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Response to Block and Barnett,
‘A Positive Programme for
Laissez-Faire Capitalism’
Colin Higgins
Massey University, New Zealand
while block and barnett’s faithful
rendition of liberal economic democracy
presents a compelling case, and economic
indicators and examples provide some evidence for their arguments, the connections they assert between laissez-faire
capitalism and social well-being are less
convincing. On a very practical level, their
analysis is incomplete. Take for example
the Economist report that found income
inequality has increased the most in the
United States, the United Kingdom and
New Zealand, where free-market policies
have been developed and implemented
the most vigorously (The Economist 1994).
Or consider the observation that, in New
Zealand, one country that pursued the
neoliberal project most enthusiastically
during the 1980s and 1990s, there is a
record number of people in jail. There are
queues of people lining up at ‘foodbanks’
and one in seven New Zealanders lives
below the poverty line (Kelsey 1997).
More significantly, however, Block and
Barnett’s analysis is incomplete with
respect to trust. The importance of trust
for the successful operation of a laissezfaire capitalist economy and society is
widely acknowledged. Well-established
practices and conventions such as supply-
JCC 19 Autumn 2005
ing goods on credit, outsourcing and the
relationship between owners and managers would not be possible without a climate of trust in the business system.
Indeed, Block and Barnett imply the existence of trust in their assertions about victimless crime and freedom of association.
Fukuyama (1995: 4) adds weight to this
argument by asserting that ‘virtually all
serious observers understand that liberal
political and economic institutions depend on a healthy and dynamic civil society for their vitality’. What Block and
Barnett, and other proponents of laissezfaire capitalism more generally, overlook
is the development and maintenance of
this climate of trust.
According to social capital theorists, the
development of trust within a society is
dependent on a variety of factors. Widely
agreed is the importance of association
between groups and individuals. Putnam
(2000) argues that such association generates norms of reciprocity that enables
co-operation. Burt (1992) suggests that it
is association between diverse groups that
is important. Cox and Caldwell (2000)
highlight the social processes and the role
of governments and other institutions in
enabling such association and connec-
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colin higgins
tion. High levels of social capital and trust
provide valuable resources in society that
enable the achievement of individual and
collective practices and conventions, such
as those suggested above (Putnam 2000).
Returning to the examples of inequality
and poverty cited above, the pursuit of a
purely laissez-faire capitalist programme
may rock the foundations on which such
a system depends for its effective functioning. Connections between groups are
difficult in situations of inequality and
poverty. Government intervention that
addresses levels of inequality and poverty,
rather than detracting from the pursuit of
economic capital, becomes an integral
part of its development. Direct government intervention and co-operation with
business and voluntary agencies potentially provides greater opportunities for
economic and social development. The
direct development of social capital ensures the development of economic capital, which further provides a platform for
the sorts of social outcome advocated by
Block and Barnett.
Colin Higgins lectures in corporate
citizenship in the College of Business at
Massey University in New Zealand. His
doctoral research, within the Corporate
Citizenship Research Unit (CCRU) at
Deakin University is a critical discourse
analysis of Shell’s ‘People, Planet and Profits’ reports.
He is editor of the CCRU’s magazine The Corporate
Citizen.
u
Department of Management, Massey University,
Private Bag 11222, Palmerston North, New
Zealand
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[email protected]
management.massey.ac.nz/staff/higgins.htm
References
Burt, R. (1992) Structural Holes: The Social Structure of Competition (Cambridge, MA: Harvard
University Press).
Cox, E., and P. Caldwell (2000) ‘Making Policy
Social’, in I. Winter (ed.), Social Capital and
Public Policy in Australia (Melbourne: Australian Institute of Family Studies): 43-73.
The Economist (1994) ‘For Richer, For Poorer’, The
Economist, November 1994.
Fukuyama, F. (1995) Trust: The Social Virtues and
the Creation of Prosperity (New York: Free
Press).
Kelsey, J. (1997) The New Zealand Experiment: A
World Model for Social Adjustment? (Auckland,
New Zealand: Bridget Williams Books).
Putnam, R. (2000) Bowling Alone: The Collapse
and Revival of American Community (New
York: Simon & Schuster).
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JCC 19 Autumn 2005