and Great Depression. But then, are we? Climate crisis is not a moment like the Second World War. It is a disaster that has been unravelling slowly— in the form of floods, forest fires, heatwaves across different geographies. 

As well intentioned this book may be, there are several glaring holes in the authors’ thinking. For the authors, they firmly argue that markets are the only way through which this crisis can be resolved. They argue that markets cannot be curbed. They can only be regulated. They make a case for states to play that role. But it is quite surprising that despite having this humongous ask from the state, Dixon and Holden do not spend time discussing the state at all.  Though they acknowledge that liberalism as a philosophy is far broader than the market, the state remains a neutral body which lacks any texture of its own. They fail to acknowledge that the crisis that they speak of is not merely a crisis of the market, but also a crisis of the state structures across the world. They do not take into account the deep historical complicity between states and markets, the reason why regulatory powers of the state stand compromised. Though this is a discussion that has its origins in Marxist ideas, but has not quite remained strictly within those precincts. Discussions of crony capitalism specifically and the state itself turning neoliberal more generally have existed for decades now.[2] In fact, there is now a growing recognition that the state is not always the neutral arbiter we imagine it to be. 

As William Davies, writing on the recent UK crisis commented, “The task of government, from the traditional neoliberal perspective, is to stand outside this chaos, merely establishing the rules of the game. For a government to join in and start acting like one of the more outrageous private competitors in the game marks the beginning of a wholly new phase of neoliberalism.”[3] Along with the rise of crony capitalism,  we are witnessing an unprecedented crisis within democratic regimes across the world. In the last decade, we have seen an massive rise in the number of populist and authoritarian regimes. Liberalism is inasmuch crisis as markets are. The states including arguably the “world’s biggest democracies” are not in a position to really be ethical, thinking regulators the way the authors imagine. I wonder why the authors chose to make their recommendations as if they are completely oblivious of these complications. It would have been fruitful for the authors to engage with these challenges and then dwelled on what could be the possible ways in which states could use its regulatory powers. It would have only made their arguments richer.  

Possibly for someone like me, these holes are ‘glaring’ because as much as I welcome this rethinking, I stand on a different end of the ideological spectrum than them. I can take a few guesses as to why they choose the path they do and why other alternative forms do not work for them.  While the authors look at the crisis within markets, they seem to presume that liberalism almost always propagates freedom. It need not always create equality, but it creates systems that are fair. This idea has its roots in the classic by Adam Smith’s Wealth of Nations where he makes a case for the “invisible hand” of the free market. Newer iterations of Adam Smith, like the much celebrated book by Daron Acemoglu and James Robinson, Why Nations Fail? The Origins of Power, Prosperity and Poverty  makes a similarly pitched argument that only countries which have supported free economic institutions have been able to support free political institutions. While there is much to get behind the arguments that they make in the book, there again seems to be a huge blindspot about the oligarchies and monopolies that have been created by the free market itself. Dixon and Holden do express their hesitation towards the idea of free market, but at the same time do not quite acknowledge these glaring issues with the free market. They make it seem like monopolies and exploitative conditions are merely irregularities that can be fixed with regulation. But a consistent body of work has shown how markets are structurally unfair and feed on inequalities.[4] While the authors have every intellectual right to make a case for free markets, the authors could have engaged with some of these criticisms or alternate worldviews to strengthen their case. 

For example, though the authors do make references to the ongoing climate crisis and how that is important, their treatment of that problem remains superficial. At no point, do they engage with the long-standing criticisms of market based development which privileges “growth” over everything else. Mere regulation, without necessarily addressing our ideology of growth will lead to very little when each year, the climate crisis is becoming visibly worse. They do not clarify how they think growth can be made compatible with sustainability while protecting free markets. As a reader, I would have liked to know how they would engage with a growing body of ideas like “degrowth ”[5]. Degrowth argues that as living through a climate crisis, we should be looking at moving towards shrinking our economies rather than growing them. While the idea may seem radical, using less of the world’s resources could be the only serious response to climate crisis. But at this point, I am only left guessing why the authors may find the arguments around degrowth unconvincing. 

Another example of the same would be their support for the Australian model where social support is not given out “for free”. Beneficiaries are expected to pay a partial sum on their own. They claim that the Australian model provides ‘an antidote to the ills of liberalism, while preserving the power and virtues of the market’.[6] While they do give reasons why the Australian system works best, it would be interesting to know from them why say other models like that of Vietnam, which were specifically commended for their management of economy during and after Covid is not something that they would like to put their weight behind. If Covid crisis is a core concern for the authors as they claim, it would have been useful to compare the Australian model with others to buttress their argument. 

While the authors continually speak of strengthening what they call ‘democratic liberalism’ and regulating markets, some of the suggestions they make sound suspiciously attuned to neoliberalism— the enemy they themselves identified. They are careful to argue that any jobs guarantee programme should be lower than minimum wage.[7] They in fact also, quite shockingly extol the benefits of having Special Economic Zones for providing such widespread employment opportunities in countries like China. Without going into these controversial claims they make, it seems that they have far more in common with neoliberal principles than they would care to admit. They seem be on the same page with the neoliberal idea that the poor are essentially lazy and would continue to live on welfare benefits— an idea that has been refuted for being absolutely misplaced but has also found deep cultural acceptance within a country like USA.[8] 

In the end, as a concluding note, I would like to reiterate that the authors set themselves out on an ambitious journey and bring forth a discussion that is much needed in our academic and policy circles. But the book ends up largely reading like a set of policy recommendations with a scanty theoretical justification for their argument. Liberalism’s crisis is deeper than the authors seem to acknowledge. If liberalism has to really be defended, it cannot be done without a serious engagement with its own structural shortcomings. 

Dr. Pati is an Assistant Professor of Political Science at the National Law School of India University, Bengaluru.

[1] Rosalind Dixon and Richard Holden, From Free to Fair Markets: Liberalism after Covid (OUP 2022) 19.

[2] Steven G. Calabresi,  and Larissa C. Leibowitz, ‘Monopolies and the Constitution: A History of Crony Capitalism’ (2013) Harv. JL & Pub. Policy, 983-1073; Aligica, Paul Dragos, and Vlad Tarko, ‘Crony Capitalism: Rent Seeking, Institutions and ideology’ (2014) Kyklos 67.2, 156-176. 

[3] William Davies, ‘Madman Economics’, (2022) 44 London Review of Books 20.

[4] This series of literature is way long (one that goes back all the way to Proudhon and Marx) to be able to comprehensively cite here. But some of the writings on contemporary crises include Naomi Klein, The Shock Doctrine : The Rise of Disaster Capitalism Metropolitan Books (2008); Nancy Fraser, Cannibal Capitalism: How our System is Devouring Democracy, Care and the Planet and What we can do about it (Verso 2022). 

[5] A Escobar, ‘Degrowth, Postdevelopment, and Transitions: A Preliminary Conversation’ (2015) 10 Sustainability Science, 451–462; Kallis, Giorgo, ‘In Defence of Degrowth’ (2011) 70 Ecological Economics 5, 873-880.

[6] Dixon and Holden (n 1) 12.

[7] ibid 77.

[8] Martin Gilens, Why Americans Hate Welfare: Race, Media, and the Politics of Antipoverty Policy (University of Chicago Press, 1999);  Ange-Marie Hancock, The Politics of Disgust: The Public Identity of the Welfare Queen (New York University Press, 2004).