After the shortest premiership in British history, there is no doubt that the socialist agenda has become an absolute mainstream in world politics.
The socialist agenda is becoming the core of all influential political elites, both those seeking and holding the power mandate, in all developed countries. This means that we must be soberly aware of the inevitable threats and devastating consequences for the civilized world that de facto socialism, as a system of socio-political and economic order, carries with it.
I have deliberately not used the term “ideology” here for one obvious reason: current socialism is not an ideological doctrine under which the economic and political order changes. Today’s metastases of state expansion are successive changes from within the political mainstream, veiled in political public rhetoric by earlier postulates about the value of the market, freedom, entrepreneurship, the primacy of individual rights, etc. Such changes are evolutionary in nature and do not have an instantaneous effect, since step by step they expand the rights of the state with a simultaneous more or less linear dating of the population and a consistent binding of economic agents to state redistribution.
The entire economic and social policy of developed countries since September 11, 2001 has been aimed at precisely this: the actual expansion of the state’s redistributive mandate. The widest range of external and internal threats, from terrorist attacks to cybercrime to pandemics, was the logical background for the transformation of the political consciousness of Western society, which assimilated one dominant idea: the dangers and uncertainties of the modern world dictate the need for maximum protectionism.
In the logic of the social contract, society has voluntarily agreed to the empowerment of the state in return for the reduction of its rights and opportunities. Voluntarily does not mean consciously, and this applies to both society and the state. Rather, we are talking here about the conditioned behavior of both society and the state, represented by political elites. I am infinitely far from the mindless conspiracism that is unfortunately inherent in the extreme spectrum of “right-wing” thought, which imposes myths about a world government and promotes the control of all world processes by some mythical titans. Not having any desire to comment on all these conspiracy theories, I will only say that the very idea that socio-economic processes can be modeled, constructed and controlled in a given vector in the long run contradicts the very essence of libertarian philosophy, literally postulating the following: it is impossible to account for all factors and possible configurations for purposeful manipulation of social processes and the economy as complex open self-organizing systems.
However, it is obvious that the adaptation caused by conditionally external triggers has become quite an endogenous process of transformation of socio-political preferences and the very conditioned behavior of both society and political elites.
At the same time, it should be understood that this state of affairs is most beneficial, first of all, to political elites as political rent-seekers. The emerged demand on the part of society for paternalism and protectionism political entrepreneurs began to consider as an unconditional opportunity to benefit today and tomorrow. This led to further intensive stimulation of such demand from the population, determining the trajectory of movement in an expanding spiral: the more, the more. The big problem is only that this approach sharply narrows the planning horizons of political entrepreneurs, which means their reluctance, perhaps escalating at times into an inability to trace the perniciousness of satisfying and sustaining such popular intensions over a longer civilizational perspective.
The consequences of this erosion we have seen and lived in for the past 20 years. The exorbitant expansion of state expenditures and the growth of social subsidies have been made possible naturally by a hypertrophied monetary expansion and a deep and broad expansion of the state in economic processes. On the one hand, the state constantly supports bad and inefficient companies, taking away resources that could have been used much more efficiently by more successful businesses. On the other hand, the growth of taxes and the tightening of regulations that are inevitable for the implementation of such a policy of “common welfare” hits hardest those more efficient economic agents, which are the main driving force of the market economy, creating jobs, developing and implementing new technologies for widespread use. At the same time, the active growth of infrastructure government programs and government contracts, as another type of government spending, distorts the competitive environment and opportunities for market players, concentrating more and more opportunities in the hands of political elites.
Socialism is actually a linear redistribution by the state of benefits directly to the population. Caring for the population in the form of direct redistribution in its favor ends up in worsening crises and, ultimately, in collapse. If the state redistributes directly to the population, or at least increasingly sinks into such a modus operandi of economic and social policy, this automatically means fewer opportunities for entrepreneurs and producers.
The hypertrophied monetary expansion as well as quantitative easing programs were, in fact, a move in precisely this direction, in the direction of de facto socialism. Government leverage is focused primarily on consumers, i.e., on inflating consumer demand. Quantitative easing and redemption of bad assets on the balance sheet is a de facto intervention in a competitive market environment, the goal of which is the same – to preserve consumer potential and social stability through employment preservation, even if it is employment in inefficient industries.
It is in the quasi-socialist paradigm that the poor live better and better at the expense of the rich, while the rich begin to live worse and worse. But it is the rich, and therefore the most enterprising and productive, who create added value and ensure technological development, allowing the less rich to live better by participating in the creation of goods and increasing productive efficiency, rather than by receiving goods directly, “for nothing,” without participating in this process.
The task of the state is not to take from one, the most successful, and give to another, less successful one. The task of a civilized free state is to make it possible for the greatest number of people to create added value and participate in this process. This is true inclusiveness, not at all what the leftist governments of developed countries have in mind, i.e., the equalization of inequality by means of state, in fact, directive redistribution from the richer to the less wealthy.
But in order to ensure such conditions, the state must give up many of the things it has already got its hands on. Most importantly, it must sharply reduce the redistributive mandate and create positive market conditions as an incentive to supply, i.e., production, rather than to stimulate demand, i.e., consumption. This requires improving the competitive environment and ceasing to crush the economy with government orders and support for inefficient companies, it requires loosening protective regulations, it requires reducing taxes, it requires reducing social spending, it requires finally leveling and stabilizing inflation – sharply reducing and bringing monetary expansion at least to the Friedman rule.
But such decisions require a strategic view and longer planning horizons for all sociopolitical actors, because the consequences of such decisions could be painful tomorrow, though necessary and cleansing. Reagan, Thatcher and Kohl took the courage to take such decisions and think long term, resulting in two decades of economic growth, social stability and technological development in developed countries in the 1980s and 1990s. As positive externalities, we also got the liberalization and democratization of the rigid autocracies of the USSR and China.
Something similar was going to be done by Liz Truss. Tax cuts for the rich and business, cuts in social spending, keeping monetary policy tight were the main points of her program. The harsh reaction and rejection of such measures by the public, investors and most importantly all political elites, including her one party members, says only one thing: no one wants the party to end and the hangover to come tomorrow.
The reaction of the markets and the rise in government debt yields does not speak to the wrong decisions by Mrs. Strass, it only speaks to the fragile and unsustainable state of the economy and the social system if any bailout decisions provoke such a panicky and hysterical reaction. This economic condition is the result of the very policies of left-wing bias and statism of the last 20 years in the developed world.
Liz Truss made a timid attempt to make just such difficult cleansing decisions by trying to think long term. The result was a fiasco of her initiatives. The reason for this end is obvious: Political elites are not ready to give up their expanding rights and opportunities for rent-seeking political entrepreneurship, and the population, investors, and productive businesses are not ready to tolerate inconvenience today in order to get really great opportunities tomorrow. The system is in a bad equilibrium and so far neither side is willing to upset it, until the appropriate trigger arises. The bad news is only that in today’s world, this potential trigger risks being far more dangerous and destructive than anything known before.
In the meantime, let’s say thank you to Liz Truss. She was ahead of her time. She at least gave it a try.