Babies and bathwater


Yes, yes, we all know, we're told it endlessly. These terrible neoliberals (that would be people like us then) have brought the world to its knees. The banks are bust, no one can get a loan, globalisation is impoverishing billions and we're going to have to tear up the entire economic order and ....well, do what?

Perhaps actually we might take the advice given to Brian and try looking at the bright side of life? For there is in fact one (and no it doesn't involve a suicide squad nor whistling).

The other, more numerous, group consists of those who are middle-class by the standards of the developing world but not the rich one. Some time in the past year or two, for the first time in history, they became a majority of the developing world’s population: their share of the total rose from one-third in 1990 to 49% in 2005. Call it the developing middle class.

Something really has changed in the world. Add these newly middle class people in the developing world to those of us in the rich and for the first time we can say that the majority of the human species are no longer in poverty. That's what globalisation has wrought. Yes, it may not seem like it when surveying the rubble of a share portfolio heavy on banks but the old Smithian manner of wealth creation, the division of labour, specialisation and the trade of the resultant production has brought us to this pretty point. We've just, over the last few decades, had the largest reduction in poverty ever. Not just since we tried this or that trick, or Keynes, or Hayek, Friedman, Jevons or Smith himself wrote a book or formulated a theory, but since a few of our inquisitive forefathers came down out of the trees.

That's really a baby that we don't want to throw out with the bathwater. Changes at the margins perhaps, more, less or different regulation fine, but this liberal capitalism thing it has one attribute that sets it apart from every other economic system we've ever tried. It's the only one that has led to a consistent and sustained rise in the standard of living of the average Joe and Joanna. Worth persevering with it then until all, not just the majority, are free from the tyranny of destitution, don't you think?