Blog Symposium on Law & Political Economy after COVID

Reimagining Neoliberalism: Blog Symposium on ‘From Free to Fair Markets’ #2

Prerna Dhoop

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

Professor Rosalind Dixon and Professor Richard Holden in a new book titled ‘From Free to Fair Markets: Liberalism After COVID’ have provided strong and to a great extent even convincing arguments for governments world-wide to consider rethinking ‘liberalism’ as the model of governance in a post-Covid era. Additionally, the authors have posited ‘democratic liberalism’ as an attractive and viable replacement for ‘neoliberalism’ to reorder polity, economy and society. Democratic liberalism, the authors have explained, adopts ‘fairness’ as a new lens for making and doing law, policy and regulation instead of the much older and time-tested ‘free markets’ lens of neoliberalism.

Seemingly, the title of the book gives its readers a slight hint that it might be a purely economic analysis of the ‘liberalism’ doctrine. However, in actuality, the authors from the Law and Economics school, have gone much beyond a narrow and banal economic analysis to construct a rather comprehensive ‘justice and fairness’ focused conception of their ‘democratic liberalism’ approach. The authors have acknowledged at the outset that the ‘democratic liberalism’ approach in its pedigree has a close connection with economist Amartya Sen and political philosopher Martha Nussbaum’s ‘Capabilities Approach’ to justice. While arguing quite strongly against ‘neoliberalism’ throughout the nine chapters of the book, the authors have recounted lived realities and everyday experiences of people during the pandemic instead of relying on mere quantitative data, cold numbers and hard statistics.

The introductory chapter lays bare the three major problems that governments across the world have been facing namely, unemployment, poverty, and pollution. The authors have elaborately described how the pandemic situation has exacerbated these problems to a significant degree and how neoliberalism has done little to alleviate the dismal state of affairs. Instead, as the authors have reasoned through illustrations how the three central tenets of liberalism namely, ‘globalisation, automation and gigification’ (GAG) have wreaked havoc in the lives of the already marginalized and vulnerable like women, disabled, poor, farmers, laborers, unemployed youth, elderly, religious and sexual minorities.

The central question that Dixon and Holden have addressed in their fascinating book is one that governments have been struggling to answer: how to do governance— law, policy and regulation— that is better, efficient, and fair post-Covid? The authors have majorly relied on American and Australian experiences, sparingly on European and Scandinavian examples and on even fewer Asian and African instances to carve out the ‘democratic liberalism’ project which they have argued is a middle path between democratic socialism and economic nationalism. To that extent, one might find striking resemblances between the democratic liberalism project and the ideational history of the concept of ‘welfare state’ that emerged in the period between 1875 and 1914 and post-World War II in countries like Germany, France, United Kingdom, U.S., the Scandinavian countries, Australia and New Zealand.[1] Like democratic liberalism, the welfare order in the late 19th and early 20th centuries was characterised as “not quite yet socialism, but certainly no longer capitalism”.[2]

A close read of the book also triggers the following question: whether the democratic liberalism project is a close cousin of the ‘third way’ concept of the 1990s that retained the ideational primacy of free market mechanism while significantly restructuring the concept of ‘welfare state’.

Can we then say that because of its close resemblance to the concepts of ‘welfare state’ and ‘third way’, democratic liberalism is like old wine served in a new bottle? After all, all three approaches are seemingly opposed to neoliberalism and seek to eliminate the unjust elements of laissez-faire capitalism on the one hand while ensuring social justice on the other hand.

The authors argue and demonstrate through illustrations that democratic liberalism as an alternative to neoliberalism does not conceive of a government as being either “interventionist” or “indifferent” rather, they construct an image of an “interested government”, one which is interested in maintaining a fine balance between seemingly contradictory democratic commitments of “dignity and equality, as well as freedom or autonomy”. I enjoyed reading Dixon and Holden’s comprehensive analysis and handling of a difficult question about remodelling global governance — its ideology, structure, and style — and making a drastic shift from an age-old ‘free markets’ approach to a comparatively newer and abstract ‘fair, compassionate and dignitarian’ model. However, I am quite sceptical about the viability and workability of their model of democratic liberalism particularly, in developing countries and Least Developed Countries (LDCs). Even in the context of developed nations, I find the democratic liberalism project wanting on several counts.

First, it is important to determine from a purely ethics and moral philosophy point of view whether the democratic liberalism model propounded by the authors is well suited to underdeveloped countries in Africa and Asia in the post-Covid era. For example, the authors have argued against welfare policies and schemes that are “economically unsustainable or entail large scale expenditure with no long-term benefits or investment potential”. To that extent, how would the Government of Kenya have dealt with the ‘humanitarian crisis’ resulting from the pandemic. Lakhs of flower farm and horticulture workers went jobless when global flower exports halted all of a sudden, aeroplanes were grounded, tons of flowers rotted but celebrations were cancelled, and florists shut shop. Similarly, the question before the Government of India during the pandemic was whether to provide compensation to the families of thousands of migrant workers who had lost their lives during the pandemic.

Where citizens have suffered from the state’s failure to provide for basic needs and without sufficient cushioning in a crisis moment, then can we really say that they should be left to die? Moral philosophy, humanity and ethics require that governments look beyond economic efficiency and return on investment when in times of crisis human lives have to be saved or deaths have to be prevented, as argued by Professor Jonathan Glover in his book Ethics and Humanity. As such, democratic liberalism as a concept must not ideally exclude democratic commitment to ethical and moral values like compassion, love, and sustenance especially, post-pandemic when citizens would require some hand holding, support and cushion to bounce back again. Reasonably, the state’s post-Covid mantra for governing citizens can neither be ‘live and let live, die and let die’ nor ‘God helps those who help themselves’. Rather, as T.H. Green had conceptualised that the ‘liberating function’ of the state is to ‘hinder hindrances to good life’ and to create an environment for individual citizens  to exercise their ‘positive freedom’ and realise their own potentialities.[3]

Second, why does the meaning of democratic liberalism exclude from within its purview social welfare programs like ‘Universal Basic Income’ (UBI) and why do the authors consider the government’s expenditure to fund a UBI-type scheme as a ‘bad debt’ when studies, pilot experiments and reports have shown how effective such measures have been to alleviate the lives of the marginalised and deprived sections of the society. The argument that UBI creates a dependency culture among the poor is rather flawed.

An overemphasis on ‘work’ and ‘wages’ does not resolve the problem of unemployment and poverty if the beneficiaries are still not able to convert the primary goods into good living as pointed out earlier by Sen through his conception of ‘conversion handicaps’ in his book ‘The Idea of Justice’ and recently by economists Abhijeet Banerjee and Esther Duflo in their book ‘Poor Economics.’ They have argued how there exist supervening circumstances namely, personal heterogeneities related to age, gender, disability and illness, diversities in the physical environment like vulnerabilities posed by climate change, water depletion and pollution, variations in social climate like poor public healthcare and substandard educational facilities, and differences in relational perspectives like cultural demands as well as societal pressures of reputation and status, factors of poverty that tend to hamper the actual enjoyment of given resources and entitlements.

Reasonably, where conversion handicaps exist apart from income handicaps as in a Covid-like scenario, a UBI accompanying a jobs guarantee is a much better and workable option. From a purely relational egalitarian perspective, UBI takes care of the inherent inequalities prevailing among the citizens. Undoubtedly, a provision for citizens’ basic needs, elimination of inherent inequalities in status and power, and an assurance of positive liberty ought to be the ethical objectives of a modern welfare state post-Covid.

Specifically, the argument against UBI with no-strings-attached being financially unsustainable is not very convincing considering the Government of India in its Economic Survey 2016-17 has worked out a formulae and modalities for funding a UBI for Indian citizens. The government’s proposed plan is to replace most of the centrally sponsored welfare schemes with a single leakage-free UBI scheme that perfectly targets beneficiaries at an estimated cost of around 4 to 5 per cent of the country’s GDP. According to the government, the UBI plan is quite competitive, reasonable, and affordable compared to its 950-plus central welfare programs.

Further, the argument that UBI discourages people from engaging in productive ‘work’ and earning ‘wages’ is quite weak. As depicted by the ‘Lying Flat’ movement in China, over-stressed and overworked youth have called out against the ‘wolf culture’ and ‘killing competition’ that prevails in corporate job settings and work spaces. While the pandemic has made human beings realise how ephemeral life is, it has also bestowed upon them the wisdom that the chase for money and job status is never ending.

Third, concepts such as ‘anthropocene age’, ‘non-human species’, ‘internalising externalities’, and ‘green politics’ are low-priority concerns for developing nations and LDCs where rising temperatures, depleting water resources and climate change are unfortunately neither part of the government’s political ideology nor political parties’ election manifestos. Further, the ideas of ‘environmental sustainability’ as well as ‘green jobs’ are alien and far-fetched for these nations where citizens and governments are still coping with more everyday questions of survival namely, food, clothing and shelter.

Fourth, it is seen that the same existential concerns of the developing world resonate with the grassroots level and poor masses in the peripheral towns, cities, and rural areas of developed nations like France where the ‘Gilets Jaunes’ or the Yellow Vests protests broke out in 2018 against President Emmanuel Macron’s introduction of the so-called environment friendly ‘fuel tax’. Taxes for unleaded gas and diesel rose by four and seven euro cents on the litre respectively which in turn significantly increased their prices by seventeen per cent and twenty three per cent respectively. The protests arose when French drivers conveniently transferred the increased fuel costs to millions of French commuters who were left with no choice but to pay for their everyday commute from home to work and back in the absence of a good public transport system in the country. Simply put, the green fuel tax made a deep hole in the French citizen’s pocket! If ‘globalisation, automation and gigification’ as the authors observe “led to empowerment of a very few and impoverishment of many”, the question that arises is: why did the French masses who supported the Yellow Vests protests against the rising economic inequalities and complete political indifference towards the poor’s concerns re-elect Emmanuel Macron. How do the authors reconcile this contradictory phenomenon and view the return of Emmanuel Macron for his second term as President? Does the French populace prioritise everyday sustenance over climate change? To that extent, even the constitutional texts of most countries both developed and developing, neither reflect climate change as an urgent priority nor provide for ‘posterity protection’ provisions namely, ‘rights of future generations’ at all. Rather, climate deniers like America’s former President Donald Trump, Australia’s Prime Minister Scott Morrison, and Brazil’s outgoing President Jair Bolsonaro have blatantly rejected green politics and environment friendly policies. For instance, Bolsonaro who is infamously called the ‘world’s most dangerous climate denier’ and ‘The Trump of the Tropics’ has widely supported massive deforestation of about 10,000 square miles of the Brazilian rainforest which is one of the most diverse and precious ecosystems on planet Earth. The burning question is: how would the authors convince the likes of Morrison and Bolsonaro to adopt democratic liberalism as an alternative to neoliberalism?

Fifth, the authors have argued that while neoliberalism has failed to address challenges posed by climate change, their model of democratic liberalism offers a timely, appropriate and a much appealing political ideology for both voters and political parties in democratic settings to engage in ‘green politics’ and opt for ‘green policies’. Opponents of the ‘Green New Deal’ and experts in the field of green energy in the U.S. have argued that hundred per cent reliance on renewable energy is not feasible because of three primary reasons. First, the vagaries of nature like sunshine and wind velocity are wholly unreliable and undependable sources of energy. Second, infrastructure for green energy like solar panels, wind turbines, transmission lines, big batteries, and back-up power are exorbitantly expensive. Third, connecting this gigantic infrastructure and supplying energy to consumers across the country is a herculean and costly task. No wonder renewable energy constitutes only 20 percent of the total energy generated in the U.S. including solar (2.8 per cent), hydropower (6 percent), and wind (9 percent). Further, green energy runs on batteries that are made using minerals from environmentally hazardous sites and even the disposal of these bio non-degradable batteries causes huge environmental pollution. Ironically, the constituents of green technology are anything but green!

Moreover, consider New Zealand’s Draft Plan 2025 under which farmers have to pay taxes on livestock emissions arising from animal belching and flatulence. New Zealand’s farmer groups are quite sceptical about the ‘burp-fart’ tax arguing that it will further crush an already unprotected and unsubsidized agricultural sector. The country’s farm sector has already been burdened by huge economic losses for several years. They have argued that emissions from human activities like fossil fuels burning and use in transportation, electricity production/generation, and industry must be curbed and taxed before emissions caused by farm animals. As such, green initiatives like fuel tax, burp-fart tax and transition to renewable energy are highly unpopular even in developed nations as these policies unfairly affect the masses.

Sixth, while the authors have suggested democratic liberalism as an apt solution which calls for greater individual rights in the post pandemic world, what has been observed is an opposite trend in both the developed and developing world—withdrawal and thinning down of individual freedoms and rights under the garb of public good, health and safety. For example, the U.K. has recently enacted the Police, Crime, Sentencing and Courts Act, 2022 in order to give greater powers to the police to restrict protests in public places; shockingly, the Parliament has gone as far as to prohibit even a ‘one-person protest’ in the guise of curbing noise pollution. Further, even when vaccination rates have gone up significantly, countries like China and New Zealand have called for complete lockdowns and greater restrictions on individual freedoms under the facade of curbing the spread of Covid infection. Taking advantage of the Covid situation, the Government of India swiftly passed the farm and labour codes respectively restricting the available safeguards and reducing the bargaining power of Indian farmers and labourers in order to benefit big employers, rich  industrialists and mega corporates. The bigger question that arises is whether the democratic liberalism project offers a practical, convincing, and viable method to reverse this interventionist trend in a post-Covid world?

Seventh, how does the authors’ democratic liberalism approach that guarantees a public baseline option for healthcare services address the availability, accessibility and adequacy concerns  of the burgeoning population in developing countries and LDCs for life saving drugs like remdesivir and antiretroviral therapy. The Australian Universal Healthcare Model might have worked wonders in the country and the Australians might have really benefited from it however, a one-size-fits-all approach is not the method to design healthcare policies especially, for overpopulated countries like India. As Banerjee and Duflo have explained, widespread problems of income as well as conversion handicaps; culture of indifference towards sanitation and healthcare;  poor medical infrastructure and healthcare facilities; and little or simply no awareness about health insurance are major impediments to the adoption of an Australian-type healthcare model in India. Then can we surmise that democratic liberalism is an attractive option for developed nations alone? Does the effective implementation of the democratic liberalism project in a country rely upon a certain minimum level of economic prosperity of its citizens?  If the answers to the aforementioned two questions are in the affirmative, then probably it is better for India to stick to its original avatar as a ‘welfare state’ in a post-Covid world.

Eight, in light of Elon Musk’s acquisition of social media giant Twitter which is the result and creation of neoliberalism, how does democratic liberalism conceive the role played by mega corporates in a democracy. Further, how does democratic liberalism regulate the ownership and control of the democratic space by a few rich men? Does it provide enough safeguards and guarantees against dissemination of one-sided, false propaganda and long-term threats to free speech and expression.

We do understand and agree with Dixon and Holden that Covid pandemic has largely exposed the imperfections in the workings of liberalism as a governance model and at the same time offered an opportunity to present day governments to rethink and redesign their laws and policies accordingly. As such, this book is a must read for students of public policy, regulatory governance, political science, international affairs, law, poverty and development, and those who are interested in questions of law and justice in a globalising world. It can be said that Dixon and Holden have achieved their purpose behind writing this book as it enables a reader to widen one’s understanding of “the capacity of a crisis to catalyse broader social, economic and political changes in the world.”

The authors have provided a convincing option to democratic citizens in deciding between different welfare state futures in a post Covid era. However, as explained above, there are pressing ethical concerns, moral dilemmas, and valid doubts about the feasibility of the democratic liberalism project. Believably, the choice is not easy to make.

Prof. Dhoop is an Assistant Professor of Law at the National Law School of India University, Bengaluru.

[1] Chris Pierson and Matthieu Leimgruber, ‘Intellectual Roots’ in F. G. Castles, S. Leibfried, J. Lewis, H. Obinger and C. Pierson (eds), The Oxford Handbook of the Welfare State (OUP 2010) 32-44.

[2] ibid. Stuart White, ‘Ethics’ in F. G. Castles, S. Leibfried, J. Lewis, H. Obinger and C. Pierson (eds), The Oxford Handbook of the Welfare State (OUP 2010), 19-31 and Desmond King and Fiona Ross, ‘Critics and Beyond’ in The Oxford Handbook of the Welfare State (OUP 2010), 45-57.

[3] Narasingha P.S.L., ‘The Liberalism of Thomas Hill Green A Reassessment’ (1982) 1 The Indian Journal of Political Science 43, 63–72 and M M Sankhdher, ‘T.H. Green : The Forerunner of the Welfare State’ (1969) 30 The Indian Journal of Political Science 2, 149.

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