Equality, Participation, Transition: Essays in Honour of Branko Horvat

that exalts individualism and leaves proportionally more of an economy
in the hands of private ownership and individual economic decision-making.
Horvat’s problem with this is that it exalts individualism
over society. He has sought a system that allows both individualism
and the liberties it entails but not at the cost of society.
1.3 Laissez-faire and beyond
Howard M. Wachtel 3
During this last quarter of the twentieth century, the search for an
alternative to capitalism appears to be over. Previous efforts have
foundered. A consensus around laissez-faire economics and individualism
is stronger than at any time in its two-hundred year history.
Nothing new or promising appears on the horizon. This is very different
from the first quarter of the twentieth century when the several
variants of socialism were on the cutting edge of the modern and held
out the promise of a better society. The confrontation with an aggressive
capitalist formation of the late nineteenth century took first the
form of theoretical debates and later actual formations on the ground.
Command economies of the Soviet sort were the first to confront
laissez-faire. When the Soviet Union showed such enormous growth in
the midst of the Great Depression that a stream of western intellectuals –
from Sydney Webb to Aldous Huxley – made pilgrimages to see how it
worked, a serious alternative to laissez-faire appeared to emerge. After
World War II and reconstruction, first the model of European social
democracy and then the Asian miracle further deflated the claims of
laissez-faire. To the delight of laissez-faire devotees and to the chagrin of
the contrarians, however, each one of these formerly successful alternatives
evaporated in the last quarter of the twentieth century. As an ideology,
laissez-faire became hegemonic, even though its actual practice
fell short of an ideal type.
‘Growth versus efficiency’, ‘efficiency versus distribution’, are catchphrases
of economics that imply substitutability or trade-offs. For a time,
these harsh trade-offs were muted somewhat. The outcome of command
economies, for example, produced considerable growth, and some
economists conceded fairer distribution as well, but at the expense of
efficiency. When the command economies never recovered from the
mid-1970s worldwide recession, and continued on a steep downward
trajectory, this concession toward growth was dropped. There was a
celebratory atmosphere among the adherents to economic efficiency as
command economies collapsed. The reason for their inability to continue
to grow was directly attributed to the lack of economic efficiency.