Ideology Buckles - It's Too Rigid, Too Flawed. Better by Far to Muddle On
Lott, Tim, The Independent on Sunday (London, England)
We must accept the random, says Tim Lott, because our invented systems lack flexibility
After the last traumatic weeks spent watching the near-fatal buffeting of the world economic system, it was fascinating to read of the commensurate bruising endured by the mind of one of the principal architects of that system, the neo-liberal former head of the Federal Reserve, Alan Greenspan.
Greenspan admitted to a congressional committee last week - after the collapse of the 40 years of economic experiment in the free market economics that he had done much to establish - that he was "shocked" at the failure of that model. He was "very distressed"; it was a "tsunami" that was "much broader than anything that could have been imagined". Most tellingly, he admitted that what he had believed in was an "ideology" which, he now recognised, contained a "flaw".
It is an extraordinary thing that such an intelligent man should be so shocked that an ideology contained a flaw. The shock came because, presumably, until the last few weeks, Greenspan didn't see what he believed in as being an ideology at all - that is to say, a self-contained, self-sustaining, supposedly coherent and hermetic system of belief. He saw what he thought constituted reality. But what he actually saw were patterns made out of smoke.
And that is why he is now reeling, along with the economies of the world and all of us that rely on them to keep our daily lives tractable. Because reality has revealed itself as too unpredictable and complex to contain within a single rigid body of ideas.
No ideologies really admit to being ideologies until they have failed. It wasn't only Greenspan but a whole generation of libertarian economic theorists who were gripped by a vision arising out of the failures of the centrist, statist "managed economies" of the 1970s.
The emergence of this mixed economy statism - too patchwork to be described as an ideology - was prophesied in a book called The End of Ideology by Daniel Bell in 1960. He observed that both the ideals of the left, in the form of socialism, and of the right, in the forms of fascism and militarism, had expired, leaving only the possibility of a raft of centrist, moderate and ad hoc compromise politics negotiated between competing centres of power.
This model - which came to be known in this country as corporatism - was seen to have failed after the inflation, economic stagnation and oil crises of the 1970s. Once again, a vacuum of ideas, or if you prefer, ideals, was waiting to be filled. And filled it was, this time by the libertarians, among them one Alan Greenspan.
This moment of the shift to the belief in economic libertarianism is captured in an article by the libertarian guru Murray Rothbard in 1977 in a journal called New Libertarian Forum. Pointing to the failure of centrist corporatist solutions, he observed that "all this provides an unusually favourable opportunity for libertarians. For we are functioning in an intellectual climate where there is no longer any real, determined, militant ideological competition. Ideological decay and confusion are everywhere. But, in this miasma, we libertarians have that alternative; we have a new and intellectually stimulating and fascinating ideological paradigm, and one that explains the collapse of modern statism better than anyone else. We have a new and systematic creed, and we are just about the only ones who still believe in our ideology. In contrast to the Left, Right, and Centre, our ideology hasn't ended; it is just beginning."
The triumph of the libertarian view came with the fall of the Berlin Wall in 1989, after which American-style free market economics was the only game in town. Francis Fukuyama, echoing Bell, published The End of History in 1992, asserting that democracies underpinned by capitalist economies were now the only realistic way to organise a society. …