Sunday, December 5, 2010

Markets and Politics: Are they really two separate choices?

I think that Sam Fleischacker makes a good argument for reducing the claim made by many that Smith's biggest contribution was the notion of self-interest (read his post here: Economics and the Ordinary Person: Re-reading Adam Smith.) The role of the individual to know most about his needs, and his ability to temper those selfish needs at the interest of others, are certainly critical notions to our world today and the increased recognition of the "relationship" as being critical to the functioning of our society as a whole and of our commercial lives.

Yet, there is one thing that stuck out for me in Fleischacker's analysis (I have to state that I have not read any of his books) is the assumption that there is a seperation between markets (economics) and politics (politicians); that somehow the market exists without the political influence of the state. I am not sure that Smith saw it this way. From my readings of Smith, he saw the need for a new type of politics that liberated and encouraged a form of market exchange based on private property. This was of course in direct opposition to the ideas of monarchy and the power of the landed class over the merchant class.

If it is not Smith that saw this separation of market/economics and politics, then I get the sense it must be Fleischacker who sees this separation. Fleishacker says, "This respect for the market, as a tool for character development, is unusual among moral philosophers: most of Smith's predecessors, peers, and successors would have favored the political realm, instead, as the best place to develop character." I disagree with this, I believe Smith saw a particular type of political-economics as being a constraint on the development of individual's character and wanted a new form of political-economy to move into one that enabled a form of market exchange based on the individual preferences of the consumer rather then the needs of the monarch or noble.

It is this continued analytical separation between economics and politics that I believe continues to confound many theorists and plays strongly into many of the dialogues and debates currently underway around questions of finance and money creation. Seeing money as something separate from politics or even economics, as something natural and epiphenomenal; as if money will exist without specific socio-political structures. The same assumption seems evident in Fleischacker, one in which the market is natural and will exist in its current form irrespective of political choices.

Perhaps I am overstating Fleischacker's argument and interpretation. However, it is a linguistic question, one that I am sure Chomsky and others would highlight. These false distinctions are something that I don't believe many moral philosophers of the Enlightenment would have supported.

Wikileaks - Aid, China and African Choice

The Guardian newspaper highlighted some of the African cables taht came out of the US Embassy's as part of the Wikileaks. I find these cables very interesting as they in many ways show an honest insight into how African's are viewing the rise of China's economic influence in Africa. The ability of China to offer investments in a way that differs greatly from the Western model of AID development has as the African's rightly point out that this is "giving the African countries options after several decades of a largely "Western" development model."

I think this is a critical insight into how the African's have felt in the decades of Euro-American AID. They have not had a choice, during the Cold War the choice was between Communism and Capitalist-Democracy and either choice came with huge costs and potential conflict. Today's choices come with far fewer consequences, and most of them are in some way positive. There are concerns raised that this Chinese model offers support to corrupt governments. I am not well studied in this arena (my friend Steven Nakana is far better versed in this stuff) but I do know that many horrid dictators in Africa were supported by Western governments over the decades of development AID.

The point is that it opens up the choices and this is a good thing, it increases competition and forces governments to offer a range of choices - a set of diverse options. This is good for Africa, after all Africa is not monolithic and the situations faced by each country are both unique and similar. This is why it is great to see the UK' DFID being identified for its ability to work on small projects in collaboration with others including the Chinese.

Ending with my continued belief that Africa is going to surprise everyone in the 21st century. More on that later though. Oh here is the link to the Guardian article: US embassy cables: African countries prefer Chinese aid to US-China cooperation.