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Page last updated at 15:27 GMT, Friday, 5 September 2008 16:27 UK

To market, to market


Woman looks at a display
The Museum of Creation and Earth History in California

Heard the one about how many economists it takes to change a lightbulb? The belief that the market would take care of it has been shaken, says Katharine Whitehorn.

I was brought up by a classical father who believed, with Socrates, that "where the wind of the argument leads there we must follow without fear".

So it's not surprising I dislike fundamentalists: that's to say, anyone who says "That's it, it is known; shut up and don't argue."

But the kind of rooted conviction I hate isn't confined to religions. I'm not keen, for example, on Richard Dawkins' atheist assertions, much as I admire him; he doesn't know, any more than anyone else does.

And there's a more everyday kind that's been around for at least 25 years that seems to go almost unchallenged, and that's the conviction that the market will take care of everything. At least, it wasn't much challenged till this summer; but now a seemingly unlikely combination of two economics editors, Larry Elliott of the Guardian and Dan Atkinson of the Mail on Sunday, apparently feel the same. Their book The God That Failed is subtitled "How blind faith in markets has cost us our future".

Katharine Whitehorn

How many economists does it take to change a light bulb? None; the market will take care of it

Do you remember the light bulb jokes? "How many New Yorkers does it take to change a light bulb? Two - one to call the electrician and one to mix the martinis" or "How many therapists? Only one but the light bulb has to really want to change." I recently found another in an old notebook: "How many economists does it take to change a light bulb? None; the market will take care of it." The only trouble is, it won't.

It's not just the markets as such, though that make me grind my teeth; market forces may be fine when they apply only to the markets. It's the conviction that commercial principles are always the most efficient; that anything done for private profit and in competition must always be better and more effective than anything done for any other fudsy old reason such as the common good.

Sometimes I feel as if I'd spent the first half of my life being told, without any obvious evidence, that anything run publicly, by government or the council or whatever, had to be better than anything run commercially; and the second half being told, equally without any evidence, that anything run for private profit must be better - and evidence of the fallacy of this pious belief piles up all the time.

This summer we've had, for example, the complete failure of the outsourced firm that was marking the exams of our schoolchildren. The latest Home Office loss was achieved by a private company that misplaced a memory stick.

And in the past there was the now widely mocked Internal Market at the BBC, and the privatisation of the railways, which even those who believe in the principle think was done the wrong way. The Potters Bar crash had Nina Bawden blaming Tony Blair for the way he allowed the railways to operate - it was a private firm that had failed to repair the track properly.

Hospital corners

It's said that part of the trouble is that the public sector people who commission the private companies aren't good at writing tight contracts and checking at every stage that the company has come up to scratch. This may well be true - I suspect that it's probably because of their blind faith in private companies that they take too much on trust.

Cleaners at work
Hospital cleaners in 1968

Someone, years ago under Margaret Thatcher, thought it would be a very good idea to farm out the cleaning of hospitals to private companies. Before that, the cleaners may not have been particularly well paid, but they belonged to the hospital, had pride in what they did, and were the hospital's grapevine.

When I wrote How to Survive in Hospital in the early 1970s, I said: "It is well known that most patients get all their information from that splendid woman with three teeth who sweeps under the bed in the mornings; it comes as a shock to realise she isn't actually a Fellow of the Royal College of Surgeons."

Under the bed? When I visited a friend in hospital a while back, I happened to drop a book. Retrieving it from under the bed, I also found, to the delight of its owner, a slipper that had been lost for more than a week. The company in charge may make decent money, but the cleaners aren't well paid and often have no sense of belonging. No wonder they're not that keen to be clean.

Yet we're more and more faced with the idea that competition and the inclusion of private involvement will be the saving of the health service. One article of this faith is the substitution of many GP practices by polyclinics. Polyclinics can provide things like X-rays and blood tests without troubling a hospital, and their supporters hope they'll give more patients easier access to a doctor.

The opposition, which includes the BMA (who got over a million signatures from patients in support of their stance), worry that continuity of care will suffer badly. The doctors will be on three-year contracts, and even over the three years there'll be no guarantee of seeing the same one.

Hospital meal trays
Outsource to cut costs

A stranger with a screen and a list of your ailments and drugs is not best placed to deal with the vast amount of non-specific illness, which usually needs, especially for the elderly, a continuing understanding of the patient and her problems.

My local campaigning group is worried, too, about the reputation of the insurance company primed to run the clinics. Even if they were pure as the driven snow, they would still have to find profit enough to cover their directors and administrators and shareholders. Hardly a bargain for Primary Care Trusts that commission them.

Caring conservatism

Political correctness has long been condemned, often unfairly, for the absurdity of always saying person rather than man or woman, for trying to be polite to minorities, or for refusing to call anyone top of the class for fear someone else weeps for being bottom.

But this isn't the real political correctness - what's really been the only politically correct thing to say under Mrs Thatcher, and under Tony Blair, is to assume that competition is better than co-operation, that it's the only useful spur to action.

Since too many people don't believe in God these days, they can still have the spiritual comfort of believing in The Market instead.

English statesman, philosopher and essayist Francis Bacon (1561 - 1626)
Francis Bacon confessed to bribery in 1621, and was banished from Parliament and court

Jane Jacobs, an American whose books such as The Economy of Cities influenced - via the mind of Keith Joseph - much the most humane side of Thatcherism, wrote one about ethics called Systems of Survival.

She thought there were two distinct streams. The commercial stream, which valued honesty in fair play and fair pay, but was not concerned with social effects; and the other stream, which went with running communities, looking after people and their commitments and casualties, governing a country and so on.

She thought you got into big trouble if you tried to mix the two. She cited a scheme for getting cops to catch more crooks by paying them extra for every crook caught. No marks for guessing what happened. They certainly caught more people - but omitted the little detail of making sure they were actually criminals.

Judges were once paid by results, in the sense of getting money from the winning side - well, making sure the winning side was the one that had paid up. Even my idol, the essayist and philosopher Francis Bacon was supposed to have taken bribes. It took centuries to get the judges to stop.

Cure all

We are heading, it seems, for bad times such as we had in the 1970s. Then the main trouble was that the unions could disrupt anything and everything at will, and flabby management seemed unable to do anything about it.

1900 photo of Grasmere Churchyard
The graves of William Wordsworth, his wife Mary and sister Dorothy

But we still had the best broadcasting in the world, a health service which had only suffered two exasperating reforms, an education system widely respected and an efficient civil service not subject either to the stodginess or the questionable integrity of civil services elsewhere.

I have always thought history will find it odd that, in those circumstances, Britain decided to copy the practices of commerce, and model all its institutions on the thing it did worst.

Bringing in market forces and competition was deemed to be the cure for everything, just as laudanum was prescribed for any ailment in the early 19th Century. A lot of women - the sisters and wives of the Lake poets, for example - were sick much of the time from the effects of heroin, because that was what laudanum consisted of. And when they were ill they were given more laudanum.

For the healing properties of laudanum substitute "the saving magic of the market" - and let's stop believing in it so blindly.

Here is a selection of your comments.

Thank you for the examination of our obsession with markets. This was a very valuable and timely consideration of a topic that I have often thought needed looking at. Katharine Whitehorn hit the spot.

I would like to hear Ms Whitehorn consider whether we have become a more careless society than in times past. Does the continuing loss of important data disks, files, drives and sticks betoken a contemporary malaise - despite the contemporary, and apparently fruitless, obsession with risk management and quality control?
Chris Senior, Nottingham

I do agree with the point of view of this article that blind faith in markets has cost us our future. I am trying to understand British politicians and in some extent British citizens fascination and admiration for America's hollow success. Why the blind copying of America's commercial practices? America's success is based on short-term, "quick-fixes" solutions for long-term, complicated problems. These fixes create an overall weak and hollow to begin with which is bound to collapse in the long term. Co-operation will more likely result in more a successful outcome then cut-throat competition.

The point about not writing tight enough contracts is an interesting one, and certainly has an element of truth in it. However, many areas of the public sector, such as the MoD, have vast experience of procurement contracting and in many instances are very good at it.

A more serious impact to the 'level playing field' between the private sector supplier and the public sector purchaser is that, in the event that a contract becomes too onerous, the supplier is usually protected by limited liability and can ultimately seek protection in bankruptcy. The purchaser meanwhile cannot absolve itself of its duties to taxpayers so easily.
DC, Poole, Dorset

Excellent - how refreshing to have someone stand up to the orthodoxy of the "market is always right". Markets are good at some things - such as allocating "private goods", but when Governments want to ape them and use market principles for "public goods' then all they do is create a mess and an erosion of services. More power to Katherine for pointing to the Emperor's nakedness!
Richard Harris, Perth, Australia

The problem is not with the 'market forces' as such, but in their confusion with the 'private ownership'. The latter is not the substitution for the former.

The private ownership on the natural monopolies, for example, leads to the disastrous consequences (perfectly in accordance with the market theory too).
Vladimir, Sydney, Australia

The author of this article seems to be confusing markets and private enterprise. A market exists when there are lots of competing choices for the consumer.

The example of badly cleaned hospitals is an example of a monopoly failing. If patients and/or doctors were able to choose which hospital to attend based on patient outcomes, cleanliness etc and the hospital received funding based on the number of patients they treated hospital that would be a market.
Paul, Leeds, UK

You are spot on. Even though I agree with you, I think your article has not recognised why this faith in 'the market' has failed us. All social systems, whether they be the NHS or the replacing of light bulbs are far more complex than is commonly perceived. They have tendrils stretching out into almost every part of society. Most people in public sector senior management have very singular perspectives. They regard themselves as morally and administratively superior to homo sapiens en masse. This leads to isolated thinking in which the tendrils are conveniently ignored because quite simply, they are too hard for these people to think about.

The reason economists are right is that the flow of money makes a feedback loop which connects supply, demand and resources. The reason they are wrong is that these loops are all interconnected and just like the public sector managers, they ignore this because it is hard to to understand.
Martyn Gilbert, Cambridge, UK

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