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.
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.
- Economic fairness is a contested term (220.127.116.11). For example, to some people it means freedom of choice while to others it means equality of opportunity.
- An economy can deliver growth, with equal opportunities for all, and be inclusive, but still damage people’s lives in other ways – so some additional regulations are needed (18.104.22.168).