Why do some Socialists support market reforms?

by Leonard P. Liggio

On July 30, the Atlas Economic Research Foundation sponsored a symposium on the legacy of Milton Friedman on the anniversary of his birth. I had the honor to be one of the speakers. Some of the discussion referred to Milton Friedman’s lectures at the Catholic University of Chile and the influence that his lectures had on the economic reforms in Chile. In passing it was noted that the success of the Chilean economic reforms have not been followed in many Latin American countries. It struck me that there is more to this development.

If we add other countries of the world in the comparison, there are interesting insights. One is that economic reforms to salvage the burden of the welfare state have been undertaken by Labor or Socialist parties in some countries. In England, Germany, Netherlands, Denmark, Sweden, Australia and New Zealand – Labor or Socialist parties have spearheaded retrenchments or reforms to the welfare state. This has not been the case in southern European countries which have had long standing Communist parties to the left of the Socialist parties. Southern European countries parallel the process in Latin America.

In a book review for Policy Review, I analyzed some of the issues raised in Seymour Martin Lipset and Gary Marks, “It Didn’t Happen Here: Why Socialism Failed in the United States” (New York, W. W. Norton & Company, 2000). The authors concluded, “The rightward distance covered by the British Labour party between 1984 and 1995 is greater than that for any other party surveyed … The most direct way of summarizing the shift is to say, simply, that the Labour party is no longer socialist… Peter Mandelson, the ideologist of the Blairites, asserts that Labour now is “a market capitalist party” … Blair noted in an interview that his administration would ‘leave British law the most restrictive on trade unionism in the Western world.’”

Lipset and Marks analyzed Australia and New Zealand whose Conservative governments had pursued decades of state intervention, inflation and special interest legislation against the market. In Australia and New Zealand, the neoliberal market principles were applied by Labor parties whose programs were, “abandoning protectionist policies, deregulating the economy, privatizing state enterprises, and moving from centralized wage fixing through arbitration to a market system at the enterprise level.”

The Index of Economic Freedom and the Economic Freedom of the World Index, by the Heritage Foundation and Fraser Institute, respectively, have indicated that the freest economies are those in the Common Law tradition and in the Baltic Hanseatic world trade tradition. Thus, northern European and Australian and New Zealand Labor parties are often more market oriented than the conservative parties of southern Europe and Latin America. These are matters that need further study and reflection.

3 Responses to “Why do some Socialists support market reforms?”

  1. John Roberts says:

    Enjoyed Bastiat’s “The Law”

  2. Mike says:

    Thanks For Sharing This post very useful

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