Page 81 - Critical Political Economy of the Media

60 Mapping approaches and themes

criticised for impeding innovation, creating stifling bureaucracy and imposing
cultural paternalism.

Social market critiques
In order to understand neoliberalism we need to understand welfarism. Liberal
democratic systems in the twentieth century expanded the provision of public
services so that non-market provision coexisted with private exchange within market
economies. Such systems organised the provision of utilities (water, telephony,
healthcare) as public services, provided either directly by government or through
agencies overseen by government. State intervention, which is anathema to the
libertarian wing of economic liberalism, finds justification in ‘social market’
approaches developed in the twentieth century. For Maynard Keynes and later
advocates of social market policies, market failure necessitates state intervention.
From this tradition of economic thinking, which influenced the post-1945
democratic states in Western Europe, the state may intervene in the exercising of
property rights in the economy in order to support public policy objectives. There
are three main types of market failure recognised by modern neo-Keynesians:
externalities, public goods and monopolies.
Externalities are costs associated with market transactions that neither buyers
nor sellers assume, but for which society pays, a classic example being car
pollution. Externality is a useful concept through which to consider the social
and cultural consequences arising from media. US critical scholar McChesney
(2003: 131) comments:

Media have enormous externalities. If the market generates a lousy journalism
that keeps the citizens poorly informed, the entire society suffers – not just the
consumers of particular media – because the resulting political governance
will be shoddy. … Conversely, if the market generates a splendid journalism
that leads to wise policies, everyone benefits, even those who are not purchasing
specific media products.

Public goods are those whose use is non-rivalrous. Many media products are, in
economic terms, public goods. Whereas private goods, such as a sandwich, are
exhausted in the act of consumption, public goods such as free-to-air (FTA)
broadcasting are not: my consumption does not prevent another consuming the
same good. As Chan-Olmsted and Chang (2003: 217) put it, ‘most media content
products are nonexcludable and nondepletable public goods whose consumption
by one individual does not interfere with its availability to another but adds to
the scale economies in production’. Why are public goods a form of ‘market
failure’? The general presumption of competitive markets is that they result in
economically efficient outcomes. The level of output and the price at which
output is traded are set by equating supply with demand. Further, the value to
the individual who purchases a good and the social value, the value to society as