Neoliberalism must die because it does not serve humanity
from Nikolaos Karagiannis and current issue of RWER
“. . . The practical use of the term “neoliberal” exploded in the 1990s, when it became closely
associated with two developments. One of these was financial deregulation, which would
culminate in the 2008 financial crash and in the still-lingering euro debacle. The second was
economic hyper-globalization, which accelerated thanks to free flows of finance and to new,
more ambitious types of trade agreements. Financialization and hyper-globalization have
become the most overt manifestations of neoliberalism in today’s world.
That neoliberalism is a highly biased concept does not mean that it is irrelevant or unreal.
Who can deny that the world has experienced a decisive shift towards markets from the
1980s on? Or that centre-left politicians – Democrats in the US, socialists and social
democrats in Europe – enthusiastically adopted some of the central creeds of Thatcherism
and Reaganism, such as deregulation, privatization, financial liberalization and individual
enterprise? Much of contemporary policy discussions remain infused with free market
principles. However, the looseness of the term neoliberalism also means that criticism of it
often misses key points. The real trouble is that neoliberal economics shades too easily into
ideology, constraining the choices that different countries appear to have and providing
cookie-cutter solutions.
However, neoliberalism decouples political liberalism from economic liberalism and promotes
commoditization of everything and the needs of transnational corporations over those of
individuals. A proper understanding of the economics that lie behind neoliberalism would
allow us to identify – and to reject – ideology when it masquerades vexing contemporary
realities: slim economic growth in general, limited job creation, massive production disparities,
transnationalism, increasing socioeconomic inequalities and misery, asymmetry of economic
and political power, and environmental degradation.
What, after all, are Western institutions? The size of the public sector in OECD countries
varies, from a third of the economy in Korea to over 60% in Sweden and nearly 60% in
Finland. In Iceland, 86% of workers are members of a trade union; the comparable number in
Switzerland is just 16%. In the US, firms can fire workers almost at will. French labour laws
have historically required employers to jump through many loops first. Stock markets have
grown to a total value of nearly one-and-a-half times GDP in the US. In Germany, they are
only a third as large, equivalent to just 50% of GDP.
What the history of both Keynesianism and neoliberalism shows is that it’s not enough to
oppose a broken system. A coherent alternative has to be proposed. “. . . read more
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—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
Real-World Economics Review Blog 
From the Time’s paper whose author is Klaus Schwab (World Economic Forum)
“Yet there are reasons to believe that a better economic system is possible—and that it could be just around the corner. As the initial shock of the COVID crisis receded, we saw a glimpse of what is possible, when stakeholders act for the public good and the well-being of all, instead of just a few.
[…]
For the past 30 to 50 years, the neoliberalist ideology has increasingly prevailed in large parts of the world. This approach centers on the notion that the market knows best, that the “business of business is business,” and that government should refrain from setting clear rules for the functioning of markets. Those dogmatic beliefs have proved wrong. But fortunately, we are not destined to follow them.”
When I tried to listen more closely to the voices shouting their either criticism or anger to the neoliberalism that has dominated globally, I was surprised to discover that nobody is publicly defending neoliberalism anymore.
I discovered that thought lines are interleaved in a hard to follow reasoning.
On one hand we have the Trump-class of thinkers that seem to fight globalism but only in the area of selectively imposing tariffs that would help them to pick domestic winners and losers with the selfish goal to score political points in the fight for power. Where the rubber meets the road, Trump and its camp was just as Keynesian as the purest of the left. Helicopter money like no other FED and Treasury have done before, and the President himself signing the $1200 checks.
One the other hand, Trump-class accused the Davos-camp that they are the evil. While the quote above shows that the Davos-camp praise the benefits of globalism and the shared technological progress across the world but accuses the regional and political implementation of this corporatism of becoming greedy and power-corrupt by the very few.
Since nobody claims to defend the neoliberalism policies anymore, I’m trying to cut through the fog and the smoke and mirrors.
Is it that the Trump-class would want to revert the globalism altogether? While the Davos-camp would want to reform the neoliberalism towards more economic power for the masses?
Hii Cristi, I hope my brief comment below on Trump as fake populist may help, as your image of “cutting through the fog” reminded me of walking home from school in the fog by following the tram-lines. Now we’ve all found the tramlines don’t lead where we want to go, we’re still in the fog. Doing National Service a bit later, I ended up walking fifteen miles with my leg in plaster, leading a convoy of vehicles (the first seeing only the reflection of his headlights on my brass Army buckles) by following the side of the road. I’m saying don’t look to economists for answers, you need to follow people like me (an information scientist) and G K Chesterton (a proto personality theorist) who in sunnier days became familiar with happier alternatives. Chesterton’s “small is beautiful” populism materialised as “The Outline of Sanity”, humorously characterising wealth as “three acres and cow”. Having followed Chesterton I discovered the monetary fraud whereby promises are passed off as gold, so my updated version is called “Complex Truth and Honest Money”. The gist of that is that in today’s urbanised societies, centralised government via bank accounts can be replaced by self-government, given credit accounts, in which we create our own money as we need it and pay off by earning our keep. National and indeed global government is still needed, but bottom up: advising us what locals tell them needs doing, not telling us (like your Davos camp?) to do what they want us to do.
“Financialization and hyper-globalization have become the most overt manifestations of neoliberalism in today’s world.”
To that analysis we can add global labor arbitrage as a significant and indeed linked feature. Financialization, hyper-globalization, global capital flows and global labor arbitrage all come together as a package. They all presuppose and require each other.
“Global labor arbitrage is an economic phenomenon where, as a result of the removal of or disintegration of barriers to international trade, jobs move to nations where labor and the cost of doing business is inexpensive and/or impoverished labor moves to nations with higher paying jobs.” – Wikipedia.
Global labor arbitrage manifested in developed countries as job losses, higher unemployment and wage stagnation. Productivity gains began to go to capitalist profits not workers. This all could be seen as poetic justice in a sense. In the Keynesian era and earlier perhaps wage earners in the West were the “aristocracy of labor”.
“In Marxist theory, those workers (proletarians) in the developed countries who benefit from the superprofits extracted from the impoverished workers of developing countries form an “aristocracy of labor”. The phrase was popularized by Karl Kautsky in 1901 and theorized by Vladimir Lenin in his treatise on Imperialism, the Highest Stage of Capitalism. According to Lenin, companies in the developed world exploit workers in the developing world where wages are much lower. The increased profits enable these companies to pay higher wages to their employees “at home” (that is, in the developed world), thus creating a working class satisfied with their standard of living and not inclined to proletarian revolution. It is a form of exporting poverty, creating an “exclave” of lower social class.” – Wikipedia.
Globalization of labor began to break down the privileged position of the aristocracy of labor in the West. The potential for a rejuvenation of leftist radicalism in the West and a more international movement of labor rights seems to be there but it is thwarted by aggressive nationalism. The USA and China are now squaring off nationalistically and this tendency seems to run counter to any internationalization of the worker struggle. This no doubt is the intention of the ruling elites in both countries, which elites are respectively neoliberal corporate capitalists (USA) and state-capitalist / corporate capitalists (China).
China and the USA are different kinds of capitalisms but they are both capitalisms. As such they are in direct geostrategic competition as they occupy precisely the same economic niche. Each wishes to dominate trade routes, access to resources, world reserve currency privileges and also the trade war, proxy war, cyber war, drone war, robot war and grey war spaces as well as the more “traditional” conventional and nuclear war spaces.
Economics, as always, is distorted by, and distorts in turn, the geostrategic power sphere. Perhaps the greatest problem with conventional economics is that it ignores power. In our system, this starts as “capital as power” (as per Capital as Power or CasP analysis) but proceeds into the translation of capital power into the openly and secretly belligerent forms of strategic and military power I mention above.
Certainly neoliberalism and capitalism “must die” and they will. However, the vehicle will be geostrategic competition leading to environmental collapse and/or nuclear war. Large warlike polities will break up and/or destroy each other. The collateral damage will kill many or all humans on the rest of the planet. But a few might survive. Some remote and desert indigenous peoples might survive. The meek will inherit the earth in that case but what a terrible place the earth will be.
Sorry for this bleak analysis but realism compels me to advance it. The trends all point to this denouement.
As a postscript, brilliant article by Yanis Veroufakis:
https://www.theguardian.com/news/2018/apr/20/yanis-varoufakis-marx-crisis-communist-manifesto
Ikonoclast, you say “Sorry for this bleak analysis but realism compels me to advance it”, but will it advance us? We don’t want to lose hope. Nikolaos was at least looking an answer.
Coming up to Christmas, reading the prophecy of Isaiah is hopeful, at least from the perspective of Australian forest fires:
For as the earth makes fresh things grow,
as a garden makes seeds spring up;
so will the Lord make both integrity and praise
spring up in the sight of nations.
But that’s just the preface to the story of John the Baptist, who asks us to make straight the way of the Lord and wash away our sins (meaning, Peter Selby’s research tells, debts). How? None of the approaches listed by Nikolaos works. Crowd funding of Obama didn’t trump the wealthy sponsoring members of the House and Senate, and Trump’s populism has proved, like Mussolini’s strong leadership, a cover for fascism; in the UK, arguably Johnson’s too. Less well known is that the Russian revolution was also populist before being taken over by the Marxist elite. So what went wrong with populism? Here’s a diagnosis from Margaret Canovan’s “G K Chesterton: radical populist”. What began in 1891 with Pope Leo XIII’s 1891 “Rerum Novarum”, developed via Pius XI’s 1931 principle of subsidiarity into Schumacher’s 1973 “Small is Beautiful”. Says Canovan’s epilogue on Chesterton today:
“Chesterton’s own populism was of a somewhat ambiguous nature. Although he defended values characteristic of peasants, he was not representing a peasantry but trying to create one; and although he claimed that he spoke to and for the actual common people of England, there is not much ground – apart from the undeniable popularity of his books – for maintaining that he did. His populism has in fact two distinguishable sides to it, a faith in the common sense of ordinary people, and on the other a commitment to a specific social ideal of small, self-governing peasant nations. …
“Those who put their trust in the simple people usually assume that the people will share their particular ideals and judgments, whereas the people’s wishes may well turn in a different direction – or most likely of all, prove to be multifarious, confused and self-contradictory.
“We must conclude, then, that populism as an ideology is incoherent. However, it would be a gross error to suppose that, having identified this incoherence at its heart, we can dismiss populism as invalid. … Populism is not in fact any more incoherent than other more academically respectable political ideologies: it has simply been more neglected and less influential”.
So there is hope in that Chesterton’s is a line of thought which we’ve been neglecting. I’ve already addressed its incoherence, which it seems to me is resolved by logic that accounts for for changes in the interpretation of money, and people’s roles and aims changing as they grow up. Any devils are of course in the detail, so discussion is needed, not knee-jerk reactions.
Among the religious, hope is for the next world is it not? Perhaps if religious people lose hope in this world they will seek hope in the next? Why would they cling to this world and place their hopes in it, if they were truly religious? Of course, they would not want to commit sins of gratuitous cruelty and destruction in and to this world, but neither would they cling to it or place their hopes in it. Thus, my words could bring no despair to truly religious people. And they would suggest to others of a philosophical persuasion a need for existential realism and stoicism as far as that is humanly possible.
Ike, that is just a knee-jerk and indiscriminate negative reaction to the word ‘religious’! That is a code-word for committing to someone who, loving us father-like, has paid off our debts. People are given hope – and courage – in this world by knowing someone loves them, not by the prospect of a party in an unknowable future. Many of us marry for a similar reason.
So yes: being religious I’m not despairing, and being of a philosophical persuasion I’m seeing the need for existential realism and stoicism; but how many other religious people are listening to you? We’re told they are listening to Trump, being persuaded that he loved them! Military and party politics generally – including Marxism – likewise thrive on comradeship rather than logic.
Read Chesterton’s “Napoleon of Notting Hill” about two guys of complementary personalities fighting off the predations of two more who were ‘developers’. But even Chesterton’s insight into how personality differences reflect habitual use of different parts of the brain prompts knee-jerk defensive reactions when one mentions Myers-Briggs. I added something to Chesterton when I realised “people’s roles and aims change as they grow up”, yet most urban horizons are bounded by earning a living and feeding the kids, with only a few entrepreneurial minds looking to the future – as in my own urban youth I longed for the distant hills. It is not that I believe that logic, on its own, will change anybody but adults of like mind; but nor will knee-jerk reactions. Community of leaders born of discussion might.
This is a quick PS, this morning’s news being about the death of spy writer John le Carre, abandoned by his mother when he was just five. After two world wars and still being let down by our political and religious leaders, it is no wonder fear is selling better than love. But that’s leading to “divide and rule”. Marx’s unsuccessful answer was “Together we win”; but how to get together? The Jesuit answer was”“Give me the child for the first seven years and I’ll give you the man.” If the future is going to be any better it is to the kids we have to show love?
This is from the man who many historians believe wrote the book that began the American Revolution.
‘In the early ages of the world, according to the scripture chronology, there were no kings; the consequence of which was there were no wars; it is the pride of kings which throw mankind into confusion. Holland without a king hath enjoyed more peace for this last century than any of the monarchial governments in Europe. Antiquity favors the same remark; for the quiet and rural lives of the first patriarchs hath a happy something in them, which vanishes away when we come to the history of Jewish royalty.
Government by kings was first introduced into the world by the Heathens, from whom the children of Israel copied the custom. It was the most prosperous invention the Devil ever set on foot for the promotion of idolatry. The Heathens paid divine honors to their deceased kings, and the Christian world hath improved on the plan by doing the fame to their living ones. How impious is the title of sacred majesty applied to a worm, who in the midst of his splendor is crumbling into dust.
As the exalting one man so greatly above the rest cannot be justified on the equal rights of nature, so neither can it be defended on the authority of scripture; for the will of the Almighty, as declared by Gideon and the prophet Samuel, expressly disapproves of government by kings. All anti-monarchial parts of scripture have been very smoothly glossed over in monarchial governments, but they undoubtedly merit the attention of countries which have their governments yet to form. ‘Render unto Caesar the things which are Caesar’s’ is the scriptural doctrine of courts, yet it is no support of monarchial government, for the Jews at that time were without a king, and in a state of vassalage to the Romans.
Near three thousand years passed away from the Mosaic account of the creation, till the Jews under a national delusion requested a king. Till then their form of government (except in extraordinary cases, where the Almighty interposed) was a kind of republic administered by a judge and the elders of the tribes. Kings they had none, and it was held sinful to acknowledge any being under that title but the Lord of Hosts. And when a man seriously reflects on the idolatrous homage which is paid to the persons of Kings, he need not wonder, that the Almighty, ever jealous of his honor, should disapprove of a form of government which so impiously invades the prerogative of heaven. Monarchy is ranked in scripture as one of the sins of the Jews, for which a curse in reserve is denounced against them. The history of that transaction is worth attending to.
~Common Sense, Thomas Paine (February 14, 1776)
The American Revolution was fought from the American side to end monarchy in America. It failed. It merely forced monarchists into tacit, underground, and backdoor options to maintain monarchical control in America. Neoliberalism is just one of the latest of these efforts. A bit more oligarchical than most previous efforts, it remains at its core a monarchy. The Guardian columnist, George Monbiot illustrates how this monarchy works with this story from 2019.
“My life was saved last year by the Churchill Hospital in Oxford, through a skillful procedure to remove a cancer from my body. Now I will need another operation, to remove my jaw from the floor. I’ve just learned what was happening at the hospital while I was being treated. On the surface, it ran smoothly. Underneath, unknown to me, was fury and tumult. Many of the staff had objected to a decision by the National Health Service to privatise the hospital’s cancer scanning. They complained that the scanners the private company was offering were less sensitive than the hospital’s own machines. Privatisation, they said, would put patients at risk. In response, as the Guardian revealed last week, NHS England threatened to sue the hospital for libel if its staff continued to criticise the decision.
The dominant system of political thought in this country, which produced both the creeping privatisation of public health services and this astonishing attempt to stifle free speech, promised to save us from dehumanising bureaucracy. By rolling back the state, neoliberalism was supposed to have allowed autonomy and creativity to flourish. Instead, it has delivered a semiprivatised authoritarianism more oppressive than the system it replaced.
Workers find themselves enmeshed in a Kafkaesque bureaucracy, centrally controlled and micromanaged. Organisations that depend on a cooperative ethic – such as schools and hospitals – are stripped down, hectored and forced to conform to suffocating diktats. The introduction of private capital into public services – that would herald a glorious new age of choice and openness – is brutally enforced. The doctrine promises diversity and freedom but demands conformity and silence.”
“The American Revolution was fought from the American side to end monarchy in America. It failed. It merely forced monarchists into tacit, underground, and backdoor options to maintain monarchical control in America. Neoliberalism is just one of the latest of these efforts. A bit more oligarchical than most previous efforts, it remains at its core a monarchy.”
Correct. However, even more insightfully it was fought because the King and the Bank of England stopped the colonies from utilizing their own money system which was much more directly distributive and hence more individually and commercially efficacious. The founding fathers “dropped the ball” monetarily after the revolution.
Craig, not really. Alexander proposed and generally put in place an economic system that 1) effectively regulated financial interests and restrained the size of financial markets; 2) provided the access to credit to build up American manufacturing; 3) put in place laws to protect the American workers and American manufacturers. Southern gentleman planters destroyed all this. Along with Andrew Jackson. So by the time of the Civil War little was left of these structures. And it got much worse after the war.