Naked Capitalism: We’re All Serfs Now

A Reversion to a Dickensian Variety of Capitalism

Posted: 19 May 2013 09:55 PM PDT

By Jayati Ghosh, Professor of economics at Jawaharlal Nehru University, New Delhi, and the executive secretary of International Development Economics Associates. Cross-posted from Triple Crisis.

Since her death, many eulogies of Thatcher have spoken of her as a revolutionary. Thatcherism (along with the associated Reaganomics) is seen as a radical transformative agenda that changed the face of economy and society. But seen from the developing world decades later, much of this agenda appears familiar, in the form of structural adjustment policies that have been forced upon different countries at different times by international institutions.

Given the broad contemporaneity of these strategies, it is a moot point who “inspired” whom, or just how original those ideas were. But it is certainly true that they contributed to shaping policy dialogue in fundamental ways, and thereby left a continuing (if unfortunate) legacy. Consider just five significant elements of this legacy, most features of which are now found across the world and especially in developing countries.

First, and possibly the most well-known: the attack on organised labour and the resulting drastic reduction in workers’ bargaining power. This occurred not just through the instrument of unemployment (or fear of it) used to discipline workers, but through regulation and legal changes as well as changing institutions. This is now an almost universal feature, except in societies such as in Latin America where recent political changes have generated some reversal.

Second, financial deregulation and significant increases in the lobbying and political power of financial agents. This has led to the massive expansion and then implosion of deregulated finance, with the crisis affecting the real economy in terrible ways. It has also contributed to deindustrialisation and the rentier economy. The UK today is clearly one, with its focus on the City of London as its most prominent “industry” – but this is increasingly the fate of countries that are much lower in the development and per capita income ladders.

Third, the triumph of private gain over social good and the aggressive delegitimisation of public provision. Quite apart from the adverse effects on the long term (in terms of inadequate public investment for the future or for meeting current social needs) this has terrible effects on society, creating not just injustice but small-minded and petty individualism as a dominant social characteristic.

Fourth, the weakening or destruction of notions of the rights of citizens, particularly social and economic rights. Most citizens of the developing world are still struggling for these to be recognised, so the rapid derecognition of such rights in the post-Thatcher era has been a setback for everyone – and is only too obvious in much of Europe today.

Fifth, sharply increasingly inequalities of assets, incomes, opportunities, which has become socially and economically counterproductive everywhere and increasingly politically destabilising as well.

Was Thatcherism then all that new? No – it was essentially a reversion to an older, Dickensian (if not even Hobbesian) variety of capitalism, bringing back into significance those more unpleasant features of the capitalist system that were supposed to have been abandoned in the forward progress of human history.

Jayati Ghosh is professor of economics at Jawaharlal Nehru University, New Delhi, and the executive secretary of International Development Economics Associates.

This piece first appeared in the Guardian. 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved.

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