3.5.9 The Legitimacy of Economic Governance
It is suggested in this book that a political system, as described in chapter 6, should be ultimately responsible for ensuring that the economy benefits everyone – rather than allowing unlimited power to the wealthy without regard to those less fortunate than themselves. Guaranteeing socio-economic rights (6.7.1), addressing economic inequality (6.7.2) and softening the impact of rapid change (6.7.8) are all clearly relevant to achieving that.
Although politicians hold the power necessary to modify the way in which an economy works, and are therefore ultimately responsible for it, the legitimacy of economic governance can be assessed in purely economic terms – itemising and quantifying its value to the population. The neoliberal mantra is that free markets are inherently fair because everyone is free to make his or her own economic decisions. That assertion, though, fails to consider the other aspects of delivering inclusive benefit to society.
If economic governance is to serve society, it needs to achieve a balance between conflicting interests and freedoms. It needs to facilitate growth, be economically fair, and avoid harming other aspects of people’s lives. Its legitimacy can be measured by its success against all three of these criteria. They can each be met by deploying the appropriate aspects of economic power, but to deliver all three requires some compromise. The following sub-sections consider them in turn:
● Neoliberalism (184.108.40.206), defined here as the unfettered supremacy of markets, addresses some of the requirements for economic growth but is problematic if totally unchecked. Although it has delivered growth in aggregate, some people have been harmed by it and the lack of appropriate regulations led to economic instability.
● Economic fairness (220.127.116.11) is a contested term: it can mean equality of income, freedom of choice, or equality of opportunity. Politicians have considerable control over all forms of fairness.
● An economy can deliver growth and be inclusive, with equal opportunities for all, yet still damage people’s lives in other ways – so some additional regulations are needed (18.104.22.168): to protect consumers, the environment, and the workforce.