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David Harvey A Brief History of Neoliberalism

News Neoliberalism as a New Form of Corporatism The Crisis of Neoliberalism A Brief History of Neoliberalism The Strange Non-death of Neo-liberalism
  What's the Matter with Kansas      
Selected Reviews The Roads We Take Financial Quotes Financial Humor Etc

Neoliberalism -- the ideological doctrine that market exchange is an ethic in itself, capable of acting as a guide for all human action -- has become dominant in both political thought and practice throughout much of the world since 1970 or so. It helped to crush communism in the USSR and largely displaced Marxism.

The shift toward neoliberalism occurred in the 1970s because businesses and the super-rich began a process of political self-organization in the early 1970s that enabled them to pool their wealth and influence to achieve dominant political power and to capture administration.  As David Swan noted in his review  (E. David Swan's review of A Brief History of Neoliberalism)

From its founding America's wealthy have feared democracy recognizing that the majority, being poor and middle class, could vote to redistribute wealth and reduce the control held by the elites. After World War II, the middle class in the United States grew dramatically somewhat flattening the countries power base. As a reaction to this dispersal of power the early 1970's saw the formation of groups like The Business Roundtable, an organization of CEO's who were `committed to an aggressive pursuit of political power for the corporation'. As the author writes, `neoliberalization was from the very beginning a project to achieve the restoration of class power'. T

he neoliberal plan was to dissolve all forms of social solidarity in favor of individualism, private property, personal responsibility and family values. It fell on well funded think tanks like The Heritage Foundation to sell neoliberalism to the general public using political-philosophical arguments.

Money pouring into lobbying firms, political campaigns, and ideological think tanks created the organizational muscle which mimics the Bolsheviks organizational muscle. And Repugs got a bunch of Trotskyite turncoats such as James Burnham, who knew the political technology of bolshevism from the first hands, were probably helpful in polishing this edifice. All that gave the Republicans a formidable institutional advantage since 1980s.

Carter and Clinton sold Democratic Party to the same forces.

This rise of special interests politics has been at the expense of the middle class. In this sense already in 1994 the USA became very unhealthy society although the crisis of 200 was still six years ahead. Collapse of the USSR and subsequent looting of the territory by Clinton administration slowed down this process, but now it's by-and-large over (with the USA failing to prevent reelection of Putin) and "latin-americanization" of the USA is again in full force.

There are no sizable countervailing forces on the horizon, although the level of public debt might be an implicit limiting factor for neoliberalism. It will be interesting to see how and by what political forces neoliberal regime in the USA ends. Some people suggest that the USA might eventually disintegrate along the lines of Civil War alliances. I think much depends how "peak oil" crisis unfolds. And will the wars with terrorism continue to give the USA elite the required level of the national unity and meaning. Rise of separatist movements in Texas, Alaska and other states is pretty indicative here.

There are several notable books on the subject

Dumenil and Levy

According to Dumenil and Levy the historical tendencies of capitalism are radically mediated by politics and social class configurations (i.e. alliances between social classes and stratas). They argue capitalistic development, since 1880s, has gone through four primary stages and corresponding crises. They emphasize these developments are not historically necessary, but contingent on politics and social class configurations.

The tendency of the rate of profit to fall in capitalistic economies does not work uniformly. In different periods, because politics and social class alliances can change, so can the profitability. The current crisis was only partially caused by falling rates of profits.

It is more result of self-organizing of the top 1%.  According to Dumenil and Levy the basic story goes like this: following the Great Depression of 1930 a strong social political alliance emerged between the management class and "popular classes" (this popular class includes blue and white collar workers, including quasi-management, clerical, and professional, which cannot be reduced to the traditional "working-class"). In the 1970s there was a severe profitability crisis, the legislative and institutional response to this crisis caused a fracture between management and popular classes, and a re-alliance between management and capitalist classes (which includes ownership and financial classes).

David Harvey A Brief History of Neoliberalism

David Harvey in his A Brief History of Neoliberalism  gives slightly different perspective. Here are some insightful Amazon reviews: 

R. Albin (Ann Arbor, Michigan United States), February 4, 2012

A good way to discuss this concise and clearly written book is to compare it with some recent discussions of politics and economics in the USA, notably the analysis published by the political scientists Paul Pierson and Jacob Hacker in their book Winner Take All Politics. Pierson and Hacker point to the increasing concentration of wealth and political power in the USA, the decline in social mobility, the impressive ability of the very wealthy to influence Congress and elections, and how these phenomena have arisen over the past generation. Readers interested in a concise discussion of their conclusions can easily find a nice review article by Hacker and Pierson using Google Scholar or similar search services. Other recent relevant issues include the decline in American manufacturing, the increasing role of the financial services sector, and the dangerous economic fluctuations introduced by a global and relatively unregulated financial system. Harvey, however, identified and discussed all these themes insightfully several years ago.

Beyond his prescience, Harvey's particular contributions are three-fold.

Harvey also points to many of the other contradictions of neoliberalism. It is often a license for the wealthy to exploit political systems in ways that undercut its central claims. Claims that it would produce an era of enormous economic growth with a rising tide raising all boats proved groundless. Regimes purportedly espousing neoliberalism, such as the Bush II era USA, indulged in disguised and incompetently applied Keynesianism. Despite scientistic claims to be based on basic features of economics, neoliberalism often ignores basic findings of economic research.

Defects of Harvey's analysis

Defects of Harvey's analysis include a bit of overemphasis on what might be called the conspiratorial aspects of his class based analysis. Harvey also omits an important criticism of neoliberalism -- its failure to recognize the sources of long term economic growth. The latter depends on technological innovation and implementation of new and improved technologies.

Two and a half centuries after the start of the Industrial Revolution, the low hanging fruit has long been harvested and further technological change depends on substantial state investment in research, including considerable investment in development and industrial policies, and a large and well educated work force.

These preconditions for sustained growth aren't and probably will never be generated by neoliberal regimes. 

Izaak VanGaalen

A Critical Look at the Post-Keynesian Era June 15, 2006

The term neoliberalism is usually heard in the pejorative sense, often coming from Latin American leaders such as Hugo Chavez and Evo Morales. The term refers to an international economic policy that has been predominant in policy-making circles and university economics departments since the 1970's. The four faces on the cover of this book (Reagan, Deng, Pinochet, and Thatcher) are considered by David Harvey the primemovers of this economic philosophy. Reagnomics, Thatcherism, Deng's capitalism with Chinese characteristics, and Pinochet's free market policies marked the beginning of new era of global capitalism.

Neoliberalism as a philosophy holds that free markets, free trade, and the free flow of capital is the most efficient way to produce the greatest social, political, and economic good. It argues for reduced taxation, reduced regulation, and minimal government involvement in the economy. This includes the privatization of health and retirement benefits, the dismantling of trade unions, and the general opening up of the economy to foreign competition. Supporters of neoliberalism present this as an ideal system. Detractors, such as Harvey, see it as a power grab by economic elites and a race to the bottom for the rest.

In this short, but very well researched book, Harvey charts the capital flows of the last thiry years. In the 1970's, there was the breakdown of the Bretton Woods system, with its fixed exchange rates, tariff barriers, and capital controls. It gave way to floating currencies and high trading volumes. Capital started searching the globe for comparative advantage. Proponents claimed that this routed out corruption and inefficiencies, while opponents saw instability and exploitation. Indeed, Harvey produces ample statistics showing how the rich got richer and the poor stagnated. More surprisingly, he points out that the aggregate economic growth during the years of Keynesian management (the decades between World War II and the 1970's) was greater than during the neoliberal era (the 1970's to the present). The neoliberal era benefitted mainly the wealthy. In the US, the richest 1% now control 15% of the wealth as opposed to 8% at the end of World War II.

When Reagan and Thatcher came to power in the late 1970's and early 1980's they used their control of the IMF and World Bank to impose neoliberal policies on the developing world - especially Latin American countries. In the case of Chile, Pinochet - after violently ousting the Allende government - instituted free market policies as prescribed by the Chicago school, and was relatively successful. Other Latin American countries were not so successful, and it created a backlash of populist nationalisms in the form of Hugo Chavez in Venezuela and Evo Morales in Bolivia.

The section on China is one of the best in the book: "Neoliberalism with Chinese Characteristics". Harvey points out that China is not a pure neoliberal state. There is still heavy state intervention in the economy and management of the currency. And as a further criticism of neoliberalism, he reminds us that China has produced some of the highest growth rates - 9 to 10 percent annually. On the downside, the gap between the rich and poor is growing, and because their currency is held artificially low they are building dangerous overcapacity.

Neither does the US, for that matter, operate according to neoliberal principles. Even as it is urging other countries to maintain minimal government and balanced budgets, it is running huge deficits and issuing ever more t-bills to cover its excess spending.

With China and the US - two linchpins in the world economy - not playing according to the rules of the game a crisis is bound to happen. One country is totally geared toward producing and exporting, while the other is content with importing, consuming, and creating more debt. Harvey believes that the global economic readjustment that is going to take place will be painful and possibly violent.

Harvey's excellent little book illustrates, once again, that the perfect market, presupposed by neoliberalism and classical liberalism, does not exist. Unfortunately, he does not offer any remedies to rectify the current situation, nor does he offer an alternative system. Nevertheless, this book is very insightful. Read more ›

11 Comments |

 E. David Swan

On the first anniversary of 9/11 President Bush made a speech saying, `Freedom is the Almighty's gift to every man and woman in this world... as the greatest power on earth we have an obligation to help the spread of freedom.' Spreading freedom is the primary function of neoliberalization but as George Lakoff stated in `Whose Freedom?' freedom can be a very subjective term. The freedom of neoliberalism is the glory of unfettered, free market economics and the rights of corporations and financial institutions over individuals and governments. It's the freedom to fully exploit resources and workers.

From its founding America's wealthy have feared democracy recognizing that the majority, being poor and middle class, could vote to redistribute wealth and reduce the control held by the elites. After World War II, the middle class in the United States grew dramatically somewhat flattening the countries power base. As a reaction to this dispersal of power the early 1970's saw the formation of groups like The Business Roundtable, an organization of CEO's who were `committed to an aggressive pursuit of political power for the corporation'. As the author writes, `neoliberalization was from the very beginning a project to achieve the restoration of class power'. The neoliberal plan was to dissolve all forms of social solidarity in favor of individualism, private property, personal responsibility and family values. It fell on well funded think tanks like The Heritage Foundation to sell neoliberalism to the general public using political-philosophical arguments.

At the same time a group of economists were working on economic theories that developed into the `Washington Consensus'. These followers of Hayek and Friedman just happened to create economic blueprints for growth that matched up exactly with the goals of the wealthy business elites. The plans were based on the superiority of the marketplace in making wise decisions but also assumed perfect information and a level playing field for competition. As the author writes, `...eminent economic theorists [...] argue that all would be well with the world if only everyone behaved according to the precepts of their textbooks' The neoliberal economists have become so focused on growth that they seem to take a decidedly amoral approach to human suffering. Above all countries needed to focus on privatization and low taxes and definitely avoid deficit spending. What has happened is a widening of the gap between the wealthy and poor. The author suggests that rather than an unfortunate byproduct of neoliberalism or a temporary situation this is the intended result.

The great irony is that the U.S., the world's number one proponent of neoliberalism, generally finds itself breaking the rules. With high deficit spending and massive subsidizing particularly in consumerism and defense spending the United States has generally taken a `do as I say, not as I do' stance. With the amount of political appointee/lobbyists shuttling back and forth between business and government Adam Smith's `Invisible Hand' looks more and more like a crushing fist.

This was not the book I expected. This is a devastating critique of neoliberalism. I didn't agree with everything the author wrote and there are most definitely many positives that have come from globalization but the corporatization of the world has the potential to by an enormous threat. Global Warming has to be the poster child for neoliberal extremism with short term economic growth trumping the welfare of the entire world. David Harvey has a decidedly liberal stance but he backs up his views with sobering facts. Despite being a book on economics I found it extremely readable and recommend it wholeheartedly.


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A Theory of Global Capitalism Production, Class, and State in a Transnational World (Themes in Global Social Change) William

(Roland Robertson, University of Aberdeen)

The leading analyst of transnational class formation provides a clear, straightforward, and convincing account of the economic, political, and social contours of contemporary capitalism. This is essential reading for anyone who wants to understand the global condition and prospects for its amelioration.

(Craig N. Murphy, M. Margaret Ball Professor of International Relations, Wellesley College, and Chair, Academic Council on the United Nations System)

Yet another book on globalization? If you think you have read too many already, think again! Here is a fresh look at the subject which shatters the illusion that globalization has to do with either free international trade or the disappearance of the state. Robinson expertly gathers the diverse threads that run through our world order and unerringly hones in on class and transnational power at the heart of it.

(Ankie Hoogvelt, University of Sheffield)

Review

"William I. Robinson has earned a reputation as one of the leading critical analysts of capitalist globalization as a system of power. This book -- both rigorous and readable -- develops his thesis that we are witnessing a world-historical transition into a new phase of capitalism, with new forms of power, resistance and struggle. Whether or not you agree with Robinson's controversial thesis, you will agree that this book represents formidable scholarship and raises crucial political questions for the twenty-first century." -- Mark Rupert, Syracuse University

--This text refers to an out of print or unavailable edition of this title.

Summer Gray

A correct formulation of the problem... October 7, 2008

The final chapter of Robinson's book opens with important words once written by Karl Marx: "The correct formulation of the problem already indicates its solution." Robinson's paradigm-shifting articulation of the problem of global capitalism as a hegemonic transnational phenomenon calls for a transnational counter-hegemonic response -- a solution that is imaginatively new, materially realizable, and desperately needed.

There is much to praise in this work, particularly in its move to transcend outdated frameworks and epistemological standards to arrive a problem that spells out possible solutions. By deconstructing the role of the nation-state in the global economy and pointing to the significance of transnational production and the rise of a transnational class and the transnational state, Robinson opens up the door and lets class, agency and culture back into the room.

I have engaged with a variety of critical literature that has sought to place the disempowered at the center of analysis in order to legitimize the voice of the "other." While I still believe that this kind of work is important, I have been frustrated with its tendency to fragment struggles by arriving at an array of different problems and respective solutions due to a lack of agreement on the most appropriate unit of analysis. As a critical theorist, Robinson avoids this by critiquing nation-state-centrism and tracing class relations to the material world. He argues that the globalist bloc

"achieved hegemony in the last twentieth century because it came to exercise a commanding influence over material life around the world, including the ability to provide rewards and impose sanctions, and because it achieved an ideological dominance by developing both an alternative ideology and a viable alternative program to global capitalism" (174).

This book has major insights for anyone critical of the world in which they live. I approached this book critically, weary of another `big picture' grand narrative story, and finished with a heightened sense of awareness about the world in which I live. Don't be intimidated by the word 'theory' in the title. This book is for everyone.

One last note: While I was reading Robinson's book, I was reminded of a documentary called Mickey Mouse Monopoly -- a film that takes a critical look at the Disney Company's role in shaping global culture through its enormous corporate power (you can watch the entire documentary in ten minute sections on youtube.com).

Robinson correctly emphasizes the importance of culture in his book, noting how such cultural icons as Coca Cola, Mickey Mouse, Big Macs, and Nike are "symbolic of the real material domination of TNCs" (31). As Robinson further notes "the ownership and merger of media worldwide is a major area of transnationalization...and their tight control over the worldwide flow of information and images are issues of cultural domination" (129). The Disney Corporation is an example of a transnational corporation participating in a larger global capitalist hegemonic project, and demonstrates careful attention to policing its image and representation. In the documentary the narrator describes Disney as "a transnational media conglomerate owning TV and radio networks, cable systems, internet sites, music studios, media production companies, magazines, sports teams, theaters and theme parks." The narrator continues to raise questions of democracy and Disney's tendency to present a "very limited world view skewed and dominated by corporate interests."

The documentary ends with a revealing quote from Disney's own Michael Eisner in an internal memo: "we have no obligation to make history, we have no obligation to make art, we have no obligation to make a statement, to make money is our only objective."

Dr. Gail Dines, professor of Women's Studies at Wheelock College, poses the following concerns:

"What kind of society do we want to live in? Do we want to live in a society were seven global corporations control our culture? At the moment the only people at the table are the holders of corporate power. That's not a democracy."

So, what kind of society do you want to live in? Read Robinson's book and let's talk.

useful contribution to Marxist theories of international relations April 23, 2012

By M. A. Krul

Although the author is William I. Robinson, who teaches sociology and IR at UC Santa Barbara, this book is the very opposite of a Robinsonade - in fact, it deals with the global convergence of the capitalist class and its interests. Robinson's thesis in this book is that rather than conceiving of globalization as increasing internationalization, i.e. increasing trade and political connections between nation-states and proceeding from that political level, it should instead be understood as an increasing transnationalization. In other words, it means that there is now a secular tendency for the formation of a global, transnational capitalist class, which operates on the basis of the interests of global capital and increasingly forms a transnational state apparatus (from UN to WTO to IMF) to exercise its power. This global capitalist class is in opposition to the old national bourgeoisies, which are ever more succumbing to this struggle, and dominates global production in terms of volume - as Robinson aptly demonstrates with some choice statistics from the 1990s (surely even more true now). This global capitalist class has not made the nation-states obsolete, but restructures their organizations and institutions of power according to its needs and tries to pave the way for the total domination of this class over all state power by programmes of austerity, privatization, 'structural adjustment', and so forth. In other words, according to Robinson, the neoliberal order is the political mode of appearance of the interests of the global capitalist class.

So far, so good. Much of this is plausibly argued, and the author makes a number of valuable points. First is the importance of seeing the current transformation of capitalism not as a struggle between nations, such as the US and China, at the fundamental level, but rather as the rise to hegemony of the global capitalist class. Its opponents are those capitals that have purely national or regional interests to maintain specifically against the interests of the global capitalist class, and of course the proletariats of the world, which are (if much more slowly) also globalizing. Second, that it is in the interests of the global capitalist class to maximize the mobility of capital, but to minimize the corresponding mobility of labor, insofar as this would allow the development of a global proletarian opposition. The forces of globalization require ever more social containment on the part precisely of the territorial state powers, in order to prevent the Polanyian counter-movement from appearing (my words, not his).

Finally, this has only been possible because every part of the globe has now been formally subsumed under the capitalist order; there is no extensive form of 'original accumulation' possible any more on any serious scale. Robinson argues that therefore the global capitalist class' main interest in international relations is to overcome the opposition not just of the various working classes, but also of the national capitals that stand in the way; and that it seeks to supplant these by introducing everywhere 'polyarchy', i.e. the hollow form of 'liberal democracy' that channels civil society and oppositional forces into the periodic election of one or another branch of the elite. He implies it is precisely the status of petty dictators and the like as representatives of the interests purely of their national capitals and their nation-state territorial position that makes them undesirable in the eyes of the global capitalist class, however willing they may be to trade with them if they have to. This would then explain the neo-imperialist adventurist turn of many of the richer countries, including many not previously participants in such undertakings.

There are some problems with the argument nonetheless. Firstly, Robinson's economic historical explanation as well as his crisis theory are somewhat shoddy and in many cases questionable. For example, as Marx himself already pointed out, to explain a crisis by stating that there is overproduction and underconsumption is to explain precisely nothing - that is how a crisis appears under capitalism. Similarly, his reading of the social-democratic consensus is surely too rosy. It is not likely that neoliberalism appeared solely as a way for globalizing capital to escape the clutches of this consensus; the consensus itself was deeply limited in scope and intensity to certain parts of Europe and the Anglo-American countries, and it was two rapid crises that brought it down at least as much as its success.

This also fits Robinson's main weakness in the otherwise excellent and essential global outlook on political economy - namely, a serious understatement of the significance of previous imperialism and the contradiction between the First and the Third World, so-called. I agree that there is a long-term secular tendency now towards the creation of an 'equalized' global proletariat and Robinson is certainly right against Arrighi c.s. that this tendency is a victory of global capitalism rather than of East Asian capitalism. Yet this does not mean that we are yet anywhere near this situation of equalization, and precisely the distinction in existing wealth creates strong counter-globalizing forces including among the Western working classes, who have much to lose by this turn of events. By all accounts, they would prefer returning to the rosy social-democratic consensus based on the post-imperial dominance of the West, and for this reason the response to globalizing capital has been explicitly right-wing, not left-wing. Robinson is too optimistic, or too naive, when he implies that the (white) working class of the US or Europe is close to an objective or subjective position of being in the same predicament as the workers of Mexico or the Philippines. They are moving there, but are doing everything they can to prevent it, at the expense of the global proletariat as much as anything.

That said, this book is an important contribution at the political and strategic level to a truly global understanding of capitalist processes in the postwar period and today. So far, much of the initiative in this has proceeded solely from Maoist or post-Maoist sources and authors like Samir Amin. It is good to see this trend being more widely followed, and the significance of this perspective being increasingly appreciated among Marxists more widely. We cannot leave world system thinking to the followers of Frank and Arrighi, great as their contributions have been; let alone such people as Niall Ferguson or Joseph Stiglitz. "A Theory of Global Capitalism" should help put us on the right path.

William I. Robinson`s Invaluable Theory of Global Capitalism., July 7, 2013
By Colin Burgess - See all my reviewsAmazon Verified Purchase(What's this?)
This review is from: A Theory of Global Capitalism: Production, Class, and State in a Transnational World (Themes in Global Social Change) (Paperback)
I gave William Robinson`s book a five star rating because he has provided me with a theoretical structure which fits the last two chapters of my book. I say "fits" because the concepts he uses are in many cases the same as mine but from a transnational viewpoint rather than a national one. Consequently I have learnt a lot by bringing the two perspectives together. In this way Robinson is more basic than Sklair, whose work I can also use in bringing together the work of many other empirical and theoretical writers. Whether this is of any interest or use to anyone else I don`t know, but this is how it is helpful to me.

Zombie Capitalism Global Crisis and the Relevance of Marx Chris Harman 9781608461042 Amazon.com Books

Diziet

The Runaway System, March 1, 2011

Chris Harman's 'Zombie Capitalism' is a closely argued, fully referenced and indexed indictment of Capitalism from it's inception in the late 18th century up to today's current crises.

It starts with a general but detailed round up of Marx's concepts: commodities, labour value, surplus value etc. There then follows a comparison of Marx's ideas with those of his critics - neoclassical, Keynsian and Marxist variations.

Once this grounding is complete, and he has demonstrated the appropriateness of using Marx's analytical tools, he moves on to a discussion of how Capitalism works. This is a fairly generalised approach but lays the foundations for later chapters.

Once these basics are out of the way, Harman moves on to consider how Capitalism has developed since Marx's time and whether Capitalism has moved beyond useful Marxist analysis. He shows, pretty convincingly to my mind, that it has not and that a Marxist approach can still shed considerable light on the workings of the system.

Following on from that, he considers the role of the state. It is clear that states are deeply involved in not just maintaining Capitalism but as active participants. Even in these days of international or transnational corporations, Harman shows how rooted 'capitals' are in the nation state. In this, he echoes Alex Callinicos. Suggestions that nation states have outlived their usefulness are clearly false. However, the state is not simply a provider of currencies, rules, regulations, copyright protection, worker maintenance etc. but is also an active participant in the Capitalist enterprise. Apart from the obvious State Capitalism (in a Keynsian sense), there are the examples of Stalinist Russia and modern China.

The history of Capitalism in the 20th century inevitable starts with the Great Depression of 1929. This is followed by the long boom of the post-World War 2 period (the 'Golden Age'). Harman shows how this was maintained not simply by the recovery from the 'creative destruction' of the war, but also by the 'disposing' of surplus capital in the purchase of arms - Eisenhower's 'military-industrial' complex - helping to maintain rates of profit. But he goes further and considers the effects of this on Russia and the Eastern Block countries.

Then comes the end of the 'Golden Age', the crisis of Keynsianism and the turn to Milton Friedman and Monetarism. Of course, a lot of this is simple history. But Harman provides a thoroughgoing and, to my mind, pretty convincing Marxist analysis of this history. He considers not just the crisis of the Western capitalist economies but also the end of Stalinist central planning.

Part Three starts with 'The New Age of Global Instability' (P227). He suggests that, in many ways, the current era is a return to the period prior to the Second World War - in a sense, back to 'business as usual' (i.e boom/slump). He argues against the prevailing 'globalist' theories, again pointing out the dependence of capitals on nation states - it is simply not that easy to move factories and their necessary supply chains across borders. However, he recognises the increasing mobility of financial capital, as it roams the world, looking for a return on investment but, at the same time, shows the many ways that 'productive capital' and financial capital are closely intertwined. For example, he considers the bubble in the telecoms industry which resulted in a huge increase in cable networks - far more than can currently conceivably be used.

The final section 'The Runaway System' (P307) looks at the likely consequences of the current form of Capitalism and, predictably enough, it is not a happy picture. Environmental degradation, 'Peak Oil', the dangers to the world's food supply are all resulting in a runaway system:

'The runaway world is, in fact, the economic system as Marx described it, the Frankenstein's monster that has escaped from human control; the vampire that saps the lifeblood of the living bodies it feeds off. Its self-expansion has indeed led it to encompass the whole globe, drawing all of humanity into its cycles of competing in order to accumulate and accumulating in order to compete.' (P325)

Capitalism is, quite simply, insatiable.

And finally, he asks, 'Who can overcome?' (P329):

'It is the very development of capitalism that shapes and reshapes the lives of those it exploits, creating the objective circumstances that can turn a disparate mass of people who sell their labour power into an increasingly self-conscious class "for itself". This class is the potential agent for challenging the chaotic and destructive dynamic of capitalism because capitalism cannot do without it.' (P349)

Overall, this is a fascinating book. I have to admit that I found the first few sections of Marxist economics hard going, not having any background in the subject, but once equipped with the basic concepts involved, the analyses presented in the later sections were powerful and persuasive.

[Jun 06, 2013] The Crisis of Neoliberalism Gérard Duménil, Dominique Lévy

Amazon.com

Hans G. Despain

Unique and Stimulating Account of the Great Financial Recession of 2008 June 6, 2012

This book can be highly recommended as a book on the Great Financial Crisis of 2008, and a book of politics, political economy, class analysis, sociology, and history. Very impressive accomplishment.

The strength of this book on the Great Financial Crisis of 2008 is that Dumenil and Levy place the crisis in a larger historical perspective. They maintain it is a mistake to isolate it merely in the context of the financial innovation and deregulation occurring from the late 1990s. Instead, capitalism has particular historical tendencies and specific class relations.

This is a very impressive volume published by Harvard University Press. It offers a play by play of the Great Financial Recession of 2008, beginning from 2000 in chapters 12 - 17, the political response and the continued stagnation in domestic economies and instability within the international economic order in chapters 18 - 20, along with very interesting historical policy observations and recommendations for this current crisis in chapters 21 - 25. Nonetheless the real power of this book occurs in its historical analysis of capitalist development since 1970s described in great detail in chapters 1 - 11.

According to Dumenil and Levy the historical tendencies of capitalism are radically mediated by politics and social class configurations (i.e. alliances). They argue capitalistic development, since 1880s, has gone through four primary stages and corresponding crises. They emphasize these developments are not historically necessary, but contingent on politics and social class configurations. Moreover, their analysis is particular to the capitalistic development in the United States and Western Europe, they are able to generalize or internationalize their analysis because of the U.S. global hegemony (although they certainly accept there are modes of resisting this hegemony (e.g. Iran, Venezuela, Cuba, China, etc.).

Dumenil and Levy have demonstrated in previous work the tendency of the rate of profit to fall in capitalistic economies. However, because politics and social class alliances can change, so can the profitability. The current crisis was not caused by falling rates of profits, but by financial innovation, credit overextension, and the particular social class alliances facilitating these activities. There is no single cause of the crisis, but broader social political mechanisms at work and in the process of transformation.

The basic story goes like this: following the Great Depression of 1930 a strong social political alliance emerged between the management class and "popular classes" (this popular class includes blue and white collar workers, including quasi-management, clerical, and professional, which cannot be reduced to the traditional "working-class"). In the 1970s there was a severe profitability crisis, the legislative and institutional response to this crisis caused a fracture between management and popular classes, and a re-alliance between management and capitalist classes (which includes ownership and financial classes).

Once the alliance between capitalist classes and management had been forged in late 1970s and 1980s, profitability returned and financial incentives and financial innovation reconfigured personal incentives and corporate motivations. Most important according to Dumenil and Levy is that these historical transformations manifested a "divorce" between ownership/finance and the domestic economy and its actual production process. The political system did nothing to reconcile this disconnect, indeed expedited the divorce via deregulation and financial innovation, what the economic literature calls "financialization" (although, to repeat in several countries the response was radically different and in specific opposition to U.S. hegemony and the neo-liberalism which the U.S. Treasury, IMF, World Bank, and WTO exported to the rest of the world).

[Jun 06, 2013] A Brief History of Neoliberalism by David Harvey

R. Albin (Ann Arbor, Michigan United States) February 4, 2012

A good way to discuss this concise and clearly written book is to compare it with some recent discussions of politics and economics in the USA, notably the analysis published by the political scientists Paul Pierson and Jacob Hacker in their book Winner Take All Politics. Pierson and Hacker point to the increasing concentration of wealth and political power in the USA, the decline in social mobility, the impressive ability of the very wealthy to influence Congress and elections, and how these phenomena have arisen over the past generation. Readers interested in a concise discussion of their conclusions can easily find a nice review article by Hacker and Pierson using Google Scholar or similar search services. Other recent relevant issues include the decline in American manufacturing, the increasing role of the financial services sector, and the dangerous economic fluctuations introduced by a global and relatively unregulated financial system. Harvey, however, identified and discussed all these themes insightfully several years ago.

Beyond his prescience, Harvey's particular contributions are three-fold.

Harvey also points to many of the other contradictions of neoliberalism. It is often a license for the wealthy to exploit political systems in ways that undercut its central claims. Claims that it would produce an era of enormous economic growth with a rising tide raising all boats proved groundless. Regimes purportedly espousing neoliberalism, such as the Bush II era USA, indulged in disguised and incompetently applied Keynesianism. Despite scientistic claims to be based on basic features of economics, neoliberalism often ignores basic findings of economic research.

Defects of Harvey's analysis

Defects of Harvey's analysis include a bit of overemphasis on what might be called the conspiratorial aspects of his class based analysis. Harvey also omits an important criticism of neoliberalism - its failure to recognize the sources of long term economic growth. The latter depends on technological innovation and implementation of new and improved technologies.

Two and a half centuries after the start of the Industrial Revolution, the low hanging fruit has long been harvested and further technological change depends on substantial state investment in research, including considerable investment in development and industrial policies, and a large and well educated work force.

These preconditions for sustained growth aren't and probably will never be generated by neoliberal regimes.

Izaak VanGaalen

A Critical Look at the Post-Keynesian Era

The term neoliberalism is usually heard in the pejorative sense, often coming from Latin American leaders such as Hugo Chavez and Evo Morales. The term refers to an international economic policy that has been predominant in policy-making circles and university economics departments since the 1970's. The four faces on the cover of this book (Reagan, Deng, Pinochet, and Thatcher) are considered by David Harvey the primemovers of this economic philosophy. Reagnomics, Thatcherism, Deng's capitalism with Chinese characteristics, and Pinochet's free market policies marked the beginning of new era of global capitalism.

Neoliberlism as a philosophy holds that free markets, free trade, and the free flow of capital is the most efficient way to produce the greatest social, political, and economic good. It argues for reduced taxation, reduced regulation, and minimal government involvement in the economy. This includes the privitization of health and retirement benefits, the dismantling of trade unions, and the general opening up of the economy to foreign competition. Supporters of neoliberlism present this as an ideal system. Detractors, such as Harvey, see it as a power grab by economic elites and a race to the bottom for the rest.

In this short, but very well researched book, Harvey charts the capital flows of the last thiry years. In the 1970's, there was the breakdown of the Bretton Woods system, with its fixed exchange rates, tariff barriers, and capital controls. It gave way to floating currencies and high trading volumes. Capital started searching the globe for comparative advantage. Proponents claimed that this routed out corruption and inefficiencies, while opponents saw instability and exploitation. Indeed, Harvey produces ample statistics showing how the rich got richer and the poor stagnated. More surprisingly, he points out that the aggregate economic growth during the years of Keynesian management (the decades between World War II and the 1970's) was greater than during the neoliberal era (the 1970's to the present). The neoliberal era benefitted mainly the wealthy. In the US, the richest 1% now control 15% of the wealth as opposed to 8% at the end of World War II.

When Reagan and Thatcher came to power in the late 1970's and early 1980's they used their control of the IMF and World Bank to impose neoliberal policies on the developing world - especially Latin American countries. In the case of Chile, Pinochet - after violently ousting the Allende government - instituted free market policies as prescribed by the Chicago school, and was relatively successful. Other Latin American countries were not so successful, and it created a backlash of populist nationalisms in the form of Hugo Chavez in Venezuela and Evo Morales in Bolivia.

The section on China is one of the best in the book: "Neoliberalism with Chinese Characteristics". Harvey points out that China is not a pure neoliberal state. There is still heavy state intervention in the economy and management of the currency. And as a further criticism of neoliberalism, he reminds us that China has produced some of the highest growth rates - 9 to 10 percent annually. On the downside, the gap between the rich and poor is growing, and because their currency is held artificially low they are building dangerous overcapacity.

Neither does the US, for that matter, operate according to neoliberal principles. Even as it is urging other countries to maintain minimal government and balanced budgets, it is running huge deficits and issuing ever more t-bills to cover its excess spending.

With China and the US - two linchpins in the world economy - not playing according to the rules of the game a crisis is bound to happen. One country is totally geared toward producing and exporting, while the other is content with importing, consuming, and creating more debt. Harvey believes that the global economic readjustment that is going to take place will be painful and possibly violent.

Harvey's excellent little book illustrates, once again, that the perfect market, presupposed by neoliberalism and classical liberalism, does not exist. Unfortunately, he does not offer any remedies to rectify the current situation, nor does he offer an alternative system. Nevertheless, this book is very insightful.

Malvin

Deconstructing neoliberalism's peculiar definition of 'freedom' September 28, 2006

A Brief History of Neoliberalism" by David Harvey is a concise and razor-sharp deconstruction of the neoliberal movement. Mr. Harvey convincingly demonstrates that neoliberalism is an ideology that has been wielded to enshrine elite privilege at the expense of people and the environment. Assiduously researched and cogently argued, Mr. Harvey offers a jargon-free and readable text that helps readers gain a greater understanding about the political economy of our neoliberal world and what this might hold for us in the future.

Mr. Harvey explains that neoliberal propaganda has succeeded in fixating the public on a peculiar definition of 'freedom' that has served to conceal a project of upper class wealth accumulation. In practice, the neoliberal state assumes a protective role for capital while it sheds as much responsibility for the citizenry as possible. Mr. Harvey details how neoliberal theory is ignored whenever it comes time to bail out corporate interests from bad decision making while the safety net for the working class has been gradually eviscerated. The author effectively intersperses the text with graphs to illustrate how thirty years of neoliberalist policies has resulted in rising inequality, slower economic growth, higher incomes among the upper class, and other measures that serve to convincingly support and prove his thesis.

Mr. Harvey's history of how neoliberalism has gained ascendancy mostly treads through familiar ground but also highlights some key events that are sometimes overlooked by others. For example, Mr. Harvey relates the well-known stories of how the Chilean coup in 1973 opened the door for Augusto Pinochet to implement the first national experiment in neoliberalism, followed by Margaret Thatcher in Great Britain in 1979 and Ronald Reagan in the U.S. in 1980.

However, we also gain greater appreciation about the importance of the New York City bankruptcy in the 1970s. We learn how the city's financial crisis allowed for the imposition of neoliberal reforms in a manner that would prove to be a familiar template around the world:

Mr. Harvey surveys neoliberalism around the world to discover connections and to analyze its effects. He finds that the U.S. economy has benefited immensely from its ability to extract tribute from other nations, including the U.S. financial community's probable engineering of crises in developing nations in order to scoop up devalued assets on the cheap.

The author discusses how economic restructuring programs imposed on poor countries has benefited U.S. and other foreign investors while it has bolstered or created a small but powerful class of wealthy individuals in Mexico, South Korea, Sweden and elsewhere. In China, Mr. Harvey remarks about the ease with which neoliberalism has found a home in an authoritarian state where the political elite have amassed their fortunes by exploiting a defenseless working class. The author is particularly concerned about the symbiotic relationship that has developed between the U.S. and China and muses about the potentially catastrophic financial situation that the two countries' mounting debts might pose for each other and the world economy.

In the final chapter, Mr. Harvey writes passionately about the need to continue building diverse democracy movements within the U.S. that are dedicated to social and economic justice. Although it is true that Mr. Harvey does not detail precisely what must be done, his thorough dissection of neoliberal ideology empowers us to effectively challenge those who hide behind false rhetorical devices in service to privilege. And for that, we should be grateful.

I give this outstanding book the highest possible rating and strongly recommend it to all.

E. David Swan

Freedom for some, crumbs for others February 19, 2007

On the first anniversary of 9/11 President Bush made a speech saying, `Freedom is the Almighty's gift to every man and woman in this world... as the greatest power on earth we have an obligation to help the spread of freedom.' Spreading freedom is the primary function of neoliberalization but as George Lakoff stated in `Whose Freedom?' freedom can be a very subjective term.

The freedom of neoliberalism is the glory of unfettered, free market economics and the rights of corporations and financial institutions over individuals and governments. It's the freedom to fully exploit resources and workers.

From its founding America's wealthy have feared democracy recognizing that the majority, being poor and middle class, could vote to redistribute wealth and reduce the control held by the elites. After World War II, the middle class in the United States grew dramatically somewhat flattening the countries power base. As a reaction to this dispersal of power the early 1970's saw the formation of groups like The Business Roundtable, an organization of CEO's who were `committed to an aggressive pursuit of political power for the corporation'.

As the author writes, `neoliberalization was from the very beginning a project to achieve the restoration of class power'. The neoliberal plan was to dissolve all forms of social solidarity in favor of individualism, private property, personal responsibility and family values. It fell on well funded think tanks like The Heritage Foundation to sell neoliberalism to the general public using political-philosophical arguments.

At the same time a group of economists were working on economic theories that developed into the `Washington Consensus'. These followers of Hayek and Friedman just happened to create economic blueprints for growth that matched up exactly with the goals of the wealthy business elites. The plans were based on the superiority of the marketplace in making wise decisions but also assumed perfect information and a level playing field for competition. As the author writes, `...eminent economic theorists [...] argue that all would be well with the world if only everyone behaved according to the precepts of their textbooks' The neoliberal economists have become so focused on growth that they seem to take a decidedly amoral approach to human suffering. Above all countries needed to focus on privatization and low taxes and definitely avoid deficit spending. What has happened is a widening of the gap between the wealthy and poor. The author suggests that rather than an unfortunate byproduct of neoliberalism or a temporary situation this is the intended result.

The great irony is that the U.S., the world's number one proponent of neoliberalism, generally finds itself breaking the rules. With high deficit spending and massive subsidizing particularly in consumerism and defense spending the United States has generally taken a `do as I say, not as I do' stance. With the amount of political appointee/lobbyists shuttling back and forth between business and government Adam Smith's `Invisible Hand' looks more and more like a crushing fist.

This was not the book I expected. This is a devastating critique of neoliberalism. I didn't agree with everything the author wrote and there are most definitely many positives that have come from globalization but the corporatization of the world has the potential to by an enormous threat. Global Warming has to be the poster child for neoliberal extremism with short term economic growth trumping the welfare of the entire world. David Harvey has a decidedly liberal stance but he backs up his views with sobering facts. Despite being a book on economics I found it extremely readable and recommend it wholeheartedly.

Published on June 15, 2006 by

Interesting argument, but evidence too wobby to be persuasive This book makes a provocative argument: that the goal of neoliberal theory and practice is to restore wealth and power to a ruling elite.

Unfortunately, I don't think it presents a strong enough case. It has a lot of footnotes and a long bibliography, but (i) many footnotes refer to an entire book, without any indication of where the fact can be found, (ii) many of the... Read the full review

Neoliberalism: A Very Short Introduction Neoliberalism: A Very Short Introduction by Manfred B. Steger (Paperback - February 8, 2010) 4.7 out of 5 stars (3)

Buy new: $11.95 $9.50 In Stock

Prime

[Jun 06, 2013] The Strange Non-death of Neo-liberalism by Colin Crouch

Diziet

Aux armes, citoyens! August 8, 2011

Colin Crouch's analysis of the continuing dominance of neoliberalism starts with a definition and history of his terms, showing how the word 'liberal' in particular has gone through some almost total reversals since the repeal of the Corn Laws. The ascendency of 'neo-liberalism', however, began in the 1980s, after the perceived failure of Keynsian economics.

The original 'Hayekian' or 'Ordoliberalismus' anti-totalitarian formulation whereby competition is seen as 'a process that would maintain in existence large numbers of firms, near-perfect markets and widespread consumer choice' was replaced by the Chicago School's view that competition should be seen in terms of its 'outcome' as the destruction of small firms and medium-sized enterprises, the dominance of giant corporations and the replacement of the demotic idea of consumer choice by a paternalistic concern for 'consumer welfare' (P16-17)

This concept of 'consumer welfare' is crucial. Unlike Hayek, this formulation accepts, even welcomes, the idea that competition will eliminate competition:

'If there would be efficiency gains from a number of smaller firms being bought out by a larger one, then that would be the outcome that would maximise what they called consumer 'welfare', even if it led to reduced competition and left consumers with a reduced choice of goods. What should therefore be the concern of the law courts in deciding antitrust cases is what outcome would be most conducive to the maximisation of consumer 'welfare', not 'choice' as such.' (P55)

By 'welfare', the Chicago economists considered the overall wealth of the society. The fact that the wealth may become increasingly concentrated in the hands of a small and diminishing number of transnational corporations (or TNCs) and a stateless elite is neither here nor there. Any redistribution of wealth should be undertaken by governments and is not the concern of the corporation.

But then, the Chicago school has a major problem with the idea of government. Here, their ideas fit neatly in with those of the University of Virginia. The Virginia school considers that civil servants, politicians et al, are there purely for self-advancement - as portrayed in Margaret Thatcher's favourite sitcom 'Yes Minister' where the Machiavellian machinations of Sir Humphrey had little to do with the promotion of societal good. Governments are seen as 'at best incompetent and at worst corruptly self-seeking' (P63).

The only way to ensure any efficiency and effectiveness in government is to apply the rules of the market. In other words, governments should act like, and learn from, firms. Thus we have the endless setting of targets, the breakup of government agencies into competing bodies and, most importantly, the inclusion of firms in the running of government in Public Private Partnerships (PPP), Private Finance Initiatives et al in almost an odd sort of reversal of mercantilism.

What develops from all this is a tripartite division - firms (TNCs), national governments and, surprisingly perhaps, the market. Here, 'the market' really refers to small and medium sized enterprises (or SMEs). It is perhaps interesting to compare this with Dani Rodrik's 'trilemma' where power is negotiated between the 'nation state', 'democratic politics' and 'hyperglobalization' - here 'hyperglobalization' more or less equates with the TNCs while the 'nation state' and 'democratic politics' conflate into national government, but the market is not really considered. I find Colin Crouch's model more convincing.

Although Crouch doesn't use the term kleptocracy, he does refer to oligopolies. Quite frankly, in the case of international banking in paricular, the difference is only one of degree. The virtual merger of politics and corporations, particularly in the US, is plain to see. The revolving door between government agencies, lobbying organisations and the corporations is notorious (see Thomas Frank's excellent 'The Wrecking Crew') but, at the same time, corporations consider themselves to be only responsible to their shareholders - the maximisation of shareholder value is considered to be management's sole aim, even though they are increasingly intimately involved in the legislative process.

It is odd, then, to see the rise of Corporate Social Responsibility (CSR). More often than not, of course, this is simply just a marketing tool. Crouch puts it nicely in the heading of chapter 6 - 'From Corporate Political Entanglement to Corporate Social Responsibility'. Political power has become increasingly concentrated in firms, or governments acting like firms or firms working for/with governments. This is hardly surprising. As Crouch says:

'a polity in which economic resources were very unequally shared would be likely to be one in which political power was also concentrated, economic resources being so easily capable of conversion into political ones.' (P125)

Later, he seems to echo Peter Oborne's 'The Triumph of the Political Class':

'...the state, seen for so long by the left as the source of countervailing power against markets, is today likely to be the committed ally of giant corporations, whatever the ideological origins of the parties governing the state.' (P145)

It seems that CSR has, then, almost taken the role of what the French aristocracy used to refer to as 'noblesse oblige' (P150). But, suggests Crouch, the growing CSR movement might be seen as a reaction to pressure from a fourth element outside the 'firms, state and market' - 'civil society':

'Civil society includes, though extends further than, the voluntary sector. It defines all those extensions of the scope of human action beyond the private that lack recourse to the primary contemporary means of exercising power: the state and the firm...States and firms do dominate our societies, but there is a lively field of contention. Challenges to domination can be made, concepts of public goals explored and turned into practical projects, against the state's claim to monopoly of the legitimate interpretation of collective values, and against the firm's claim that the conversion of values into the maximisation of shareholders' interests is as good as life can get.' (P153-4)

Crouch considers that there are potentially five types of groups that may challenge the state and the firm. Most of these are pretty well compromised, he feels, and I would agree. Political parties (see Peter Oborne) and most organised religions - both seem unlikely contestants. Whether campaigning groups, the voluntary sector and ethically motivated professionals can make the difference and wield the 'power of the powerless' is finally what this book is about. Where Dani Rodrik calls for a 'reining in', a deliberate limitation to 'hyperglobalization' in order for nation states to again exert a moderating influence, Crouch sees the nation state as hopelessly compromised and the only moderating and humanising influence coming from civil society:

'Civil society...operates in the interstices left among the great erections of political and economic power, like little houses springing up busily and untidily, creating vitality in a street dominated by the inaccessible security-controlled doors of skyscrapers. Since it contains a vast array of competing groups, with different and sometimes opposed moral agendas, it also embodies a kind of moral relativism. But this is moral relativism only at the meta-level of the character of the system as a whole. Within it the great majority of participants act with moral purpose. In societies that contain a plurality of rival values, where no religion or set of beliefs has hegemony, that is all we can hope for.' (P161)

The question is, is it enough? Is this anything more than a 'post-modern relativist politics' or a restatement of 'pressure group politics'? I'm not convinced - but the ideas just might help fuel resistance to the neoliberal monolith. Thank-you Professor Crouch. :-) RACKETS AND REVOLUTIONS October 31, 2011

DAVID BRYSON TOP 1000 REVIEWER

The general public, such as myself, need to understand economics these days, supposing we didn't before. This book is the right kind of adult reading. It explains, with severe and unflagging concentration but without jargon or statistics, the economic theories that have dominated the last 80 years. Professor Crouch sees neoliberalism as having stepped into the vacant space left after the inflationary excesses of the 70's were taken as a sign that the generally Keynesian consensus that had dominated `western' economies since the 30's was played out. I think he should have gone one step further and made a point that would fit his later argument perfectly, namely that the reaction was not so much against Keynesian theory as against the behaviour of the working classes whom Keynesian demand management and deficit spending had empowered. They had created wage-push inflation, so here was the opportunity to push back and reduce them to the statistics that is all they constitute in market-forces economics of various varieties.

Crouch is repelled by this mentality and so am I, but he has written no kind of tract or political pamphlet. He issues no simplistic demands to change the system or even to reform it drastically, because however repellent it is not nonsense. There is strong economic argument underpinning it, and Crouch states in so many words that the Chicago economic theory at least describes the present-day economy. However it is masquerading as being some triumph of free markets, and Crouch demonstrates powerfully that it is nothing of the sort. What has happened behind the presentational sleight of hand is that the manipulation of the economy has reverted into the hands of a few movers and shakers in the big corporations. It has largely obliterated the kind of free market that Adam Smith and other such dreamers envisaged, and reduced `consumer choice' to choice among such options as it has itself contrived through gaining a grip on legislatures and controlling the terms of popular debate. The masquerade consists in the monstrous effrontery of representing this oligarchical outcome as the result of untrammelled consumer choice. We have got what we really asked for, apparently, it's just that we don't know it.

On the one hand this reduces individual consumers to statistics contained within aggregate economic performance, on the other it places the control of the economy in comparatively few hands; and that, I slightly suspect, may be neoliberalism's Achilles heel. To me, it seems to follow from Crouch's arguments that while there are some basic economic laws, such as supply and demand, that are more or less as immutable as gravity, others depend on what people in general will accept. It is convenient to depersonalise the behaviour of `money' or `capital' as if it moved itself without human intervention, but they can only get away with this story if it represents some genuine mass activity. Once it gets down to traceable individuals then sooner or later they can be traced. Technology helped to create the problem by allowing money to move so quickly that the transactions are done and dusted before anyone else realises, but technology can also now see into places that were once beyond inspection, even if there is a time-lag before the scrutiny happens. Disclosure, not by lumbering governments and regulators, but by the public at large, may yet be neoliberalism's nemesis.

I rather wish that Crouch had separated his analysis more, putting manufacturers in one category and the bankers and such like in another. There is surely a clear difference between firms that produce genuine products, items that at least have a genuine cash price and value, and the manipulators of `money' that is really no longer true money but a figment that gets progressively more fictional as it gets wrapped in bundles containing goodness knows what supposed transactions, valued according to what are literally bets on what the next punter, equally ignorant of what he is supposedly buying, might be willing to pay. How this current display of human arrogance and folly may develop obviously I have no idea, but it must be at least possible that if public outrage boils over it will target the money barons most. Major manufacturers may have the US congress, for example, eating out of their hands, but when the only financial reality is cash, something everyone knows and something that no conceivable economic system can change, then the spectacle of this or that finance house playing tricks it may not even itself understand in order to pile up phantom finances, thereby putting real people's real finances in peril, may just come to seem a racket too far. It takes me back to school history classes when we were required to identify the `causes of the French Revolution'. The causes could be summarised as one basic cause, namely that the oligarchy pushed their arrogance and presumption too far. Obviously an international money market is a different kind of target, and any putative onslaught on it would take different forms, but if the balloon goes up one thing for certain is that academic niceties, such as supposed inevitable rightness as markets work out their own impersonal logic, will be sidelined for the time being.

The international aspect is giving the whole show a breathing space, allowing, for one thing, outrageous remuneration to be given to banking executives on specious grounds of international comparability. That particular bluff will surely be called sooner or later, but in general Crouch's handwringing at the way in which the money miscreants are getting away with it is a little misplaced. It can't all be stopped in its tracks, but he should not have fallen for the simple error of feeling he has to provide alternatives. These are bound to be easy prey for critics. The real value of this important book is in the earlier chapters; and the answer to any supporter of the status quo who said `You have to provide an alternative' should have been `No, you'.



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