Paul Kneafsey 10130489 EC4004 Book Review False Dawn: The Delusions of Global Capitalism

Summary of Book: In False Dawn: The Delusions of Global Capitalism, John Gray argues that the global free market is an unworkable economic delusion. He does this by looking closely at countries where it has been attempted, such as Great Britain and New Zealand, and describing the effects it has had on society in these countries. As well as this, he also looks at countries such as Japan that have implemented indigenous forms of capitalism, and the performance of their economies and the effects of their indigenous capitalism on their societies.

About The Author: John Gray John Gray was born on the 17th of April, 1948 in South Shields, Tyne and Wear, England. He was formerly the Professor of European Thought at the London School of Economics. He is one of the worlds foremost political philosophers. He recognized before everyone else that the world was heading for an economic crisis. He is the author of over fourteen books about politics and philosophy, including False Dawn: The Delusions of Global Capitalism, Straw Dogs: Thoughts on Humans and Other Animals, and Black Mass: Apocalyptic Religion and the Death of Utopia. He regularly contributes articles to publications such as The Guardian and The New Statesman. Gray was influenced by the writings of people such as Thomas Hobbes, Michael Polanyi, and John Stewart Mill.

My opinion of the Book: In my opinion, False Dawn: The Delusions of Global Capitalism is a well written account of how the global free market is an unattainable, unworkable dream. Gray documents how the doctrinal implementation of a free market economy by a countrys government never has long lasting success. He gives clear examples of how countries that have done this have had a breakdown in the family orientation of their societies and the move towards greater individualism.

Before I started reading this book, I believed it would be about how capitalism in general was failing, and the author would be discussing a how move to either socialism or communism would be beneficial to the West. However, after reading it, I am now aware that there are many different types of capitalism and there is not just one main type that each country subscribes to. Previously, I believed that the American free market was the only type of capitalism, but now, after reading this book, I understand that there are many types, such as the Japanese, American, and Chinese models of capitalism.

Main Arguments of the Book: The book has eight main arguments. These are: 1. Free markets cannot exist without strong governments. 2. Democracy and the free market are competitors 3. Socialism has broken down 4. Most former communist countries have not adopted a western economic model 5. Marxian-Leninism has much in common with free market economic rationalism 6. The free market is an American project 7. Late modern capitalism corrodes the values and institutions of bourgeois life 8. Thoughts on what could happen in the future

Free markets cannot exist without strong government In the first main argument of his book, Gray examines how free markets need strong governments to survive. The example he gives is that of Great Britain towards the end of the 19th Century. Britains government brought in to effect laws such as the Poor Laws, the Enclosure Acts, and repealed laws like the Corn Law. The Poor Law Act of 1834 set the level of aid lower than the lowest wage available. This meant people were encouraged to work, or else they would be impoverished. The Enclosure Acts privatized most of the countrys common land. The Corn Law was a protectionist measure, and its repeal represented a massive victory for supporters of the free market.

The free market in this period came about because the British parliament was strong enough to bring in these laws. As Gray himself says, these were the three decisive steps in the construction of the free market in mid-nineteenth-century Britain (Gray 1998, p.11).

Democracy and the free market are competitors In the second main argument of his book, Gray argues that the free market cannot succeed where there is a democratic system of government in place. This is because the free market has such a negative effect on society that when the time for an election comes around, the party that implemented a free market philosophy is inevitably voted out of government. An example of this is in New Zealand in the 1980s. Before the reform, New Zealand was a social democratic country. It had strong traditions of state interventionism to protect social cohesion. However, in the 80s it was re-engineered into a neo-liberal, non-interventionist state with free market dispositions. As a result of this reform, an underclass was created, where there had previously been none. The underclass was created because there was a huge reduction in the expenditure on welfare, and increases in expenditure on police, courts and prisons. This underclass was economically marginalized and socially excluded (Gray 1998, p.41). Because of this, in the general election of 1996, the Conservative National party lost so many seats they had to enter a coalition with the Nationalist party.

Socialism has broken down In the third main argument of his book, Gray examines socialist central planning in the Soviet Union. He says that The Soviet Union was not a regime that achieved rapid progress at regrettably high human cost. It was a totalitarian state that killed or ruined the lives of millions of people, and devastated the natural environment (Gray 1998, p.214). In the earliest phase of Bolshevism, War Communism, there was widespread deindustrialisation and famine. Industrial output fell by 75 per cent and productivity by 70 per cent. The famine of 1920-1921 was as a result of the cutbacks in agriculture and the

requisitioning of grain from peasants. According to sources, the famine killed over 5 million people. After the abandonment of War Communism, there were yet more famines, such as the famine of 1932-1933. These were as a result of the attempts to collectivize agriculture, by the replacement of the peasant small holdings with gigantic factory farms. Between 1930 and 1937, 11 million peasants died. In 1933 alone, almost 8 million people died of starvation. The martial law that was in place meant that there was military discipline on the shop-floor and people who were constantly absent could be shot for desertion. As well as this, 3.5 million people died in the Gulag. From these statistics, it is clear that it was only a matter of time before the Soviet Union broke up and socialism died.

Most former communist countries have not adopted a western economic model Despite the collapse of Marxian socialism being welcomed as a victory for the west, most former communist countries have not adopted a western economic model. In both Russia and China, communism has been replaced with indigenous forms of capitalism. Russia is dominated by criminals, like the mafia. The economic system is run by an almost nonexistent state. Anarcho-capitalism is flourishing because the state itself was criminalized and independent institutions were destroyed in the communist era.

Marxian-Leninism has much in common with free market economic rationalism Marxian-Leninism and free market economic rationalism both view the natural environment as a resource that has to be used up. They have scant regard for the casualties of economic progress. They are both variants of the idea of replacing all the diverse human cultures with a single, world civilization. In the case of Marxian-Leninism, Lenin envisaged a society where there was no military or police force, and all the remaining state functions could be done by anyone. In the case of free market economic rationalism, its advocates want a world civilization where the government is totally non-interventionist.

The free market is an American project In the sixth main argument of his book, Gray argues that no other country accepts the free market ideology as America does. They have seen the effects of the free market on the American society, such as the massive rates of incarceration, divorce and the creation of an underclass, and have decided instead to pursue their own indigenous form of capitalism instead. For example, Japan has refused to cave in to western trade organisations demands to abandon full employment, lower savings and embrace the market individualism culture of the west, specifically America. As the author says, Japans most unforgivable sinis its full employment culture (Gray 1998, p.173). America persistently tries to enforce the free market in other countries. It is the free markets greatest advocate. It believes that it can project the American values to the last corner of the earth- without incurring the casualties or the expense that usually go with empires (Gray 1998, p.128).

Late modern capitalism corrodes the values and institutions of bourgeois life Gray says that late modern capitalism is destroying traditional institutions like the career for life. Traditionally, most middle-class people could expect to spend their working lives in a single vocation (Gray 1998, p.217). Nowadays, in late modern capitalism, the idea of a career is out-dated. The number of jobs someone will have in their lifetime is increasing. This is as a result of the economic insecurity of today. Firms are more inclined to hire and fire people than they ever were.

Thoughts on what could happen in future The author says that America does not have the hegemonic power to make a universal free market a reality (Gray 1998, p.218). It does however, have the power to block global market reforms. So long as it has this power, ideas such as the Tobin Tax will never become a reality.

As resources become scarcer, repeats of The Great Game could occur, in which states competes militarily for resources such as oil and gas. An arms race could lead to an all-out war over these resources.

False Dawn in relation to the Irish Economy: The Irish economy can be related to False Dawn in that, just as Gray says that the performance of the economy of Britain was linked with the competency of the government at the time, so too was the performance of the Irish economy linked with the competency of the government during the elections after the current crisis began. The government that had been in charge during the boom, Fianna Fil, was voted out after their incompetence in regards to banking regulation and developers corruption was revealed to have brought about the crisis. Another example of how the book can be related to the Irish economy is when the author quotes Michael Lind. Countries such as Ireland with mature economies have to compete with countries such as Poland, which have low-wage, high-skill economies (Lind 1995, p.203). An example of when this happened in Ireland recently is when Dell moved it production plant in Limerick to Poland in 2009, because the cost of doing business in Ireland was too much.

Bibliography Gray, J (1998), False Dawn: The Delusions of Global Capitalism, London: Granta Lind, M (1995), The Next American Nation: The New Nationalism and the Fourth American Revolution, New York: The Free Press