Reappraisals (68 page)

The other lesson we should have learned from the experience of our age is that, murderous or benevolent, the state is a strikingly inefficient economic actor. Nationalized industries, state farms, centrally planned economies, controlled trade, fixed prices, and government-directed production and distribution do not work. They do not produce the goods, and as a consequence they do not distribute them very well, even though the promise of a more equitable system of distribution is usually the basis of their initial appeal.

Neither of these lessons is entirely new. Eighteenth-century critics of mercantilism knew why state-regulated economies were inefficient and self-defeating. The opponents of autocratic monarchies, from the English Puritans through the French Enlightenment to the Russian novelists of the last century, had long since itemized the sins and deficiencies of unrestricted central power and its stifling effect on human potential. What the twentieth century teaches is simply an updated version of Lord Acton’s dictum: Absolute state power destroys absolutely, and full state control of the economy distorts fully. The short-lived disaster of Fascism and the longer-lasting tragedy of Communism can be adduced in evidence of processes known to our forebears but of which Colbert’s system and the ancien régime were but pale anticipations. We now know that some version of liberalism that accords the maximum of freedom and initiative in every sphere of life is the only possible option.

But that is all we know,
and not everything follows from it. The lessons of 1989 obscure almost as much as they teach, and, worst of all, they tend to obscure a third lesson: that we no longer have good reason to suppose that
any
single set of political or economic rules or principles is universally applicable, however virtuous or effective they may prove in individual instances. This is not a plea for cultural or moral relativism, but it is not incoherent to believe that a system of economic management might work in one place and not another, or to recognize that, within limits, what is normal and expected behavior by a government in one free society might understandably be thought intolerable interference in another.

Thus the application of neoliberal economic policy in the United States is possible, in part, because even some of those who stand to lose thereby are culturally predisposed to listen with approval to politicians denouncing the sins of big government. The American combination of economic insecurity, social inequality, and reduced or minimal government intervention in the field of welfare legislation, for example, would prove explosive in societies where the state is expected to have a hand in such matters and gets the benefit of the doubt even when it appears to be abusing its power. Thus, for reasons that are cultural and historical rather than economic, the U.S. model is not exportable and even across the breadth of the Atlantic Ocean causes quivers of distaste and anxiety among otherwise sympathetic foreign observers.

The British case, which bears some resemblance to the U.S. one, is in certain respects a little closer to the European norm. The British
state
has never played a very important part in people’s lives, at least as they perceive it; it is
society
that binds the British together, or so they had long believed. Reinforced by the myth and memory of wartime unity, British people in the postwar decades were notably sensitive to hints that selfish group claims were being favored by the state at the expense of the common good. Indeed, Margaret Thatcher effected a small revolutionin her country precisely by playing on a widespread fear that some sectors of society—the labor unions in particular—had gained access to the state and were using it to sectoral advantage. That she herself expanded the role of the state in other spheres of life—notably justice and local government—and used central authority to benefit other sectoral interests is beside the point. The British were susceptible to the suggestion that their difficulties arose from the omnipresence of an inefficient and vaguely threatening central power, though they had no desire to squander the achievements of state-administered social legislation in the fields of health, welfare, and education, as the Tories’ final, ignominious defeat revealed.

But the British example is equally inapplicable to the continental European case—and not just because of the amusing European propensity to speak of Anglo-American neoliberalism as though the British and U.S. experience and examples were interchangeable. There are doubtless many European Socialists and liberals who would like to emulate Tony Blair. But the price of that would be to pass through the experience of Margaret Thatcher (without whom Tony Blair would still be an obscure Labour politician with no original ideas of his own), and no European politician of any hue imagines for a moment that his own country could survive
that.
It is not just that Thatcher produced double-digit unemployment and destroyed the traditional manufacturing base of the British economy, while briefly lining the pockets of the middle class with the windfall proceeds from privatization: Some of that has already happened in France, Belgium, Spain, and elsewhere. But Thatcher demolished the theory and much of the practice of the providential state, and it is that which is unthinkable across the channel.
²⁵

In continental Europe the state will continue to play the major role in public life for three general reasons. The first is cultural. People expect the state—the government, the administration, the executive offices—to take the initiative or at least pick up the pieces. When the French demand that their government provide shorter working hours, higher wages, employment security, early pensions, and more jobs, they may be unrealistic but they are not irrational. They do not generally press for lower taxes (in contrast with the U.S. political obsession with tax cuts). They recognize that high taxes are the means by which the state might meet such expectations, and they are indeed highly taxed, which is why they resent it when the state fails to deliver the social goods. Germans, too, expect the state to ensure their well-being. And although, for historical reasons, they are disposed to identify the latter with social compacts and a stable currency, they too expect the state to play an active role in maintaining job security, regulating commerce, and servicing the remarkably generous welfare net with which they have provided themselves.

Even in Italy, where the state is weak and much more politically vulnerable, it has played a crucial role in providing employment, transfer payments, regional largesse, and an intricate variety of support schemes, all of which have contributed enormously to the social stability of a country whose unity has always been in question and that has been prey to more, and deeper, political crises than the Anglo-American experience can begin to appreciate. Let us pose the counterfactual question: Where would Italy be now without its huge and inefficient civil service, its over-staffed public services, its dysfunctional and discredited systems of wage-price linkage, its underfunded pension schemes, and its corrupt and abused
Cassa per il Mezzogiorno
, established in 1950 to channel resources to the backward south but long a feeding ground for the political clients and business associates of the governing Christian Democrats?

The Italian state has stood not between Italy as we now see it and some hypothetical Italian miracle of the neoliberal imagination, but between postwar Italy and political collapse. This is not just because the country would otherwise have faced insuperable social conflicts and regional disparities, but because the long-standing cultural expectations of Italians—that the state must do what society and economy, left to their own devices, cannot—would have been unacceptably thwarted. In unsteady and fragmented societies the state is often the only means by which some measure of coherence and stability can be guaranteed. The historical alternative in such cases has usually been the military, and it has been Italy’s and Europe’s good fortune that
that
route has been taken infrequently in recent memory.

Thus, although the state itself has had a bad press in the recent European past, there has been little loss of faith in the importance of the things it can do, properly led. Only a state can provide the services and conditions through which its citizens may aspire to lead a good or fulfilling life. Those conditions vary across cultures: They may emphasize civic peace, solidarity with the less fortunate, public facilities of the infrastructural or even the high cultural sort, environmental amenities, free health care, good public education, and much else. It is generally recognized that not all of these may be available in their optimal form, but in that case too it is only the state that can adjudicate with reasonable impartiality between competing demands, interests, and goods. Most important, only the state can represent a shared consensus about which goods are positional and can be obtained only in prosperity, and which are basic and must be provided to everyone in all circumstances.

These are things the market—much less the global market—cannot do. Paradoxically, the idea of an active state today represents an acknowledgment of
limits
on human endeavor, in contrast to its overweening utopian ambitions in the recent past: Because not everything can be done, we need to select the most desirable or important among what is possible. The idealization of the market, with the attendant assumption that anything is possible in principle, with market forces determining which possibilities will emerge, is the latest (if not the last) modernist illusion: that we live in a world of infinite potential where we are masters of our destiny (while somehow simultaneously dependent on the unpredictable outcome of forces over which we have no control). Proponents of the interventionist state are more modest and disabused. They would rather choose between possible outcomes than leave the result to chance, if only because there is something intuitively and distressingly callous about leaving certain sorts of goods, services, and life chances to the winds of fate.

The second case for preserving the state today is pragmatic, or perhaps prudential. Because global markets
do
exist, because capital and resources fly around the world and much of what happens in people’s lives today has passed from their control or the control of those who govern them, there is a greater need than ever to hold on to the sorts of intermediate institutions that make possible normal civilized life in communities and societies. We are accustomed to understanding this point when it is directed to the need for voluntary organizations, community structures, small-scale exercises of autonomy in public life, and local civic ventures or issues of common concern, such as safety, environment, education, culture. And we understand, or think we understand, the importance of intermediate institutions when we study totalitarian regimes and notice the importance their rulers attached to the
destruction
of anything that came between the isolated, anomic subject and the monopolistic state.

What we have failed to grasp is that, on the eve of the twenty-first century,
the state itself is now an intermediary institution too
. When the economy, and the forces and patterns of behavior that accompany it, are truly international, the only institution that can effectively interpose itself between those forces and the unprotected individual is the national state. Such states are all that can stand between their citizens and the unrestricted, unrepresentative, unlegitimated capacities of markets, insensitive and unresponsive supranational administrations, and unregulated processes over which individuals and communities have no control. The state is the largest unit in which, by habit and convention, men and women can feel they have a stake and which is, or can be made to appear, responsive to their interests and desires.

Finally, the need for representative democracy—which makes it possible for a large number of people to live together in some measure of agreement while retaining a degree of control over their collective fate— is also the best argument for the traditional state. Indeed, the two are fated to live or die together. Political choices will always be made because politics, as an antithetic activity, is the proper form in which different collective preferences are expressed in open societies. And because the state is the only forum in which politics can be practiced—something that becomes obvious as soon as we envisage the alternatives—it is imprudent as well as unrealistic to seek to reduce or bypass the state. It is because the free flow of capital threatens the sovereign authority of democratic states that we need to strengthen these, not surrender them to the siren song of international markets, global society, or transnational communities. That is what many perceive as wrong with the European project, and it is what would be wrong with assigning the policymaking initiative to global market forces.

Just as political democracy is all that stands between individuals and an overmighty government, so the regulatory, providential state is all that stands between its citizens and the unpredictable forces of economic change. Far from being an impediment to progress, the recalcitrant state, embodying the expectations and demands of its citizenry, is the only safeguard of progress to date. Whatever the gains in social legislation on working conditions and hours, education, the dissemination of culture, safeguarding health and the environment, insurance against homeless-ness, unemployment, and old age, and the limited redistribution of wealth, they are all vulnerable and politically contingent. There is no historical law that says they may not someday be undone. For it is with social advance as with political freedoms: We must always stave off threats to what has been won, rather than presume these gains to be a secure part of some unassailable heritage.

Furthermore, it is not in the interest of proponents of global market forces to seek the dismantling of the providential state. Unregulated markets are frequently self-delegitimizing, as numerous historical examples suggest. Perceived as unfair, they can become dysfunctional and will be rejected even by those who stand to gain from their smooth operation. For social and political stability are important economic variables too, and in political cultures where the providential state is the condition of social peace, it is thus a crucial local
economic
asset, whatever its actual economic behavior. That is why “the market” has worked well, albeit in very different ways, in situations as distinct as Social Democratic Scandinavia, Christian Democratic Italy, social-market Germany, and providential-state France.