False Dawn: The Delusions of Global Capitalism, by John Gray, New York: The New Press, 234 pages, $25.00
In False Dawn, John Gray attempts to attack global capitalism at its intellectual roots. In other words, he portrays the worldwide spread of markets as the manifestation of deeply flawed ideas about how the world works. The attack, a sloppy jumble of internal contradictions and factual distortions, fails spectacularly. Nevertheless, the book does achieve something: It articulates, quite boldly and with rhetorical verve, a relatively sophisticated version of reactionary globalphobia. It's not a pretty sight, but it merits our attention all the same.
Gray is a professor at the London School of Economics and a fairly prominent public intellectual in Britain. Like America's Pat Buchanan, Gray opposes globalization from the right; also like Buchanan, Gray is a repentant ex-free-trader. Gray's intellectual about-face, though, goes far beyond international economics. He is a former classical liberal whose earlier books include intelligent and admiring analyses of J.S. Mill and F.A. Hayek. Now he rejects not just free trade, not just liberalism, but the whole "Enlightenment project"–or at least his caricature thereof. (In The Future and Its Enemies, Virginia Postrel identifies Gray as a leading voice of what she calls "reactionary stasis.")
Indeed, at the bottom of Gray's hostility to the world economy is its supposed Enlightenment pedigree. "A single global market," he writes, "is the Enlightenment's project of a universal civilization in what is likely to be its final form." In an invidious and oft-repeated comparison, he portrays global capitalism and the now-defunct ideal of collectivism as two sides of the same rationalist coin: "Even though a global free market cannot be reconciled with any kind of planned economy, what these Utopias have in common is more fundamental than their differences. In their cult of reason and efficiency, their ignorance of history and their contempt for the ways of life they consign to poverty or extinction, they embody the same rationalist hubris and cultural imperialism that have marked the central traditions of Enlightenment thinking throughout its history."
Gray does not dispute (at least not consistently) that, unlike socialism, free markets deliver the goods. "The argument against unrestricted global freedom in trade and capital movements," he concedes, "is not primarily an economic one. It is, rather, that the economy should serve the needs of society, not society the imperatives of the market." In particular, Gray argues that free markets undermine the "needs of society" by fomenting incessant and unsettling change. "The permanent revolution of the free market denies any authority to the past," he writes. "It nullifies precedent, it snaps the threads of memory and scatters local knowledge. By privileging individual choice over any common good it tends to make relationships revocable and provisional."
At this point Gray sounds like a full-fledged neo-Luddite, rejecting the rat race of economic and technological progress in favor of some lost bucolic wonderland of cheerful, ruddy peasants and a wise and kindly nobility. But Gray's views are more complicated, and less coherent, than they first appear. Gray distinguishes between the "global free market," a utopian fantasy he harshly condemns, and globalization more generally, whose inevitability he recognizes and accepts.
"A global single market is very much a late-twentieth-century political project," he argues. "It is good to remind ourselves of this, and to make an important distinction. This political project is far more transient than the globalization of economic and cultural life that began in Europe in the early modern period from the fifteenth century onwards, and is set to advance for centuries. For humankind at the close of the modern period globalization is an historical fate. Its basic mechanism is the swift and inexorable spawning of new technologies throughout the world. That technology-driven modernization of the world's economic life will go ahead regardless of the fate of a worldwide free market."
It appears, then, that John Gray is highly selective in his railings against the "Enlightenment project." The "universal civilization" of science and technology, after all, has its own "cult of reason and efficiency," heaps "contempt" on traditional superstitions and folkways, and spreads its own "cultural imperialism." Even more so than do free markets, the "permanent revolution" of scientific and technological advance "denies any authority to the past," "nullifies precedent," and "snaps the threads of memory." Yet while free markets are dismissed as a dangerous pipe dream, technological progress is a "historical fate."
The muddle gets deeper. Gray explicitly acknowledges that free markets and technological developments are pushing the world in the same direction. In fact, he actually argues that technology's push is the ultimately stronger and decisive one, writing, "The dislocations of social and economic life today are not caused solely by free markets. Ultimately they arise from the banalization of technology. Technological innovations made in advanced western countries are soon copied everywhere. Even without free-market policies the managed economies of the post-war period could not have survived–technological advance would have made them unsustainable."
Here, then, is Gray's argument so far: The current worldwide displacement of state control by markets is driven by the same kind of Enlightenment-inspired rationalist monomania that gave us the Soviet Union. This ideological campaign should be condemned. Yet this condemnation should not extend to the worldwide displacement of state control by markets that is driven by another bit of Enlightenment-inspired rationalism–namely, the global triumph of Western science and technology. And by the way, this latter technology-driven phenomenon is much more potent than the former ideology-driven one, and indeed is so powerful that statism would be giving way to markets even if free market ideology did not exist.
It's the incredible shrinking thesis. It poses as a radical, Enlightenment-bashing jeremiad–but it's just a pose. Gray shrinks from the full implications of his argument, and then proceeds to cut the legs out from under it with understated but devastating qualifications. In the end, there's not much left.
This kind of self-contradiction occurs again and again in Gray's book. For example, Gray blasts the Thatcherite deregulation of the British labor market, attributing to it the following baleful consequences (among others): "The bourgeois institution of the career or vocation ceased to be a viable option for an increasing number of workers. Many low-skill workers earned less than the minimum needed to support a family. The diseases of poverty–TB, rickets, and others–returned."
Yet then Gray turns around and admits: "Margaret Thatcher understood that British corporatism–the triangular coordination of economic policy by government, employers, and trade unions–had become an engine of industrial conflict and strife over the distribution of the national income rather than an instrument of wealth creation or a guarantor of social cohesion."
Likewise, Gray condemns New Zealand's neoliberal reforms for undermining "social cohesion," but then concedes, "By the early 1980s a major shift in policy may have been unavoidable. It was not unreasonable to fear that New Zealand might slip from its status as a First World economy." For both Britain and New Zealand, Gray simultaneously trashes liberalization and the mess that preceded it. What should have been done? On that crucial point Gray is silent.
Meanwhile, Gray argues, in familiar globalphobic fashion, that the world economy today follows a kind of "Gresham's Law," in which "bad" capitalism drives out "good." "Sovereign states are waging a war of competitive deregulation, forced on them by the global free market," he writes. "A mechanism of downwards harmonization is already in operation." With equal vigor, though, Gray argues the exact opposite: "A global free market presupposes that economic modernization means the same thing everywhere….The real history of our time is nearer the opposite. Economic modernization does not replicate the American free market system throughout the world. It works against the free market. It spawns indigenous types of capitalism that owe little to any western model."
To cite a final example, consider Gray's analysis of East Asian capitalism. It is clear that he regards it as far superior to the American alternative, asserting, "In the contest between the American free market and the guided capitalisms of East Asia it is the free market that belongs to the past." Oops–no doubt this passage was written before the full dimensions of the Asian economic collapse had become apparent (the book was originally published in Britain in the spring of 1998). But Gray doesn't wait for events to refute him; he blithely refutes himself.
Thus, when he considers Asia's leading economy, Japan, he admits that it has been a "no-growth economy" for the better part of a decade. Indeed, he even tries to make a virtue of the fact by saying, "Perhaps in Japan's uniquely mature industrial society the collapse of economic growth could be an opportunity to reconsider the desirability of restarting it." Gray can't make up his mind whether Asia is outgrowing or out-stagnating us.
Is there anything solid in all this murk? Well, yes–Gray is consistently unambiguous in his cartoonish, over-the-top anti-Americanism. Through all his zigs and zags, he is steadfast in his loathing of American-style capitalism as it has emerged during the past couple of decades.
Gray argues that in the United States during the 1980s and '90s, "market utopianism" has displaced "Rooseveltian liberalism" and "gone far towards establishing itself as the unofficial American civil religion." Hyperbole aside, Gray is correct that American capitalism has undergone a fundamental shift in recent years. What is today called the "American model"–i.e., the absence of price and entry regulation, flexible labor markets, return-driven (as opposed to relationship-based) allocation of capital–is indeed a relatively recent phenomenon. In Gray's eyes, its advent is a catastrophe of the first order.
Predictably, he repeats the usual canards about rising economic inequality. Here is my favorite line from the book on that score: "The middle classes [in the United States] are rediscovering the condition of assetless economic insecurity that afflicted the nineteenth-century proletariat." That Gray could make such a statement–when an all-time record 66 percent of American families own their own homes, and an all-time record 52 percent of Americans own stocks–is a telling indicator of his regard for the facts.
For Gray, though, the supposed economic failings of American-style capitalism are only the beginning. "In the United States," he warns, "free markets have contributed to social breakdown on a scale unknown in any other developed country. Families are weaker in America than in any other country. At the same time, social order has been propped up by a policy of mass incarceration….Free markets, the desolation of families and communities and the use of the sanctions of criminal law as a last recourse against social collapse go in tandem."
Let us stipulate that broken homes and bulging prisons are serious social pathologies. But to blame these ills on the economic deregulation of the past 20 years is nothing short of ludicrous. After all, divorce, illegitimacy, and crime rates began soaring in the 1960s, when "Rooseveltian liberalism" was still in full flower.
As an alternative to the "global free market," Gray upholds Isaiah Berlin's vision of "a world which is a reasonably peaceful coat of many colours, each portion of which develops its own distinct cultural identity and is tolerant of others." But it is the proponents of economic liberalization, not Gray and his reactionary confreres, who are the true partisans of Berlin's pluralist and tolerant vision. For at the core of Gray's snarling rejection of free markets is intolerance–intolerance of the millions upon millions of individual choices that make up the marketplace.
John Gray disapproves of free markets on the ground that they give short shrift to "social cohesion." Yes, stability and belonging and tradition are certainly "vital human needs." But so are freedom, experimentation, and creativity. Gray regards these as dangerous and supports coercive policies that would suppress them. Supporters of liberalization, on the other hand, celebrate the dynamic virtues, while recognizing that they entail tradeoffs. In the liberal system, these tradeoffs are made by individuals according to their own individual and subjective preferences. Which approach is more likely to produce a vibrant "coat of many colours," and which a dull gray jacket of stagnation and repression?
Contributing Editor Brink Lindsey (email@example.com) is director of the Cato Institute's Center for Trade Policy Studies.