Home > neoclassical economics, Real World Economics Movement, The Economics Profession > Two concept proposals: from neoclassical economics to neoliberal economics and from neoliberalism to plutocratism

Two concept proposals: from neoclassical economics to neoliberal economics and from neoliberalism to plutocratism

from Deniz Kellecioglu

It is important to talk about concepts that reflect reality. This is especially true if we are concerned about people’s emancipation – it is easier to struggle when your nemeses are conceptualised and visible. In my opinion, one of the greatest obstacles of recent history is the evasive and concealed character of hegemony.

In our context of economics, it has been obvious for a while that we can no longer use the term neoclassical economics (NCE) to describe the current mainstream economics (theory and education). NCE has been so distorted and so disfigured over the past decades that it no longer reflects mainstream theoretical narratives (see Lawson 2013 for a recent discussion). From one perspective, as the economist Joan Robinson talked about “bastard Keynesianism” in the 1960s, we have now a “bastard Neoclassicism”. This followed from an elite capture and customisation of NCE. The fundamental flaws of NCE, as we real-world economists see it, were actually sources of strength for the elites and elite-oriented individuals. The basics of NCE functioned brilliantly to advance their perspectives, interests and power (not only economical and political, but also social and cultural). A “free” world is wonderful if you start with a stronger upper hand, i.e. unequal point of departures. Because NCE was moulded at the hands of neoliberal forces, I think it should now be called neoliberal economics

I am aware that this term has been used before, but to my knowledge its usage has been rare and just in the passing. Although it is not a perfect term, other terms are less suitable and do not really reflect the central characteristics and historical underpinnings of the current mainstream economics. For instance, “elitist economics” or “plutocracy economics” capture the associated power and moral philosophy of the current mainstream, but stands either too vague or too radical for a broad number of users to define the theoretical wing of hegemony.

The urgency to swap terms is especially critical in the current aftermath of the global financial crisis (GFC). Mainstream economists continue to retain and reinforce the neoliberal narratives (theory) and syllabus (education). So in my opinion, the most appropriate term that reflects the content and the economic history of the current mainstream is neoliberal economics (NLE).

It would be fitting if economics departments that continue to teach mainstream economics label those courses neoliberal economics to clarify its distinction as one of many schools of thought. But we all know that will not happen. But it does not stop us from labelling it as such.

Perhaps paradoxically, I want to swap the term neoliberalism in favour of plutocratism in describing the current global hegemony and its governmentality, or possibly neoliberal plutocratism to maintain a historical linkage.

Kellecioglu plutocracy post photo

The analytical concept neoliberalism has served rather well to describe the global power hegemony of the past three decades or so. But now, we need a term that better reflects the ever more unequal global economy, as well as the outcomes on the social, cultural, psychological and political fronts. It is now more evident than ever that we have a small group of global plutocrats, most visible through the U.S. dollar billionaire lists. Their number and wealth have risen outrageously around the world over the past decades while the populace at large have stagnated, not to mention the bottom three billion people who live under appalling conditions.

This plutocracy is global in its character and its members collide and collude whenever and however they see fit. Usually their co-operation is implicit. Their interests, ambitions and influence are rather straightforward – they do not need to make it explicit. Their activities are therefore relatively more difficult to observe and document. If they choose to come together, for instance at the annual World Economic Forum, they express a lot of “concern” for the world and wrap themselves with “caring” characters. However, the infamous Citigroup reports provided some crucial insights into the things that are at stake.

All in all, in order to visualise this group we should call them for what they are: plutocrats. And since it goes without saying that we have a global plutocracy, plutocratism ought to be the appropriate term that reflects their ideas, methods and influence. Note that apologists for the plutocracy are included in the analytical concept. Such an apologists is Alan Greenspan who continues to produce narratives that excuse and resume this global hegemony – the saying “logic is like a whore that can sleep with anyone” comes to mind.

Why do I suggest abandoning neoliberalism but suggest using neoliberal economics? Well, in my view, it is political economy that have dominated and driven economic theory, not so much the other way around. There is a feedback loop but it is the implemented hegemony variant (plutocratism now, neoliberalism before) that have directed and influenced mainstream economics through various channels and incentives, including outright corruption. In so, there seem to be a stronger lag effect to theory compared to the reverse. Current mainstream economics (theory and education) have not yet (hopefully never) formalised plutocratism, but have formalised neoliberalism (aggressive fostering of homo economicus, egoism, competition, anti-government, anti-regulation, anti-welfare, anti-labour, etc).

It was neoliberalism that deformed NCE, but neoliberalism itself have been increasingly amplified into a more grotesque form over the past years: plutocratism. And just as NCE was, more or less, the theoretical wing of neoliberalism, NLE is now, more or less, the theoretical wing of plutocratism.

These two terms are just proposals, of course. The important thing is to trigger a discussion so that we are better able to pinpoint and communicate about the forces we are up against. The more visible they are, the easier to engage them, and the easier to channel our frustration towards them instead of at our fellow human beings, which is unfortunately more common now.

  1. F. Beard
    November 15, 2013 at 7:56 pm

    It’s not complicated. Abolish the designed in or by Hell government-backed banking and money cartel and provide restitution to its victims, nearly the entire population, with new fiat metered to just replace existing credit as it is repaid until all deposits are 100% backed by reserves, excluding borrowed reserves.

    Or continue to think a money system based on usury for stolen purchasing power, especially from the poor, is sustainable and CONFIRM my, by now deeply held suspicion, that nearly all of you are blinded by Satan. And confirm that Progressives are not interested in just sharing since common stock as private money is an ethical form of endogenous money creation that SHARES wealth and power rather than steals them.

    • BFWR
      November 15, 2013 at 8:17 pm

      So who issues common stock and (presumably) for what in exchange? And when an increasing percentage of individuals have nothing including employment to exchange and yet our productive capabilities are abundant….how do we deal with that absurdity?

      Monetary grace, the free gift is the 21st century economic and monetary answer, the same as individual grace was the answer to the legalistic Judaism and Roman tyranny of the 1st century. The only question is will our 21st century evolution be recognized in time by the populace to awaken our present day religionists and Financial authorities….so we can avoid a conflict in an era or modern weaponry?

      • F. Beard
        November 19, 2013 at 11:00 pm

        If restitution with new fiat until all deposits are 100% backed by reserves is not sufficient then the common stock of all large US corporations should be equally redistributed to all US citizens under the presumption that they were built with the entire population’s stolen purchasing power anyway. Also, land reform ala Leviticus 25 or modern equivalent could be considered.

    • November 18, 2013 at 11:03 pm

      To F. Beard,
      “QE 4 The People” “End Taxation by Another Name (Interest)”

      Quantitative Easing (QE) is the Federal Reserve Bank’s way of doing what the Private For Profit Banks (PFPB) have been doing for almost a century now. It is the process of purchasing assets while creating deposits without spending any new money. The PFPB have been making loans for trillions of dollars and have declared these loans as deposits while using “temporary money” that is not issued by the Federal Reserve which is really just ‘printed out of thin air.’ Since 1913 this may have been in excess of $100 trillion. Now for the really stupid part. They have used this counterfeiting scheme to exploit over $100 trillion(REAL Money already issued) from the people of this nation. They have used this non-existent money as a source of raising revenue for their own PFPB, in amounts greater than the $100 trillion by a taxing scheme they call “compound interest”. The results are called “Interest Income” to confuse you so that you are not aware that it is “taxation by another name”

      Now for the most stupid question of all time:

      WHY not have the Federal Reserve Bank do “QE 4 The People” ?

  2. BC
    November 15, 2013 at 8:06 pm

    “Neoliberalism”, “globalization”, and “free trade” are a euphemism for the Anglo-American neoimperial trade regime within the superstructure of the global corporate-state.

    The emerging ideal type system of economic exchange, power, and control is various versions of the corporate-state, state-capitalism, or corporate socialism, depending upon one’s point of view and focus. The US, EU, Japan, China, and Russia all conform to one variety of the corporate-state or another.

    In the US, the revenues of the Fortune 25-100 to 300 are equivalent to 40-75% to 100% of US GDP, even though the Fortune 300 employ no more than 13-14% of the US labor force at revenue to employee of nearly $450,000, which is more than ten times the average wage and salary job of Americans.

    As global revenues and real GDP per capita slows or ceases growing globally owing to Peak Oil, population overshoot, resource constraints, record debt to GDP, and EXTREME wealth and income concentration to the top 0.01-0.1% to 1%, we are likely to see an acceleration of global mass consolidation of ownership and capacity among the Fortune 300, resulting in the years ahead, by way of Pareto distributional effects, of revenues equivalent to 50-75% of US GDP further concentrating from the Fortune 25-100 to the Fortune 10-25. These firms will be the only ones able to afford to invest in automation, smart systems, and Big Data at necessary scale in order to increase revenues per employee with no growth of revenues, while simultaneously eliminitating tens of millions of jobs and purchasing power worldwide without net replacement.

    The result of this once-in-history growth of scale of supranational corporations and the associated extreme concentration of wealth and income to the top 0.1-1% ensures that gov’ts will remain increasingly captive to the owners of the Fortune 25-300, so much so that we are seeing the culmination of Mussolini’s ideal type merging of the largest firms and the state: fascism.

    Thus, the future is now, and it’s fascism, only what is not yet apparent is whether it will be benign, have a friendly face, and be responsive to the needs of the bottom 90-99%; or whether it will be authoritarian and repressive, resulting in mass joblessness, loss of purchasing power and well-being, privation, misery, fear, anger, violence, and despair among the bottom 90-99% of the population.

    • Deniz Kellecioglu
      November 18, 2013 at 12:33 pm

      Dear BC, your descriptions are in line with the above. I think it is important to ponder about these developments in terms of fascism. In many ways, that’s where we are heading. I am just thinking that fascism is usually a political process and governance, driven by political individuals and groups. In our context, it is mainly economic power that drives the processes and the political power are, more or less, pawns of plutocrats. Either way, I am glad you reminded us to consider fascism when thinking about these issues.

  3. Claude Hillinger
    November 15, 2013 at 9:56 pm

    To label the current economic mainstream ‘neoliberal economics’ is an excellent idea. It is widely understood what neoliberal policies are and it is logical to call the economic theory that provides a logical foundation for such policies ‘neoliberal economics’. Conversely, the term ‘neoclassical economics’ lacks a good justification and does not convey much meaning to a broader public.
    I disagree however with the proposal to do away with ‘neoliberal’ as a standalone concept and to substitute ‘plutocratism’. I think that this neologism has no chance of adoption. Besides, we should heed the advice that old William of Occam gave with his “razor”, not to multiply entities unnecessarily.

    • Deniz Kellecioglu
      November 18, 2013 at 12:28 pm

      Thank you Claude for your valid comments. But I see a lot of problems in continuing to use the term neoliberalism. The most important reason is that it simply does not capture the grotesque magnitude of current hegenomy (in the post-GFC era). Plutocracy is the term that is most suitable to capture the hegemony of today. And the associated ideological governance form should then be called plutocratism. Other suggestions are welcome.

      I have actually been reluctant to use neoliberalism for some time. For one, simply because I do not see much “new” and “liberal” in the descriptions and analysis of the term. The described elitist rule are similar to old ways, but revamped and developed. Today, such elitist rule is monstrous and its ideology is firmly embedded even in social norms.

      In relation, I think the term is too vague, despite (or perhaps because of) three decades of sophisticated analysis. It simply fails to pinpoint the hegemony in a clear concrete manner.

  4. sergio
    November 17, 2013 at 12:07 pm

    “Neoclassical” economics has nothing to do with classical economics or economics.
    “Neoliberalism” has nothing to do with liberty.
    Neoliberalism is anti-state ideology which goal is to take power from the state and give it to corporations.
    Neoclassical economics just serves neoliberal anti-state ideology.

  5. Econoclast
    October 30, 2016 at 3:24 pm

    Language matters. This is a good blog entry and discussion.

    I prefer “plutonomics”, an expression I recall first seeing on RWER. It embraces hubris and wealth inequality quite well, and the word rolls off the tongue. It also combines in one word both the economics and the politics, and thus could be considered a one-word label that tags the long-awaited (by me) resurgence of political economy to embrace it all.

    This said, I prefer also not to spend too much time on labels, but more on the content.
    For example, if I’m interested in corporate power (and I am) I might be called an Institutional Economist. As that puts me in league with such luminaries as Thorstein Veblen and John Kenneth Galbraith, I don’t mind. But it is the deep look at what rules us today — predatory corporate power — that interests me, not what we call it. Just be sure to call it abusive.

    That said, language matters if we intend to communicate. My experience is that I need define “plutonomics” less frequently than I need define some of the other labels, such as “neoclassical” or “neoliberal”. And the traditional labels such as liberal, conservative, even progressive, have become so twisted by the plutocratic spinmeisters that they’ve become quite meaningless.

    Speaking of communication, in my writing I distinguish between a rant and an essay. A rant is purely self-expression, a release of emotional energy. An essay has structure, involves some thought, and above all seeks to communicate something to someone. It is less blatantly egotistical. I can rant with the best of them. I prefer to communicate.

    I appreciate those blog comments that stay focused on the blog entry’s core point, sometimes hard to do when we’re upset. But we all could benefit from more communication.

    Postscript: While typing the intended word “egotistical” I typed “ecotistical”. Actually not a bad non-word to describe the plutocracy’s practice of the biblical “man shall dominate the earth”. Just saying.

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