The State in the Age of the New Laissez-Faire

It is one of the “truths” not yet proven, but stated more and more often: “Markets” dread the void, which is why they need to be “insured.” They need “secure guarantees” that public deficits can be funded. And, without these guarantees, they react severely and punish culpable states by making them insolvent. Because, according to the ultra-liberalism that holds that “markets” live and breathe, states are guilty of excess, especially in the social sphere, and, consequently, it is necessary to limit their action and power. By this public-sector demonizing logic — which draws on Hobbes’s old Leviathan concerns at the beginning of the English Civil War and extrapolates them to other periods — taxes, the existence of the welfare state and market regulation are the causes behind the financial earthquake of September 2008.

Stock exchange reactions differed a decade ago, when George Bush was governing with the support of the said “markets” and when he staged his great economic witchcraft show. Based on the neo-liberal catechism that provided for both the increase of the defense budget and the reduction of the taxes paid by the wealthy, Bush’s experiment led to a significant growth of the deficit. And when the public debt of the United States exploded in 2002, Vice President Dick Cheney explained in scholarly fashion to Paul O’Neill, the secretary of the Treasury at the time who was concerned about the deficit reaching $500 billion and wanted to take action, that “deficits don’t matter.” To be more precise, according to O’Neill himself, Cheney said: “You know, Paul, Reagan proved deficits don’t matter,” and immediately added: “We won the [2002] midterms (congressional elections). This is our due.” Should we expect a similar policy during the next months, given the sympathy of Romanian policy makers for Reaganism, as well as this year’s electoral backdrop? Even with the support of the “markets” and the International Monetary Fund?

It would be strange, to say the least, as “markets” seemed to have suddenly discovered that deficits are dangerous and have exerted pressure for a radical reduction in budgetary spending during the past year and a half. Could this be the key to ending the crisis? Faced with these preconceived notions, which pollute public debate and run the risk of producing policies that might break the fragile social balance defining Western democracies, former American President Bill Clinton was one of the people who reacted. In his well-researched volume, “Back to Work,” Clinton (self-) critically looked back on 30 years of anti-statist ideology. We say self-critically because a large number of deregulation policies were promoted in the U.S. during his presidency (1993-2001) — albeit under the magic wand of Alan Greenspan, the then-chairman of the Federal Reserve. Using figures convincingly, Clinton described the devastating effect of [anti-statist] policies by means of a comparison with the economic success of the Asian “dragons” or China during the same period. Clinton underlined the fact that it was not the market, but the promotion of various forms of partnerships between the public and the private sectors, that explains the performances of these states.

Bill Clinton, a supporter of moderate neo-liberalism, as well as of “liberalism” in the American sense of the word, does not believe in an almighty state or in an almighty market. This is why he provides this interesting analysis of compared political economy. Laissez-faire is not a solution for Clinton. Economic reform cannot be achieved without reversing the aim of current public policies and ensuring the conditions for social innovation by means of the state’s determined action in strategic fields such as education, infrastructure, research and development.