I, and I am sure many other readers of and writers of Samizdata, have been following the career of Steve Baker MP, ever since he was elected MP for Wycombe in 2010. However, the last posting I did here about Baker elicited understandable scepticism from commenters about whether Baker would stick to his free market principles long enough to make any difference. Yeah, sure, he is now on the Treasury Select Committee. Big deal. Baker, like all the others, said doubters, would soon go native.
Well maybe he will, but he hasn’t yet. Not if this City A.M. report by Peter Spence about Baker’s latest sayings and doings is anything to go by:
In almost every area of economics we’ve accepted that markets do it best, he says. Few could imagine a committee of nine wise men deciding how we produce food, clothes, cars, or mobile phones.
But when it comes to producing money, we’ve accepted just such an arrangement. And for Baker it’s crazy that this has led to an obsession with what men like Carney have to say. That we’re trying to decipher from after dinner comments the trajectory of monetary policy is illustrative of the mess we’re in. “The truth is this is like kremlinology, have we worked out what the politburo thinks? It’s mad.”
We see the same thing across the Atlantic, where former Federal Reserve chairmen Alan Greenspan and Ben Bernanke have both given speeches to investors shortly after leaving the office. What investors think about US monetary policy has knock-on effects around the world, evident after last summer’s “taper tantrum”, as the Fed stumbled towards scaling back QE.
“It’s amazing we tolerate this,” says Baker, as words from both men have had the power to move markets, such is the extent of the “kremlinology” investors are hooked on. “I want the people doing this kreminology, making their living doing it, to question whether this is actually a free market,” he says.
“I think we operate a kind of monetary socialism, and it’s the single biggest institutional problem with our economic system.”
That bit about wanting people to “question whether this is actually a free market” is the bit that really matters here, I think. Clearly, Baker wants all such questioners to realise that the answer is: “No”.
Much of the problem with the world’s financial system these days is the most observers of it don’t even seem to think of it as a nationalised, government dominated system in the same way that tractor production was a nationalised, government dominated system in the old USSR. It is simply inconceivable to them that “money” could, by its very nature, be anything but a nationalised industry, so much so that to think of it as a “nationalised industry” is beyond them, because even to use such a phrase is to allude at least to the possibility – the thinkability – of a non-nationalised, free market version of the same industry. This is not a debate about how the nationalised industry of money should be managed, so much as a debate about the fact that it is a nationalised industry. Or, it would be such a debate, if only people like Steve Baker MP can manage to get such a debate started.
No doubt many Soviet tractor-makers felt similarly about what they did. That too, they were sure, just had to be run by the government, or else tractor making would descend into a black hole of chaos and impossibility and absurdity. The idea of a “free market in tractors” was, for such people, literally unthinkable. And millions in the West mocked all this nonsense. So, why do the descendants of such mockers – literal and intellectual – not mock their own Central Bankers now, just as Central Tractorers were mocked back then?
People may respond to Baker’s challenge by saying: “Yes, it is a nationalised industry, and a good thing too.” But for people even to talk like that would be a huge shift in thinking, because the fact of monetary nationalisation would have been accepted, even as it is being defending.
Until the metacontext (to use a favourite word here) of this debate is changed, free market capitalism will go on getting the blame for all that is wrong about the world’s financial system. And the “solution” will continue to be to restrict free markets in financial matters ever more ferociously.
Keep it up Mr Baker. You have not gone native yet. And you have an admiring fan club out here that continues to notice and continues to applaud.