The Free Market in the Context of Globalization: Myth, Magic or Menace?

• Author: Courtney Blackman
• Pages: 207-225

THE FREE MARKET

207

I have chosen to speak on the topic, ‘The Free Market in the

Context of Globalization: Myth, Magic or Menace’. Let us look

first of all at globalization. There are two sides to globalization:

the first is substantive; the second is ideological. On the substantive

side, globalization may be defined as the information revolution,

already apparent in the 1980s but which gathered increasing

momentum in the 1990s. It is marked by the explosion in the

usage of computers for the storage and processing of large volumes

of information, and by new technologies in the field of

telecommunications that make possible the virtually instantaneous

transmission of information and capital worldwide. One result has

been the ‘death of distance’, the title of Frances Cairncross’

brilliant lecture on a similar occasion in 1998. It is now possible

for multinational corporations to integrate the production and

marketing of goods and services without regard to national

boundaries.

The substantive process of globalization, driven essentially by

these technological innovations, is irreversible. We must therefore

treat it as a fact of life, and learn to adjust to it. Indeed, over the

last three years, Prime Minister Arthur has taken several measures

designed to reposition the Barbadian economy for the challenges

of globalization. Tonight, I propose to treat the ideological aspects.

An ideology is a system of belief about how the world ought to

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THE FREE MARKET IN THE

CONTEXT OF GLOBALIZATION

MYTH, MAGIC OR M ENACE?

THE PRACTICE OF ECONOMIC MANAGEMENT

208

work. Modern scholars use the term ‘paradigm’ interchangeably

with ‘ideology’; so will I.

Let us first of all place the ideological aspects of globalization

in historical perspective. For most of the Cold War the two

opposing economic paradigms were Keynesianism in the west and

Marxism-Leninism in the east. The latter espoused a command

economy in which the vast majority of economic decisions were

taken by a central planning authority. Keynesians, in the west,

while leaving the vast majority of economic decisions to the private

sector, argued the need for regulation of national spending and

investment through fiscal and monetary policy so as to maintain

full employment.

Keynesian policies began to lose their effectiveness in the

1980s, and as the command economies of the eastern bloc palpably

began to fail, President Ronald Reagan in the United States and

Prime Minister Margaret Thatcher in the United Kingdom

launched a vigorous counter-revolution for a return to the pre-

Keynesian laissez-faire paradigm, which held that the workings of

the ‘free market’ would optimize the national welfare. Proponents

of laissez-faire support the principle of ‘minimalist’ government

— that that government is best which governs least, and that as

few restrictions as possible should be placed on economic activities.

With the comprehensive collapse of the Soviet Union in 1989,

the field of battle was left to the modern version of the laissez-

faire paradigm, known as ‘neo-liberalism’, or ‘market

fundamentalism’, with its mantra of the ‘free market’. The

collapse of the socialist bloc was seen as confirmation of the ‘truth’

of neo-liberalism, and neo-liberal economists soon began to occupy

the top posts at leading American universities and the US Treasury,

while there was a changing of the guard at the IMF from

Keynesianism to ‘market fundamentalism’. The new dispensation,

reflecting ‘free market’ principles, came to be known as the

‘Washington Consensus’.