In the panoply of cliches about liberalism, you can almost certainly find that liberalism destroys the lives of the poorest and is only an instrument used by the wealthiest to maintain position. But what I have just described corresponds in fact to the very definition of socialism. Let’s see why.
First, let us look at the global poverty figures since 1820: Source: Our World in Data. Since 1970, poverty has been steadily declining in the world. Why is that ? The two most populous countries of the time, China and India, were composed of the vast majority of the poor. These two countries were also countries that had chosen to implement socialist or communist programs.
But in the late 1970s, China opted to open up to the world and introduce little by little some elements of market economy. In 1991, Indian Prime Minister Rao also embarked on many reforms to reduce the burden of state and bureaucracy in the Indian economy. Result: in 1991 the poverty rate of India was 46%, in 2011 this had dropped to 21%
AGAINST WORLD POVERTY
As a result, policies that have allowed a greater share of market mechanisms have drastically reduced poverty at the global level. Why that ? Take the case of an economy where an agent decides what people have the right to produce, sell and consume.
Your abilities may only allow you to produce potato gratins. Blowing up, many of the inhabitants of your village also love your potato gratin. A restaurateur hires you to produce these delicious gratins of potatoes of which you have the secret. You are satisfied, you receive a salary in exchange for the realization of these gratins.
It is then that our regulatory agent intervenes: the wage is too low, it is indecent. The restaurateur must pay you more! It therefore obliges the restaurateur to pay you more. Unfortunately, the restaurateur believes that by paying you so much he can not find it any more because an insufficient number of customers would take the potato gratin and he would therefore no longer cover his costs. Result: you no longer receive your salary.
Then you say to yourself, too bad I will launch my activity alone, without being the employee of someone. The minimum wage rule will no longer apply. Nevertheless our regulating agent wishes to make sure that the gratin you produce will be of quality: it obliges you to have a certain type of cooking, to respect strict procedures of washing and peeling of your potatoes etc. You must therefore make significant investments in equipment. Moreover, monitoring these procedures dramatically increases your preparation time and requires you to modify your initial recipe.
Appraisal: your au gratin costs more to produce and the inhabitants of the village really do not like your new recipe dictated by the regulating agent. The State therefore prevents you from offering your services and therefore ensuring your survival.
In his book, The market, Laurence describes the market as an indispensable element of emancipation of the poor. It takes the example of the market of Pezenas which in the 18th century was relatively unregulated and allowed many families to sell their small production and to supplement their income.
Conversely, in the Paris of the 1790s, many stoppages came to regulate the sanitation of these places, which had the direct effect of prohibiting access to many poor merchants who could not submit to these rules.
In 1798, the legislator introduced the patent, a right to access the market. Laurence describes the fate of Marie-Denise and Antoinette, condemned for having sold their small clothes without paying the patent. The imposition of this patent rule has the direct effect of prohibiting the sale of their production to these two sisters who then find themselves without resources and under the obligation to pay a fine.
The author’s description throughout the book reveals the market as a real instrument of liberation for the poorer classes. At the beginning of the Middle Ages, peasants and craftsmen were deprived of market and therefore had to sell their production to the lord who himself ensured the redistribution of production to his people.
However, little by little, the lords realized that they could benefit from the establishment of a market on their land: they themselves had access to products that were not produced on their land and could collect taxes.
However, by opening a market, they diminish their power vis-à-vis their people whose survival no longer depends solely on them. Farmers and artisans can henceforth sell to a multitude of people who come to the market and can directly buy what they need from them.
The market therefore allows them to emancipate themselves from the authoritarian power of the lord and to buy what they truly need without the consent of the lord.
If you read between the lines, you will soon understand that the medieval lord is none other than our modern state. In a country where 57% of production is of public origin, a huge part of what we produce is directly bought and redistributed by the state. By erecting regulations in all directions, the state prevents the poorest from selling their services or products.
In exchange, he prefers to give them subsidies and thus make them dependent on his goodwill. The emancipation allowed by the market is now annihilated by a state that keeps its poorest citizens on a leash and fed them with croquettes of doubtful taste.
Far from being an instrument that crushes the poorest, the market is a formidable tool that helps them to emerge from poverty and emancipate themselves from an authoritarian power. The graph at the beginning of this article is but the most inadequate proof.