False Dawn: The Delusions Of Global Capitalism [Paperback]

 

 

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John Gray's popular critique of globalization and laissez-faire capitalism has enjoyed a resurgence as a "prophetic" account of our current global economic problems, but I think the book is better viewed as an incomplete analysis, and one that is riven with contradictions and equivocations.

Gray's clearest and most consistent argument is that capitalism, and especially the sort of global laissez-faire capitalism promoted by the United States, is a politically constructed product, quite unnatural in most human societies and rarely long-lasting. Thus, the free market that developed in Britain in the mid-nineteenth century "was an artefact of power and statecraft" (p.7). Gray asserts that the promotion of laissez-faire capitalism - an Enlightenment "universal civilization", according to Gray - is as utopic as Soviet Bolshevism. The promoters of "neo-conservative" capitalism [now neoliberal] are "as much captivated by the illusion that the historic sources of human conflict can be transcended as the most vulgar Marxist" (p. 102).

So what form of global economic system is likely to develop in the near future? According to Gray, it will be an eclectic mixture of different forms of capitalism, forms which respect local cultures and traditions, and which strive to meet the primary needs of social cohesion and a baseline level of sustenance. Gray believes that the most successful economies will be the mixed economies in Asia. Though Gray wants to avoid generalizations about Asiatic economies, he nevertheless generalizes about Asiatic economies: "One of the appeals of "Asian values" is that by adopting a thoroughly instrumental view of economic life they avoid the western obsessions that make economic policy an arena of doctrinal conflict" (p. 192). In comparison to Asian pragmatism, ideologically narrow laissez-faire economies are at a disadvantage: "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" (p. 131). However, as the champion of the free market, America will retard the acceptance of a framework "in which governments can protect what is distinctive and valuable in their economic cultures" (p. 204). Because of this, Gray is enormously pessimistic about the future of the global economy.

There are three profound problems with Gray's analysis. The first is that inequality is only briefly discussed (see pp. 32, 108 and 114 ff.). For Gray, inequality is a social problem that leads to legitimacy issues for Western governments. But inequality is much more than this. It's at the core of the housing bubble and the exotic debt instruments that have been used to create demand where real wealth does not exist. The wealth and income inequalities within states, and the growing trade imbalances between states, are simply not a major part of Gray's Tory worldview. In this manner, Gray's book is not prophetic as one reviewer has stated.

The second major problem with Gray's book is that he has two meanings of "anarchic" economies. The first meaning is clear enough: laissez-faire capitalism is enormously destructive of both political intervention (via Keynesianism and social democracy) and traditional social structures (so revered by conservatives). On the other hand, Gray also uses "anarchic" to refer to a period of globalization when the laissez-faire experiment has failed. It's unclear whether Gray is aware of the conflict, but he occasionally offers what amounts to a synthesis: "Worldwide mobility of capital and production triggers a 'race to the bottom', in which more humane capitalist economies are compelled to deregulate and trim back taxes and welfare provision. In this new rivalry all the varieties of capitalism that competed during the post-war period are mutating and metamorphosing" (p. 218). Gray appears to be arguing that laissez-faire capitalism causes its successor (post- laissez-faire capitalism). This might actually make sense, but the transition is never fully explained, and it does not reflect his other argument that the Asian and German economies will resist laissez-faire capitalism. To the extent that they are successful in resisting the transformative nature of capitalism, then neither form of anarchy appears inevitable. Of course, it could be that the second meaning of technology-driven global anarchy is really just moving the laissez-faire project to its most extreme form. The two anarchies are not conceptually distinct nor successive stages; they are part of the same process.

Finally, if the Asian countries (and possibly Germany) do resist laissez-faire capitalism, isn't their pragmatism likely to overcome global anarchy? If so, Gray's Hobbesian pessimism may be misplaced.

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