Author: Richard Barbrook

AMERICAN THEORIES OF MEDIA DEREGULATION

‘Television is nothing more than a toaster with pictures’ – Mark Fowler 1981

The mass media in contemporary Western Europe has been undergoing a period of profound transformation. For some, this involves a ‘paradigm shift’ from public service to free market broadcasting. (Hoffman‑Riem 1986: 126‑9) After the Second World War, most national broadcasting systems were organised on ‘public service’ lines based on the example of the BBC. This state capitalist model was sometimes modified during the years of the long boom by the addition of regulated commercial services. This oligopoly took different forms, from the supervised independent stations of Britain to the hidden state ownership of the French ‘radios périphériques’. However government supervision was maintained even in the commercial sector. But, as Fordism faltered, this ‘duopoly’ model was increasingly seen as an obstacle to the successful operation of national broadcasting systems. Instead, an extension of commercial ownership and advertising funding, coupled with less state supervision, was proclaimed as the only way forward for the mass media. For example, in Britain, cable and satellite television were developed by corporate investors with only weak regulatory supervision. There are now plans to auction off both radio and television franchises to the highest bidder. In France, state‑owned radio and television stations have been privatised and a subscription television service has been introduced. It is generally accepted that any expansion of the mass media in Western European countries will take place through further commercialisation and market competition. (Hoffman‑Riem 1986: 129)

‘The fundamental aim of broadcasting policy should…be to enlarge both the freedom of choice of the consumer and the opportunities available to programme makers to offer alternative wares to the public.’ (Peacock 1986: 125)

This change in strategy is described as deregulation. It is justified by the work of economists and others writing in the USA. The policies adopted by the Federal Communications Commission (FCC) also provide a potent example of what deregulation looks like in practice. Under the influence of their ‘big brother’ across the Atlantic, most West European states have begun to follow each other down the road of deregulation. But, they are applying policies and theories derived from a very different economic, political and legal system to their own countries. However, the urgencies of the crisis of Fordism are forcing changes in the most deeply revered shibboleths of the nations of Western Europe. The methods and technologies of production are undergoing a period of profound restructuring, leading to corresponding changes in the types of state regulation.

The Origins of Deregulation Theories

In the USA, the theories and practice of media deregulation originated from a reaction against the system of broadcasting regulation established in the late 1920s. But, in turn, this regulatory system in the USA was started as method of dealing with the ‘chaos’ of the pioneering days of American broadcasting. The failure to establish definite property rights on the airwaves led to the cuthroat competition of ‘transmitter wars’ between rival stations on the same frequencies. (Davies 1928) The resulting mutual interference and ‘anarchy’ was a major justification for the state capitalist solutions adopted first in Britain and later in the rest of Western Europe. (Briggs 1961: 103‑4) However, the laissez‑faire period of American broadcasting did not last more than a few years. In 1927, the US Congress passed a Radio Act which nationalised the airwaves and set up the FCC as the body to allocate radio licences. (Rothbard 1972: 124; Barnouw 1966: 195‑8) But, unlike the BBC, the radio stations themselves were not nationalised. Instead, the FCC became the method of monopolising the airwaves on behalf of big business. (Brindze 1937: 11) The myriad of independent stations were transformed into the giant networks of NBC and CBS. (FCC 1940) As with the earlier Interstate Commerce Commission (ICC), the effect of regulation by the FCC was to consolidate control in the hands of the Morgan, Rockefeller and other financial houses which controlled the American economy. (Brindze 1937: 31‑56; Kolko 1965: 231‑5) The Radio Act was a forerunner of the 1930s legislation which controlled both the prices and production levels of many sectors of American industry. Following the 1929 Wall Street Crash, the American government not only adopted Keynesian policies of deficit spending and wage rises to stimulate consumerdemand, but also used government regulations to cartelise key branches of production to prevent ‘overcompetition’. The ‘transmitter wars’ were seen as one of many examples of laissez‑faire liberalism leading to economic instability. State fiscal and legal intervention of the New Deal was perceived as the only way of controlling the crisis‑ridden path of capital accumulation.

The early stages of American radio broadcasting seemed to have discredited market competition on the airwaves both in the USA and elsewhere. According to the conventional wisdom, radio and television broadcasting were ‘natural monopolies’ and ‘common carriers’ which justified cartelization backed by state regulation. (Tunstall 1986: 38) As long as the regulatory bodies supported the major networks owned by big business, then the power of the FCC was not challenged. But, during the social turbulence of the 1960s, the role of the FCC began to change. This was part of a more ‘activist’ approach to regulation resulting from the campaigns of Ralph Nader and other consumer activists. They hoped to use the regulatory bodies to control the more antisocial activities of the large corporations. Under the chairmanship of Newton Minow, an appointee of US president John Kennedy, the FCC began to become more than just a defender of corporate interests. It tried to impose content restrictions on broadcasters, quotas for childrens programmes and encouraged the hiring of staff from ethnic minorities. (Tunstall 1986: 247) However, as the long boom faltered, the close regulation of the mass media and other sectors of production came under increasing attack in the USA.

The defeat of the US military in Vietnam and the growing economic crisis at home led to a reaction against the activist politics of the 1960s. This led to the emergence of the New Right as the major force in American politics. This was the beginning of a period of dominance of the Republican Party unparalleled since their disgrace following the 1929 Crash. Like its New Left opponent, the New Right was a heterogeneous coalition. It consisted of a melange of corporate funders, religious groups, ex-leftist academics and professional lobbyists. (Phillips 1982: 43‑52) This was a consequence of the coalition building necessary to elect Republicans to Congress and the Presidency. The bizarre nature of this alliance was expressed in its contradictory economic and social policies. Its avowed aim of fiscal rectitude resulted in an expanding budget deficit, while its pro‑family policies included cutting back on welfare payments. However, as the Reagan presidency demonstrated, ideological consistency was less important than political success.

The Ideologues of the Right

The theorists of deregulation in the mass media and other sectors must be located as one part of this coalition. They consisted of economists, lawyers and politicans who worked for large corporations, think‑tanks or academic institutions. The think‑tanks were a product of the lobbying system within American politics. For example, the American Enterprise Institute commissioned research to prove the need for deregulation policies, including the mass media. (Tunstall 1986: 11‑2) Therefore these theorists were academic entrepreneurs, producing intellectual justifications of the policies of the large corporations and financial institutions. The major theorists of deregulation, including the mass media, were:

George J. Stigler: Professor of American Institutions at the University of Chicago.
Ronald H. Coase: Professor of Law at the University of Chicago and an editor of The Journal of Law and Economics.
Sam Peltzman: Professor of Business Economics at the University of Chicago.
Richard A. Posner: Professor of Law at the University of Chicago.
Roger G. Noll: Professor of Social Science at the Californian Institute of Technology and associated with the American Enterprise Institute for Public Policy.
William G. Shepherd: Special Economic Assistant at the US Department of Justice 1967‑8, Ann Arbor and Stanford Universities and associated with the Brookings Institute.
Bruce M. Owen: lawyer, anti‑trust economist and associated the American Enterprise Institute for Public Policy.
James Q. Wilson: Institute of Politics at Harvard University and the Workshop on Industrial Organisations at the University of Chicago.
William J. Baumol: Professor of Economics at Princeton University, AT&T advisor and associated with the Brookings Institute.
Mark V. Nadel: associated with the American Enterprise Institute for Public Policy.
Arthur S. De Vany, Ross D. Eckert, Charles J. Meyers, Donald J. O’Hara, Richard C. Scott: employed by General Electric.
Mark S. Fowler: Chairman of the FCC 1981‑6 and ‘small‑town southern radio advertising salesman’. (Tunstall 1986: 239)

The University of Chicago was the centre of pre‑Keynesian liberal theory in the USA. In 1958, its Economics Department had founded The Journal of Law and Economics. However its ideas remained on the fringes of American politics during the long Fordist boom. The 1930s Slump was blamed on the policies of the Republican governments which preceded it. Laissez‑faire liberalism seemed condemned by the memory of past disasters. But, in turn, the crisis of the early 1970s discredited Keynesian economics. The collapse of the Bretton Woods international monetary system and the quadrupling of the oil price threatened the dominant role of the USA in the global economy. Government intervention and deficit spending were no longer able to solve the problems of capital accumalation. Republican politicans now portrayed the America of the 1923-9 US president Calvin Coolidge as a ‘golden era’ of business expansion and small‑town virtues, rather than as the harbinger of the 1930s Great Depression. (Phillips 1982: 12‑3, 131‑2) The old dogmas of laissez‑faire were now rehabilitated. For the Republican Party, these theories offered an alternative to the exhausted remedies of the Keynesians.

The University of Chicago was home to two schools of conservative economics: monetarism and supply‑side. Both were committed to market capitalism and took inspiration from the neo‑classical fundamentalism of the ‘Austrian School’. (Littlechild 1978: 17‑9) However, these schools were often advocating contradictory policies. The fiscal rectitude of the monetarists was an obstacle to the tax‑cutting policies of the supply‑siders. (Phillips 1982: 129‑30) The deregulators were overwhelmingly supply‑siders. They wished to rehabilitate Say’s Law, which saw that the demand for commodities derived from the production and supply of the same goods. (Hutt 1974: 24‑9) This theory saw the market as a self‑correcting mechanism which would enter a depression only if outside interventions prevented its operation. Through this approach, the supply‑siders had ‘… shifted focus from the sufficiency of effective demand to the productive capacity of the economy and the willingness of firms to use it and to expand it.’ (Rinder 1984: 17) Deregulation was justified through Say’s Law as removing barriers to the supply of goods and services, thus stimulating the economy more effectively than Keynesian interventionism.

But the supply‑siders did not want just to undermine the intellectual defenders of the 1930s New Deal policies of US president Franklin Roosevelt and the 1960s Great Society programme of US president Lyndon Johnson. The Keynesian orthodoxy was already under attack from the anti‑capitalism of the New Left. Its anti‑capitalism was combined with the individualist populism of earlier American radicalism. (Zane Mairowitz 1976: 164‑72) The New Right also had roots in the anti‑elite rhetoric of populism, rather than traditional Republicanism. (Phillips 1982: 46‑50) The religious revivalists derived their moral and cultural authoritarianism from the ‘outsider’ campaigns of Barry Goldwater and George Wallace in the 1960s. The populism of the supply‑siders and other right‑wing economists was very different from their religious allies. They wanted to use the widespread discontent with state bureaucracy to reassert the necessity for market capitalism. This approach took the anarchic individualism within the 1960s counterculture and harnessed it to the changes necessary for the next stage of Fordism. Whereas the New Left saw individual freedom was possible only through participatory democracy and cooperative production, the New Right economists saw the same goal as achievable through market competition and consumer choice. Some theorists even claimed the distinction between Right and Left itself was obsolete and should be replaced by the divisions between libertarians and collectivists. As one convert from the New Left to the New Right put it:

‘In some basic sense…the new supply‑side doctrine was but a reincarnation of my old social idealism in the form of a new and, I was inclined to think, more mature ideological garb. The world could indeed be started anew. Its current, accumulating economic and social breakdowns could be repaired and its older, inherited ills of racism and poverty vanquished by sweeping changes in the policies which caused or prolonged them.’ (Stockman 1986: 42)

The Supremacy of the Market

The American deregulation theorists saw their work as a refutation of the ‘public interest’ defence of state regulation. (Wilson 1974: 138‑9; Stigler 1971: 3; Noll and Owen 1983: 5‑6; Peltzman 1971: 109‑10; Posner 1974: 336‑7) This theory had acheived prominence after the 1930s Slump as the theoretical justification for the New Deal. It showed why the market and private property alone were not able to guarantee prosperity and social welfare for most people. State intervention into the economy was necessary to correct ‘market failures’. The deregulation school wished to demonstrate both theoretically and empirically that state regulation could not achieve the goals which it proclaimed. Instead the supply‑siders wanted to prove that only through a competitive market economy could the interests of the public be achieved. Say’s Law demonstrated that state controls would prevent the formation of ‘market‑clearing prices’, leading to depression and unemployment. (Hutt 1974: 89‑102) State intervention was characterised as both inefficient and counterproductive. A theoretical assault on the shibboleths of the New Deal was one part of the more general attack on the old orthodoxies. It was the academic front of an overall attempt to undermine public support for the Fordist consensus.

This critique rested on an idealisation of the market as a method of socio‑economic organisation. New Deal theorists had seen the government as securing the ‘public interest’ through interventions to correct the workings of the market economy. In turn, the politicans were accountable to the public through elections. In contrast, the neo‑classical economists claimed that the people could only express their economic needs and desires through the market. They saw themselves as the theorists of ‘self‑interest’ rather than ‘public interest’. (Wilson 1974: 138) As consumers, individuals showed their wants and desires through their choice of commodities produced by competing capitalists. Price competition was seen as the best method of determining what people really wanted.

‘We increase social utility by promoting competition, removing artifical barriers to entry, preventing any one firm from controlling price or eliminating its competitors, and in general establishing conditions that allow the price of goods to be as close as possible to their cost of production.’ (Fowler and Brenner 1982: 210)

The supply‑siders’ claimed that the ‘public interest’ was best secured, not through government regulation, but through market competition. The market was the only true indication of the ‘public interest’ in a society of customers, especially as lower prices and greater consumption resulted from increased economic efficency. (Noll and Owen 1983: 6) This approach assumed that the market expressed ‘rational choice by individuals’ who were able to optimise their own self‑interests. (Mithick 1980: xxi) It portrayed people as almost always determining their social behaviour and actions in response to monetary incentives. (Rinder 1984: 17‑8) Society was no more than a collection of atomised and self-seeking individuals.

As the market was seen as the primary method of economic organisation, the supply‑siders theorised the state as divorced from the rest of capitalist society. Politics was founded upon the use of force against the spontaneous development of the market system. (Von Mises 1947: 27) Regulation was state coercion against capitalist enterprises. (Stigler 1971: 4; Mithick 1980: 8 ) For conservatives, regulation was characterised as the political control over individuals and companies in a market. (Nadel 1983: 221) But, for some supply‑siders, state intervention into economic life was not itself illegitimate in the American context. It was sanctioned by the US Constitution which was the basic law of the land. The very specific origins of the American state provided the inspiration for the generalised abstractions of the supply‑siders about the role of government. The Founding Fathers had wanted a limited state which would guarantee a private capitalist economy. (Beard 1969) The protection of the independence of newspapers through the First Amendment showed how the Constitution provided a legal framework for the ‘free trade’ in ideas. The American state was created as an institution which was not strong enough either to nationalise industries or to impose a totally free market. This resulted in a state which ‘… may own fewer businesses, but regulates more business practices than most other democracies.’ (Wilson 1974: 152)

But the supply‑siders had to explain not only why there were regulations over the economy, but also why their number had multiplied during the previous century. Through a theoretical analysis of this process, the supply‑siders hoped to show that controls were not introduced to benefit consumers. This allowed them to campaign for their replacement by market competition. A major defence of regulation within the USA was as a method of dealing with ‘externalities’ which occured when prices and property rights couldn’t deal with the side‑effects of market competition. (Mithick 1980: 4, Nadel 1983: 21‑3) The classic example was pollution. Both producers and consumers often found it easier and cheaper to damage the enviroment because it was difficult to identify the costs of their harmful activities to ‘third parties’. Government regulations to limit pollution were defended as a method of controlling these ‘externalities’ of the market economy. In the mass media, interference of broadcasts by competing signals was the ‘externality’ which justified the powers of the FCC. If the deregulation school wished to criticise the effectiveness or necessity of such regulatory bodies, they had to discredit the statist solutions to the problems of ‘externalities’. Therefore, they claimed that the best way of correcting the ‘unintentional’ side-effects of competition was not state intervention, as it added ‘intentional’ inefficiencies into the marketplace. Instead, legislators should make a more effective use of the market mechanisms. (Mithick 1980: 4) For example, the supply‑siders saw that a clear definition of private property rights in the spectrum would allow the courts to deal with interference of a signal by other broadcasters. (Littlechild 1978: 65‑8) According to this analysis, interference became a form of trespass on private property in the electro-magnetic spectrum. (De Vany et al 1969: 1538) The defence of property rights was seen as the key role of the state within the market economy. If this duty was successfully carried out by the government, then further interventions into the media or other sections of the economy would be unnecessary.

‘The chaos of the airways … demonstrated why capitalism is incompatible with anarchism, why men do need a government and what is a government’s proper function. What was needed was legality, not controls.’ (Rand 1967: 125)

From ‘Regulatory Capture’ to ‘Public Choice’

The supply‑siders saw other less benign reasons for regulatory growth. The New Right echoed the populism of their New Left contemporaries by adopting the theory of ‘regulatory capture’. This analysis saw state regulation as the enforcement of cartels and price‑fixing. (Wilson 1971: 43; Wilson 1974: 157‑8; Posner 1974: 337‑8) Oligopolies had a major problem with ‘free riders’, who wished to benefit from monopoly pricing without restricting their own competitive activities. By controlling market entry and setting prices, a regulatory agency acted as the political enforcer of the rules of a cartel. (Stigler 1971: 3)

‘… in a subtle process of interaction with the regulators, the regulated party succeeds (perhaps not even deliberatly) in coopting the regulators into seeing things from their own perspective and thus giving them the regulation they want …’ (Mithick 1980: 95)

The ‘captured’ regulatory agency acted as the planning agency for long‑term corporate strategies in each regulated sector. (Noll and Owen 1983: 32‑3) This view of regulation as a monopolists’ conspiracy was inspired by the work of the New Left economic historian Gabriel Kolko, who, as his conservative admirers admitted, was a self-acknowledged ‘Marxist’. (Kolko 1965; Noll and Owen 1983: 155) He saw ‘regulatory capture’ as big business using the state to monopolise branches of production under a smokescreen of reformist rhetoric. The supply‑siders’ populism was most evident in their appropriation of this New Leftanalysis. However, these conservatives were also worried about ‘agency capture’ of the regulated industry by big government. For them, political controls were was a surreptious form of nationalisation. (Wilson 1971: 46‑7) The right‑wing libertarians wished to direct public anger against the ‘new class’ of state bureaucrats rather than the old populist enemies of industrial monopolists and Wall Street bankers. They were critics of state controls, not the private corporations who benefited from them. (Phillips 1982: 42, 131‑2)

Because the analysis of ‘regulatory capture’ was potentially anti‑capitalist, the supply‑siders tried to build a ‘… refined version of the capture theory.’ (Posner 1974: 343) They wanted to show that there was not a simple monopolists’ conspiracy to manipulate the regulatory agencies. Instead there was competition between different economic interest groups to control the agencies. (Wilson 1974: 159) This continual bargaining ensured that there could be no one permanent winner from regulatory controls. (Noll and Owen 1983: 158‑9) Moreover, this analysis allowed the supply‑siders to further develop their attack on state regulations. The establishment of regulatory agencies created competing interest groups by establishing a substitute for the market. (Noll and Owen 1983: 5) Competition was displaced from the market into the state. This allowed industries to buy from politicans those regulations which suited their interests. (Stigler 1974: 12‑3) There was a supply and demand for government action, controlled by the costs and prices of regulations. Industries were willing to pay so they could gain the benefits of cartelisation without the problems of ‘free riders’. These costs were passed onto the voter‑consumers in the form of monopoly prices.

‘Viewing regulation as a product allocated in accordance with basic principles of supply and demand directs attention to factors bearing on the value of regulation to particular individuals or groups, since, other things being equal, we can expect a product to be supplied to those who value it the most.’ (Posner 1974: 344)

According to the supply-side theorists, companies used the legal forms of regulation as a substitute for market competition. (Baumol and Ordover 1985: 50) Each industry or company tried to obtain the regulatory structure which most benefited their economic interests. The supply‑siders had extended their analysis of market competition into the state itself. If political intervention shaped or ‘distorted’ market competition, then politics became a form of economics by other means. Competing industries were transformed into rival lobby groups. (Nadel 1983: 242‑3)

‘The industry which seeks regulation must be prepared to pay with the two things a party needs: voters and resources.’ (Stigler 1971: 12)

Because they too were entrepreneurs, politicans were not always bribed by the corporate lobbies. Instead, by exploiting scandals to promote new regulations, politicans won votes from the disgruntled consumers of corporate commodities. (Wilson 1974: 144‑6) Sometimes, campaign contributions were not enough. This was an entrepreneurial analysis of political action. It showed that politicans and bureaucrats were not disinterested public servants, but were motivated by self‑interest. In other words, they were no better than the capitalists which they sought to regulate. This analysis drew on the work of James M. Buchanan and Gordon Tullock, both of whom had studied at the University of Chicago – the high temple of neo-liberal economics. Their approach was known as the ‘public choice’ school. They saw that, as ‘utility‑maximising individuals’, politicans wanted to be re‑elected and bureaucrats wished to maximise their power. Corporations could make bargains with the state because politicans needed campaign contributions and bureaucrats wanted promotion or easy work.

‘… students in this … economics of politics assume that all the individuals in government aim at raising their own utility, that is, serve their own interests within certain institutional limitations, and then inquire what policies they can be expected to pursue.’ (Tullock 1976: 2)

By demonstrating the selfish motivations of the political entrepreneurs, these theorists promised both a more ‘realistic’ view of the state and reasons for limiting its power. For the electorate also was composed of rational individualists, who acted as both voters and consumers. They needed a ‘constitutional contract’ to provide a framework for the enforcement of property rights and the provision of public goods. But they also needed legal limits on the self‑interest of politicans and bureaucrats so that voters would benefit as consumers through the workings of the marketplace. (Locksley 1981) The discrediting of government actions was necessary for this renewed belief in effectivity of market competition. The supply‑siders wished to demonstrate by the ‘interest group’ theory of the state that the whole political process was not about service to the public, but a form of organised corruption.

‘[The American government's] projects and ministrations were not spawned from higher principles, broad idealism or even humanitarian sentimentality; they were simply the flotsam and jetsam of a flagrently promiscuous poltics, the booty and spoils of organised thievery conducted within the descrated halls of government.’ (Stockman 1986: 35)

Despite this denunciation of state intervention, the supply‑siders’ state theories in many ways paralleled those of the earler ‘pluralist’ school of American political scientists. (Dahl 1961; Polsby 1963) These had seen competing interest groups as the great achievement of the USA, especially when compared with the USSR. The supply‑siders created a more ‘economistic’ version of the work of these Cold War apologists. What they did reject was the political scientists’ New Deal reformism. For them, only the market could guarantee freedom and ‘choice’, not the mediation of the political process. This theoretical approach allowed the supply‑siders to explain the growth of regulation within the American system. Regulations which prevented competition and fixed prices acted as hidden taxes and subsidies. (Wilson 1974: 155) For instance, the content regulation of radio and television was seen as a hidden tax on the owners of stations. (Fowler and Brenner 1982: 220) This regulation also increased prices for advertisers. But the extent of this taxation or subsidy was limited by the willingness of the voters to pay for particular regulations. However, different interest groups could make agreements to support each others’ regulations or subsidies. This was known as ‘log rolling’, as agreement to inact one law was only possible through the passage of other pieces of legislation. ‘Public choice’ theorists were able to construct cost‑benefit analyses of whether a particular interest group would participate in such legislative coalitions. The tax cost of one measure to an interest group would be offset by the subsidy inherent in another law. This was seen as the basis of most politics within democratic states. Even the alliances which were necessary to create political parties were examples of this process. (Tullock 1976: 41‑51)

Campaign contributions could encourage people to vote for particular candidates. But there were limits to how far money could buy votes. As self‑interested individuals, consumers voted for the combination of regulation and taxation which benefited them most. (Locksley 1981: 41‑5) Therefore the growth of regulation was limited by the ‘vote‑maximising price changes’ which any public agency could impose on the voter‑consumers. (Peltzman 1971: 119‑21) These prices could include non‑monetary rewards. But, because the politics of regulation had such economic benefits, they were shaped by those groups who gained most from them. Using a cost‑benefit analysis, it was proved that where the benefits were concentrated and the costs diffused, then regulations were more likely to be adopted. Smaller lobby groups had organisational advantages as they had less problem with ‘free riders’. (Wilson 1974: 140‑2; Noll and Owen 1983: 41‑3) This mathematical analysis was a neo‑classical economist’s proof of Robert Michels’ infamous ‘iron law of oligarchy’, expressed as the ‘… lower internal costs of organising political power’ in small groups. (Peltzman 1971: 127)

Anarcho‑Capitalism

The theorists of regulatory capture demonstrated that ‘market failure’ was matched by ‘government failure’. (Coase 1970: 55) Also that ‘imperfect markets’ were regulated by ‘imperfect governments’. (Wilson 1974: 137) Therefore most supply‑siders supported the call for a ‘minimal state’ which would only provide protection for property and defence against other countries. (Nozick 1974; Rand 1967) But some theorists rejected even this pessimistic view of state intervention. They were influenced by the ‘anarcho‑capitalist’ currents within the American Right. The espousal of anarchism by right‑wing economists was the logical conclusion of advocating market solutions to all social problems. The closeness of this type of New Right analysis to sections of the New Left was shown by the joint authorship of a book criticising the American state by anarchists of both varieties. (Radosh and Rothbard 1972) This type of supply‑siders wanted to show that state regulations were always unworkable, seeing that ‘… much of regulation appears to be a particularly cruel hoax.’ (Noll and Owen 1983: 155) They saw the state as the source of all social problems. Thus it was necessary to prove that the state could never regulate in the ‘public interest’.

‘Regulation may be a ritual in which the participants make a noisy but empty show of adversity in order to assure their respective constituencies of zeal, and then compromise at a level not far different from what the free market would have dictated.’ (Posner 1970: 35)

Some theorists showed how the regulatory agencies could not limit even monopoly prices or profits. If prices were fixed, the quality of the service would decline instead. (Posner 1970: 32‑8; Stigler and Friedland 1970: 43‑8) They wanted to demonstrate that political decisions were less effective than even monopolistic price competition. Others took a less dramatic view, they saw regulatory agencies as simply incapable of carrying out their allotted tasks. The agencies could not know all the information which they needed successfully to regulate. Only the owners of an enterprise possessed such knowledge. The patriarchs of the ‘Austrian school’, such as Friedrich vHayek and Ludwig von Mises, emphasised price competition was the best method of overcoming the problems of information costs within the economy. Market competition was seen as a process of discovering the needs of consumers and the cheapest methods of supplying them. (Littlechild 1978: 23‑4) Therefore regulatory discretion was seen as a major problem of interventionist agencies. The FCC was presented as a major culprit in this arbitrary decision‑making. (Wilson 1971: 51‑4) In the American legal system, there was the added complications of enforcement, with regulatory judgements having to be carried through ‘due process’ if they were to be enforced in the courts. (Stone 1976: 189‑90)

The Costs of Regulation

The supply‑siders’ critique was not solely of the failures and inabilities of governments. Also they emphasised the various economic costs of regulation. The ‘public interest’ theorists claimed that regulations were used to control corporations, giving tangible benefits for the voter‑consumers. The supply‑siders wished to prove that these benefits were only short‑term, if not completely illusory. For them, only the market could produce the greatest benefits for people in the long‑term. They proved the ‘inefficency’ of non‑market decision making through its imposition of increased costs on consumers. (Wilson 1971: 44‑6) This analysis rested on a tautology: only competitive marginal prices could allocate resources in an optimal way for society as a whole. As regulation involved limiting market entry and price‑fixing, it stopped marginal pricing occuring. Therefore, by definition, regulated industries were ‘inefficient’, as non‑marginal prices were effectively taxes on the voter‑consumers. (Shepherd 1975: 254‑6) These sectors were misallocating resources because they were not maximising the potential benefits of consumers. (Baumol and Ordover 1985: 250) Moreover, especially when revenues derived from a percentage of investment, regulated industries overused capital as well. (Shepherd 1975: 243‑5) This analysis was a direct refutation of ‘public interest’ analyses. The supply‑siders had changed the definition of what was the interest of the public. They constructed a circular argument whereby market competition both defined and created the needs of people.

For the supply‑siders, the necessity for marginal pricing lay in technological innovation and change. A regulated industry was ‘anti‑Darwinian with a vengeance’. (Shepherd 1975: 233) Regulations created inertia and rigidities because they prevented market entry and limited profits. (Wilson 1971: 57‑8; Peltzman 1971: 121‑2) As their profits and markets were secure, regulated companies introduced new technologies slowly and did not take risks. Regulations had to be weakened if technological innovation was to be encouraged.

‘The presence of regulation…confers benefits on those who have an incentive to resist economic change.’ (Owen 1983: 137)

Some theorists argued that even limitations on monopoly profits were undesirable because this discouraged innovation in these types of companies! (Baumol 1975: 189‑91; Posner 1970: 37) Without the incentive of ever higher profits, monopolies delayed the introduction of new technologies. The long‑term costs of slow technological innovation outweighed any short‑term benefits of regulation, even in monopolised industries. The supply‑siders saw technological changes as the solution to the problem of ‘natural monopolies’, such as public utilities. Historically, this had been one of the ‘public interest’ defences of regulation. However, the introduction of new technologies was undermining these old monopolies and removing the justification for regulation. (Shepherd 1975: 226‑7; Noll and Owen 1983: 37) The media and telecommunications were prime examples of this process for the deregulators. The new forms of production undermined the old boundaries between industries. Technological innovation was removing the necessity for the regulation even of utilities. Theorists constructed a life‑cycle of regulatory agencies. They saw their rise and fall in response to the development of a sector of production. (Shepherd 1975: 227‑9; Stone 1976: 187) The importance of this approach was its prophecy of the death of agencies. This occurred when new technology allowed an industry to be ‘returned’ to the market. Deregulation was an act of euthanasia.

Both for government and corporations, the removal of ‘obsolete’ regulations was a cost‑cutting measure. The supply‑siders emphasised the large costs for companies involved in complying with regulations. They believed that market prices alone could determine the production of commodities. The law was the only workable defence against unwanted ‘externalities’, not state intervention. The major target of the deregulators was the growth of the state itself. The campaign against big government included cutting back on the costs of the regulatory agencies. The restriction of agency budgets ensured they would not have the staff or resources to moniter corporations too closely. The economic crisis of the 1970s gave the opportunity for the supply‑siders to put their theories into action.

‘… the rising costs of regulation have collided with incomes that may have become stationary under inflation … the common interests of government and business in economic development have diverged over the costlines of some of the social regulation.’ (Mithick 1980: 424)

The supply‑siders’ theories justified deregulation as a return to market freedoms. But, for their corporate backers, it represented ‘… a return to the days before Ralph Nader.’ (Phillips 1982: 51) It was estimated that the abolition of regulatory controls under the first Reagan administration saved the corporations $11 billion in ‘one‑time’ benefits and over $10 billion annually as well. (Weidenbaum 1984: 36‑7) Though less important to the corporations than Reagan’s tax cuts and deficit spending, it did represent a considerable boost to corporate profits at a period of crisis. (Jasinowski 1984: 46) Deregulation was part of impetus for the ‘Reagan boom’ which occurred during the late 1980s.

Regulating for Free Markets

But most supply‑siders did not simply want to abolish or cripple the regulatory agencies. They wished to move towards a new type of regulatory body. This was to be not only cheaper to run, but also to have very different goals. If the pioneer regulatory agencies had been designed to enforce cartels and price‑fixing, the new style agencies were to encourage market competition. Deregulation should involve the control of industries by the market, instead of politicans. The supply‑siders were influenced by the need for incentives for entrepreneurship advocated by the ‘Austrian School’. Removing barriers to entry, along with tax cuts, were seen as encouraging capitalists to seek out ‘profit opportunities’ and invest in innovation. (Littlechild 1978: 30)

‘… incentives are a powerful force for serving the interests of the general public and can be effectively channelled to that end by enlightened, procompetitive regulatory policies.’ (Noll and Owen 1983: 161)

The survival of the regulatory agencies was necessary only to enforce competition policy. Continued support in US Congress for the agencies was conditional on their adoption of deregulation policies. (Nadel 1983: 224‑30) The marginal pricing of all commodities was the most overt aim of this change in regulatory policy. The state was now seen in an anti‑trust role, rather than as the organiser of cartels. Deregulation was the method of encouraging market entry by new competitors. The remaining regulations were to be designed to help new companies enter previously protected markets. The regulatory agencies were to become the watchdogs of market competition, preventing industries succumbing to inertia through monopoly domination. Especially in the introduction of new technologies, market entry was the method of ensuring that there was market change. Consumers would benefit through lower prices and new products. (Noll and Owen 1983: 60‑3) The only limitation seen for this strategy was how far entry could be successfully arranged. But, it was hoped, new technologies would make the remaining ‘natural monopolies’ more competitive, even if the new entrants did not suceed. (Shepherd 1975: 238)

Deregulating the Mass Media

The deregulation of the mass media was a major objective of the supply‑siders. This was because the media was seen as one of the new ‘sunrise’ industries which were changing the nature of American capitalism. It was a key sector of the emerging ‘post‑industrial’, ‘technetronic’ or ‘third wave’ society. (Bell 1973; Brzezinski 1970; Toffler 1980) But attempts to introduce deregulation by revising the 1934 Communications Act were blocked in the US Congress, with the notable exception of the 1984 Cable Act. However, even though the legislation could not be changed, deregulators were successfully nominated as FCC commissioners. (Tunstall 1986: 220‑257) By the late 1970s, the FCC had taken a ‘leadership role’ in deregulation in the USA. (Noll and Owen 1983: 157) This was not simply a result of a change of personnel, but also because of the new advances in media and telecommunications technology. The FCC supply‑siders wished to take advantage of technological advances to bring about market competition. They wanted to end the anomaly of a regulated electronic media and an unregulated newspaper industry. They thought radio and television broadcasting should benefit from the First Amendment. This constitutional guarantee gave the right of the ‘free trade’ in ideas without government interference to media capitalists. The FCC had always used the First Amendment to justify regulatory policy. In the 1960s, the FCC had interpreted the First Amendment as the right of access for all citizens. But, by the late 1970s, the FCC took a more ‘literalist’ approach, taking the Founding Fathers’ nostrums at their word.

‘..those who would justify regulation by pointing to a programme’s potential to offend viewers stand the First Amendment on its head… Only words and ideas that trouble or confound need the special aid of constitutional protection.’ (Fowler and Brenner 1982: 229)

But this support for ‘free speech’ was somewhat disingenuous. In practice, it meant supporting rights of station owners to broadcast more than the FCC permitted amounts of advertising, rather than encouraging political radicals to make programmes! (Tunstall 1986: 145‑7) Also the First Amendment was used as a justification for enforcing the market allocation of stations and frequencies. The ‘public interest’ was now to be served by competition between stations. The American network television was seen as superior to the British state capitalist model. As a monopoly, the BBC was paternalistic, elitist and unresponsive to the desires of its viewers. In contrast, competition for advertising meant that the American television networks provided popular programmes to attract a mass audience. Moreover, whatever its contemporary drawbacks, commercial ownership would lead to technological innovation in the long‑term. (Coase 1970: 96‑8) Therefore the regulation of the airwaves was ‘inefficient’. Instead of licencing stations as ‘public trustees’, the FCC should be promoting the exclusive ownership of frequencies and making them into tradeable commodities. The mass media was a capitalist enterprise like any other.

‘For a variety of reasons, the Commission [the FCC] has traditionally refused to recognise the undeniable fact that commercial broadcasting is a business. But it is a business, one that faces increasing competition in the years ahead for the eyes and ears of its audience.’ (Fowler and Brenner 1982: 210)

The supply‑siders claimed that market competition was the only way to optimise the use of the spectrum. (De Vany et al 1969: 1505‑7; Fowler and Brenner 1982: 210‑12) US president Ronald Reagan’s head of the FCC saw frequencies as commodities which should be treated like any other economic good: owned as private and alienable property. He dismissed the frequency shortage arguments for regulation because neo‑classical economics saw ‘… virtually all goods in society are scarce.’ (Fowler and Brenner 1982: 221) Price rationing encouraged greater use of the limited resources than government protectionism. For some supply‑siders, the best way to encourage the optimal use of the spectrum was to auction frequencies to the highest bidder. This ensured both the transformation of the spectrum into private property and encouraged its greatest possible use. (Wilson 1971: 56; Coase 1970: 100; Fowler and Brenner 1982: 221) No longer would the FCC allocate frequencies ‘gratuitously’ to its friends, but instead would have to sell them in ‘… an objectively defined, open, impartial process.’ (Rand 1967: 127, 129)

The FCC’s role would become the enforcement of the market in property rights over the spectrum. (De Vany et al 1969: 1507‑8, 1529‑31) It would create legally enforceable property packages within the spectrum. These should consist of designated ‘rights’ over the time, area and spectrum used for broadcasting. This would create clear boundary lines between the owners of broadcasting frequencies. Any inflexibility in the original division of the airwaves would be overcome through subsequent recombinations during successive sales and purchases. This meant the FCC had also to lay down clear rules for the exchange of frequencies between owners. (De Vany et al 1969: 1505‑18, 1551‑2, 1538‑40) Only as private property would the scarcity of frequency space encourage technological innovation. Then the spectrum could be utilised for as many different services as possible. It even opened up the broadcasting frequencies for use by non‑broadcasting services. (Fowler and Brenner 1982: 224‑6) In the last resort, the broadcasting deregulators advanced the ‘technological fix’ as the solution to any market imperfections. The long‑term benefits of competition would outweigh any short‑term losses from lack of regulatory oversight. The introduction of pay television by cable companies was seen as the major solution to the problems of limited programme choice in commercial broadcasting. The ‘distortions’ caused by indirect funding by advertising would be overcome once television and radio programmes could become properly tradeable commodities. (Wilson 1971: 56)

‘…consumers who were willing to pay more for resources used in the broadcasting industry than were the advertisers could secure the kind of programs they wanted.’ (Coase 1970: 101)

The Limitations of the Supply‑Side Theories

The supply‑side approach demonstrated, and even magnified, the indequacies of neo‑classical economics. This type of analysis ‘… is characterised by extreme individualism in methodology, by an unhistorical point of view, and by taking consumption as its point of departure.’ (Bukharin 1972: 36; Littlechild 1978: 20‑3, 28) It was based on a concept of value which ignored the specificity of capitalism as a mode of production. Instead, neo‑classical economics drew on an ahistorical and eternal relationship between people and nature. (Hilferding 1984: 133‑4; Bukharin 1972: 46‑54) Its ‘individual‑psychological’ theory of price was fundamentally unscientific as it was derived from the use value of commodities, rather than their exchange values. (Marx 1973: 267‑8) But the supply‑siders were not just wrong in theory, they were also utopians. They dreamt of a capitalism without slumps, unemployment and wars. The supply‑siders believed that if reality could be made more like their theories, then all would be well. They resembled an earlier believer in the benificence of the stateless market.

‘Instead of saying like everyone else: when the weather is fine, a lot of people are to be seen going out for a walk, [this type of theorist] makes his people go out for a walk in order to be able to ensure them fine weather.’ (Marx 1978: 55)

The supply‑siders were entrepreneurs, working as academics directly or indirectly for the large corporations. They made their living out of producing theories which pleased their patrons. (Marx and Engels 1970: 65) However, it is important to understand why the large corporations decided to fund these theorists and bring them in from the fringes of American intellectual life. This patronage of the supply‑side theorists represented a change in the attitudes of big business towards state regulation. In the 1920s and 1930s, corporations like General Electric (GE) supported government intervention into the economy. In broadcasting, its RCA and NBC subsidaries were the major beneficaries of the FCC’s cartelisation of the airwaves. But, by the 1960s, GE was funding the economists and engineers who were advocating the deregulation of broadcasting. (De Vany et al 1969) GE wanted to break down the regulatory barriers to technological innovation, as well as seeking a domestic regime which would justify global ‘free trade’ in the media and other communications services. This change in the direction of corporate lobbying was a major contributory factor to the rise of the New Right economists.

By the early 1980s, their views were the ‘official economic theology’ of US president Reagan’s administration and many other Western governments. (Phillips 1982: 50) Some analysts have seen the rise of the New Right primarily in political and ideological terms. (Hall and Jacques 1983) This approach theorised the ‘relative autonomy’ of the state from the accumulation of capital in production. But the New Right itself had a more sophisticated approach than the political scientists and Eurocommunists. In their hero Coolidge’s famous words, they saw that “the business of government is business”. Sometimes politicans and bureaucrats were the competitors of private capitalism, especially when the state owned and controlled sectors of capital. But they were also the hirelings of the large corporations. Nowhere was this more true than the USA. The ‘realism’ of the ‘public choice’ examination of the state lay in this school’s attempts, however schematically, to chart this close interconnection between the public and private sectors. The examination of ‘log‑rolling’ showed how different groups allied to utilise the state to further their own interests, rather than helping to advance some abstract ‘public interest’. These theorists even claimed that this approach was inspired by Marx’s political analysis! (Tullock 1976: 1)

The supply‑siders attempted to construct a political economy of the state with the limited tools of neo‑classical economics. They concentrated on the key questions of who paid for state intervention and how it was organised. Cost‑benefit analysis allowed them to see beyond the wishful thinking of the New Deal apologists. The supply‑siders wanted to know who gained and who lost financially from political struggles. Moreover, they showed how regulations emerged as the result of struggles between different interest groups. Therefore the supply‑siders could construct an analysis of the bureaucratic politics of regulatory agencies. No longer were they seen as disinterested public servants, or even a conspiracy of monopolists. Instead they were a method of ‘log‑rolling’ between different factions of capital. However, this analysis was an abstraction of American politics in one period. The historically specific nature of the American state was eternalised as an abstract theory of all states in all times. As neo‑classical economists, they were completely ahistorical. These advocates of the ‘nightwatchman state’ could not explain why the policies of the Coolidge era were ever abandoned, or even why these orthodoxies came back into fashion. Ironically, their greatest weakness was their inability to understand their own sudden success as academic entrepreneurs. They could not explain why their theories were at the centre of public policy after years of neglect.

The rise of the supply‑siders was based on their use value for the large corporations. They may have been theoretically wrong, but they could provide intellectually coherent defences of the policies adopted by the new wave of conservative governments. The dissection of their explanations of social reality explains less than an examination of the social changes inherent in accepting their analysis of the crisis of capitalism. The adoption of supply‑side nostrums was a response to a profound crisis with the predominant regime of accumulation adopted in response to the Despression of the 1930s. The return to the old orthodoxies of the 1920s was not simply amnesia concerning the last economic catastrophe. This was because the doctrines of laissez‑faire were not simply reactionary by the late 1970s. In many ways, they abstracted new tendencies within Fordism in crisis. In the early 1970s, the long boom was coming to an end. The hegemonic power of international Fordism, the USA, was losing its predominant position to its erstwhile allies, Japan, France and West Germany, while simultaneously being challenged in the peripherary by the growth of Third World nationalism. The post‑war order was reaching its limits, not only as an international system of states, but also as a particular stage in the history of capitalism. Governments attempted to use the standard methods of Keynesian ‘pump‑priming’ to escape from the crisis, only to find themselves faced with the problems of low growth coupled with inflation: ‘stagflation’. At this point, the Keynesian orthodoxies came increasingly under question. As the 1980s began, the ‘monetarist shock’ took place.

‘…a decision to open up the crisis, to challenge the distribution of value‑added between capital and wages, and to refuse credit to insolvent capitals and consumers.’ (Lipietz 1987: 159)

The transformation of the supply‑side theorists into gurus of the new order, along with other New Right neo‑classical economists, must be put in this context. As the post‑war system broke down, it was thought that American capitalism needed a period of crisis to restructure itself. The old boundaries between different branches of production were being broken down by new technologies. The pace of such technological change was slowed down by regulatory restraints. For the backers of the New Right, market instability became preferable to ‘regulatory overload’ and economic stagnation. The supply‑siders did not just share Say’s schematism, but also Bakunin’s belief that the urge to destroy was a creative one! It was in this way that supply‑side economics, for all its mathematical charts, was truly post‑modernist in its ‘…affirmation of human and irrational qualities.’ (Phillips 1982: 142)

The ‘monetarist shock’ did cause a major international crisis, which could only be reversed through a new period of credit expansion and deficit spending. It was at this point that supply‑side economics became the major theology of New Right governments. It provided the justification for the Reagan government’s policies of tax‑cutting. (Stockman 1982) The supply‑siders also offered other antidotes to the crisis of Fordism. They emphasised microeconomic solutions to macroeconomic problems. As governments had already applied Keynesian countermeasures, the crisis did not take the form of overproduction, but of profitability. (Lipietz 1987: 43) Measures such as tax cuts, defence spending and deregulation were methods of raising the rate of profit for corporate capitalism. (Lipietz 1987: 168) Therefore the embracing of supply‑side remedies by corporate funders and governments must be located in this historically specific crisis of Fordism. The theoretical justifications of deregulation are only one part of a wider attempt to construct countertendencies to the crisis.

Nowhere is this clearer than in the advocacy of marginal pricing in the supply‑siders’ schemas. Average pricing rested on cross‑subsidisation between different sectors of production. This encouraged the formation of monopolies through the subsidisation of price wars in potentially competitive areas. Through state validation of credit, mass production of consumer commodities became the basic form of capitalism under Fordism. (Aglietta 1979) Also it allowed the long‑term planning of capital accumulation by these monopolies. A major theme of the ‘Austrian School’ was how this planning through ‘just prices’ and ‘fair wages’ was the first step towards the totalitarian state. (Hayek 1962: 76‑88; Stalin 1952: 26‑9) The neo‑classical economists were right when they saw the theories of ‘natural monopoly’, ‘common carriers’ and ‘public service’ as the ideological expressions of corporate or state cartelisation of production. But, on the other hand, the supply‑siders themselves were providing theorical justifications for the next stage of capitalism.

In reality, marginal pricing often only was a ‘doctrinal principle’, as it was based on personal judgements on the choices open to capitalist firms. (Melody 1974: 289‑90, 296‑7) But its adoption still encouraged market competition in all sectors of production. A lowering of the costs of market entry meant that large corporations would no longer cross‑subsidise across society to protect a monopoly position. This intensified the pressure to lower the socially necessary labour‑time embodied in commodities through a restructuring of the means and methods of production. Deregulation represented the enforced maximisation of profitability in each branch of capitalist production, even at the expense of successful accumulation across society as a whole. The corporations abandoned their less profitable markets in favour of concentrating on the core consumers. More choice for some led to less for others. This was the ‘Brazilian solution’ to the crisis of Fordism, as it was a recovery in profitablity which did not cover the whole population. Whereas earlier stages of Fordism had produced mass consumer goods for all wage‑earners, this solution threatened to create an ‘underclass’ which was outside the benefits of capitalist growth. There was a more restricted distribution of the fruits of capital accumulation in ‘technetronic’ civilisation. The new stage of Fordism was ‘exclusionary’. (Lipietz 1987: 169) Therefore the solutions of the supply‑siders threatened to be destabilising.

‘… supply‑siders … focus on short‑term growth and earnings with little concern for long‑term social and economic by‑products.’ (Rinder 1984: 27)

But this period of instabilty was seen as necessary to beat the USA’s international rivals. This was crisis as restructuring. Marginal pricing would wake up the corporations from their inertia and rigidity. It would speed up the main areas of restructuring: technological innovation and changes in working patterns. The ‘information revolution’ was designed to break down boundaries between cartelised sectors, allowing new entrants into hitherto protected markets. New types of work practices, such as ‘flexible specialisation’, were to be introduced.

The adoption of the practice and theories of deregulation was the political expression of this process of restructuring production. The Fordist regime of accumulation had to change its mode of regulation as it adapted itself to its exclusionary form. This Brazilian solution seemed to be inevitable within the evolution of the production process. But the policies of deregulation helped speed up this developemt. The internationalisation of production was undermining the possibilities of national regulation of the crisis. (Lipietz 1987: 42) However, the state was used to encourage market competition within hitherto protected branches of production. This showed that the transformation had local roots as well. The double move towards privatisation and globalisation attacked the National Fordist state both internally and externally. Deregulation may have presented itself as a return to the virtues of the past. But it was actually a possible solution for the failures of the Keynesians to avert the crisis.

‘Legislation, whether political or civil, never does more than proclaim, express in words, the will of economic relations.’ (Marx 1978: 76)

The changes in media regulation policy illustrate the parallel transformation of media production. The first stages of Fordism in the media were systems based on funding by licence fees or mass advertising. These types of broadcasting corporations created the demand for mass produced radio and television sets. They provided programmes for the mass audiences who owned these commodities. The state regulated broadcasting to form public or private monopolies to provide radio and television broadcasting on a national basis. This type of regulation was typical of Fordism in its inclusive stage. The moves towards deregulation illustrate the changes in media production. Mass advertising and licence fees started to reach their limits during the peak of the post‑war boom. Also new technologies allowed for an increase in the number and types of stations which could be provided. The introduction of subscription television channels and targeted advertising illustrated the possibilities of new developments in broadcasting technology and funding. These new services were no longer designed to be consumed by the whole population. Instead, the tiered market was to be introduced into the electronic media, creating the ‘information rich’ and the ‘information poor’.

Some of the solutions of the supply‑siders were difficult to apply to the media. It was not easy to adopt the marginal pricing of radio or television programmes when their cost of reproduction was almost zero! There were also the technical problems of turning each programme into individual commodities within the broadcast media. Therefore the advocates of deregulation concentrated on the removal of regulatory restrictions on the provision of new radio and television services. The auctioning of frequencies was the ultimate expression of the supply‑side policies for the restructuring the mass media. No longer were these vital means of production to be owned by the state. As privatised property, they would only be used for services which could be profitably provided. Even on frequencies assigned for the media, non‑broadcasting services could be substituted if they produced more revenue than radio or television programmes. This was a vision of a Brazil in the media. The ‘exclusionary’ stage of Fordism was introduced into broadcasting through these developments. The structures of state intervention were changed to encourage this market competition. But this process of deregulation occured because of the more profound problems within the production of media. The new types of regulatory agency were an expression of this process, not its cause.

But it is unwise to see the deregulation of the mass media as necessarily the future of broadcasting. The governments of Western Europe have followed the American example as the only way to reach the promised ‘post‑industrial’ society. Deregulation is seen as the best method of creating ‘national champions’ which can successfully compete in the global media market. The British government is proposing to try supply‑side remedies which even the FCC has not adopted, such as the auctioning of frequencies. However, as with other theories of ‘post‑Fordism’, this vision of a deregulated media ‘… involves a selective description of the past and an abstract norm for the development of the future.’ (Bonefield 1987: 121) Not only does it ignore that deregulation is only one possible solution to the restructuring of the media, it also does not take into account possible changes in the wider regime of accumulation. The solutions of the New Right will not necessarily provide a permanent solution to the crisis. The financial crash of 19th October 1987 (Black Monday) highlighted that the boom and bust cycle still ruled over capitalism. The revival of protectionism and the retreat from internationalisation of production was always a possible alternative. National Fordism could yet reappear, relegating the supply‑siders once again to the fringes of economic theories. This is why the emergence of fibre optic networks shows how even subscription television could herald a different future for broadcasting. These networks could act as a new ‘common carrier’, providing a host of media and interactive services. Is a new period of state regulation and inclusive Fordism ready and waiting? Only time will tell…

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Thanks to: Vincent Porter, Geoff Mulgan and Gareth Locksley.

This paper was written in March 1988 for the Centre for Communication and Information Studies, Polytechnic of Central London, London, England.

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AMERICAN THEORIES OF MEDIA DEREGULATION

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