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Contents Bulletin Scripting in shell and Perl Network troubleshooting History Humor

Neoliberalism as a New, More Dangerous, Form of Corporatism

Transnational elites Uber Alles: "Elite International" instead of Communist International

Version 3.2
News Corporatism Recommended books Recommended Links Casino Capitalism Two Party System as polyarchy Ayn Rand and Objectivism Cult
Financial Crisis of 2008 as the Crisis of Neoliberalism Gangster Capitalism The Great Transformation Psychological Warfare and the New World Order Jeremy Grantham On The Fall Of Civilizations Alternatives to Neo-liberalism Globalization of Corporatism
Elite Theory Compradors Fifth column Color revolutions Anti-globalization movement Right to protect  If Corporations Are People, They Are Psychopaths
Super Capitalism as Imperialism Neocolonialism as Financial Imperialism America’s Financial Oligarchy Inverted Totalitarism Disaster capitalism Neoliberalism as a Cause of Structural Unemployment in the USA Neoliberalism and inequality
Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime Harvard Mafia Friedman --founder of Chicago school of deification of market Republican Economic Policy Monetarism fiasco Small government smoke screen The Decline of the Middle Class
Libertarian Philosophy Media domination strategy Neoliberalism Bookshelf John Kenneth Galbraith Globalization of Financial Flows Humor Etc


Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare. “There’s class warfare, all right, "Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning."

- New York Times

Make no mistake, the neo-Liberal fuckers are just as bad as the Stalinists

May '68 and its Afterlives [Review]

GB: once a great cultured nation, now a poorly-educated gangster mafia state, ruled by oligarchs and inhabited by soccer hooligans

The Kremlin Stooge


Introduction

Neoliberalism is a new form of corporatism based on the ideology of market fundamentalism, dominance of finance and cult of the rich ("greed is good") instead of ideology on racial or national superiority typical for classic corporatism. It is a counterrevolution aimed at destroying WWII compromise between workers and capitalists, which in the US called News Deal. It is a broad strategy of economic (and frost of all financial), political, cultural and sometimes military elites to destroy social-democratic state and to restructure power relationships, institutions, ideology more toward capitalists interests. It is international movement but if slogan of Communists International was "workers of all countries unite" the slogan of neoliberal revolution are both "Elites of all countries unite" and  "viva the law of jungles" or "if you see that guy who is ready to fall push him in the back".  Of course with the appropriate PR smoke screen.

Dealing with neoliberalism we can differentiate between theee dimensions:

It can be succinctly defined as "Transnational elites Uber Alles" or "casino capitalism"( the latter term is more applicable to G7 club).  Actually some elements of the idea of "national superiority" were preserved by reserving the USA special status and in "in a form superiority of "creative class" which includes capitalists, financial oligarchy,  and "executives" (top layer of transactional corporate elite). In a way, neoliberalism considers "creative class"  to be a new Arian race. 

From political point of view neoliberalism vision is close to Communists vision. It also relies on state repression (despite demagogy of Washington consensus about "free markets"). Under neoliberalism the state become more repressive toward social policies and , especially, labor, but much less repressive toward various forms of capital and especially large capital.  In this sense the only difference is the location of the capital:  while the USSR was the holy land of communist world and Moscow its global capital, now the holy land of neoliberalism is the USA and the capital in Washington. With the USA government and Washington headquarters of IMF and World Bank taking functions of Politburo of CPSU.

Like with Comminist International, other states are just vassals who implement directions from benevolent "Washington Obcom" and install leaders recommended, or face ostracism (YouTube)... Funny that it was corrupt communist elite which put a major effort in helping to implement this vision via the dissolution of the USSR.

Neoliberalism is not merely a new pseudo-religious, cult-like version of globalized corporatism. Like national socialism before it is also simultaneously a powerful state ideology, And first of all, the official state ideology of the USA where it became an integral part of American Messianism. As such, it permeates many aspects of social cooperation and culture. It is militant (does not hesitate to exercise force or overthrows the governments), deceptive (what Washington means by the "spread of democracy" is actually spread of neoliberalism), missionary  (regards itself as a monopolist of the "truth" and protector of "universal values" ) and colonizing (servicing simultaneously the  ideology behind Neocolonialism). It is also messianic as in "the end justifies the means" and does not abstain from using dirty methods including black propaganda and color revolutions for achieving its goals.  In the level of hypocrisy and methods used against "natives" it reminds British empire. 

It blackmails antagonists as depraved, primitive, and below par. A good sample of neoliberal blackmail can be extracted from the US press coverage of preparations to Iraq war( US press enlists for war on Iraq) and Libya coup d'état.  Another good set of samples provides US press coverage of Putin's Russia, which as a middle ground between neoliberalism and resource nationalism became a thorn in Washington's back.  One of the reasons for Russia's defeat in Chechnya between 1994 and 1996, was an attempt by America in the 1990s, with tremendous help from the comprador part of Russian elite it managed to create, to turn Russia into a standard neoliberal vassal state, whose elites would be subservient to the US foreign policy and would exist to export raw materials to the West and to transfer money to Western bank accounts. That attempt failed with Putin coming to power.  So now the level of animosity from the USA and  British elites and serving them MSM now goes over the roof .

With the notable exception of the USA, neoliberalism is hostile to nationalism. That does not exclude flirting with neo-fascist elements in countries were neoliberalism is under attack from the left or from resource nationalists. But those forces are viewed more like tactical allies (Ukraine is a good example) and can be thrown under the bus, when they do their dirty job. Inside the USA, the holy city of neoliberal ideology,  it to a certain extent merged with  American Exceptionalism;  the USA is viewed as exemplarity neoliberal country, the shining city on the hill which has right to impose their views and interests on the rest of the globe with impunity, standing outside the law.

The essence of neoliberalism is globalization of corporatism, which previously have distinct national boundaries and some form of which were rabidly nationalistic.  Just imagine a single global state with the capital in Washington with the tipical for such a state flow of people to capital. There are also second class cities such as London, Berlin. Tokyo, etc which while not as attractive are much better then the "deep province", such as Praga, Warsaw or Sanct-Petersburg.  So the flow of people and commodities such as oil has distinct direction from the periphery to the center. To keep each country in the line and this flow of commodities uninterrupted, this "Capitalist International" relies on the part of national capitalist class and elite which is connected to international corporations serving the same role as Communist Parties or Communist International.  Such as part is often called Compradors or Fifth Column of Globalization

And this "international elite" is even more responsive to pressure as its fortiunes and often familis reside if "first class cities" of G7. This way neoliberalism is able to suppress the other part of the elite of particular country which favors "national" development and typically resides inside the country. As a PR smokescreen neoliberalism pay lip service to national development, but in essence it is hostile to it and favor "underdevelopment" of nations outside G7.  It's anti-social and has distinct schadenfreude attitude to weak nations: it derives pleasure from seeing the misfortunes of other nations and it try to exploit such moments ("disaster capitalism").  Vae victis  as Romans used to say (Victor's justice).

And the winner in neoliberal revolutions is not the middle class and lower strata of population (although they might be sold on it and fight for it, being deceived by propaganda), but international and local oligarchy represented via international corporations and banks. For bottom 90% population the hangover after the neoliberal revolution  comes really quick. This affect was clearly visible after successful color revolution in Serbia, Georgia and Ukraine. In cases of Georgia and Ukraine the neoliberal leaders lost power after their term and there were efforts to put them in jail for abuse of power and corruption, which were not successful only due to USA pressure (only former Ukrainian Prime Minister Julia Timoshenko, the Joan of Arc of Orange revolution was jailed). In any case popularity of leaders of neoliberal revolutions drops to almost unheard levels with Victor Yushchenko commanding 2% approval rating in Ukraine before the end of his term.

Unlike previous revolutions (with the exception of Bolsheviks revolution)  the unique feature of neoliberal revolution is drastic lowering the standard of living of middle class and poor, along with dramatic enrichment of top 1% of population and international corporations.  In a way it is equivalent to selling of local population into slavery to international corporations by local oligarchy. with the interesting Pareto style 80:20 split. In other words only 20% of population get something from neoliberal revolution with over 50% concentrated at, way, the top 5%, and lion share in top 1%. This "top 20%" constitute "fifth column of neoliberalism" in the particular state.

Lower 80% standard of living typically dramatically drops after neoliberal revolution. That does not mean that those capitalists who favor "national" development are considerably less brutal in exploiting lower 20% population, but at least the "spoils" of this exploitation are left by and large in the country and specially used to improve infrastructure and such while neoliberal model of exploitation often is sucking the vassal states dry.  Former Eastern European countries such as Bulgaria, Rumania and Serbia provide especially interesting and educational example of how neoliberalism deforms the economy.

There are some exceptions like China (which practice not pure neoliberalism bus a mixture of neoliberalism with national development, kind of "neoliberalism with Chinese face" ;-), but even in China this process of dramatic enrichment of top 1%  is clearly visible although it is not accompanied with drastic lowering of standards of other 99% of population like happened in Russian, Ukraine and other post Soviet republics.   Again in the level of decimation of local middle class and poor neoliberal revolutions have a lot in common with Bolshevik's revolution in Russia of 1917.

Here is a quote from insightful Amazon review by razetheladder  of  Chalmers Johnson book Blowback The Costs and Consequences of American Empire:

Johnson's strength is in recounting the specificities of US foreign policy; he's much weaker at an overall understanding of imperialism. He seems to think that American policymakers have naively built up the economic strength of their Japanese, Korean, and now Chinese competitors by focusing on maintaining their own military power. This is an old critique, resting on the notion that imperialism hurts the imperialists.

But Johnson is relying on the idea that "America" is a unitary entity, so that the hollowing out of industry hurts "America", not specific social groups within the country. In reality, US foreign policymakers work to advance the interests not of "America", but of those same business elites that have benefited from turning Asia into the world's sweatshop and undermining the unions that built their strength on American industry. American economic imperialism is not a failed conspiracy against the people of Asia, but an alliance between American elites and their Japanese, Korean, Indonesian, and Chinese counterparts - against the potential power of the working majority in all those countries.

But it's more complex than that, too, since the US seeks to prevent the emergence of an independent military challenge (especially China, but also Japan) to its Asia hegemony while seeking to expand the power of American commercial interests in the region, even as it tries to keep Asian elites happy enough with the status quo to prevent their rebellion against it.

Neoliberalism relies mainly on financial mechanisms and banks and use brute force only as a secondary weapon for subduing people and minor countries (you can get much farther with a kind neoliberal word and cruise missiles, then with just kind neoliberal word alone). In time, it generally coincides with computer and Internet revolution, which made globalization of labor via outsourcing of production and services to poor countries much more attractive.

We can probably distinguish two forms of neoliberalism, one within G7 countries which are the center of neoliberal ideology and where while squeezing middle class it operates with "velvet gloves", and a more brutal practice outside G7 (in vassal countries with local elites as fifth column of globalization):

Some authors define neoliberalism differently. For example, Robert McChesney, defines neoliberalism as an economic paradigm that leaves a small number of private parties in control and able to maximize their profit at the expense of the other smaller players and the rest of population. He notes that unlike in classic corporatism, which relies on mass mobilization, neoliberalism relies on the opposite trend: a distracted or apathetic or depoliticized public essentially "goes along" with this, using the dominance of consumerism as a Trojan horse of depolitization and the loss of community spirit. This practice proved to be as efficient as mass mobilization of classic corporatism and achieve the same purposes with less violence. It is commonly called Inverted Totalitarism.

David Harvey defines neoliberalism as attempt to undermine power and sovereignty of governments by transnational corporations and establish the regime in which the power of financial oligarchy (aka power of "free market") is dominant in the society.  This definition has a weak point as neoliberalism has distinct tendency to convert state in national security states, in which as we noted before two distinct modes co-exists: permissive for capital and repressive for labor and social programs.

There are also other definitions.  But all-in-all any viable definition need to underline the fact that neoliberalism is about the transnational economic elite taking larger share of resources, income and political power in the society away from middle class. So it always means blatant enrichment of top 1% at the expense of other 99%.  

In this respect neoliberalism is based on a different strategies of capital accumulation based on the rise of transnational capital. The integration (or re-integration as is case with the USSR) of most countries in global production and financial system is based of forming a narrow strata of comprador elite (aka fifth column). Transnational fraction of local elites in competition with nationally-oriented fractions vies for and in many countries won the state power (that's what color revolutions were about). They utilized this acquired power to restructure national economy in the interest of transnational corporation and merge them into the new global manufacturing and finance system with the center at the USA. 

In a way a new non-state capitalist system emerged by breakdown of First World Keynesian capitalism (welfare states) and Third World "developmentalist" capitalism by abolishing two key features: state intervention on the level of medium and large capital (and, especially, international capital), and redistribution of wealth mechanisms.

Globalization became a new efficient strategy of capital accumulation as it allowed to shake off compromises and concessions that has been imposed by middle class with upper strata or industrial workers on national governments of G7 countries in the preceding epoch. With the demolishing of gold standard in 1973 financial capital acquired unprecedented mobility and became able to operate across the borders in a new ways, which allows to eliminate the power of trade unions and state intervention, altering the balance of power in favor of international corporations.  Emerging transnational elites instituted polices of deregulation, "supply-side" economics and regressive taxation creating new incentives for capital. Labor force was de-unionized and pushed into deregulated conditions with elimination of full time positions and adoption of "flexible labor" schemes. Via neoliberalism the world has became just a unified playing table for global corporations and states that support them. Material and political obstacles were removed as all  states which undergone neoliberal revolutions shifted from post-WWII Keysian social contract to serving transnational capital and transnational elites.

In a way it is the revolt of the elite, instead of revolt of proletariat which Marxists expected.  And it led to forming powerful Transnational Elite International (with Congresses in Basel) instead of Communist International (with congresses in Moscow).  Marx probably is rolling in his grave seeing such turn of events and such wicked mutation of his political theories.

Neoliberalism is also an example of emergence of ideologies not from their persuasive power or inner logic, but from the private interests of the ruling elite. As it borrowed a lot of ideas from Trotskyism, it can be called Trotskyism for rich (so much for valiant efforts of Senator McCartney  to fight Trotskyism in the USA :-). Political pressure and money created the situation in which intellectually bankrupt ideas could prevail much like Catholicism prevailed during Dark Ages in Europe. 

Neoliberalism also signifies a new historical period in the development of capitalism, the period of dominance of "monopoly-finance capital," and associated "Stagnation-Financialization trap" (SF trap) that drives processes of financial expansion in the economy from one bubble to another due to desperate attempts to stave off the tendency for stagnation of the "real economy" under the neoliberal regime.

While ideological postulates behind neoliberalism (Washington consensus) were discredited after financial crisis of 2008, it now persists in "zombie stage" as there is no viable alternatives and because  the ability of transnational elite to find and fund a sufficient part of national elite (compradors) proved to be overwhelming for most states. And it is a quite powerful zombie which still is able to attack and suck blood from other countries which was recently demonstrated in Libya and Ukraine (Maydan).

Since 2007 some Latin American countries got governments that openly oppose neoliberalism. Direct military invasion against them is now more difficult as the threat of communism (which justified such invasions in the past) is off the map.  But we can expect attempts to stage color revolutions or classic Coup d'état to reverse those events. One such color revolution (White revolution in Russia in 2011-2012) recently failed. Another (Maidan in Ukraine) is ongoing.

For G7 nations the neoliberalism in zombie stage might have staying power to survive until the end of the period of "abundant hydrocarbons" whether it means the next twenty or the next two hundred years. In any case they, and first of all the USA and GB,  bet their prosperity on the viability of neoliberal regime and they now can't abandon it without significant losses.

Still ideological crash of neoliberalism in 2008 has its effects and the rest of the world gradually becoming less and less enthusiastic about neoliberalism, although few dare to openly argue with the USA policies. And the USA remains the sole superpower (new Roman Empire). 

But it is intellectually bankrupt doctrine, no question about it. Not long ago, the cold war ended with the restoration and triumph of capitalism in the form of neoliberalism on a global scale, and then, less than three decades later, neoliberal form of capitalism is intellectually bankrupt. By all accounts, the financial catastrophe of 2008 is the worst since the Great Depression, which brought  not only a severe economic crisis, but a political crisis that somewhat reminds the crisis of Marxist ideology in the USSR in 1960th.

And it undermined the efforts to promote neoliberalism as the only viable ideological model for other countries, although it still holds on the strength of American bayonets, size of transnational elite interested in maintaining status quo, as well as technological superiority of the West. Moreover no viable alternative exists, although attempts of partial restoration of the power of national states and more balanced approach between interests of national population and international corporations are attempted in various forms in various countries (Putin's regime in Russia, Hungary, many Latin American countries) 

Ideology of neoliberalism as the replacement of both Marxism and state capitalism

Historically neoliberalism emerged as an ideology the elite brought to light as a band aid during the crisis of state capitalism in 70th. But it proved to be more relevant and long lasting then that. As Pope Francis noted that like Marxism in the past this is a new philosophy attractiveness of which stems for what he called "idolatry of money" and turning inequality into moral imperative (Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013):

No to the new idolatry of money

55. One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

Simultaneously neoliberalism proved to be the most capable ideology to fight and displace Marxism. It actually inherited quite a bit from Trotskyism (see below), so in a way it was "evil twin" of Marxism. And it was relevant and effective not because it was a "better ideology", but because Marxism as ideology self-destructed due to several major problems caused by actual experience with state socialism as implemented in USSR and other countries of Warsaw block:

Neoliberalism and cheap hydrocarbons

There essence of neoliberalism is free movement of goods and people by global corporations  without any respect for national borders. And that is the source of increasing efficiency and dropping prices on many categories of good. An interesting question is how much the rise of neoliberalism was forced on humanely by the short historical period of availability of cheap hydrocarbons. Energy is important driver of globalization. Even the previous stage of globalization: the creation of colonial empires by Great Britain, France, Germany and Spain was at least partially based of steam power and coal.

Now it is an oil that serves the same role. The latter allow cheap global transportation, mass air travel  and powers huge US military machine which has no equals in the globe and serves as a guarantor of security of neoliberal regimes all over the globe.  Out of three major components of globalization --  the US as a sole superpower, cheap international shipping and air travel, and (to lesser extent) global telecommunication networks all three depends of cheap energy. BTW Google is not running of holy spirit; it is one of the top consumers of electrical energy in the USA.

While it is unclear to what extent neoliberalism will be affected by rising energy prices, it seems few things arouse more passions these days then "oil plato" (or how it is often, but incorrectly, called the oil peak) and how it affects the civilization and different countries. The key fact is that  EROEI (energy return on energy invested) of oil extraction is rising dramatically for the last two decades and it looks like this trend will continue.   The current world oil production has EROEI around 40 so you extract forty times as much of energy then you spend for extraction. 

New oil discoveries have EROEI around 10 (with bitumen oil sand EROEI  in single digits). And EROEI  also the source of the current disconnect between the purchasing power of money and the resources available to back that up. Pessimists say that a further increase in fuel prices is inevitable, and sooner or later the world will face a kind of "offshoring apocalypse". That's unlikely as important part of neoliberal regime is the new level of global communications and this part will be by-and-large intact. But transportation costs will affect the globalization in a negative way without any dount. For example with EROEI in single digits mass air travel will come to a screeching halt.

At the same time the end of cheap hydrocarbons era might marks the start of fuel wars, which, as such, will be a drastic reversal of globalization, playing the same role as WWI. When each state will try to pull the energy blanket, globalization trends will definitely suffer.

Rise of cost of energy makes both offshoring of manufacturing and outsourcing of service jobs to other countries less viable. A growing number of American companies are moving their manufacturing back to the United States. This emerging "re-shoring movement" has to be kept in proportion. Most of the multinationals involved are bringing back only some tiny fraction of their production destined for the American market. Much of what they had moved over the past few decades remains overseas. Moreover some firms like Caterpillar decided to move research and development facilities in China as split between manufacturing and research badly affects both research and the quality of final products.

But re-shoring tendencies can't be easily dismissed. They are driven by powerful forces which might only get stronger with time.  Boston Consulting Group (BCG) in April 2012, notes that 37% of those with annual sales above $1 billion are planning shifting production facilities from China to America. Of the very biggest firms, with sales above $10 billion, the number reached 48%. Among reason sites are rising Chinese labor costs and transportation costs. Many shipping companies slowed the speed of their ship (increasing the delivery time) in order to fight rising oil prices. As Economist, the flagship of neoliberal establishment thought in GB, noted (Reshoring manufacturing):

 The Massachusetts Institute of Technology looked at 108 American manufacturing firms with multinational operations last summer. It found that 14% of them had firm plans to bring some manufacturing back to America and one-third were actively considering such a move. A study last year by the Hackett Group, a Florida-based firm that advises companies on offshoring and outsourcing, produced similar results. It expects the outflow of manufacturing from high- to low-cost countries to slow over the next two years and the reshoring to double over the previous two years. “The offshoring of manufacturing is now rapidly moving towards equilibrium [zero net offshoring],” says Michel Janssen, the firm’s head of research.

By contrast, pay and benefits for the average Chinese factory worker rose by 10% a year between 2000 and 2005 and speeded up to 19% a year between 2005 and 2010, according to BCG. The Chinese government has set a target for annual increases in the minimum wage of 13% until 2015. Strikes are becoming more frequent, and when they happen, says one executive, the government often tells the plant manager to meet workers’ demands immediately. Following labour unrest, wages at some factories have gone up steeply. Honda, a Japanese carmaker, gave its Chinese workers a 47% pay rise after strikes in 2010. Foxconn Technology Group, a subsidiary of Hon Hai Precision Industries, a Taiwanese firm that does a lot of manufacturing for Apple and other big technology firms, doubled pay at its factory complex in Shenzhen after a series of suicides. Its labour troubles are still continuing.

...As soon as 2015, says Hal Sirkin, a consultant at the firm, it will cost about the same to manufacture goods for the American market in certain parts of America as in China in many industries, including computers and electronics, machinery, appliances, electrical equipment and furniture. That calculation takes into account a wide variety of direct costs, including labour, property and transport, as well as indirect ones such as supply-chain risk.

...“Pay for senior management in several emerging markets, such as China, Turkey and Brazil, now either matches or exceeds pay in America and Europe”

So while production and service outsourcing overseas or offshoring can still provide substantial cost savings for many companies, the question arise whether those cost savings are sustainable (Can outsourcing overseas provide sustainable cost savings).

Neoliberalism as a strategy of class struggle for transnational elite

Bushonomics is the continuous consolidation of money
and power into higher, tighter and righter hands

George Bush Sr, November 1992

Neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a strategy of "class struggle" (in Marxist terms) designed to redistribute wealth upward toward an increasingly narrow fraction of population (top 1%). The essence of neoliberalism is well reflected in the listed above George Bush Sr. quote "...the continuous consolidation of money and power into higher, tighter and righter hands".  Kind of revolt of the elite against common people, instead of revolt of proletarians against capitalists.  The attempt to redistribute the wealth of nations in favor of the top 1% and especially top 0.01%.

From the very beginning neoliberalism was a project to restore of class power of US corporations owners and first of all financial oligarchy ("financial revanchism" was the major driver of neoliberalism), which was undermined by New Deal.

So it is not surprising the during neoliberal revolution (or more correctly counter-revolution) in the USA  all redistributive postwar state capitalism policies that hurt financial elite came under attack.   With the demise of the USSR, the necessity of such policies to ensure social peace disappeared and the elite (and first of all financial elite) got a carte blanch for decimating middle class, and  redistributing the wealth up. Golden days of the US middle class not ended not exactly with the election of Reagan (remember his decimation of air traffic controller union) but with the election of Mr. Gorbachov. And they became a distant past under Clinton who sold Democratic Party to financial oligarchy and only become worse and worse under Bush II and Obama (who, social policy-wise, is just well-tanned Bush III). And on international arena brutal enforcement of Washington consensus became a norm. So Ukraine got under the same neoliberal steamroller.

Neoliberalism promises of "better future" for population outside top 1% were by and large political scam. In best case no more then top 20% of population can benefit from neoliberal policies. And that's in best case, which is applicable probably only to G7 countries. And the other bottom 80% experience a sharp decline of their standard of living. For "peripheral countries like Ukraine, Iraq, Chili, etc) instead of 80:20 the proportion in probably 90:10. 

All-in-all neoliberalism as a social system always lower the average standard of life of people in countries which adopted it, never rise it. That happened even in countries which historically has very low standard of living of middle class such as former USSR republics and Eastern Europe. At the same time it tremendously improved standard of living of upper 10% (20% in case of G7 countries) of population, and, especially, the top 1% - the new aristocracy.  And that top 10% has enough political power  to keep and consolidate neoliberal counter-revolution and with help of G7 countries to spread it around the globe. 

Transnational elite "International" proved be both more viable and durable then "proletarian International" envisioned by Marx and his followers. That does not mean that elites from other countries are treated as equal partners. No they are treated as "villagers that came to the city" but still they are given a chance to "merge" with local "aristocracy of wealth".  

The USA is the center on neoliberal order, its capital. Neoliberalism is supported by projection of the USA military power and the use of US capital. It forces global economic integration on US terms at whatever costs to others. But with those reservations it is as close to "oligarchy of all countries unite" as one can get.

In a way Marx probably is turning in his grave, as his ideas were hijacked and implemented by the part of population he considered to be doomed. In other words  Marxist idea of "class struggle" was turned to its head and converted into pervert  "revolt of the elite" (and first of all financial oligarchy), unsatisfied with the piece of the pie it is getting from the society and stimulated by technological revolution (emergence of Internet and cheap mass produced computers).  Neoliberal philosophy can be distilled into a single phrase: "Humanity begins at the rank of CEO" or as George Bush Sr, aptly said November 1992 it is "...the continuous consolidation of money and power into higher, tighter and righter hands." 

Some authors like Colin Cronch in The Strange Non-death of Neo-liberalism consider it to be a new ruling class alliance. His basic idea is that at least in USA neoliberalism represents the shift of loyalty of the upper management class: following the Great Depression of 1930 a political alliance emerged between the upper management class and "salaried middle class" (which includes the top layer of blue and white collar workers, including quasi-management, clerical workers, and professionals, and which cannot be reduced to the traditional "working-class"). A severe profitability crisis of the 1970s with its inflationary excesses  caused a fracture between upper management and "salaried middle class". From that point upper management allied with owners and financial oligarchy forming a new ruling class.

This neoliberal transformation of the society with the redistribution of wealth to the top 1% (or, more correctly, the top  0.01%) "have and have more" (as unforgettable G.W.Bush quipped) was completed in the USA in late 90th. The rest of population (aka moochers) and organization such as trade unions were undermined and decimated by financial oligarchy with near complete indifference to what happens with the most unprotected lower quintile of the population.

Like Russia in the past under Bolsheviks the USA became occupied country. And much like Bolsheviks in the past, the neoliberal reformers don't care about failures and contradictions of the economic system which drive the majority of country population into abject poverty. No they care about that their action such a blowing out financial bubble like in the USA in 2008 which definitely could move national economics toward the disaster ("off the cliff").  They have somewhat childish, simplistic "greed is good" mentality: they just want to have their (as large as possible) piece of economic pie fast and everything else be damned.

To that extent they have mentality of criminals and neoliberalism is a highly criminogenic creed, but it tried to conceal the racket and plunder it inflicts of the societies under dense smoke screen of "free market" Newspeak.  That means that outside the USA and G7 countries which are the major beneficiaries of this "hyper globalization of élites" neoliberalism is an unstable social order, as plunder can't continue indefinitely. and as natural resources become more scarce, the fight for them might give advantages to "Asian" autocratic flavor of state capitalism.

Problems inherent in neoliberal model were also by-and-large masked for two decades by a huge shot in arms Neoliberalism got with the dissolution of the USSR. This particular event (which was just a decision of part on nomenklatura including KGB to join neoliberal counter-revolution) put on the dinner table of neoliberal elites half a billion people and quite a bit of resources to plunder. This gift of a century from Bolsheviks slowed down the process of plunder of G7 own population, especially in the USA. It is interesting to note that, like Bolsheviks in the past, neoliberal elite behaves more like occupiers of the country, then as a traditional, "native" aristocracy; this phenomenon was especially pronounced in Russia (privatization under Yeltsin regime) and other xUSSR countries.   And in xUUSR space new neoliberal lords were almost as brutal as German occupiers during WWII.

So later neoliberalism in came under pressure even in G7 countries, including the USA, as slogan on a corner Wall Street cafe "Jump Suckers !" demonstrated so aptly in 2008 and later in Occupy Wall Street Movement (which probably should be named "get rid of Wall Street occupation of the country"). The latter was quickly undermined, dissipated by the emerging National Security State. Total surveillance makes opposition movements practically impossible. 

Neoliberalism was also partially reversed in Chile (the first country on which neoliberal counter-revolution was launched), Russia, and several other countries. It was never fully adopted in northern Europe or Asian countries. The model of autocratic state capitalism used in Asian countries actually serves as the only viable and competing with the neoliberalism modern social organization. Move of manufacturing centers to China and other East Asian countries also moves political influence toward this region, away from the USA and G7.   Recently China managed slightly push back western global brands in electronics (especially in Eastern European markets), producing competitive smartphones (Huawey, Fly, Lenovo), tablets (Lenovo), PCs and networking equipment such as routers and switches under this own brand names. 

Neoliberalism was enforced under dense smoke screen of propaganda. One can see an example of this smoke screen in Thatcher's dictum of neoliberalism: "There is no such thing as society. There are only individuals and families."  In foreign policy neoliberalism behaves like brutal imperialism (aka neocolonialism) which subdue countries instead of brute force either by debt slavery or combination of debt slavery with direct military intervention.  In neoliberal view the world consist of four concentric cycles which in order of diminishing importance are

  1. Finance
  2. Economics
  3. Society
  4. Planet

In other words, finance and transnational financial institutions are considered to be the most important institutions of the civilization, the institutions which should govern all other spheres of life. It is clear that such one-dimensional view is wrong, but neoliberals like communists before them have a keen sense of mission and after they managed to accomplish its "long march through the institutions" (during which they gradually hijacked them in what is called quite coup) they changed the way Americans think (Using the "Four M" strategy -- money, media, marketing, and management)

A well-oiled machine of foundations, lobbies, think-tanks, economic departments of major universities, publications, political cadres, lawyers and activist organizations slowly and strategically took over nation after nation. A broad alliance of neo-liberals, neo-conservatives and the far right (including neo-fascists and religious right) successfully manufactured a new common sense, assaulted Enlightenment values and formed a new elite, the top layer of society, where this "greed is good" culture is created and legitimized.

As Crouch says in his book The Strange Non-death of Neo-liberalism:

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. (Page 125)

... ... ...

...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. (Page 145)

"Greed is good" as the key ethical principle of neoliberalism

Its key ethical principle of neoliberalism (only for the elite, never for prols or middle class) is "Greed is good" (as Gordon Gekko the personage of Wall Street (1987 film) quipped in the film).  This strata of people (which starts on the level of CEO of major corporation) who preach those principle is assumed to be Übermensch. People below are considered to be "under humans", or "inferior humans" (Untermenschen)

According to Wikipedia, the inspiration for the "Greed is good" speech seems to have come from two sources. The first part, where Gekko complains that the company's management owns less than three percent of its stock, and that it has too many vice presidents, is taken from similar speeches and comments made by Carl Icahn about companies he was trying to take over.  The defense of greed is a paraphrase of the May 18, 1986, commencement address at the UC Berkeley's School of Business Administration, delivered by arbitrageur Ivan Boesky (who himself was later convicted of insider-trading charges), in which he said, "Greed is all right, by the way. I want you to know that. I think greed is healthy. You can be greedy and still feel good about yourself".

As Pope Francis notes glorification of greed is socially destructive. While in all previous "classic" religions (including such social religion as  Marxism) excessive greed was morally condemned, neoliberalism employed a slick trick of adopting "reverse", Nietzschean Ubermench morality. Here is a relevant quote from his Evangelii Gaudium, Apostolic Exhortation of Pope Francis, 2013

One cause of this situation is found in our relationship with money, since we calmly accept its dominion over ourselves and our societies. The current financial crisis can make us overlook the fact that it originated in a profound human crisis: the denial of the primacy of the human person! We have created new idols. The worship of the ancient golden calf (cf. Ex 32:1-35) has returned in a new and ruthless guise in the idolatry of money and the dictatorship of an impersonal economy lacking a truly human purpose. The worldwide crisis affecting finance and the economy lays bare their imbalances and, above all, their lack of real concern for human beings; man is reduced to one of his needs alone: consumption.

56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.

No to a financial system which rules rather than serves

57. Behind this attitude lurks a rejection of ethics and a rejection of God. Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person. In effect, ethics leads to a God who calls for a committed response which is outside of the categories of the marketplace. When these latter are absolutized, God can only be seen as uncontrollable, unmanageable, even dangerous, since he calls human beings to their full realization and to freedom from all forms of enslavement. Ethics – a non-ideological ethics – would make it possible to bring about balance and a more humane social order. With this in mind, I encourage financial experts and political leaders to ponder the words of one of the sages of antiquity: “Not to share one’s wealth with the poor is to steal from them and to take away their livelihood. It is not our own goods which we hold, but theirs”.[55]

Like Bolshevism and National Socialism before neoliberalism needs a huge propaganda machine comparable with the propaganda machines of Bolsheviks and the Third Reich.  Neoliberal ethics is pushed through the throat by hundreds of radio stations, cable TV channels (with Fox  as the most prominent  stooge of neoliberal propaganda), magazines and newspapers (Wall Street Journal, NYT, etc). This ethics is presented as a specific philosophy of Randism which is an ultimate expression of neoliberal ethics. 

Here analogy with Bolshevism became even more stark. When you think about the current Republican Party, you can distinguish a small circle of ideologues consisting by-and-large of Ayn Rand followers. In a way it reminds the original Ann Rand circle called "collective", which like Bolshevik's core consisted of Jewish intellectuals, such as Greenspan. And that is not a positive characteristic. Murray Rothbard, a member of Rand's circle for several months in 1958, described the Randroids as “posturing, pretentious, humorless, robotic, nasty, simple-minded....dazzlingly ignorant people.” (Sex, Ayn Rand and the Republican Party)

Like in Marxism the view of other classes (in this case lower classes) by this new alliance is hostile. They are parasites, moochers, etc (exactly like capitalist class in Marxism), all feeding from the state, which in turn deprives "masters of the university" the spoils of their ingenious activity.  Neoliberalism professes open and acute hostility to "lower classes", as if  modeled on Bolsheviks hatred of "capitalists". This hate (like hate in general) paradoxically gives neoliberalism a driving force: as Irish novelist Elizabeth Bowen quipped: "Some people are molded by their admirations, others by their hostilities."  

And this Ubermench feature of neoliberalism attracts young people in the same way they were attracted to national socialism with its hate of racially inferior nations.  In a way neoliberalism converted the concept of "Arian race" into the concept of morally and intellectually superior transnational elite.

Neoliberalism and Trotskyism

 "Neoliberalism was a stunning utopia of economic determinism,
one even more ambitious than that of Marx."
-- Logos

The simplest way to understand the power of neoliberalism as an ideology, is to view it as Trotskyism refashioned for elite. Instead of "proletarians of all countries unite" we have slogan "elites of all countries unite".  Instead of permanent revolution we have permanent democratization.

Among the ideas that neoliberalism borrowed from Trotskyism via renegades such as James Burnham we can mention the following 14 traits:

  1. Like Trotskyism Neo-Liberalism has a totalitarian vision for a world-encompassing monolithic state governed by an ideologically charged "avangarde".  One single state (Soviet Russia) in case of Trotskyism, and the USA in case of neoliberalism is assigned the place of "holy country" and the leader of this country has special privileges not unlike Rome Pope. 
  2. The idea (and reality) of "dictatorship of the financial oligarchy" replaces the concept of "dictatorship of proletariat". This dictatorship is often disguises as rule of creative class.  
  3. The  pseudoscientific ‘free-market’ theory which replaces Marxist political economy and provides a pseudo-scientific justification for the greed and poverty endemic to the system, and the main beneficiaries are the global mega-corporations and major western powers (G7).
  4. Like Marxism in general neoliberalism on the one hand this reduces individuals to statistics contained within aggregate economic performance, on the other like was in the USSR, it places the control of the economy in comparatively few hands; and might be neoliberalism's Achilles heel. Degeneration of the elite can be fatal for a society.
  5. The idea of Permanent revolution to bring to power the hegemonic class.   In neoliberalism this takes that form of "export of democracy" as the method of achieving and maintaining world dominance of globalist elite (which in its role of hegemonic class replaces proletariat used in Trotskyism):
  6. The role of propaganda machine and journalists, writers, etc as the solders of the party that should advance its interests.  Compete, blatant disregard of truth to the extent that Pravda journalists can be viewed as paragons of objectivity (Fox news)
  7. The idea of the party as an vanguard of the hegemonic class and representing its interests. Open desire to dismantle and privatize all the mechanisms of redistribution of income, including (in the USA) Social Security and Medicare.
  8. Creating and maintaining the illusion of "immanent threat" from powerful enemies for brainwashing  the population (National Security State  instead of "Dictatorship of proletariat").
  9. The idea of revolutionary situation for overthrow of "unfriendly" regimes  (and artificial creation of it via color revolution methods); role of students in such a situation.  Compradors instead of communist parties as the fifth column inside the societies.
  10. Like Trotskyites, Neoliberals are inherently hostile to competing non-liberal societies - which they see not simply as different, but as wrong. That include nationalistic regimes (Hussein, Kaddafi) as well as theocracies (with a notable exception of  Saudis)
  11. The ideas of truth as "a class truth"; neoliberals reject the idea that there are any external moral values. They feel that these should be result of 'market of opinions' and the truth is the one that market favors.
  12. Use of academic science and "think tanks" for brainwashing of the population. 
  13. Economic fetishism. Neoliberals see the market as a semi-sacred element of human civilization. They want to impose global market that favors transnational corporations.  Everything should be profitable and run as a market.  Including labor market. The idea of employability is characteristically neoliberal. It means that neoliberals see it as a moral duty of human beings, to arrange their lives to maximize their value on the labor market. Paying for plastic surgery to improve employability (almost entirely by women) is a typical neoliberal phenomenon -- one that  would surprise Adam Smith.
  14. Reliance on international organizations to bully countries into submission (remember Communist International and its network of spies and Communist Parties all over the world). The global financial institutions are indeed a bastion of neoliberal ideology, and they can bully some poor countries into adopting neoliberal policies. The global financial institutions are an instrument of US policy - and if there is a quasi-imperial power, it is the United States.
  15. Capitalist International. Neoliberalism advocates the globalized unity of elites ( hierarchy to be exact under benevolent guidance of the US elite).  At the same time conditions of population of countries with "globalized" elite go downhill and internal social protection mechanisms are dismantled.  That creates resistance to globalism and neoliberalism.
  16. Like Marxism, neoliberalism tries to weaken, if not abolish, nation states replacing state sovereignty with international organizations dominance (for weaker countries typically using debt slavery to IMF and World bank).  Neoliberalism reflect the nature of global capitalism as a hegemonic transnational phenomenon. By deemphasizing  the role of the nation-state in the global economy and increasing the significance of transnational production and the rise of a transnational elite and the transnational corporations neoliberalism realizes dreams of Marx in a very perverted form.
  17. Finally, neoliberalism like Marxism in the past has become strongly associated with specific cultures (the US culture) and a specific language (English). But like Marxism, as an ideology Neoliberalism as  is not tied to any culture or language. Theoretically any global language would suit, and it can be Esperanto. But in reality the English language, neoliberal policies, and pro-American foreign policy is a "package deal" for neoliberals and its fifth column supporters outside G7; this was especially true in Central and Eastern Europe. Kind of Neoliberal International (they call it "Washington Obcom" in Eastern Europe). That does not exclude corporatism-style jingoism, chauvinism, flag-waving and foreigner-bashing in the USA and other G7 countries. Tony Blair is probably the best example:
    Don't tell me that a country with our history and heritage, that today boasts six of the top ten businesses in the whole of Europe, with London the top business city in Europe, that is a world leader in technology and communication and the businesses of the future, that under us has overtaken France and Italy to become the fourth largest economy in the world, that has the language of the new economy, more brilliant artists, actors and directors than any comparable country in the world, some of the best scientists and inventors in the world, the best armed forces in the world, the best teachers and doctors and nurses, the best people any nation could wish for.

    Don't tell me with all that going for us that we do not have the spirit to meet all the challenges before us.

    Blair conference speech, 26 September 2000

This "capitalists counteroffensive" or "revolt of the elite"  was pioneered in Britain, where Margaret Thatcher was elected leader of the Tory Party in 1975 and put into real shape by Ronald Reagan in 1981-1989 (Reaganomics). Margaret Thatcher victory was the first election of neoliberal ideologue (Pinochet came to power via supported by the USA military coupe de tat).  Both Thatcher and Reagan mounted a full-scale counterattack against the (already weakened and fossilized) unions. In GB the miners were the most important target. In USA traffic controllers. In both cases they managed to broke the back of trade unions. Since 1985 union membership in the USA has halved.

Privatizing nationalized industries and public services fragments large bargaining units formed of well organized public-sector workers, creating conditions in which wages can be driven down in the competition for franchises and contracts. This most important side effect of privatization was dramatic redistribution of wealth to the top layer of financial and managerial elite (corporate rich).

Neoliberalism gradually gained strength since probably late 50th with free-market theorists like Friedrich Hayek and Milton Friedman as influential ideologues. Ann Rand also made an important contribution with her "greed is good" philosophy of positivism. Still many economists and policy-makers favored a ‘mixed economy’ with high levels of state intervention and public spending. That changed in the 1970s when the state capitalism run into rocks. In a way rise of Neoliberalism was the elite response to the Long Recession of 1973-1992: they launched a class war of the global rich against the rest. Shrinking markets dictated the necessity of cutting costs by sacking workers and driving down wages. So the key program was to reverse the gains made by the US lower and middle class since 1945 and it needed an ideological justification. Neoliberalism neatly fitted the bill. With outsourcing, the global ‘race to the bottom’ became a permanent feature of a new economic order.

At 1980th it became clear that the age of national economies and ‘autarkic’ (self-contained) blocs like the USSR block ended as they will never be able to overcome the technological and standard of living gap with the major Western economies. This inability to match the level of standard of living of western countries doomed communist ideology, as it has in the center the thesis that as a superior economic system it should match and exceed the economic level achieved by capitalist countries. Collapse of the USSR in 1991 (in which KGB elite played the role of Trojan horse of the West) was a real triumph of neoliberalism and signified a beginning of a new age in which the global economy was dominated by international banks and multinational corporations operating with little or sometimes completely outside the control of nation-states. 

The rise of neoliberalism can be measured by the rise of the financial and industrial mega-corporations. For example, US direct investment overseas rose from $11 billion in 1950 to $133 billion in 1976. The long-term borrowing of US corporations increased from 87% of their share value in 1955 to 181% in 1970. The foreign currency operations of West European banks, to take another example, increased from $25 billion in 1968 to $200 billion in 1974. The combined debt of the 74 less-developed countries jumped from $39 billion in 1965 to $119 billion in 1974. These quantitative changes during the "Great Boom" reached a tipping point in the 1970s. Global corporations by then had come to overshadow the nation-states. The effect was to impose a relentless pressure on national elites to increase the exploitation of ‘their own’ working class. High wages became a facto that deters new investment and labor arbitrage jumped in full swing. Taxes on business to pay for public services or welfare payments became undesirable. As well as laws designed to make workplaces safe, limit working hours, or guarantee maternity leave. While from purely theoretic perspective the ‘free-market’ theory espoused by neoliberal academics, journalists, politicians, bankers, and ‘entrepreneurs’ is compete pseudoscientific Lysenkoism-style doctrine, it became very popular, dominant ideology of the last decade of XX century. It provides a pseudo-scientific justification for the greed, poverty, as well as economic crisis endemic to the system. It also justified high level if inequality of the political and business elite an a normal state of human society. In this sense, neoliberalism became an official ideology of the modern ruling elite.

Stages of development of neoliberalism

Neoliberalism was not an accident, it was a development that appeared slightly different forms in many countries, including such diverse as the USA (Reagan), GB (Thatcher), China (Deng Xiaoping was a neoliberal reformer), Chile(Pinochet), Russia (Yeltsin gang), and many other countries. 

During its history which starts around 70th (with the first major success the Pinochet's coup de etat in Chile, which was supported by the USA), neoliberalism undergone several  basic stages of development:

Hegemony of the USA and its allies

The USA was and probably will remain the center of neoliberalism and firmly established as  most important  and the most powerful promoter of the doctrine (in some case, like with Serbia, Iraq and Libya, on the tips of bayonets). 

After the dissolution of the USSR the US elite felt that "everything is permitted" and essentially started to pursue global Roman style imperial policy.  The USA military forces are active over most of the globe: about 226 countries have US military troops, 63 of which host American bases, while only 46 countries in the world have no US military presence. This is a projection of military power that makes the Roman, British, and Soviet empires pale in comparison.  In his 1919 essay, “The Sociology of Imperialisms,” Joseph Schumpeter wrote of Rome during its years of greatest expansion.

There was no corner of the known world where some interest was not alleged to be in danger or under actual attack. If the interests were not Roman, they were those of Rome’s allies; and if Rome had no allies, then allies would be invented. When it was utterly impossible to contrive such an interest—why, then it was the national honor that had been insulted.

The fight was always invested with an aura of legality. Rome was always being attacked by evil-minded neighbors, always fighting for a breathing-space. The whole world was pervaded by a host of enemies, and it was manifestly Rome’s duty to guard against their indubitably aggressive designs.*

As G. John Ikenberry, professor of geopolitics at Georgetown University noted in Foreign Affairs:

The new grand strategy [initiated by the Bush administration]…. begins with a fundamental commitment to maintaining a unipolar world in which the United States has no peer competitor. No coalition of great powers without the United States will be allowed to achieve hegemony. Bush made this point the centerpiece of American security policy in his West Point commencement address in June: “America has, and intends to keep, military strengths beyond challenges—thereby making the destabilizing arms races of other eras pointless, and limiting rivalries to trade and other pursuits of peace.”

…The United States grew faster than the other major states during the decade [of the 1990s], it reduced military spending more slowly, and it dominated investment in the technological advancement of its forces. Today, however, the new goal is to make these advantages permanent—a fait accompli that will prompt other states to not even try to catch up. Some thinkers have described the strategy as “breakout,” in which the United States moves so quickly to develop technological advantages (in robotics, lasers, satellites, precision munitions, etc.) that no state or coalition could ever challenge it as global leader, protector and enforcer (“America’s Imperial Ambition,” Foreign Affairs, October 2002).

Perhaps one of extreme expressions of this neo-Roman imperial policy became that book by The Grand Chessboard: American Primacy And Its Geostrategic Imperatives by Zbigniew Brzezinski. This is how Brzezinski views the (supposedly sovereign) nations of Central Asia (sited from Amazon review by "A Customer" Jan 3, 2002  as pawns in a greater game for geopolitical domination: 

The quote "... the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together." (The Grand Chessboard p.40) is probably the most revealing.  Just ponder the meaning of these statements in a post-9-11 world:

To most Americans the people of the world and other nations are just that -- people, just like us, with a right to self-determination. To Brzezinski, they are merely pawns on a chessboard.  At the same time, despite the fact that the analogy are not perfect, Rome fell, Napoleon fell, Hitler fell, USSR fell. Countries with too aggressive foreign policy  ultimately self-destruct, because they over-extend their own countries resources to the point when people wellbeing drops to the levels of some colonies. The USA have over million people with the security clearance. So in a way it is becoming a copy-cat of the USSR.  And while the US military is busy fighting for oil interests all around the world, those wars were launched by borrowing money and it's unclear who will pay the bills.

Neoliberalism beginning as ideology start was pretty modest. It was never considered a "right" ideology, ideology for which people are ready to fight and die. It was just an "ideology of convenience", an eclectic mix  of mutually incompatible and incoherent mosaic of various ideologies (including some ideas of Trotskyism and national socialism) that served as useful tool to counter communist ideology. This is the tress of Friedman pretty weak opus "Capitalism and Freedom" -- which can be considered to be close analog of Communist Manifesto for neoliberalism. It also was useful for fighting some Keynesian excesses.  Only later it become favorite ideology of financial oligarchy.

So in fight against "Godless communism" which does not respect private property and used "all-powerful" state, it idealized private property ownership, the role of "free" (as in free shooting) market and stressed the necessity to control the size of the government. As a tools to fight communist ideology those were reasonably effective tools. But at some point this deeply flawed, but useful for the specific purpose framework went out of control and became the cult of the deified markets and explicitly stated the necessary of diminishing the role of the state to minimum to ensure the high level of inequality the new neoliberal elite strived for (note not optimizing for a given  historical conditions and technology available, but unconditionally diminishing to the point of elimination). Reagan famous phase "Government is not a solution to our problem, government is the problem."  is a perfect example of how to "Throw out the baby with the bath water".  But the meaning is more sinister: it meant "throw out of the water middle class".

That happened when financial oligarchy understood that a tool created for fighting communism is perfectly suitable for fighting elements of "New Deal".  And it proved to be pretty effective in dismantling of set of regulations of financial sector that were the cornerstone of "New Deal". That was a very smooth ride "deregulatory" ride until 2008.  But after 2008 the USA (citadel of neoliberalism) faces the set of problems that at least on the surface look similar to the problem that USSR faced before its disintegration, although the USA still have much more favorable conditions overall and disintegration is not among the current threats. Among them:

Still there are important difference with Marxism: despite extremely  flawed to the point of being anti-scientific neoliberal ideology is still supported by higher standard of living of population in selected Western countries (G7).  If also can rely on five important factors:

  1. Military dominance of the USA and NATO. There are very few countries in the globe without explicit or implicit USA military presence.
  2. Financial dominance of USA and its allies. The role of dollar as world currency and the role of USA controlled global financial institutions such as World Bank and IMF
  3. Technological dominance of USA and G7. Continuing brain drain from "Third world" and xUSSR countries to G7 countries.
  4. Cultural dominance of the USA (although this is gradually diminishing as after 2008 countries started of assert their cultural independence more vigorously).
  5. Ideological dominance, neoliberalism as yet another major civic religion

Military dominance of USA and NATO

The American society and the U.S. armaments industry today are different then it was when Dwight Eisenhower in his farewell speech (Eisenhower's Farewell Address to the Nation) famously warned Americans to beware the "military-industrial complex." See also The Farewell Address 50 Years Later.  The major opponent, the USSR left the world scene, being defeated in the cold war. That means that currently the USA enjoy world military dominance that reminds the dominance of Roman Empire.

The USA now is the world's greatest producer and exporter of arms on the planet. It spends more on armed forces than all other nations combined -- while going deeply into debt to do so.

The USA also stations over 500,000 troops, spies, contractors, dependents, etc. on more than 737 bases around the world in 130 countries (even this is not a complete count) at a cost of near 100 billions a year. The 2008 Pentagon inventory includes 190,000 troops in 46 nations and territories, and 865 facilities in more than 40 countries and overseas U.S. territories. In just Japan, the USA have 99,295 people who are either members of US forces or are closely connected to US. The only purpose is to provide control over as many nations as possible.

Funny but among other thing the Pentagon also maintain 234 golf courses around the world, 70 Lear Jet airplanes for generals and admirals, and a ski resort in the Bavarian Alps.

Military dominance of the USA and NATO were demonstrated during Yugoslavia bombing and then invasion of Iraq. It's clear the Yugoslavia bombing would be out of question if the USSR existed. 

Neoliberalism and militarism

Under neoliberalism, markets are now fused with the logic of expansion and militarization is the most logical was of securing expansion, improving global positions, and the ordering of social relations in a way favorable to the transnational elite.

Under neoliberal regime the United States is not only obsessed with militarism, which is shaping foreign policy , but wars have become real extension of the politics, the force that penetrates almost every aspect of daily life. Support of wars became a perverted version of patriotism.

As Henry A. Giroux  noted in his interview to Truth-out (Violence is Deeply Rooted in American Culture), paradoxically in the country of "advanced democracy" schools and social services are increasingly modeled  after prisons. Four decades of neoliberal policies have given way to an economic Darwinism that promotes a politics of cruelty.

Police forces are militarized. Popular culture endlessly celebrating the spectacle of violence. The Darwinian logic of war and violence have become addictive, a socially constructed need. State violence has become an organizing principle of society that has become the key mediating force that now holds everyday life together. State violence is now amplified in the rise of the punishing state which works to support corporate interests and suppress all forms of dissent aimed at making corporate power accountable. Violence as a mode of discipline is now enacted in spheres that have traditionally been created to counter it. Airports, schools, public services, and a host of other public spheres are now defined through a militarized language of "fight with terrorism", the language of discipline, regulation, control, and order. Human relations and behaviors are dehumanized making it easier to legitimate a culture of cruelty and politics of disposability that are central organizing principles of casino capitalism. 

The national news became a  video game, a source of entertainment where a story gains prominence by virtue of the notion that if it bleeds it leads. Education has been turned into a quest for private satisfactions and is no longer viewed as a public good, thus cutting itself off from teaching students about public values, the public good and engaged citizenship. What has emerged in the United States is a civil and political order structured around the criminalization of social problems and everyday life. This governing-through-crime model produces a highly authoritarian and mechanistic approach to addressing social problems that often focuses on the poor and minorities, promotes highly repressive policies, and places emphasis on personal security, rather than considering the larger complex of social and structural forces that fuels violence in the first place.

The key reference on the topic is the  book The New American Militarism (2005) by Andrew Bacevich. Here is one Amazon review:

In his book The New American Militarism (2005), Andrew Bacevich desacralizes our idolatrous infatuation with military might, but in a way that avoids the partisan cant of both the left and the right that belies so much discourse today. Bacevich's personal experiences and professional expertise lend his book an air of authenticity that I found compelling. A veteran of Vietnam and subsequently a career officer, a graduate of West Point and later Princeton where he earned a PhD in history, director of Boston University's Center for International Relations, he describes himself as a cultural conservative who views mainstream liberalism with skepticism, but who also is a person whose "disenchantment with what passes for mainstream conservatism, embodied in the present Bush administration and its groupies, is just about absolute." Finally, he identifies himself as a "conservative Catholic." Idolizing militarism, Bacevich insists, is far more complex, broader and deeper than scape-goating either political party, accusing people of malicious intent or dishonorable motives, demonizing ideological fanatics as conspirators, or replacing a given administration. Not merely the state or the government, but society at large, is enthralled with all things military.

Our military idolatry, Bacevich believes, is now so comprehensive and beguiling that it "pervades our national consciousness and perverts our national policies.

" We have normalized war, romanticized military life that formally was deemed degrading and inhuman, measured our national greatness in terms of military superiority, and harbor naive, unlimited expectations about how waging war, long considered a tragic last resort that signaled failure, can further our national self-interests. Utilizing a "military metaphysic" to justify our misguided ambitions to recreate the world in our own image, with ideals that we imagine are universal, has taken about thirty years to emerge in its present form.

It is this marriage between utopians ends and military means that Bacevich wants to annul.

How have we come to idolize military might with such uncritical devotion? He likens it to pollution: "the perhaps unintended, but foreseeable by-product of prior choices and decisions made without taking fully into account the full range of costs likely to be incurred" (p. 206). In successive chapters he analyzes six elements of this toxic condition that combined in an incremental and cumulative fashion.

  1. After the humiliation of Vietnam, an "unmitigated disaster" in his view, the military set about to rehabilitate and reinvent itself, both in image and substance. With the All Volunteer Force, we moved from a military comprised of citizen-soldiers that were broadly representative of all society to a professional warrior caste that by design isolated itself from broader society and that by default employed a disproportionate percentage of enlistees from the lowest socio-economic class. War-making was thus done for us, by a few of us, not by all of us.
  2. Second, the rise of the neo-conservative movement embraced American Exceptionalism as our national end and superior coercive force as the means to franchise it around the world.
  3. Myth-making about warfare sentimentalized, sanitized and fictionalized war. The film Top Gun is only one example of "a glittering new image of warfare."
  4. Fourth, without the wholehearted complicity of conservative evangelicalism, militarism would have been "inconceivable," a tragic irony when you consider that the most "Christian" nation on earth did far less to question this trend than many ostensibly "secular" nations.
  5. Fifth, during the years of nuclear proliferation and the fears of mutually assured destruction, a "priesthood" of elite defense analysts pushed for what became known as the Revolution in Military Affairs (RMA). RMA pushed the idea of "limited" and more humane war using game theory models and technological advances with euphemisms like "clean" and "smart" bombs. But here too our "exuberance created expectations that became increasingly uncoupled from reality," as the current Iraq debacle demonstrates.
  6. Finally, despite knowing full well that dependence upon Arab oil made us vulnerable to the geo-political maelstroms of that region, we have continued to treat the Persian Gulf as a cheap gas station. How to insure our Arab oil supply, protect Saudi Arabia, and serve as Israel's most important protector has always constituted a squaring of the circle. Sordid and expedient self interest, our "pursuit of happiness ever more expansively defined," was only later joined by more lofty rhetoric about exporting universal ideals like democracy and free markets, or, rather, the latter have only been a (misguided) means to secure the former.

Bacevich opens and closes with quotes from our Founding Fathers. In 1795, James Madison warned that "of all the enemies of public liberty, war is perhaps the most to be dreaded, because it comprises and develops the germ of every other." Similarly, late in his life George Washington warned the country of "those overgrown military establishments which, under any form of government, are inauspicious to liberty, and which are to be regarded as particularly hostile to republican liberty."

Financial dominance

With dollar role as the primary world reserve currency the USA still rides on its "Exorbitant privilege".    But there are countervailing forces that diminish dollar importance, such a euro.  Financial dominance under neoliberalism became the primary tool of ensuring the control over the nations. See Neocolonialism as Financial Imperialism

US and Western banks dominate the globe with New York and London as two world financial centers.

Things little changed after 2008 despite the fact that the US economy in entered a deep debt crisis, which is amplified by the level of destruction of real economy by offshoring and outsourcing achieved under the umbrella of neoliberalism during previous four decades. While the USA remains the sole super power its imperial problems now reached such a level that they may start to affect the foreign policy.  Troubles of organizing an invasion in Syria are probably symptomatic.  It proved to be more difficult undertaking that similar invasion of Iraq a decade earlier.

Economic troubles have important side effect: the ideological dominance, achieved by the USA during 1989 till 2008 is now under attack. There are a lot of skeptic and in a way neoliberalism goes the way of  Marxism with the major difference that there were probably some sincere followers of Marxism at least during the first 30 years of its development. 

Centrality of transnational financial flows (including emerging countries debt) and financial oligarchy in neoliberal regime

Since the late 1970s, there was a radical shift of economic activity from the production of goods and non-financial services to finance with the rapid growth since then of the share of financial profits in total corporate profits. Also reflective of this process of "financialisation of the Economy" was the explosive growth of private debt  as a proportion of gross domestic product, and the piling of layers upon layers of claims with the existence of instruments like options, futures, swaps, and the like, and financial entities like hedge funds and structured investment vehicles.

With financialisation, the financial masturbation -- speculation directed on making money within the financial system, bypassing the route of commodity production, increasingly became the name of the game. Using Marxist terminology   the general formula for capital accumulation, M-C-M', in which commodities are central to the generation of profits, was replaced by M-M', in which money simply begets more money with no relation to production.

This is related to the reason which brought on the financialization of the economy in the forefront: beginning with the sharp recession of 1974-75, the US economy entered a period of slow economic growth, high unemployment/underemployment and excess capacity. That happened after around 25 years of spectacular ascent following the second world war.  So financialisation was thought a s a remedy to this "permanent stagnation" regime. And for a while it performed this function well, although it was done by "eating the host".

Finance under any neoliberalism-bound regime can be best understood as a form of warfare, and financial complex (typically large Western banks as locals are not permitted, unless specially protected by remnants of the nation state)  as an extension of military-industrial complex. Like in military conquest, its aim is to gain control for occupying country of land, public infrastructure, and to impose tribute putting the country in debt and using dominance of dollar as world reserve currency. This involves dictating laws to vassal countries (imposing Washington consensus, see below) and  interfering in social as well as economic planning using foreign debt and the necessity to service the foreign loans as a form of Gosplan.

The main advantage of neoliberalism in comparison with the similar practice of the past is the conquest is being done by financial means, without the cost to the aggressor of fielding an army. But the economies under attacked may be devastated as deeply by financial stringency as by military attack when it comes to demographic shrinkage, shortened life spans, emigration and capital flight. Actually following s successful attack of neoliberalism and conquest of the country by neoliberal elite Russian economy was devastated more then during WWII, when Hitler armies reached banks of Volga river and occupies half of the country.  

This attack is being mounted not by nation states alone, but by a cosmopolitan financial class and international financial institutions such as World bank and IMF with full support of major western banks serving as agencies of western governments. Finance always has been cosmopolitan more than nationalistic – and always has sought to impose its priorities and lawmaking power over those of parliamentary democracies.

Like any monopoly or vested interest, the financial "Trojan horse" strategy seeks to block government power to regulate or tax it. From the financial vantage point, the ideal function of government is to enhance profits via privatization and protect finance capital from the population to allow “the miracle of compound interest" to siphon most of the revenue out of the country. Some tiny share of this revenue is paid to compradors within the national elite. In good years such tactic keeps fortunes multiplying exponentially, faster than the economy can grow. This "paradise for rentiers" last until they eat into the core and cause deindustrialization and severe debt crisis. Eventually they do to the economy what predatory creditors and rentiers did to the Roman Empire.

Technological dominance

The globalist bloc of Western countries led by the USA achieved hegemony in the end of the twentieth century because it managed to become the center of technological progress and due to this acquired a commanding influence over industrial production and social life around the world, including the ability to provide rewards and impose sanctions. One or the reason of technical backwardness of the USSR just before the dissolution were technical sanctions imposed by the West via COCOM.  As most of global corporations belong to G7 this lead to "natural" technological hegemony of this block. As Thatcher used to say "There is no alternatives", although she meant there is no alternatives to neoliberalism, not to Western technology from G7 nations.  Only recently Asian countries started to challenge this status quo in some areas.

Global corporation managed to create a situation in which the same goods are used in most countries of the globe.  Western brand names dominate. American and European airliners, Japanese, American and German cars, Korean and American smartphones, Chinese and American PCs, etc.

China became world factory and produces lion share of goods sold under Western brands.

Dominance in Internet and global communications

The debate about the USA dominance in internet and global communications reemerged in June 2008 due to revelations make about existence of the Prism program and similar program by British security services. For example, Jacob Augstein used the term "Obama's Soft Totalitarianism" in his article Europe Must Stand Up to American Cyber-Snooping published by SPIEGEL. The NSA's infrastructure wasn't built to fight Al Qaeda. It has a far greater purpose, one of which is to keep the USA as the last superpower.

The USA has capabilities of intercepting of lion share of global internet traffic and with allies tries to intercept all the diplomatic communication during major conferences and trade talk in direct violation of Vienna protocols. Latin American countries were one of the recent victims of this activity during trade talks with the USA.  There were reports about snooping on UN personnel communications in NYC.

Here is an interesting comment of user MelFarrellSr  in The Guardian discussion  of the article NSA analysts 'willfully violated' surveillance systems, agency admits (August 24, 2013):

Here's the thing about the NSA, the GCHQ, Yahoo, Google, Microsoft, et al...

We all have to stop commenting as if the NSA and the GCHQ are in this thing on their own; the reality is that no one was supposed to know one iota about any of these programs; the NSA and the GCHQ began and put in place the structure that would allow all internet service providers, and indeed all corporations using the net, the ability to track and profile each and every user on the planet, whether they be using the net, texting, cell, and landline.

We all now know that Google, Yahoo, and the rest, likely including major retailers, and perhaps not so major retailers, are all getting paid by the United States government, hundreds of millions of dollars of taxpayer money, our money, to profile 24/7 each and every one of us..., they know how we think, our desires, our sexual preferences, our religious persuasion, what we spend, etc.; make no mistake about it, they know it all, and what they don’t currently have, they will very soon…

These agencies and indeed all those who are paid by them, will be engaged over the next few weeks in a unified program of "perception management" meaning that they will together come up with an all-encompassing plan that will include the release of all manner of statements attesting to the enforcement of several different disciplinary actions against whomever for "illegal" breaches of policy...

They may even bring criminal actions against a few poor unfortunate souls who had no idea they would be sacrificed as one part of the "perception management" game.

Has anyone wondered why, to date, no one in power has really come out and suggested that the program must be curtailed to limit its application to terrorism and terrorist types?

Here’s why; I was fortunate recently to have given an education on how networks such as Prism, really work, aside from the rudimentary details given in many publications. They cannot, and will not, stop monitoring even one individuals activity, because to do so will eventually cause loss of the ability to effectively monitor as many as 2.5 Million individuals.

Remember the “Two to Three Hop” scenario, which the idiot in one of the hearings inadvertently spoke of; therein lies the answer. If the average person called 40 unique people, three-hop analysis would allow the government to mine the records of 2.5 million Americans Do the math; Internet usage in the United States as of June 30, 2012 reached a total of over 245,000,000 million…

The following link shows how connected the world is… http://www.internetworldstats.com/stats2.htm

We should never forget how the Internet began, and who developed it, the United States Armed Forces; initially it was known as Arpanet, see excerpt and link below…

"The Internet may fairly be regarded as a never-ending worldwide conversation." - Supreme Court Judge statement on considering first amendment rights for Internet users.

"On a cold war kind of day, in swinging 1969, work began on the ARPAnet, grandfather to the Internet. Designed as a computer version of the nuclear bomb shelter, ARPAnet protected the flow of information between military installations by creating a network of geographically separated computers that could exchange information via a newly developed protocol (rule for how computers interact) called NCP (Network Control Protocol).”

http://inventors.about.com/library/weekly/aa091598.htm 

There is no government anywhere on the planet that will give up any part of the program…, not without one hell of a fight...

Incidentally, they do hope and believe that everyone will come to the same conclusion; they will keep all of us at bay for however long it takes; they have the money, they have the time, and they economically control all of us...

Pretty good bet they win...

That includes industrial espionage:

EntropyNow:

Or industrial espionage?

Absolutely. See EUROPEAN PARLIAMENT report dated 11 July 2001 (Note it was before the 9/11 attack in the US).

7. Compatibility of an 'ECHELON' type communications interception system with Union law

7.1. Preliminary considerations
7.2. Compatibility of an intelligence system with Union law

7.2.1. Compatibility with EC law
7.2.2. Compatibility with other EU law

7.3. The question of compatibility in the event of misuse of the system for industrial espionage
7.4. Conclusion

EntropyNow -> StrawBear

The fact that they snoop on us all constantly, that's the problem. I agree that the indiscriminate surveillance is a problem. However, with such vast powers in the hands of private contractors, without robust legal oversight, it is wide open to abuse and interpretation. I believe we need to pull the plug and start again, with robust, independent, legal oversight, which respects fundamental international human rights laws In the US, the NDAA is a law which gives the government the right to indefinitely detain US citizens, without due process, without a trial, if they are suspected to be associated with ‘terrorists’. Now define ‘terrorism’?

Section 1021b is particularly worrying, concerning “substantial support.” It is wide open to interpretation and abuse, which could criminalize dissent and even investigative journalism. See Guardian’s excellent article by Naomi Wolf, 17 May 2012::

As Judge Forrest pointed out:

"An individual could run the risk of substantially supporting or directly supporting an associated force without even being aware that he or she was doing so. In the face of what could be indeterminate military detention, due process requires more."

In an excellent episode of Breaking the Set Feb 7 2013 Tangerine Bolen  (Founder and Director, Revolutiontruth) stated that ‘Occupy London’ was designated a ‘terrorist group” officially. There are independent journalists and civil liberty activists being targeted by private cyber security firms, which are contractors for the DOD, they are being harassed and intimidated, threatening free speech and liberty for everyone, everywhere. As Naomi Wolf concludes:

“This darkness is so dangerous not least because a new Department of Homeland Security document trove, released in response to a FOIA request filed by Michael Moore and the National Lawyers' Guild, proves in exhaustive detail that the DHS and its "fusion centers" coordinated with local police (as I argued here, to initial disbelief), the violent crackdown against Occupy last fall.

You have to put these pieces of evidence together: the government cannot be trusted with powers to detain indefinitely any US citizen – even though Obama promised he would not misuse these powers – because the United States government is already coordinating a surveillance and policing war against its citizens, designed to suppress their peaceful assembly and criticism of its corporate allies.”

MadShelley

It seems to me that potential terrorist threats come in two sorts: the highly organised and funded groups that could commit catastrophic destruction, and the local schmucks that are really just old-fashioned losers-with-a-grudge adopting an empowering ideology.

The first group would be immensely cautious with their communications, and fall outside this sort of surveillance.  The second group, if Boston and Woolwich are any evidence, are not effectively detected by these measures.

It appears very clear to me that this is runaway state power, predictably and transparently deflected with cries of "terrorism".  And, perhaps most worrying, that definition of terrorism is now as wide as the state requires.  Anything that embarrasses or exposes the evils of our states, including rendition, torture, and all manner of appalling injustice, is classified as a matter of 'national security', which must not be exposed lest it aid the enemy.  

I know Orwell's name gets tossed around too much... but Jesus!  I really hope we're not bovine enough to walk serenely into this future. 

General_Hercules

...The NSA's infrastructure wasn't built to fight Al Qaeda. It has a far greater purpose, one of which is to keep the USA as the last superpower and moral authority for the rest of the time humanity has in this world.

All this muck is hurting bad. Obama is having a tough time from all sides. All the moralists think he is a villain doing everything he promised to change. All the secret society members think he is a clown who has spilled out every secret that was painstakingly put together over decades....

Cultural dominance

The temples of neoliberalism  are malls and airports ;-). And they are build all over the glone is a very similar fashion. A drunk person accidentally transfered from New Jersey to, say Kiev and put in one of mjor malls can never tell the difference :-).

English became the major international language. Both language of technology and commerce. Much like Latin was before. 

In developing countries goods are sold at considerable premium (up to 100%) but generally everything that can be bought in the USA now can be bought say in Kiev.  Of course affordability is drastically different, but for elite itis not a problem. That create another opportunity for the top 1% to enjoy very similar, "internationalized"  lifestyle all over the globe.

Hollywood films dominate world cinemas. American computer  games dominate gaming space.  In a way the USA culturally is present in any country.  It was amazing how quickly remnants of communist ideology were wipes out in the xUSSR countries.

Incorporation of "globalist" parts of national élites as second class citizens of the transnational ruling class

Another aspect of cultural power of neoliberalism is that it accepts national elites (on some, less favorable then "primary" elites conditions) as a part of a new transnational elite, which serves as the dominant class.  By class, following classic Marxism we mean a group of people who share a common relationship to the process of social production and reproduction, positioned in the society relationally on the basis of social power.

The struggle between descendant national fractions of dominant groups and ascendant transnational fractions has often been the backdrop to surface political dynamics and ideological processes in the late 20th century. These two fractions have been vying for control of local state apparatuses since the 1970s.

Trans national fractions of local elites swept to power in countries around the world in the 1980s and 1990s. They have captured the “commanding heights" of state policymaking: key ministries and bureaucracies in the policymaking apparatus — especially Central Banks, finance and foreign ministries — as key government branches that link countries to the global economy.

They have used national state apparatuses to advance globalization and to pursue sweeping economic restructuring and the dismantling of the old nation-state–based Keynesian welfare and developmentalist projects.

They have sought worldwide market liberalization (following the neoliberal model), and projects of economic integration such as the North American Free Trade Agreement (NAFTA), the Asia Pacific Economic Cooperation (APEC) forum, and the European Union. They have promoted a supra-national infrastructure of the global economy, such as the World Trade Organization, as we discuss below.

In this new, transnational social system transnational corporations are intermixed with nation-states which they have special privileges. And the state itself now serves not the people of the country (which historically were upper classes) but primarily service the interests of the transnational corporations (and, by extension, narrow strata of "comprador" elite, much like aristocracy of the past). It is now extension and projection of corporate power ("What is good for GE is good for America"). Both the transactional elite (and first of all financial oligarchy) and transnational corporation enjoy tremendous privileges under such a regime (corporate socialism, or socialism for the rich). Like Bolshevik state was formally dictatorship of proletariat but in reality was dictatorship of the elite of an ideological sect called Communist Party (so called nomenklatura), transformed nation-states like the USA, GB, France, Russia, etc now to various degrees look like  dictatorships of transnational elite (transnational bourgeoisie like Marxist would say ;-) while formally remaining sovereign democratic republics.  Like with Communist Parties in various countries that does not excuse antagonism or even open hostilities. 

That does not eliminates completely the elites competition and for example the EU elite put a knife in the back of the US elite by adopting the euro as completing with the dollar currency (so much about transatlantic solidarity), but still internalization of elites is a new and important process that is more viable that neoliberal ideology as such. Also for any state national elite is not completely homogeneous. While that is a significant part of it that favor globalization (comprador elite or lumpen elite) there is also another part which prefer national development and is at least semi-hostile to globalism.  Still the comprador part of the elite represents a very important phenomenon, a real fifth column of globalization, the part that makes globalization successful. It plays the role of Trojan horse within nation states and the name "fifth column" in this sense is a very apt name. This subversive role of comprador elite was clearly visible and well documented in Russian unsuccessful "white revolution" of 2011-2012: the US supported and financed project of "regime change" in Russia.  It is also clearly visible although less well documented in other "color revolutions" such as Georgian, Serbian, and Ukrainian color revolutions. comrade Trotsky would probably turn in his coffin if he saw what neoliberal ideologies made with his theory of permanent revolution ;-). 

Great propaganda success of neoliberalism

As professor David Harvey noted in his A Brief History of Neoliberalism neoliberal propaganda has succeeded in fixating the public on a peculiar definition of  "freedom" that has served as a smoke screen to conceal a project of speeding upper class wealth accumulation. In practice, the neoliberal state assumes a protective role for large and especially international corporations ("socialism for multinationals") while it sheds as much responsibility for the citizenry as possible.

The key component of neoliberal propaganda (like was the case with Marxism) was an economic theory. Like Marxism it has three components

For more information see

 Ideological dominance, neoliberalism as yet another major civic religion

There is no question that neoliberalism emerged as another major world  civic religion.  It has its saints, sacred books, moral (or more correctly in this case amoral) postulates and the idea of heaven and hell.

Neoliberalism shares several fundamental properties with high demand religious cults. Like all fundamentalist cults, neoliberalism reduces a complex world to a set of simplistic dogmas (See Washington Consensus). All of society is viewed through the prism of an economic lens. Economic growth, measured by GDP, is the ultimate good. The market is the only and simultaneously the perfect mechanism to achieve this goal. Neoliberalism obsession with materialism have become normalized to the degree that it is hard to imagine what American society would look like in the absence of these structural and ideological features of the new and militant economic Darwinism that now holds sway over the American public.  The mantra is well known: government is now the problem, society is a fiction, sovereignty is market-driven, deregulation and commodification are the way to a bright future, and the profit is the only viable measure of the good life and advanced society.  Public values are a liability, if not a pathology.  Democratic commitments, social relations, and public spheres are  disposables, much like the expanding population of the unemployed and dispossessed. Any revolt is the threat to the neoliberal regime of truth and should be dealt with unrestrained cruelty. The market functions best with minimal or no interference from government or civil society and those who don't agree will be taken by police to the proper reeducation camps.  All governments with possible exception of the US government should be minimized to allow unrestricted dominance of global corporations.  The genius of neoliberalism as a cult, was its ability to cloak the US pretences of world hegemony in an aura of scientific and historical inevitability.  Which again makes it very similar and in a way superior to Marxism as a cult. The collapse of the Soviet Union was the supreme, heaven sent validation of Margaret Thatcher’s claim that there was no alternative. There is only one blessed road to prosperity and peace and outside it there is no salvation, nor remission from sins.

The great economic historian Karl Polanyi observed, “The idea of a self-adjusting market implied a stark utopia.” And neoliberalism was a stunning utopia of economic determinism, one even more ambitious than that of Marx.

With all the big questions thus settled, history appeared to be at an end. There was one and only one route to prosperity and peace. All that was required was to make sure the model was correctly applied and all would be well. We all settled into our assigned roles. Capitalists retreated to the role of technocrats, eschewing risk themselves while shifting and spreading it throughout society. The rest of us were relegated to the roles not of citizens, but of consumers. Using our homes as ATMs, we filled our lives with Chinese-made goods, oblivious to the looming environmental and social costs of a runaway, unregulated consumer-driven society. Only a marginalized few questioned the basic economic structure. It was the era of homo economicus, humans in service to the economy.

Now that perfect machinery lies in pieces all around us and the global economic free fall shows no signs of ending any time soon. The fundamental reasons underlying the collapse aren’t all that difficult to discern. Central to the whole neoliberal project was the drive to rationalize all aspects of human society. Relentless efforts to cut costs and increase efficiency drove down the living standards of the vast majority, while the diminution of government and other non-commercial institutions led to increasing concentration of wealth at the very top of society. As high paying jobs in the industrial and technical sectors moved from developed countries to low wage export-based economies in the developing world, capacity soon outstripped demand and profits in the real economy began to sag. Not content with declining earnings, wealthy elites began to search for investments offering higher returns. If these couldn’t be found in the real economy, they could certainly be created in the exploding financial sector.

Once consigned to the unglamorous world of matching those with capital to invest with those with enterprises seeking to grow, finance became the powerful new engine of economic growth. No longer stodgy, bankers and brokers became sexy and glamorous. Exotic new financial instruments, called derivatives, traded on everything from commodities to weather.

This speculative frenzy was supported by a central bank only too happy to keep credit extremely cheap. Debt exploded among consumers, businesses and government alike. Creating new debt became the source of even more exotic investment vehicles, often bearing only the most tenuous of connections to underlying assets of real value, with unwieldy names such as “collateralized debt obligations” and “credit default swaps.”

All the debt and the shuffling of fictional wealth hid the underlying rot of the real economy. It was a house of cards just waiting for the slight breeze that would send it all crashing down. And a collapse in housing prices in 2008 laid bare the economic contradictions.

The fundamental contradiction underlying much that confronts us in the age of crises is an economic and social system requiring infinite growth within the confines of a finite planet. Any vision seeking to replace neoliberalism must take this contradiction into account and resolve it. The overriding market failure of our time has nothing to do with housing. It’s the failure to place any value on that which is truly most essential to our survival: clean air and water, adequate natural resources for the present and future generations, and a climate suitable for human civilization.

No such new vision is currently in sight. That this leaves everyone, neoliberals and their foes alike, in a state of uncertainty and doubt is hardly surprising. The seeming triumph of neoliberalism was so complete that it managed to inculcate itself in the psyches even of those who opposed it.

We find ourselves unsure of terrain we thought we knew well, sensing that one era has ended but unsure as to what comes next. We might do well to embrace that doubt and understand its power to free us. Our doubt allows us to ask meaningful questions again and questioning implies the possibility of real choice. Removing the intellectual straitjacket of neoliberal orthodoxy opens up the space necessary to reconsider the purpose of an economy and its proper role in a decent human society and to revisit the old debate over equity versus efficiency. It calls into question the assumption most central to homo economicus; that all humans act only to maximize their own interests.

It seems clear that the world emerging over the coming decades will look quite different from the one we now inhabit. Of necessity it will evolve in ways we can’t fully understand just yet. Old battle lines, such as the ones between capitalism and socialism, will likely fade away. Both of those models arose in a world of abundant and cheap fossil fuels and within the confines a planet with a seemingly endless capacity to absorb the wastes of our conspicuous consumption. New battle lines are already beginning to take shape.

The Revolution is Upon Us The Age of Crisis and the End of Homo Economicus Logos

I think that like is the case with Marxism, the staying power of neoliberalism is that propose the religion picture of world with its "creation history", saints, and way of salvation. In a way it plays the role similar to the role of  Catholicism in middle ages (aka Dark Ages). The greed of catholic clergy in Middle ages (trade in indulgencies) is a match of the greed of neoliberals( with financial derivates replacing indulgencies ;-). It is equally hostile to any attempts to analyze it, with the minor difference that heretics that question the sanctity of free market are not burned at the stake, but ostracized.  It support "new Crusades" with the same mechanism of "indulgences" for small countries that participate.

The level of hypocrisy is another shared trait. The great irony is that the USA, the world's leading proponent of neoliberalism (with the US President as a Pope of this new religion), systematically is breaking the rules when it find it necessary or convenient.  With high deficit spending and massive subsidizing of defense spending and financial sector, the United States has generally use a "do as I say, not as I do" approach. And 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 of corporatist thugs. It involves dogmatic belief that the society is better off when ruled by a group of wealthy financiers and oligarchs, than by a group of professional government bureaucrats and politicians with some participation of trade unions.

The USA also dominates the cultural scene:

The United States' position as the leading maker of global culture has been basically unchallenged for the last century or so, especially in the Western world. Yet the economic power of the Western world is waning even as new nations, with new models of economic and social life, are rising. Might one -- or several -- of these nations like China, India or Brazil become new centers of global culture?

I believe that the answer to this question for the foreseeable future is "no." While the U.S.'s cultural prominence is partially related to its political, military and economic power, such power is not the only cause of America's global cultural hegemony. Rather, the U.S. offers a unique convergence of several factors, including economic opportunity, political freedom and an immigrant culture that served as a test bed for new cultural products.

Let me offer a brief account of the rise of the American film industry to suggest the way political, economic and immigrant forces shaped American cultural hegemony. In the U.S., the film industry started as commercial enterprise largely independent of state control. Movies had to adapt to market conditions to earn profit for their producers. In order to achieve this goal, American movies needed to appeal to a diverse population made up of both native-born and immigrant citizens.

As a consequence, filmmakers had to make movies that could appeal to international audiences simply to meet domestic demand. This fact helped the American film industry become globally preeminent well before the U.S. became a superpower. In other words, while U.S. military and economic power strengthened the position of the U.S. movie industry as globally dominant, that position was not dependent on U.S. military and economic power. Instead, American producers had a competitive advantage in global markets that was later cemented in place by the U.S. post-war economic and military hegemony in the West.

After the dissolution of the USSR, the USA became natural center of the "neoliberal religion" a dominant force in the new world order (the world's only superpower). And they used their newly acquired status against states which were not "friendly enough" very similar to Catholicism with its Crusades, launching a series of invasions and color revolutions against "nonbelievers" in a globalist neoliberal model. The level of plunder of Russia after the dissolution of the USSR looks like a direct replay of  Crusades with the siege of Constantinople as primary example (despite stated goals, Crusades were by-and-large a monetary enterprise of the time with fig leaf of  spread of Catholicism attached). This period of neoliberal crusades still continued in 2013, sometimes using various proxy to achieve "the regime change" by military means.

As we already refereed to neoliberalism as a cult an interesting question is whether neoliberalism can be viewed  new "civic religion". The answer is unconditional yes, and I think that like Marxism before it should be considered to be yet another  civic religion. It has it's set of holy books, Supreme being to worship, path to salvation and set of Apostils. Like communism before it propose humanity grand purpose and destiny.

Approliving:

Theistic and civic religions are also similar in that they both offer visions of humanity’s grand purpose and destiny.

There are also significant differences between theistic religions and civil religions. Theistic religions explicitly rely on claims of divine authority for their validity, while civil religions rely on reason and the interpretation of commonly-accepted historical knowledge. Followers of theistic religions stress the importance of faith in times of adversity, while followers of civil religions tend to have a more pragmatic attitude when reality casts doubt on their beliefs.

Civil religions are more like big social experiments than actual religions because their central claims are much more falsifiable, and their followers show evidence of holding this perception (e.g. references to “the American experiment"; the voluntary abandonment of Communism throughout Eurasia when it became clear that it wasn't working).

Communism bears so much resemblance to Christianity because, as you mentioned last week, the Western imagination was thoroughly in the grip of Christianity when Communism emerged. Communism is similar to Christianity out of practical necessity: had it not been based on the Christian template, Communism probably would have been too intellectually alien to its Western audience to have ever taken off. Luckily for the founders of Communism, they were also subjected to this Christian cultural conditioning.

With all this in mind, and given that religion is evolving phenomenon, I think that civil religion is actually a distinct species of intellectual organism which has (at least in part) evolved out of religion.

Like Marxism,  neoliberalism is first and foremost a quasi religious political doctrine.  But while Marxism is aimed at liberation of workers , a political doctrine  neoliberalism is aimed at restoring the power of capital. Neoliberalism originated in the rich countries of Anglo-Saxon world (GB and USA) so along with open despise of poor, it always has a distinct flavor of despise for peripheral countries. In global politics, neoliberalism preoccupies itself with the promotion of four basic issues:

As such, neoliberalism, in its crudest form, is crystallized in the Ten Commandments of the 1989 Washington Consensus (policy of debt slavery set for the world by the US via international financial institutions). While pushing the democracy as a smoke screen, they implicitly postulate  hegemony of the financial elite (which is a part of "economic elite" that neoliberalism defines as a hegemonic class).  Financialization of the economy also serves as a powerful method of redistribution of wealth, so neoliberalism generally lead to deterioration of standard of living for lower quintile of the population and in some countries (like Russia in 1991-2000) for the majority of the population. This is done largely via credit system and in this sense neoliberalism represents "reinters paradise". Neoliberal globalization was built on the foundation of US hegemony, conceived as the projection of the hegemony of the US capital and dollar as the dominant reserve currency. As such it is critically dependent of the power and stability of the US and the financial, economic, political and military supremacy of the US in every region. For this purpose the USA maintains over 500 military bases (737 by some counts) and over 2.5 million of military personnel.

But there are also important differences. Unlike most religions, neoliberalism  is highly criminogenic (i.e., having the quality of causing or fostering crime). It is more criminogenic in countries with lower standard of living and in such countries it often lead to conversion of a "normal", but poor state into a kleptocratic state (Yeltsin's Russia is a good example) with the requisite mass poverty (Global Anomie, Dysnomie and Economic Crime Hidden Consequences of Neoliberalism and Globalization in Russia and Around the World). Unfortunately architects of this transformation (Harvard Mafia in case of Russia) usually avoid punishment for their crimes.  Corruption of the US regulators which happened under neoliberal regime starting from Reagan is also pretty well covered theme.

While economic crisis of 2008 led to a crisis of neoliberalism, this is not necessary a terminal crisis. The phase of neoliberal dominance still continues, but internal contradictions became much deeper and the regime became increasingly unstable even in the citadel of neoliberalism -- the USA. Neoliberalism as an intellectual product is practically dead. After the crisis of 2008, the notion that finance mobilizes and allocates resources efficiently, drastically reduces systemic risks and brings significant productivity gains for the economy as a whole became untenable.  But its zombie phase supported by several states (the USA, GB, Germany), transnational capital (and financial capital in particular)  and respective elites out of the sense of self-preservation might continue (like Bolshevism rule in the USSR in 70th-80th) despite increasing chance of facing discontent of population and bursts of social violence.

Cornerstone of neoliberal regime, the economic power of the USA is now under threat from the rise of Asia.  This is one reason of mutation of neoliberalism into aggressive neoconservative imperialism that we witness in the USA.

While intellectually neoliberalism was bankrupt from the beginning, after 2008 believing it in is possible only by ignoring the results of deregulation in the USA and other countries. In other words the  mythology of  self-regulating "free market" became a "damaged goods". In this sense, any sensible person should now hold neoliberal sect in contempt. But reality is different and it still enjoy the support of the part of population which can't see through the smoke screen. With the strong  support of financial oligarchy neoliberalism will continue to exists in zombie state for quite a while, although I hope this will not last as long as dominance of Catholicism during European Dark Ages ;-).  Still the US is yet to see its Luther.  As was noted about a different, older sect: "Men are blind to prefer an absurd and sanguinary creed, supported by executioners and surrounded by fiery faggots, a creed which can only be approved by those to whom it gives power and riches".

Like communism in the USSR it is a state supported religion: Neoliberalism enjoys support of western governments and first of all the US government. Even when the US society entered deep crisis in 2008 and fabric of the society was torn by neoliberal policies it did not lose government support.   

Market fundamentalism as an ideology of neoliberalism;
Washington Consensus

Market fundamentalism is an ideology of neoliberalism and represents a pseudo-scientific approach to economic and social policy based on neoclassical theories of economics that absolutized the role of the private business sector in determining the political and economic priorities of the state and consider privatization as the ultimate solution of all problems in the society.

Like social theories behind Italian and German versions of corporatism ideology of neoliberalism is pretty eclectic. It is discussed at some additional length at pages related to the topic Casino Capitalism on this site. 

We need to note, there the neoliberal ideology adoption and implementation patterns varies from country to country, like it was actually with the classic corporatism as well. In the USA this form of corporatism emerged in most radical form. Another center of neoliberalism was GB in which it also has had a more radical form then, say, in Spain or Italy.

And we called the US version of neoliberalism radical, it is not a metaphor: corporatism under General Franco is a pale shadow of corporatism under Bush-Obama regime. 

This new stage of capitalism development is often called "corporate socialism" of "socialism for rich" or "socialism for banks". The latter name is applicable because the key component of transnational elite is financial oligarchy. All of those terms reflect the key fact that at this stage of capitalism development it is the transnational elite and first of all financial oligarchy which completely dominates power structures of the society. Due to the role of financial oligarchy in this new elite this social system was also nicknamed Casino Capitalism.

Neoliberalism should probably be viewed as a further development of a form of corporatism that emerged in the USA in late 60th. It came to power in Ronald Reagan administration which was in a way quite coup. And it became completely dominant after the collapse of the USSR during Clinton regime during which Democratic Party also adopted neoliberalism as an official platform.

The term itself emerged in the 1970s, when some Latin American economists began using "neoliberalism" to designate their program of market-oriented reforms. It has come into wide use starting with 1973 Chilean coup d'état.  After triumph of neoliberalism in Chile under Augusto Pinochet (from 1973) neoliberalism spread to Great Britain under Margaret Thatcher (from 1979) and then to the United States under Ronald Reagan (from 1981). Broadly speaking, neoliberalism seeks to transfer control of the economy from the public to the private sector with the state providing guarantees only to corporations and not to individual citizens like under socialism. That's why is often called "corporate socialism". 

After dot-com bust of 2000-2002, however, the term "neoliberalism" had become a pejorative used to denigrate prostitution of economics performed by Milton Friedman and Chicago school . This trend increases after financial crisis of 2008-2012. So it is probably fare to say that right now neoliberalism entered the stage of decline.  The last important victory of neoliberalism was probably navigating Russia into joining WTO, which happened in summer of 2012. 

It has neoliberal Newspeak that include such terms as "free market", efficiency, consumer choice, transactional thinking and individual autonomy. In essence this is an modernized ideology of merger of state and corporate power that was hallmark of classic corporatism, with an additional twist of emphasizing the Arian style theories of  inferiority of lower classes (reflected in promoting the "class of creators", entrepreneurs( Randism), etc)  and "ultimate justice" of redistributing wealth to the top 1%.

On state level it tries to abolish social programs and completely shift the risks to individuals (replacing pensions with 401K plan in the USA), while fully providing social protection to corporations, especially financial giants involved in casino style gambling. In other words it socialize private losses and privatize social program that benefits of individual citizens.

Neocolonial aspects of  neoliberalism are often called  "Washington Consensus", a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations (like the International Monetary Fund (IMF) and World Bank) and directed on making developing nations "debt slaves" of the industrialized nations.  This policy got tremendous impetus with the dissolution of the USSR when the principal foe, which to certain extent limited the level of greed in such deals due to fear of "communist infiltration" if case deal is too one sided,  folded.

The concept and name of the Washington Consensus were first presented in 1989 by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C.  The list   created by Williamson's included ten points:

  1. Legal security for property rights;
  2. Financialization of capital.
  3. Fiscal policy Governments should not run large deficits that have to be paid back by future citizens, and such deficits can only have a short term effect on the level of employment in the economy. Constant deficits will lead to higher inflation and lower productivity, and should be avoided. Deficits should only be used for occasional stabilization purposes.
  4. Redirection of public spending from subsidies to people to subsidies to corporations (tax breaks, preferred regime, etc). Especially hurt were classic socialist programs, which neoliberal call "indiscriminate subsidies" that neoliberal deem wasteful. They are limited to those what benefit corporations such as primary (but not university) education, primary health care and infrastructure investments. Pensions and other social problems need to be privatized. 
  5. Tax reform– broadening the tax base by shifting tax burden to the poor and middle classes and adopting low taxes for corporations and top 1% with the states goal to encourage "innovation and efficiency";
  6. Interest rates that are market determined and positive (but moderate) in real terms;
  7. Floating exchange rates;
  8. Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by law and relatively uniform tariffs; thus encouraging competition and long term growth. Financial liberalization under the smoke screen of trade liberalization and complete dominance of foreign banks in local financial systems of developing countries.
  9. Liberalization of the "capital account" of the balance of payments, that is, allowing people the opportunity to invest funds overseas and allowing foreign funds to be invested in the home country
  10. Privatization of state enterprises; Promoting market provision of goods and services which the government can not provide as effectively or efficiently, such as telecommunications, where having many service providers promotes choice and competition.
  11. Deregulation – abolition of regulations that impede market entry or restrict competition, except for (G7 only) those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions;

A Decade Long Triumph of Neoliberalism after the Dissolution of the USSR

As we mentioned before, the greatest triumph of neoliberalism was the dissolution of the USSR in 1991. After this event, there was a period of "triumphal march of neoliberalism", which lasted probably till 2005, when each year it claimed as a victory yet another country (Yeltsin neoliberal gang rule in Russia lasted till 2000, all former socialist countries were converted to neoliberal regimes shortly after, Kosovo in 1999; Serbia in 2000; Iraq in May, 2003; Georgia in December 2003; Ukraine in 2004). It also managed to stabilize and improve the situation in the USA. Plunder of Russia and other xUSSR states along with Internet revolution were two factors that influenced relative prosperity of the USA in 1994-2000.

And like Catholicism in Europe in Middle Ages, in 90th  neoliberalism looked like an incontestable ideology propagated by "sole superpower" (" anew holy Roman Empire") with the help of vassals and subservient financial institutions such as World Bank and IMF. The dominance on the USA in 1991 looked rock-solid and if somebody told me in 1999 that in less then 20 years the USA would be on ropes both politically and financially I would just laugh. Still after the dissolution of the USSR neoliberalism managed  to dissipate most of the gains in approximately 20 years and in 2008 entered the phase of structural crisis.  As of 2013 the idea of self-regulating market is dead and even solidarity of international elites, the hallmark of neoliberalism,  is under question.

The first cracks in neoliberalism facade were caused by Clinton's attack on Yugoslavia in 1999, the first armed neoliberal crusade attempted under the smoke screen of protecting the right of Kosovo Muslims in Serbia. It failed to implement "regime change" in Serbia and despite overwhelming military superiority of NATO forces has shown that bringing neoliberal regime on the tips of bayonets is a costly and high risk exercise. It took another several years and a color revolution in Serbia to achieve those goals.  It did established the second Muslim state in Europe (effectively NATO protectorate), which was a part of the plan.

Color revolution in Serbia started a series of other successful color revolutions in Serbia (Serbia's Bulldozer Revolution in 2000) ,Georgia (Saakashvili regime came to power in November 2003 as a result of "Rose revolution"),  Ukraine (Viktor Yushchenko regime came to power in 2004 via Orange Revolution) and several other countries.

After those successes, there were several setback: color revolutions failed in Belorussia and Russia. Results of color revolution in Ukraine were partially reversed by government of Viktor Yanukovych who ousted Yushchenko government defeating Yulia Tymoshenko in 2010 election (with Yutchshenko personally having less the 3% support).  They are close to partial reversal in Georgia where Saasaskvily regime is hanging in the air.

Fear of population and establishment of "National Security State"
 to protect the interest of transnational elite

Politically neoliberalism correlates with growth of political power of financial oligarchy and media-military-industrial complex. Growth of political power of financial oligarchy among national elite has led to the dramatic growth of inequality and created growing fear of the top 0.01%  (oligarchs) over preserving their power and financial gains.

That naturally leads to the establishment of National Security State" state, militarization of police and introduction of total surveillance over the citizens under the pretext of fighting against terrorists.

In the article GCHQ taps fibre-optic cables for secret access to world's communications by Ewen MacAskill, Julian Borger, Nick Hopkins, Nick Davies and James Ball,  the authors describe blanket surveillance regime (21 June 2013, The Guardian) in comparison with which KGB and even STASI looks like complete amatures:

Britain's spy agency GCHQ has secretly gained access to the network of cables which carry the world's phone calls and internet traffic and has started to process vast streams of sensitive personal information which it is sharing with its American partner, the National Security Agency (NSA).

The sheer scale of the agency's ambition is reflected in the titles of its two principal components: Mastering the Internet and Global Telecoms Exploitation, aimed at scooping up as much online and telephone traffic as possible. This is all being carried out without any form of public acknowledgement or debate.

One key innovation has been GCHQ's ability to tap into and store huge volumes of data drawn from fibre-optic cables for up to 30 days so that it can be sifted and analysed. That operation, codenamed Tempora, has been running for some 18 months.

GCHQ and the NSA are consequently able to access and process vast quantities of communications between entirely innocent people, as well as targeted suspects.

This includes recordings of phone calls, the content of email messages, entries on Facebook and the history of any internet user's access to websites – all of which is deemed legal, even though the warrant system was supposed to limit interception to a specified range of targets.

As Glenn Greenwald  wrote in his article  Are all telephone calls recorded and accessible to the US government? (May 4, 2013, The Guardian):

Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications.

It would also help explain the revelations of former NSA official William Binney, who resigned from the agency in protest over its systemic spying on the domestic communications of US citizens, that the US government has "assembled on the order of 20 trillion transactions about US citizens with other US citizens" (which counts only communications transactions and not financial and other transactions), and that "the data that's being assembled is about everybody. And from that data, then they can target anyone they want."

Despite the extreme secrecy behind which these surveillance programs operate, there have been periodic reports of serious abuse. Two Democratic Senators, Ron Wyden and Mark Udall, have been warning for years that Americans would be "stunned" to learn what the US government is doing in terms of secret surveillance.  Strangely, back in 2002 - when hysteria over the 9/11 attacks (and thus acquiescence to government power) was at its peak - the Pentagon's attempt to implement what it called the "Total Information Awareness" program (TIA) sparked so much public controversy that it had to be official scrapped. But it has been incrementally re-instituted - without the creepy (though honest) name and all-seeing-eye logo - with little controversy or even notice.

In his book "Brave New World Order" (Orbis Books, 1992, paper), Jack Nelson-Pallmeyer  identifies seven characteristics of a such a state:

  1. The military is the highest authority. In a National Security State the military not only guarantees the security of the state against all internal and external enemies, it has enough power to determine the overall direction of the society. 
  2. Political democracy and democratic elections are viewed with suspicion, contempt, or in terms of political expediency. National Security States often maintain an appearance of democracy. However, ultimate power rests with the military or within a broader National Security Establishment.
  3. The military and related sectors wield substantial political and economic power. They do so in the context of an ideology which stresses that 'freedom" and "development" are possible only when capital is concentrated in the hands of elites.
  4. Obsession with enemies. There are enemies of the state everywhere. Defending against external and/or internal enemies becomes a leading preoccupation of the state, a distorting factor in the economy, and a major source of national identity and purpose.
  5. The working assumption is that the enemies of the state are cunning and ruthless. Therefore, any means used to destroy or control these enemies is justified.
  6. It restricts public debate and limits popular participation through secrecy or intimidation. Authentic democracy depends on participation of the people. National Security States limit such participation in a number of ways: They sow fear and thereby narrow the range of public debate; they restrict and distort information; and they define policies in secret and implement those policies through covert channels and clandestine activities. The state justifies such actions through rhetorical pleas of "higher purpose" and vague appeals to "national security."
  7. The church is expected to mobilize its financial, ideological, and theological resources in service to the National Security State.

You can probably safely replace the term "military" with the term "finance" in the above list to make it more applicable to contemporary neoliberal societies. And if you think about, it finance is a new form of warfare. In any case National Security State is now reality and by-and-large displaced the previous form, called Inverted Totalitarism which existed from late 40th to late 80th. 

Criminogenic effects of neoliberalism

The fact the neoliberalism is highly criminogenic is well established. The postulate "greed is good" implicitly assumes that the legal system is perfect. In order to distinguish greed from enlightened self-interest, we will define greed is self-interest taken to an extreme or unseemly degree. A “greedy” market participant that seeks to gain at the expense of others and the society at large. So in essence this is a parasitic behavior.  This might be done within the legal framework exploiting loopholes in it, but most commonly it involves a violation of the law that is difficult to enforce and are supported internally by corporate brass (A Troubling Survey on Global Corruption - NYTimes.com):

A new survey of corporate officials and employees in 36 countries — in Europe, Africa and the Middle East, as well as India — indicates that there is plenty of corruption that needs investigating.

Over all, 20 percent of the respondents said they knew of incidents at their own companies within the previous year that could be construed as cooking the books — moves to either understate expenses or overstate revenue. Among senior managers and directors, the figure was 42 percent.

It is typically difficult to determine what the optimal set of laws is; lawmakers must make their best guess, and in most cases they pass laws that are proved to be suboptimal over time. Holes in those laws can be systematically exploited. Also law always lags behind market and technological developments; it is difficult for lawmakers to know how to regulate things like new products or new investment vehicles. That creates another opportunity to engage in destructive for the society as whole behavior without fear of punishment by the law.  Neoliberalism also is "sociopath friendly" regime in a sense that sociopathic qualities became a desirable for the top brass. And with sociopathic leadership in place it is difficult to imagine what the improper business is. "Creative destruction" in this case becoming something like a pack of wolves against a sheep.

Wall Street also developed two step combination: first weaken the law, and then engage in criminal behavior that is now decriminalized. In other words, if one argues that it is perfectly acceptable for people to be greedy, the problem is that there is no mechanism to constrain greedy people so that they can do no harm to others. As history demonstrates pretty convincingly (with the 2008 crisis as the most recent example), the legal system typically fails to place the appropriate constraints on such market behavior. That's why additional mechanisms are important for society survival and prosperity, and that's why most world religions consider greed to be a vice. This brings us to works of John Kenneth Galbraith and his discussion of the necessity of countervailing economic forces. Neoliberalism destroyed those countervailing forces over the last several decades.

Since the legal system can not and never in reality guarantee that markets function efficiently, there is a role for other institutions to foster a more enlightened self-interest as a social norm and thus improve efficiency. It's mostly about how self-interest is channeled that makes the difference, since eliminating self-interest seems similarly sociopathic (the USSR is a perfect example here). We would be a lot better off to channel self-interest in financial sector productively, than let it run wild foraging on speculation, arbitrage, and monopolization.

But it is those institutions that can channel self-interest in a more productive way, that neoliberalism systematically tries to weaken. In this sense neoliberalism is not only criminogenic, it is self-destructive. Moreover, unethical behavior is arguably more of the rule of corporate conduct rather than the exception. As such it represents a systemic flaw of neoliberalism as a flavor of corporatism. And the Great Recession of 2008 is a direct manifestation of this systemic flaw. In other words it was not accidental, it was not the first and it is not the last.

Example of Russia neoliberal revolution of 1989-1994 is probably one of the most terrifying examples of this trend. But the situation in the USA after 2008 is structurally even worse as it entails much more sophisticated layers of corruption and first of all almost complete corruption of the government by financial oligarchy (nobody was prosecuted for the financial crisis of 2008). It signified the creation of two separate caste of citizens with the upper caste being above the law, much like it was with Nomenklatura in the USSR. 

Neoliberalism also exploits fundamental problem that in any large bureaucracy dealing with huge sums of money people have bad and/or contradictory incentives and lack of accountability creates opportunity for corruption. So in way it is using corruption for the purposes of maintaining the neoliberal regime, which is pretty unique feature.  And, despite appearance,  all large bureaucracies are prone to corruption. 

One of the key mechanisms of corruption that is used under neoliberal regime is so called "the revolving door". It works in both direction: from top corporate seats to government and back.

Typically people who moved to government from private industry are not forgetting your former friends, especially in crisis (Paulson is a very good example here, but any Secretary of Treasury probably is not much worse example either). There are also implicit incentives to help your former employer, when there is an opportunity for a multimillion dollar deal. Also in this variant of  "revolving door" regime, those who are coming to the government or to the public service have the incentive structure and morale they acquired in their prior employer  -- a large corporation.

When a long time government servant is expecting to join a corporation after leaving the government there is a strong, but implicit incentive not to hurt future friends. Income inequality is probably one of the root causes for this. If incomes in public and private sector were not so much out of balance, few people would be motivated to sell themselves out so shamelessly.

But with the current level on income inequality this mechanism works wonders to emasculate regulatory agencies top brass.  The mechanism that efficiently replicates this governance systems and keeps it in place one of the central part of criminality of neoliberalism:  the conscious breaking down of institutional capacity of state to regulate business activity. Thus creating the situation of "mafia state", with the oligarchy instead of regular Mafiosi.

The other key mechanism is bribing the press corps to present (often close to criminal) actions favorable to oligarchy (in a words of Margaret Thatcher), as  "There Is No Alternative"  (TINA). BTW in Russian "tina" is the highly viscosious, amorphous substance on the bottom of the lake or swamp. In the latter case it can swallow people or animals. This effect is the same as for "Neoliberal TINA".  Typically "TINA" works by remapping the debate to exclude anything not favorable to the financial elite (Journalists in the service of Pete Peterson Remapping Debate). Here is how stealing from Social Security to preserve recent gains by financial elite was presented during debates on (note the terminology) "curbing the country’s “unsustainable” debt and deficits.":

  • Maria Bartiromo, 2011 (host, CNBC’s “Closing Bell with Maria Bartiromo”)
  • Tom Brokaw, 2012 (former anchor and managing editor, NBC Nightly News)
  • Erin Burnett, 2012 (host of CNN’s “Erin Burnett OutFront”)
  • John F. Harris, 2012 (editor-in-chief of Politico)
  • Gwen Ifill, 2011, 2010 (senior correspondent of “PBS NewsHour”)
  • Ezra Klein, 2011 (columnist, Washington Post)
  • Jon Meacham, 2010 (former editor-in-chief, Newsweek)
  • Bob Schieffer, 2010 (host, CBS “Face the Nation”)
  • Lesley Stahl, 2010 (reporter, CBS “60 Minutes”)
  • George Stephanopoulos, 2012 (host, ABC’s “This Week”)
  • David Wessel, 2012, 2011 (economics editor, Wall Street Journal)
  • George Will, 2011 (columnist, Washington Post)
  • Judy Woodruff, 2012, 2011 (host, “PBS NewsHour”)
Peterson, however, is hardly a disinterested and dispassionate observer of such discussions. In fact, he is now beginning his fourth decade of arguing that there is no alternative to enacting “entitlement reform” (read: cut Social Security and Medicare) and “tax reform” (read: raise regressive taxes and lower progressive ones) in the name of curbing the country’s “unsustainable” debt and deficits.

An essential and successful element of the Peterson strategy is to create an environment where it is widely if not universally believed that there is no alternative to his vision. The conceit is that those with “courage” will see past narrow, partisan concerns and embrace an ideal: a bipartisan consensus that has the strength to demand “shared sacrifice” from a childish and selfish populace. A review of the proceedings of the Fiscal Summits of the last three years makes agonizingly clear that most of the journalists who conducted interviews or moderated panel discussions both reflected and amplified the Peterson worldview...

So, for example, Lesley Stahl, the CBS “60 Minutes” reporter, was fully a part of the Erskine Bowles and Alan Simpson deficit-cutting team during her interview with both men: “You are going to have to raise taxes and cut things, big things, put restrictions on Social Security. Everybody knows that.”

Virtually none of the reporters thought to ask about or suggest an alternative path, such as preserving Social Security benefits and bolstering the system’s reserve by raising the cap of wages subject to Social Security taxes (currently annual wages above approximately $110,000 are not subject to any Social Security tax).

And most questioning proceeded either on the false assumption that deficits were derived from excessive spending on entitlements or as though they had mysteriously, but inevitably, come to pass.

Many journalists fairly shouted their personal desire to see greater cooperation and “compromise,” with groups realizing the importance of submerging their interests to the greater good. Who should do the submerging? In 2012, Tom Brokaw had a suggestion in the form of a question to former President Bill Clinton: after Wisconsin Governor Scott Walker pushed through a bill undermining the right of union members to collectively bargain, shouldn’t those workers have just sat down and negotiated with Walker as, Brokaw said, “has been traditionally done in this country” instead of “gather[ing] outside the capitol”?

There were a couple of exceptions to the rule. In a session moderated by Ezra Klein of the Washington Post in 2011, Klein posed a number of questions that reflected an unwillingness to operate from within the Peterson framework. For example, Klein asked New York Times columnist David Brooks whether, instead of blaming Americans for simply wanting benefits without paying for them, the causes of the debt should be located in the Bush tax cuts, two unfunded wars (Iraq and Afghanistan), and the federal government’s emergency response to the financial crisis.

Judy Woodruff, of the PBS NewsHour, generally asked questions from within the Peterson frame, but, at one point in 2012, posed a question that perhaps all the journalists should have been thinking about as well. She asked Rep. Christopher Van Hollen, Jr. (D-Md.) if “Democrats like you, by participating in forums like this one that is all focused on austerity, on cutting the deficit and the debt…really become also window dressing for a conservative agenda that is anti-jobs and anti-recovery and wrongheaded economics?”

Over the course of the three years of fiscal summits that Remapping Debate examined, the other journalist interviewers and moderators hewed strictly to the conventional Peterson wisdom. What follows are annotated illustrations of this recurring problem.

Neoliberalism as a key contributor to growth of amorality and economic crimes

Although neoliberal regime is not necessarily a kleptocracy (although Yeltsin regime definitely was), the difference is only in  a degree. It does use corruption and criminality to stabilize the neoliberal regime and protect it from backlash that follow economic crisis caused by excessive appetite by financial oligarchy (if I am sounding like a communist here it is not accidental; as people of former USSR observed: communism was all wrong about socialism, but it was surprisingly realistic in its views of capitalism).   And as for corruption it is pretty ironic that the USA tried to position itself as a leader of anti-corruption crusade, because as Niall Ferguson noted (quoted from Zero Hedge):

“It is corruption when corporations can buy regulation.   It is corruption when laws are sponsored by Wall Street.” 

It is a sad state when the current level of corruption of the U.S. government is what was once only associated with third world countries ruled by dictators. The problem is that corruption of major institutions and first of all regulators is predicament for any country which adopted neoliberal model, and the US in no exception. Niall Ferguson called it "suffering from a third world disease.". In his new book The Great Degeneration he states the central question of the “great degeneration” is whether our institutions, and first of all institution which should uphold the rule of law are degenerating. He thinks that there are four symptoms of degeneration:

Quite frankly, like in the case of international financial capital, the most necessary constituents that define organized crime are in place so the difference in only in degree:

Organized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run for the purpose of engaging in illegal activity, most commonly for monetary profit 

Quoting Wikipedia:

In the United States, the Organized Crime Control Act (1970) defines organised crime as "The unlawful activities of [...] a highly organised, disciplined association [...]".[3] Criminal activity as a structured group is referred to as racketeering and such crime is commonly referred to as the work of the Mob. In the UK, police estimate organized crime involves up to 38,000 people operating in 6,000 various groups.[4] In addition, due to the escalating violence of Mexico's drug war, the Mexican drug cartels are considered the "greatest organised crime threat to the United States" according to a report issued by the United States Department of Justice.[5]

By all estimates Mexican grug cartels dwarf the size and wealth of the US financial sector.

If you think that the increasing level of penetration of Mexican mafia into the US is the result of external forces think again. In a way Reagan regime was a clear invitations for any self-respectful international crime syndicate to start operating in the US territory. And the exposition of crime that was a side effect of neoliberal counterrevolution in Russia has a distinct blowback effect in the USA. The same reasoning is applicable to various sophisticated financial crimes including computer related.  What you expect unemployed or semi-employed for 300 dollars a month programmers to do to in order to provide a living for themselves and their families.

Neoliberalism and propaganda of amorality

As Will Hutton  noted in The Guardian neoliberalism doctrine entail direct propaganda of amorality( Across Europe, political leaders have lost the trust of their people:

There was a time when to live a life virtuously was well understood. It embraced personal integrity, commitment to a purpose that was higher than personal gain, a degree of selflessness and even modesty. Those at the top may have got there through ruthlessness and ambition, but they understood that to lead was to set an example and that involved demonstrating better qualities than simply looking after yourself.

No more. Perhaps the greatest calamity of the conservative counter-revolution has been the energy it invested in arguing that virtue, whatever its private importance, has no public value. The paradox, the new conservatives claim, is only through the pursuit of self-interest can the economy and society work best. Responsibilities to the commonweal are to be avoided.

The retreat of virtue has become the plague of our times. Greed is legitimate; to have riches however obtained, including outrageous bonuses or avoiding tax, is the only game in town. But across the west the consequences are becoming more obvious. Politics, business and finance have become blighted to the point that they are dysfunctional, with a now huge gap in trust between the elite and the people.

In the USA it took more then three decade to eliminate morality and to establish "law of jungle" mentality in the population. In other countries such as Russia this process was much quicker and run deeper. And in no way this newly acquired level of criminally is reflected in incarceration statistics. Most of "neoliberal-style: crimes are financial crimes and as such they are difficult to direct and difficult to procedure. sometimes they are impossible to procedure either because of the political influence of the players or potential effect on the economy if particular persons and institutions are brought to justice. The latter factor was acknowledged by the US justice department.

Neoliberalism propagates criminal behavior by creating acute means-ends discrepancies and due to excessive cultural emphasis on monetary or material success goals ("greed is good" mentality) for members of society. At the same time mobility is restricted and majority of members of the society has no realistic chances to attain those goals. Still media brainwashing incites the desire more than they have. Success stories of going from rags to riches make the American Dream  more believable, despite the fact that it is deeply and irrevocably fake.  As this cultural meme is internalized it creates a strain, which combined with the culturally induced underemphasize on the proper methods, stimulates deviance of various types. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path. This process creates a vicious circle toward higher rates of deviance and widespread anomie under neoliberal regime.  Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions within the neoliberal doctrine and affects deviance in two ways. One is associated with strain, relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable. Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising or insider trading or running a prostitution ring.  While those criminogenic effects of neoliberalism became  prominent in the USA as was demonstrated by 2008 financial crisis, when most of financial players involved were engaged is behavior that is deeply and irrevocably asocial and amoral.  However, a very similar process is now being reproduced throughout the world. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. This high criminogenic impact of globalization and neoliberal policies is extremely difficult and costly to reverse. 

Moral relativism and concept of "Justice for some"

Moral relativism  means that anything that helps to achieve the goal is moral. It was actually pioneered by Marxism in context of means to be used to achieve "proletarian revolution". It is a part of Randism as a ersatz version of Nietzschean Philosophy. 

Corruption, facilitated by the credibility trap, is the biggest problem facing the West today. That is the real subsidy, the most debilitating entitlement.

It is the belief of the elite that the power of their office is an achievement that rewards them with the right to lie, cheat and steal, both for themselves and their friends.

Although it is most important to understand that they would be shocked and insulted if one uses those words, lie, cheat and steal, to describe what they are doing.  They view themselves as exceptionally hard working, as obligated by their natural gifts and superiority.

Through a long indoctrination that starts sometimes in their families, but is most often affirmed in their elite schools and with their circle of privileged friends, they learn to rationalize selective moral behaviour not as immoral but as 'the entitlement of success.'  And they are supported by a horde of morally ambivalent enablers who will tell them whatever they wish to hear.

There are one set of rules for themselves and their friends, and another set of rules for the rest.

Few who actually do evil consciously choose to be evil.  They rationalize what they do in any number of ways, but the deceit often hinges on their own natural superiority, and the objectification and denigration of the other.  We are makers, and they are takers. Although many may work hard, they see their own work as having special value and merit, while the actions of the others are inconsequential and unworthy.

Given enough time, their rationalizations become an ideology, desensitized to the meaning and significance of others outside their own select group.  This supremacy of ideology empties their souls, and opens the door to mass privation and even murder, although rarely done by their own hands.

This is what Glenn Greenwald calls 'justice for some.' Or even earlier what George Orwell captured in the slogan, 'Some animals are more equal than others.'

And just to be clear on this, with regard to the Anglo-American political situation, the tragedy is not that just some are corrupted, which is always the case. The tragedy is that the Democrats and the Labor Party learned that they could become as servilely corrupted by Big Money as the Republicans and the Conservative Party, while maintaining the illusion of serving their traditional political base.

And it has rewarded them very well in terms of extraordinarily well-funded political power, and almost unbelievable personal enrichment afterwards.  

In such a climate of corruption,  political discourse loses the vitality of ideas and compromise for the general good, and take on the character of competing gangs and crime families, engaged in aggressive schemes and protracted turf wars, tottering from one pitched battle and crisis to another.

As Jesse put in his blog  Jesse's Café Américain
"A credibility trap is a condition wherein the financial, political and informational functions of a society have been compromised by corruption and fraud, so that the leadership cannot effectively reform, or even honestly address, the problems of that system without impairing and implicating, at least incidentally, a broad swath of the power structure, including themselves.

The status quo tolerates the corruption and the fraud because they have profited at least indirectly from it, and would like to continue to do so. Even the impulse to reform within the power structure is susceptible to various forms of soft blackmail and coercion by the system that maintains and rewards.

And so a failed policy and its support system become self-sustaining, long after it is seen by objective observers to have failed. In its failure it is counterproductive, and an impediment to recovery in the real economy. Admitting failure is not an option for the thought leaders who receive their power from that system.

The continuity of the structural hierarchy must therefore be maintained at all costs, even to the point of becoming a painfully obvious, organized hypocrisy.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

The problem which the modern world has not yet grappled is how to react to the rise of a global elite, which considers itself to be above national restraints, and a law unto themselves.

Their success has been propelled by the dominance of Anglo-American financialization, and the rise of oligarchies in Russia, China, Latin America, and India.  Countervailing power has been co-opted and in many cases eliminated.  Any opposition has become marginalized and isolated.

The new oligarchs are supported by fiat currencies of respective national goverements, which together the increase of insubstantial 'cashlessness' in wealth. The latter provides much greater ability to reallocate wealth.

Legal arbitrage

Legal arbitrage is a powerful instrument for transnational corporations to press government into compliance.  As soon as government tries to impose some restriction on their operations they threaten to leave.

This behavior is by-and-large conditioned by the low price of oil. With price of oil above, say $200 per barrel, transportation costs became big enough to make this behavior less likely

Globalization and deregulation supports selective justice, to the extreme detriment of local legal regimes (outside G7), and individual choice and freedom.   The new global elite consider themselves to be a new Arab sheiks, a law unto themselves, above what they consider subhuman restraint. Or using Nietzschean terminology,  Übermenschen.

“Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn't succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today's super-rich are increasingly a nation unto themselves...

A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble."

Chrystia Freeland, The Rise of the New Global Elite

The Consequences of Neoliberalism in Third World Countries and xUSSR space: stagnation instead of growth

Being an implementation of the "law of jungles" on international scene with the USA as a 100 pound gorilla, the neoliberal regime has distinct criminogenic character both within the USA (unpunished financial crimes made by top management of leading Wall Street banks and investment firms) and, especially, in "newly liberalized" countries of former USSR ("a New Latin America").  Which is the main "sphere of influence" of international corporations from G7 countries.

Along with internationalization of economies and integration of elites there was internalization of organized crime and growth in sophistication of criminal methods of appropriation of wealth, including those used by international corporations. 

In this discussion we will follow key points of the article  Global Anomie, Dysnomie, and Economic Crime Hidden Consequences of Neoliberalism and Globalization in Russia and Around the World

Introduction

TRANSNATIONAL CRIME HAS RECENTLY ACQUIRED A PROMINENT PLACE IN PUBLIC debates. It is commonly presented as the most significant Crime problem at the turn of the millennium (Myers, 1995-1996; Shelley, 1995). Many have even suggested that it represents a serious domestic and international security threat (Paine and Cillufo, 1994; Williams, 1994). The argument is also made that a wave of transnational crime undermines policies and the functioning of an increasing number of market economies around the globe (Handelman, 1995; Shelley, 1994). As a consequence, the proposed remedies are often quite drastic and involve undercover operations, privacy-piercing approaches, and the participation of intelligence services in the fight against global crime (Andreas, 1997; Naylor, 1999; Passas and Blum, 1998; Passas and Groskin, 1995).

Yet, little attention and virtually no systematic research has been devoted to understanding the causes, structure, extent, and effects of serious cross-border misconduct (Passas, 1998). The risks it poses may be grossly exaggerated (Naylor, 1995; Lee, 1999). The draconian measures being contemplated and implemented in different countries, therefore, are essentially an exercise in shooting in the dark. Chances are good that the target will be missed and substantial "collateral damage" may be caused by ill-conceived policies in this "war" on crime. This risk is particularly high in countries in transition toward a market democracy. It would be much wiser, thus, to carefully study the problem before taking ineffective and possibly damaging actions.

This article seeks to make a contribution by concentrating on the causes of transnational economic crime. The main argument is that, contrary to conventional wisdom, neoliberalism and globalization contribute to processes leading to global anomie, dysnomie, and, ultimately, economic misconduct. They do so by activating the criminogenic potential of economic, political, legal, and cultural asymmetries, as well as by creating new such asymmetries (Passas, 1999). These asymmetries cause crime by furnishing opportunities for misconduct, by generating motives for actors to take advantage of such opportunities, and by weakening social controls. More specifically, means-ends disjunctions are systematically created, as neoliberal policies foster new needs and desires that are all too often left unfulfilled. Promises of more freedom, prosperity, and happiness for a larger number of people have turned out to be chimerical. Economic and power inequalities have widened within and across countries in the last two decades . The number of poor has reached unprecedented levels, while welfare programs and safety nets are reduced or abolished. Enormous populations have become more vulnerable to exploitation, criminal victimization, and recruitment in illicit enterprises or rebel and fundamentalist groups. Normative standards and control mechanisms are weak or completely absent exactly when they are needed the most.

This article begins with some basic conceptual clarifications and outlines the theoretical framework so far applied to the analysis of U.S. organizational and individual deviance. Then, the main features of globalization and neoliberalism are presented, followed by a contrast of promises made by proponents of neoliberal policies and their actual consequences. Attention then shifts to specific criminogenic effects of these outcomes and the case of Russia, which illustrates the different stages in the processes leading up to serious misconduct and anomie. The chief policy implication of this analysis is that the recently unleashed forces of neoliberalism need to be reined in and held in check, while government policies ought to better shield the least privileged from the adverse effects of globalization.

Some Conceptual Clarifications

Although there is no universally accepted definition of transnational crime, many commentators seem to think of it as a globalized form of the stereotypical "organized crime." This, however, leaves out corporate and governmental crimes, whose effects can be far more harmful than those of "professional" criminals and ethnic groups involved in the business of illegal goods and services. We therefore need a definition that is inclusive enough without becoming too relativistic and subjective. For our purposes, transnational crime refers to cross-border misconduct that entails avoidable and unnecessary harm to society, is serious enough to warrant state intervention, and is similar to other kinds of acts criminalized in the countries concerned or by international law. Crime will be viewed as transnational when the offenders or victims are located in or operate through more than one country (Passas, 1999).

Globalization is another term that is often used without clear definition. In the simplest sense, it refers to a growing interconnectedness and multilateral linkages across national borders. According to Keohane and Nye (2000: 104), globalism is a state of the world involving networks of interdependence at multicontinental distances. The linkages occur through flows and influences of capital and goods, information and ideas, and people and forces, as well as environmentally and biologically relevant substances (such as acid rain or pathogens).

Globalism has several dimensions, such as economic, cultural, environmental, or military, not all of which take place at the same time. So, whenever globalism increases and becomes thicker or more intense, we can speak of globalization. When globalism decreases, we can speak of de-globalization.

Finally, the term "criminogenic asymmetries" refers to structural discrepancies and inequalities in the realms of the economy, law, politics, and culture. Such asymmetries are produced in the course of interactions between unequal actors (individual or organizational) or systems with distinctive features. All asymmetries contain some criminogenic potential. Durkheim argued that crime cannot be eliminated, because we are and always will be different from each other. Even in a society of saints, minor deviations would be considered serious offenses. In modern societies, crimes are those behavioral differences (asymmetries) that have been outlawed by legislative bodies. There is always the opportunity for powerful actors to victimize less privileged ones (economic, political, and power asymmetries). This potential is not always materialized. Criminal opportunities are not necessarily taken advantage of. Mostly this is because actors do not always seek or wish to make use of illegal opportunities. They may not regard such action as appropriate (due to socialization, internalization of norms) or fear adverse consequences. The criminogenic potential is most likely to be activated when opportunities, motives, and weak controls are all present.

For example, a combination of legal/regulatory asymmetries with economic and political asymmetries has given rise to a huge illicit market for toxic waste disposal. Many Third World countries either did not regulate toxic waste or did so much less rigorously than did industrialized states. This provided an opportunity for maximum-profit-seeking companies to getrid of their hazardous waste in areas where rules were lax or nonexistent (Center for Investigative Reporting and Moyers, 1990; Critharis, 1990). Power and economic asymmetries between rich and poor countries have led waste recipients to allow this to go on because of their dependence on foreign investment, the need for cash to service external debt, or the desire to create jobs (Korten, 1995). Economic and knowledge asymmetries also shaped the motivation of local participants in this questionable trade. The decision to go along reflects an incomplete understanding of the extent or nature of the hazard, their desperate need for additional income, an effort to be competitive and attractive to foreign companies (race to the bottom), or corruption.

Anomie and Deviance

Both Durkheim (1983) and Merton (1968) have stressed how high rates of deviance should be expected when social expectations are out of balance with realistic opportunities to reach the desired goals. According to Durkheim, this means-ends discrepancy is caused by society's inability to regulate people's naturally limitless desires. This problem was particularly acute in the commercial and business sector, in which anomie was chronic during the industrial revolution, opening up new horizons and undermining society's ability to contain aspirations. A similar situation can be observed in contemporary societies, where electronic, information, and biological technologies constantly redefine what is possible and break new ground.

According to Merton, unrealistic hopes and expectations are not simply natural, but socially constructed and promoted. Structural problems are at the heart of the means-ends disjunction. The U.S. culture and the ideology of the American Dream encourage lofty expectations, while society fails to provide equal access to legal opportunities. Meanwhile, there is a cultural overemphasis on success goals at the expense of normative behavior (as further elaborated by Messner and Rosenfeld, 1994). Both of these factors make for deviance and anomie.

Without ignoring the differences between the two sociologists, it has been possible to use an elaborated version of their anomie theories to explain corporate crime in the context of capitalist economies (Passas, 1990). Regardless of whether people strive for "more" due to natural drives or because of cultural encouragement, the point is that market economies cannot perform without lofty aspirations, consumerism, emphasis on material/monetary goals, and competition. All this leads to the pursuit of constantly moving targets and systematic sources of frustration. A synthesis of anomie theory with reference group analysis made clear how means-ends discrepancies are socially generated and experienced by people in all social strata. It also showed how this theoretical framework is applicable to the analysis of crime without strain or problems (i.e., anomie theory is not a strain theory) and to "organized crime" even after discrimination or blockage of legitimate opportunities no longer affects minority groups (Passas, 1997).

In brief, the dynamic social process leading to structurally induced strain, anomie, and deviance without strain is as follows. Means-ends discrepancies are caused by a strong cultural emphasis on monetary or material success goals for all members of society, while a good number of them do not have a realistic chance to attain them. Socially distant comparative referents are constantly introduced and sustained through the school, family, politics, workplace, media, advertising, and even religion (Passas, 1994). Regardless of their social background and the social capital available to them, people are urged to desire more than they have. Success stories of going from rags to riches make the American Dream even more believable. As this cultural theme is internalized, competitive forces and consumerism foster normative referents on what is "normal" and appropriate. The widely internalized egalitarian discourse clashes in practice with widespread inequality (power and economic asymmetries). Consequently, those m embers who fail to meet such comparative and normative standards are likely to experience relative deprivation and frustration. This strain, combined with the culturally induced overemphasis on goals and the concomitant under-emphasis on the proper methods, makes for deviance of various types (see Merton's typology). A good part of the deviance is an individual search for a solution to these structural problems. If the deviant solution is successful (i.e., perpetrators are not caught or adequately punished), this adaptation may become normative for others in a similar social context. To the extent that this solution is available to them (demand for illicit goods or services, access to illegitimate opportunity structures), they may adopt this role model -- and may be expected by their significant others to follow this path -- even though the original source of strain has by now been eclipsed. Unless effective control measures are taken, this process continues in a vicious circle toward higher rates of deviance and widespread anomie (for a schematic representation of this process, see Figure 1 at the end of the article).

In the literature, anomie is often conceptually confused with its causes or effects. To keep its explanatory potential, this mistake should be avoided. Anomie is a withdrawal of allegiance from conventional norms and a weakening of these norms' guiding power on behavior. This is caused by structural contradictions and affects deviance in two ways. One is associated with strain, the other is not. The former is caused by relative deprivation, frustrations, and the almost obsessive focus on goals. This makes deviance thinkable, as conventional norms are regarded as nonbinding, at least temporarily. Rationalizations enable departures from otherwise accepted/internalized social rules, as actors convince themselves that in their particular circumstances an exception is acceptable (Aubert, 1968; Sykes and Matza, 1957). Through interactive processes, techniques of neutralization and rationalizations contribute to a context in which newly socialized actors may adopt normative referents and deviant behavior as a matter of course. If "this is the way business is done around here," people may engage in price fixing or misleading advertising without experiencing any prior frustration or problem.

Globalization and Neoliberalism

These structural problems have been most prominent in the USA. However, a very similar process is now being reproduced throughout the world through globalism and neoliberalism. Promises are made that are not fulfilled. People's expectations are exalted at a time when economic and power asymmetries increase and become less justifiable and intolerable in the eyes of the people affected. The logic of the market permeates popular thinking and introduces rationalizations, making the adoption of a criminal or unethical solution more acceptable. The horizontal lines in Figure 1, rather than representing controlling influences, at the global level point to the criminogenic impact of globalization and neoliberal policies.

Nowadays, globalism and neoliberalism seem to be indistinguishable empirically or even conceptually (Cox, 1993; Stewart and Berry, 1999). Nevertheless, I think it is useful to try to separate them analytically. As noted earlier, globalism refers to the degree of interconnectedness and the increase or decrease of linkages. By contrast, neoliberalism refers to an economic and political school of thought on the relations between the state on the one hand, and citizens and the world of trade and commerce on the other. Because it espouses minimal or no state interference in the market and promotes the lifting of barriers to trade and business transactions across regional and national borders, it certainly becomes a motor of globalization.

Globalization in the last two decades shows clear signs of deeper and thicker interconnections that affect many more people than ever before. The effects are now much faster, as shown by the financial crisis in Thailand in 1997. The world has shrunk and become "one place," with global communications and media, transnational corporations, supranational institutions, and integrated markets and financial systems that trade around the clock (McGrew, 1992; Sklair, 1995). The cultural landscape has changed under the influence of mass media. Through their ads, TV programs, movies, and music, they contribute to cultural globalism, target young children, and foster consumerism (e.g., "Image Is Everything," "Just Do It," or "Coke Is It"). Information technology is making for "distant encounters and instant connections" (Yergin and Stanislaw, 1998). Fresh normative and comparative ideals are thus promoted, legitimated, and presented as attainable. Scholars attribute the momentum of this process to the forces of capitalism (Wallerstein, 1983), technology (Rosenau, 1990), the presence of a hegemon (Gilpin, 1987), or a combination of them all (Giddens, 1990).

Neoliberalism, in particular, has made a major contribution to the dynamic and contradictory processes of globalization since the elections of Ronald Reagan, Margaret Thatcher, and Helmut Kohl. During the 1950s and 1960s, the dominant concerns revolved around distributive justice, neocolonialism, and dependency theory. These were displaced in the 1980s and into the 1990s by discourses of "free markets," individualism, and self-help (Woods, 1999). Policies of deregulation, privatization of state assets, and removal of tariffs implemented the doctrine that the state should get out of the way of free enterprise. Unemployment, inequality, and poverty were no longer explained by structural contradictions or constraints. The problems became individualized and blamed on corrupt administrations or on the poor themselves. The proposed medicine was more liberalization of the economy, free competition, privatization of inefficiently managed government agencies, abolition of capital controls, and permitting foreign capital to enter all markets.

The ideological underpinning of globalization, thus, has been the primacy of economic growth, which is thought to be benefiting the whole planet. Consistent with that prime directive, country after country has been persuaded (or forced) to promote "free trade" and consumerism, to reduce government regulation of business, and to adopt the same economic model regardless of local specificities and differences between industrialized and developing countries (Bello, 1999; Mander, 1996).

More specifically, shifts in the North, the East, and the South have been quite remarkable. In the North, the welfare state that used to care for citizens "from cradle to grave" has been replaced by a "pay as you go" social service system. Even public utilities have been privatized and have begun to charge "economic prices," as former subsidization systems were abolished. Further, "industrial interventionism and labour protection have given way to laissez-faire; and tax systems whose major purpose was to correct inequalities have been transformed into systems mainly intended to promote incentives and economic efficiency" (Stewart and Berry, 1999: 151).

In developing countries, similar shifts took place as a result of hegemonic influences from the North. Western-educated Third World "technocrats" returned to their home countries eager to introduce neoliberal policies (Burbach et al., 1997: 86; Newsweek, June 15, 1992). As the bandwagon of liberalization took off, few countries wished to be left out. As a World Bank official warned, "lagging countries risk being left farther behind....For economies that remain inward-looking, the risk of being marginalized is greater than ever" (cited in Klak, 1998: 21).

Yet, the shifts have not always been voluntary. A host of measures and conditions consistent with the neoliberal agenda were imposed on countries through international institutions, such as the International Monetary Fund (IMF), the World Bank, the OECD, the European Union, the G7, etc. Countries drowning in external debt sought additional loans to pay off their older ones -- chiefly to banks from the industrialized world. Billions of dollars were made available to them, but only if they introduced Structural Adjustment Programs (SAPs). Despite important differences among the various economies, SAPs shared the same basic elements: long-term "structural" reforms to deregulate the economy, liberalization of trade, removal of restrictions on foreign investment, promotion of an export orientation of the economy, wage reductions and controls, privatization of state enterprises, and short-term stabilization measures such as cutbacks in government spending, high interest rates, and currency devaluation (Bello, 1996 ; 1999).

Changes along these lines also took place in the East, where the switch from state-managed economies toward "free market" and parliamentary democracy has been quite drastic and swift (Glinkina, 1994; Woods, 1999). The problem is that the introduction of global neoliberalism has brought about enormous economic and political asymmetries, as its promises and theoretical expectations remain unfulfilled.

The Promises of Global Neoliberalism

The supporters of global neoliberalism make a series of claims. For instance, the world is shrinking following greater connectivity (IBM claims to offer "solutions for a smaller planet"). The distinction between core and periphery states is presumed to be getting fuzzier and irrelevant, as there are only winners from now on. Investment, trade, and development opportunities are more widely distributed around the world. There is a marked convergence into one world economy, in which everyone can find a market niche. Media and cultural influences are more widespread and multilateral, as foods, music, and art are imported to the North and integrated into local cultures. Finally, people are more integrated thanks to telecommunication technologies and immigration (Klak, 1998).

To [neoliberal] economists, all these trends are positive, even if short-term hardship is deemed necessary for some parts of the population. Global welfare is expected to be enhanced, as the forces of free competition within and between countries will encourage more efficient resource allocation and bring about higher productivity (Oman, 1999). A more open, trade-creating world should, therefore, benefit everyone, if unevenly. Trickle-down effects of wealth creation would ensure that virtually everyone will participate in this welcome trend (Korten, 1996).

The objective of SAPs was to render developing economies more efficient, drive up growth rates, and provide foreign exchange that could be used to repay debt. Higher growth rates are empirically associated with comparatively more equal income distribution (Alesina and Rodrik, 1994). Hence, neoliberal policies would bring about not only more economic growth, productivity, a better division of labor (multistate production and wider participation), lower unemployment, more wealth and prosperity, but also more democracy, less poverty, and fewer inequalities. Unfortunately, in most countries, these virtuous circles did not occur.

The Consequences of Global Neoliberalism

Throughout the world, the expectations raised by neoliberal theorists have not materialized despite the extensive application of their policy recommendations. Instead, most economies "fell into a hole" of low investment, decreased social spending and consumption, low output, decline and stagnation. Both the World Bank and the IMF retreated from SAPs and acknowledged their failure (Bello, 1999; Katona, 1999; Multinational Monitor, June 2000; Watkins, 1997).

In the North, GDP growth was lower in the 1980 to 1990 period than in the 1950s and 1960s. We also witness a higher volatility in growth (e.g., booms and busts). Lost in all the talk about huge technological advances ushering in the computer and Internet era is the fact that productivity growth now is half that of levels in the 1950s and 1960s. Unemployment in OECD (Organization for Economic Cooperation and Development) countries has risen from eight million in 1970 to 35 million in 1994. In the midst of U.S. prosperity and economic expansion, inequalities increased. The number of people living under the officially defined poverty level grew from 11.4% of the population in 1978 to 13.5% in 1990. Almost one in four new babies in the U.S. are born into poverty, while the top one percent of Americans saw their real income shoot up by 50% (Levy, 1998; Wilterdink, 1995). Also noteworthy is that U.S. and Western European international trade relative to GDP was greater a century ago than in recent years (Hirst and Thompson, 1996).

Neoliberal dreams proved to be even more chimerical in the South. Role models, like South Korea, Malaysia, and Indonesia plunged into crises in the 1990s. Mexico and Brazil, which faced their own scary periods, experienced growth of three percent in the last two decades, whereas that rate was six percent during the dirigiste period of 1950 to 1980. Wage gaps widened. Even in Costa Rica and Chile, models of success in Latin America, the results have been an unmitigated disaster for the lower social classes. The number of Costa Ricans below the poverty line rose from 18.6% in 1987 to 24.4% in 1991, while 42% of all Chileans are also living in poverty (Burbach et al., 1997: 86). Half of the investment flows to developing countries went to just three countries (China, Mexico, and Argentina). In addition, some investments had negative local effects. For instance, as diverse agriculture was converted into monocultures or to export-oriented flower plantations, self-sufficiency was undermined (Clinard, 1990; Klak, 1 998).

Moreover, the core-periphery distinction is as relevant as ever. Its real meaning relates to power, authority, and the accumulation of wealth, where the gaps (asymmetries) are increasing. Although production (of certain items) is more dispersed, the concentration of power, control, and benefits has become more pronounced. In 1991, 81% of the world stock of direct foreign investment was in the core triad of the USA, the European Union, and Japan -- up from 69% in 1967. The appearance of integrated markets also obscures the fact that 80% of all world trade is within the core triad, in which resides less than 20% of the planet's population (Hirst and Thompson, 1996; Klak, 1998).

In Latin America, debt jumped from $230 billion in 1980 to $600 billion in 1997. Capital had been fleeing those countries up to the early 1990s, when net inflows were the result of casino capital -- seeking short-term gains and likely to abandon those countries at the first hint of trouble. Consequently, new debts were created with a new round of borrowing (Robinson, 1998-1999). An important reason why developing countries cannot pay off their debt is that trade protectionism in the North has kept them from penetrating those markets. Trade liberalization has been inconsistent in that rich countries demand more open markets abroad, while continuing to subsidize their own economic sectors, such as agriculture (Andreas, 1999; UNDP, 2000; Watkins, 1997). Compounding these problems, aid to poor countries has been cut back. Whatever assistance is offered comes with strings attached, including the reduction of state intervention, which could have softened the effects for the most vulnerable (Watkins, 1997; Woods, 1 999). These policies further undercut food security, cause poverty, and increase economic and power asymmetries. For instance, the cost of living in the Caribbean and the U.S. is quite comparable. In 1997, however, per capita income in Trinidad and Tobago, the richest Caribbean state, was less than half that of Mississippi, the poorest U.S. state. The gap between skilled and unskilled workers widened even more: Haitian workers made clothing with Disney logos for less than 60 cents per hour, while Disney's CEO made $9,700 per hour (Klak, 1998).

The claim of multilateral and even cultural influences also masks tremendous asymmetries. Even though we listen to reggae in the North, 95% of TV programs in St. Lucia come from the U.S. The most widely read newspaper in the Caribbean is the Miami Herald. Consequently, U.S. affluence and opportunity, often romanticized, is especially well-known, deeply ingrained, and alluring to the Caribbean...[where] people are prone to set their living standard goals in accordance with what the U.S. media ascribe to the United States. And the imbalance in media flows is increasing with the Caribbean's economic crisis and neoliberalism, as local media have been slashed (Klak, 1998: 11).

As dreams of consumption are disseminated, 86% of total private consumption expenditures is accounted for by 20% of the world's people in industrialized countries (UNDP, 1998). For the people who live outside the consumption geographical area, big banks offer credit to only 10% of the people in developing countries, whereas ads for credit cards and consumer items are omnipresent (Barnet and Cavanagh, 1994). Well over one billion people are deprived of basic consumption needs. For hundreds of millions, basic sanitation, clean water, adequate housing, and health services are unattainable luxuries. Two billion people live on less than two dollars a day and 1.3 billion on less than one dollar a day (ICFTU, 2000). Struggling to survive, some decide to sell their body parts to make ends meet, which is the ultimate symbol of commodification (ScheperHughes, 2000).

A negative effect of the Internet is that it alters the relationship between our place of residence and our cultural preferences, experiences, and identities. A spreading global virtual reality disconnects locality from culture, weakens the bonds to particular communities, and estranges people from each other (Minda, 2000). Ladakh, a Himalayan province that prospered for a millennium despite harsh weather conditions, illustrates how (especially cultural) globalization devastated local communities (Norberg-Hodge, 1996). In 1962, isolated Ladakh was linked to the rest of India by an army-built road. The modernization that began in 1975 took about a decade to change the pride Ladakhis felt until then into a collective inferiority complex. Tourism and the media conveyed a picture of wealth, technology, power, and work that was alien and irresistible to them. Village life by comparison began to appear "primitive, silly, and inefficient" (Ibid.: 35). Ladakhis felt ashamed of their culture and strove for consumer items that symbolize modern life, such as sunglasses and Walkinans. As Western educational standards penetrated Ladakh, the intergenerational learning experience that helped them provide for themselves in their rough terrain gave way to schools that used texts imitating Indian and British models that were completely irrelevant to their lives (e.g., figuring out the angle of the Tower of Pisa and learning how to keep a London-like bedroom tidy). There used to be no such thing as a "paying job"; there was no money economy. Gradually, however, unemployment -- previously nonexistent -- became a serious problem, because naturally available resources were abandoned, cheap imports made local farming redundant, and people flocked to the cities to compete for scarce jobs. Radios and TVs chased away the traditions of singing together and group story telling. The points of reference ceased to be real people living nearby, but geographically and socially remote ideals. Consumerism bred new "needs," which could hardly be materialized. Family and other bonds disintegrated and divisions emerged between old and young, Buddhists and Muslims. The result was unprecedented violence, community breakdown, and anomie.

Criminogenic Effects: Systemic Strains and Global Anomie

What makes the ideology of the American Dream unique is a focus on money and material goods, a strong emphasis on "winning" (often, by all means), and success for everyone in a society where many opportunities for material advancement are available and plenty of "rags to riches" stories lend legitimacy and credibility to the egalitarian discourse. Legal opportunities, however, for achieving the lofty goals are inaccessible to most Americans. In such a consumption-driven culture, which highly values competition and individualism, the means-ends disjunction has entailed a significant criminogenic risk, much greater than in the rest of the world. Crime has been the flip side of economic growth, innovation, and better living standards for certain segments of the population. What sheltered other countries from this negative potential were things absent or minimized in the USA, such as rigid social stratification, low rates of social mobility, less materialism and time spent before TV boxes, safety nets for the underprivileged, more emphasis on other priorities (e.g., solidarity), etc.

This made it possible to explain the higher crime rates in the U.S. compared to other developed or developing countries. These protective factors, however, are now being gradually lost. Disjunctions between socially induced goals and legal means are few in societies that do not encourage high social mobility. In such societies, people may not feel that they are lacking anything, even when they are "objectively" deprived. Economic or other asymmetries are unknown or not experienced and perceived as intolerable. Global neoliberalism breaks down societal barriers and encourages new needs, desires, and fashions. It promotes the adoption of non-membership reference groups for comparisons that can be unfavorable and upsetting. New normative reference groups define what is "cool" to do. People's ideals in the South and the East may not be about getting from "a log cabin to the White House." However, they are being systematically driven to abandon old ways and values in order to consume. They do not necessarily think that they can be "like Mike," but they do fancy those pricey athletic shoes. So, fresh normative and comparative models create new "needs," together with the expectation that the fulfillment of such needs is vital and achievable.

Yet, as needs and normative models are "harmonized," people become conscious of economic and power asymmetries, and directly experience their impact. Globalization and neoliberalism heightened this awareness, further widened the asymmetries, and fostered the interpretation of them as unnecessary and changeable. In the end, most people realize that the attainment of their lofty goals and lifestyles is beyond reach, if they are to use legitimate means. The success in spreading neoliberalism has brought about a series of failures: more poverty, bigger economic asymmetries, ecosystem deterioration, slower and unsustainable growth patterns. At the time that societies most needed the shield of the state to cushion these effects, welfare programs, safety nets, and other assistance to the poor (individuals, companies, and states alike) forcibly declined or disappeared. Thus, global neoliberalism systematically causes relative deprivation as well as absolute immiseration of masses of people. In effect, it has generated new sources of criminogenesis and removed existing antidotes to it.

All this provides multiple motivations for criminality, as many would turn left and right for solutions and illicit opportunity structures become more international and accessible. At the same time, many weak states lose their autonomy, come to depend more on international organizations and transnational capital, and are unable to cope with emerging crime threats from criminal enterprises and powerful corporations. So, globalism and neoliberalism replace the "egalitarian discourse" of the American Dream in the scheme represented in Figure 1 in a process occurring in the industrialized world, developing countries, and those in transition from Communism to market democracies. Nowhere are these results more clearly visible than in the former USSR.

The Case of Russia

No one argues that there was no appetite for consumer goods in the years of the USSR or that such goods were widely available. Crime, corruption, illegal markets, and even underground factories could be found behind the official facade of the command system before glasnost and perestroika, although black marketers were not numerous and lived modestly. The government turned a blind eye to these activities, because they served as a safety valve in an inefficient system (Gleason, 1990; Handelman, 1995; Naylor, 1999b). Discontent, enormous structural problems, and an inability to deal with them characterized the pre-transition years. This is particularly true for the 1960s, when Khrushchev pledged that the USSR would overtake the U.S. in the production of industrial goods by the 1980s. Yet, as inefficiencies precluded such progress, demands for more consumer items "from an increasingly educated, by now self-assured, population, started to put pressure on government...as a loyal expression of the citizens' request for the gradual delivery of promised well-being" (Castells. 2000: 25).

In the 1990s, however, the rates of fraud, prostitution, drug trafficking and abuse, alcoholism, smuggling, white-collar crime, violence, and corruption skyrocketed (Castells, 2000; Handelman, 1995; Holmes, 1997; Lee, 1994; Shelley, 1994). To be sure, Russia is unique in the degree of chaos and disintegration that accompanied the transition to a market economy and the implementation of neoliberal reforms. Few countries have experienced the speed and intensity of privatization, deregulation, and the lack of political leadership and administrative skills we witness in Russia. Indeed, it is the closest we can come to a social state of anomie, without a total collapse and anarchy. This does not mean that Russia is atypical. Very similar, albeit less intense, processes have occurred throughout the world (Lee, 1999; Mander and Goldsmith, 1996; van Duyne et al., 2000). Nevertheless, precisely because it is such an extreme case, it illustrates the theoretical points made here and the process toward anomie and economc crime.

Enter Neoliberalism

In the 1985 to 1989 period, reforms took place while the Communist Party was still in control. The Law on Cooperatives (1986) and the Law on Individual Labor Activity (1987) paved the way for further reforms, such as legalization of small businesses in 1989. Between 1990 and 1991, the USSR Supreme Soviet, with Yeltsin as chairman, introduced laws that made state and private enterprises equal, allowed state companies relative independence from government managers, abolished mostrestrictions on property bought by citizens, promoted privatization, and allowed foreign companies to operate in Russia. Such reforms did not take place at the same pace throughout the USSR. This set Russia apart from the Union and Yeltsin from Gorbachev. Legal asymmetries made the task of law enforcers impossible, as they did not know which laws to prioritize and apply (Afanasyef, 1994). Up to the 1991 coup and the collapse of the USSR, reforms were cautious and gradual, and had not challenged the core of the command economy system. F ollowing the failed coup and under Yeltsin, however, this changed dramatically. Demagogy and erroneous judgments on the feasibility of a swift transition to a market democracy compounded the problem. The Russian government was warned of the dire consequences of a speedy transition to a market economy without previous establishment of the necessary institutions and legal infrastructure. The chairman of an international advisory committee, which repeatedly issued warnings in 1992, was told that "forces in the Kremlin" favored a less "regulatory approach that would provide greater freedom of manoeuvre. Gaidar, supported by the IMF, believed firmly in the intrinsic capacity of market forces to remove obstacles by themselves, and people could use their vouchers to acquire shares" (Castells, 2000:188). Prices were liberalized, imports and exports became free, domestic trade restrictions were abolished, government intervention was minimized, and public property was massively privatized. By June 1994, officials were self-congratulatory over the fact that 70% of state assets had passed into private hands (Kuznetsova, 1994).

New Normative and Comparative Referents

The reforms initiated by Andropov and Gorbachev (perestroika and glasnost) allowed some freedom of speech and openness that let globalization and media influences into the USSR. The post-1991 changes, however, offered new hope out of the severe problems people were facing. Russian leaders fostered heightened aspirations by declaring that the country would soon be modernized and join the "civilized world." Authorities in the former Soviet republics made the same promise, arguing that '"since we gotrid of the Russians,' all obstacles to prosperity have been removed and Western standards are within reach" (Burbach et al., 1997: 118). There were forceful and impressive presentations of consumerist lifestyles as "desirable," "modern," and feasible. Distant comparative and normative referents were thus promoted by the media and advertising. Indeed, the yearning for Western lifestyles and consumption items made the initial acceptance of neoliberalism by the population much easier (Ibid.). Neoliberalism strengthened that desire and made consumerist dreams appear realistic. Even young Russians now would like to be like Mike and wear the same type of shoes or eat the same breakfast. As Glinkina (1994: 385) put it, an important factor contributing to the criminalization of the economy has been "a drastic stratification of the population's standard of living with a simultaneous loss, in a considerable part (especially among the youth), of socially important goals --replacing them with consumption ideals...."

It must be noted that the normative shift was far more radical in the former USSR and Eastern Europe than it was in Third World countries. The transition from socialism to capitalism by overzealous authorities espousing the new dogma of neoliberalism has had its own direct anomic effects, as will be seen below.

The Consequence: Means-Ends Discrepancies

The worldwide consequences of neoliberal policies were replicated in Russia. However, the effects have been far more disastrous than elsewhere: lower productivity, high unemployment, much steeper inequalities, increased levels of absolute poverty, disappearance of familiar safety nets, and administrations paralyzed by ineptness and corruption. The ensuing means-ends discrepancies are far more than a theoretical construct. They are painfully experienced by large numbers of people who realize that they simply cannot attain their goals. Within one year, inflation wiped outmost people's life savings, while the buying power of most wages dropped to the level of the 1950s. In the winter of 1993, funds were often insufficient to heat residential buildings (Burbach et al., 1997; Handelman, 1993).

As a new bourgeoisie emerged from the ashes of the Communist regime, one-third of the population became impoverished. The gap between the rich and the poor opened up suddenly and grew out of proportion. Official data indicate that in 1994 the difference between them was elevenfold. Researchers argue that the difference between the top 10% and the bottom 10% is 28-fold (Kuznetsova, 1994). Even the chair of the Privatization Commission admitted that the process created "pauper-proprietors" who "cannot survive without state protection" (cited in Burbach et al., 1997: 120).

Relative and Absolute Deprivation

The rising expectations of the 1960s led to disenchantment with Communism and paved the way for radical social change. The abandonment of the Soviet conservative model and very rapid implementation of neoliberal policies fueled hopes that a much better future was within reach. Russians rejected rigid stratification and strove for a socially mobile ideal. As has been noted, [the middle classes] believed that capitalism could offer even more. Thus, the modernization that had been promised by the neoliberals was perceived by the majority of the population as the modernization of consumption.... The Western model of consumption has finally triumphed, at least in the main cities. But for the majority of the people, the price is that even the former Soviet way of life has become an unattainable dream (Burbach et al., 1997: 124).

The aspiring yuppies have ended up as "dumpies," while a growing polarization makes them see a few of their compatriots enjoy luxuries attained by looting the remnants of the former USSR.

Thus, the post-Soviet Russian dream turned out to be a nasty nightmare (Handelman, 1995). As happened in many other countries, austerity, belt tightening, and lower (in some cases, no) salaries were imposed as consumerism took hold. The impact of these experiences on personal feelings is much more widespread, intense, and unpleasant due to the higher expectations. Even people who are not objectively deprived now feel relatively deprived. Comparisons between their present and past situations are unfavorable: "Formerly privileged sections of the Russian population, such as teachers, doctors, miners, and workers in the oil and gas industry, went on strike, for they could no longer survive on 50 to 70 dollars per month salaries" (Burbach et al., 1997: 125-126).

East-West political and administrative asymmetries, economic asymmetries, and relative deprivation in the aftermath of the collapse of the USSR and disillusionment with Western policies and capitalism have been clearly criminogenic (Handelman, 1994; Shelley, 1994). Motives for various types of crime became abundant, illegal opportunity structures multiplied, and control systems have been seriously damaged and undermined. The Mertonian category of "conformity" has almost become a rarity, as crime rates increased sharply. Even worse is the problem of economic crime. Recorded economic crimes rose almost 23% during the first seven months of 2000, compared with the same period in 1999 (Radio Free Europe/Radio Liberty, August 17, 2000). Strains and discontent have translated into a range of predatory misconduct, corruption, political violence, a variety of illegal markets, and expressive misconduct.

Search for Solutions and Anomie

In this context, many can be expected to "innovate," to employ illegal methods for survival or the satisfaction of their basic and newly acquired needs. Methods range from petty property crimes and prostitution to criminal enterprises and white-collar crime, depending on the social position of the offender. An electronics engineer, for example, could not live on his three dollars per month and moonlighted as a taxi driver. When his taxi broke down, he turned to selling poppy straw (OGD, 1996). Unpaid and depressed professionals with access to more valuable commodities, such as nuclear material, pose an even more serious threat (Lee, 1999). Consumerist teasing increased demand for goods made unavailable (e.g., cars or electronics) by the economic collapse, fueling smuggling operations, black market networks, and associated illegal enterprises. Shortages of other desired goods are artificially created by quickly adapting entrepreneurs.

Similar conditions outside Russia explain the illegal car trade between Eastern and Western Europe (van Duyne et al., 2000) and the illegal trade in various commodities between China and Hong Kong before unification (Vagg, 1992). In Russia, many took advantage of such supply-demand asymmetries, including the vory v zakonye (commonly described as "thieves in law"), who had been the dominant type of professional offenders in the USSR. Structural changes and globalization, however, brought about more competition from ethnic groups (Armenians, Azeris, Chechens, Georgians, etc.) in drugs and arms trafficking, as well as from loose and ad hoc associations of criminals in certain locations or industries. Unsettling reports assert a symbiotic relationship between criminal groups and active or retired intelligence officials. Deteriorating economic conditions have facilitated recruitment for employees in growing illegal markets. Criminal enterprises, for instance, have "...invested heavily in the opium business, financing much of the new cultivation by hiring peasants and even entire villages to plant and protect the poppy crops" (Lee, 1994: 401).

Another source of criminal opportunities sprang from the disintegration of institutions and the disarray in law enforcement. Legitimate businesses are exposed to blackmail and other criminal victimization, but the authorities are unable to assist them. Consequently, many domestic and foreign companies deal with criminal groups and seek their protection, rather than rely on the government (Lee, 1994). Not surprisingly, the majority of Russian experts consider the strengthening of criminal groups to be a "very significant" social consequence of the market reforms introduced in 1992 (Afanasyef, 1994).

Other illicit opportunities were furnished by the privatization process, such as selling state assets at extremely low prices or driving down the prices of privatized companies so as to cheaply purchase vouchers owned by individuals desperate to make ends meet. Privatization in countries with an existing bourgeoisie and experienced managers and entrepreneurs facilitated certain corporate crimes and abuses of power by respected professionals. In Russia, the mix of offenders was different: former company directors, the nomenklatura, professional criminals, and new entrepreneurs with a black market background (Glinkina, 1994; Kuznetsova, 1994; Shelley, 1994). The attempt of former Communist officials to dominate this field did not prove lasting. Many were not competent to run private businesses and had to sell them or lose control. The main beneficiaries seem to be former black marketers and outsiders to the old order (Naylor, 1999b). The abuse of privatization has had an anomic effect as the impunity of offenders became widely known, to the point that Russians began to refer to privatization (privatizatsiya) as prikhvatizatsiya, which means "grabbing" (Handelman, 1995: 104).

Crime and corruption in the midst of privatization fervor are not unique to Russia. (On other previously Communist states, see Popescu-Birlan, 1994; on Latin America, see Saba and Manzetti, 1996-1997.) As a former World Bank official put it, "everything we did from 1983 onward was based upon our new sense of mission to have the south privatized or die; towards this end we ignominiously created economic bedlam in Latin America and Africa" (cited in Katona, 1999). Another similarity with other parts of the world is the degree of authoritarianism that accompanied neoliberal policies. While stimulating rapid accumulation of private capital, the role of the state is reduced to implementing financial austerity. When people started to oppose such measures, "Yeltsin resorted, with Western support, to establishing a semi-authoritarian regime. Making Russian 'reformers' invincible to political and legal challenges inside the country contributed to further criminalization of the Russian State, which acquired an oligarchic character" (Beare, 2000:6). As similar processes occurred around the world, from Pinochet's Chile to Suharto's Indonesia, one wonders if such reforms would have been possible in a democracy.

Legal organizations also "innovate" by cutting corners and breaking the law due to the environment created by unsystematic legal reforms. Unable to navigate a sea of legal gaps and inconsistencies, "...most managers of private as well as state-owned enterprises cannot run their businesses without committing crimes" (Afanasyef, 1994: 437). Many companies cannot handle the competitive challenges generated by globalism and require state protection. The subsidization of privatized companies, however, introduces further regulatory and price asymmetries that foster the smuggling of goods across newly created borders within the former USSR (see below on nonferrous materials). Enterprises that do not enjoy state intervention are at a disadvantage and may be forced into bankruptcy or crime as a last resort. This is analogous to the situation in all countries that abolish trade barriers, let transnational corporations in, and eliminate preferential treatment for domestic industries.

High-level corruption and banking crimes have become quite common, as the networks of mobsters, financiers, businessmen, and high-level officials extend beyond Eurasia (Beare, 2000). The ongoing investigations into billions of dollars (possibly IMF-provided funds) laundered through the Bank of New York have expanded to include British, Swiss, and Italian entities and actors.

Moreover, pyramid schemes and other frauds have devastated gullible investors, as is the case with other post-Communist countries. Independent Oil, Lenin Trade and Financial Corporation, Aldzher (a security corporation), and other companies defrauded more than a million depositors and investors. Just as the Lincoln Savings and Loan frauds were committed in midst of obsessive deregulation in the U.S. against "the weak, the meek, and the old," Russian pensioners have been the main fraud victims (Glinkina, 1994).

Economic asymmetries among countries produce another set of criminal opportunities, as many become strongly motivated to flee the problem and search for a better future in the West, where the "goodies" are available. However, neoliberalism has promoted the free movement of everything but labor. Quotas and restrictions in promised lands generate demand for illegal services such as the smuggling of humans (Chin, 1999). This leads to opportunities for criminal exploitation, corruption, child/cheap labor, slavery, and forced prostitution.

Women, who are increasingly breadwinners but make up two-thirds of the newly unemployed in Russia, are even more vulnerable in this respect. Economic desperation drives many of them to prostitution or high risk taking. Lack of opportunity makes Russians and East Europeans softer targets for human traffickers. They are more likely to be lured to the West with promises of well-paying, respectable jobs only to end up blackmailed, beaten up, and forced into prostitution (Bruinsma, 1999; Shelley, 1994). The same problems faced by Thai, Mexican, and other women in the U.S. have led to a public hearing before the House Subcommittee on International Operations and Human Rights (September 14, 1999).

Relative deprivation and experience of injustice have a revolutionary potential too. International communications convey the message that injustice and inequality are avoidable. Events in one corner of the earth affect feelings and encourage people elsewhere to rebel against aggression. This may inspire change and foster rebellion. Just as the ideals of the French Revolution led to rebellions in the Balkans against the Ottoman rule (Hovannisian, 1994), the independence of the Baltic states and the U.N. response to Iraq's invasion of Kuwait inspired the East Timorese to fight against the Indonesian autocratic rule (Dunn, 1994). The uprising of Zapatistas in Mexico was deliberately started on January 1, 1994, the day NAFTA went into effect, "as a highly symbolic way to protest neoliberalism and globalisation in Mexico and Latin America" (Robinson, 1998-1999: 123-124).

Repressed nationalism, globalism, and bad times have jointly contributed to several armed conflicts and rebellions in the former USSR (the Caucasus, Moldova, Crimea, Tajikistan, and Chechnya). Rebellion and illegal markets become interconnected, as armed conflicts necessitate training, weapons, intelligence, and financing. The cases of Chechnya, Tajikistan, Afghanistan, and Colombia show how political revolts are associated with corruption, money laundering, the traffic in arms, drugs, and even nuclear material and other crimes that go unpunished (Kuznetsova, 1994: 445; Lee, 1999; Naylor, 1999b; OGD, 1996). Chechnya, which survives thanks to donations from criminal organizations based in other parts of Russia, has become such a paradise for these activities that some depict the war there as "a crusade against a 'mafia republic,'" while others think of it as "a conflict between opposing criminal elites for the control of oil and the financial resources held by the government in Grozny" (Politi, 1998: 44).

Finally, "retreatism" is the only option left to those lacking access to illegal opportunities or who are unwilling to assume the associated risks of violence and arrest. Hence, expressive crimes could be expected. More important, the rates of alcohol and drug abuse (further facilitated by the decriminalization of drug use in Russia in 1991) increased geometrically, especially in the cities, and fueled the demand for things provided in illegal markets (Lee, 1994; OGD, 1996).

Anomie

The transition from a command to a market economy practically legalized large parts of the black market and made legal business dependent on criminals' protection. The dismantling of borders and increased contact among previously isolated ethnic groups contributed to the formation of new, wider networks of illegality (Politi, 1998). The result was that one could hardly tell criminals from businessmen, particularly when some outlaw groups act on instructions from government officials or the police (Handelman, 1993). Given official efforts to ensure that the transition to a market economy would occur before substantial opposition could build and that the changes would be irreversible, too many shady actors were allowed to take advantage of this official shield (Glinkina, 1994; Naylor, 1999b). In this light, common views on government-criminal interfaces and symbiosis are plausible, although difficult to prove. Surveys in 1994 showed that the concern of Russians over organized crime was second only to their fears of triple-digit inflation (Afanasyef, 1994). At the perceptual level, therefore, this interface is real and has real consequences: demoralization and anomie.

The corrupted process of privatization has generated widespread rationalizations, such as, "it is OK to steal from the state" or "everyone is doing the same thing." Taking an example pointing to international security risks, Lee (1999: 21) has noted that, "perhaps the most serious problem is the growth of a privatization mentality within the nuclear complex. Economic reform has meant a license to steal. This has resulted in broad systemic corruption and a variety of insider threats and conspiracies."

An additional sign of anomie is what has been described as a "culture of urgency" among young killers:

For them there is no hope in society, and everything, particularly politics and politicians, is rotten. Life itself has no meaning, and their life has no future.... So, only the moment counts, immediate consumption, good clothing, good life, on the run, together with the satisfaction of inducing fear, of feeling powerful with their guns (Castells, 2000: 210).

Only effective social controls can halt the process toward further deviance and a higher degree of anomie (deviance without strain). Unfortunately, in Russia and elsewhere, a decreased level of autonomy for certain states, the increased power of international organizations and transnational corporations, and dysnomie add to the fuel.

Dependence, Deregulation, and the Race to the Bottom

"Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs (lesser developed countries)?" "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.... I've always thought that underpopulated countries in Africa are vastly under-polluted; their air quality is vastly inefficiently low compared to Los Angeles or Mexico City" (1991 memo attributed to World Bank official Lawrence Summers, who later became U.S. Secretary of Treasury; it is widely believed that he did not write it, even though he has accepted responsibility for it. At any rate, this illustrates the neoliberal mindset).

The loss of autonomy and reduced sovereignty of the state relative to capital referred to earlier (Korten, 1996; Watkins, 1997) is particularly acute in the former Communist countries. Speculative capital will quickly flee each country at the first sign trouble or wavering over neoliberal reforms. External debt grew in all former Communist countries, but especially in Russia, which bears the marks of Africa-like dependent capitalism and "colonial subjugation. The country exports fewer and fewer industrial products and more and more raw materials. Meanwhile, it imports low-quality mass consumption goods, obsolete and hence cheap technology, luxury items and radioactive waste" (Burbach et al., 1997: 120-121). An instance of the direct and blatant interference of foreign governments and transnational corporations in domestic matters was when Chase Manhattan urged the Mexican government to crush the Zapatista rebellion to calm down U.S. investors (Silverstein and Cockburn, 1995; see also Clinard, 1990).

Ironically, the higher degree of dependency in the South and East has lowered the accountability of politicians and corporations. They can now blame globalization for the loss of jobs and lower wages, and prescribe more "efficiency," deregulation, short-term austerity, and declining levels of public spending so as to keep capital in place or attract more. Thus, economic and political leaders appear to be protectors of the public interest and a stabilizing force, while they dismantle existing safety nets (economic neoliberalism has also undermined political liberalism; Klak, 1998).

The Russian government's aversion to regulation (Glinkina, 1994) is observable in other countries, where deregulation turned into competitive deregulation and a race to the bottom. Even in the U.S., the savings and loan disaster and the asymmetric regulation of hazardous wastes demonstrate how criminogenic this process has been. This made it possible to dump legally in Pennsylvania what was prohibited in New Jersey, in what has been termed "crimes without law violations" (Passas, 1999). Such crimes are most likely in the global context given the overwhelming influence of TNCs over national laws and macroeconomic policies. This has prompted some to speak of "rationalized corporate colonialism" (Mander, 1996). Such asymmetries of power make for legal norms that allow overseas that which is, for good reason, criminalized in the base country (e.g., toxic waste dumping, testing drugs on humans, bribery, tax evasion, as well as the patenting of life forms by biotechnology companies and other outrageous practices) (see King and Stabinsky, 1998-1999; Shiva, 1997). The legal asymmetries and uneven power of transnational corporations that create or perpetuate these and other asymmetries give rise to crimes without law violations. Thus, entire countries become vulnerable to victimization by TNCs, a significant problem that is often neglected in conventional discussions of transnational crime. The volatile combination of low wages, bad working conditions, tax breaks only for the rich/corporations, lower environmental standards, deregulation, and less corporate and political accountability with the government relegated to the protection of the international free trade system has predictably made for crises (e.g., Korea, Malaysia, Indonesia, Mexico, and Brazil). It also makes for dysnomie.

Dysnomie and Further (Global) Anomie

Dysnomie literally means "difficulty to govern" and obtains when the following three conditions are present: a lack of a global norm-making mechanism, inconsistent enforcement of existing international rules, and the existence of a regulatory patchwork of diverse and conflicting legal traditions and practices. Russia is in this respect a microcosm that reflects what is happening in the entire world.

Since reforms took place at an uneven pace in each Soviet Republic, an asymmetry grew wider following the collapse of the USSR. In addition, this collapse suddenly created thousands of miles of new borders that had to be policed, just as state resources were diminished. This made for porous borders that offered no resistance to smugglers. This is how Estonia became the largest exporter of nonferrous materials, even though it does not produce any (Glinkina, 1994). Extensive legal changes accelerated the transition to a market economy, but they were marked by inconsistencies and lacked the necessary legal and institutional infrastructure (Handelman, 1995). For example, the law against private entrepreneurship and commercial mediations was repealed only on December 5, 1991. The law against black market transactions, which defined them as "the buying up and reselling of goods or other items for profit-making," was first amended in February 1990 to increase penalties for certain offenses, was then officially rein terpreted to refer only to trade in commodities sold at state-fixed prices (October 1990), and was finally repealed in February 1991 (Afanasyef, 1994: 429). Lack of resources made the problem worse, as underpaid, ill-equipped, and outgunned police could not be expected to do an effective job.

Weak controls allow criminals to get away and to regard themselves as successful. Deviant "solutions" came to be seen as keys to "success." Successful deviance then becomes a normative referent, contributing to a wider normative breakdown and overemphasis on goals at the expense of normative means. In the context of massive cultural shifts -- from the criminalizing of private profit and the hiring of labor outside the household to making them central values for a new social order -- the sense of right and wrong became fuzzy. As the deputy minister of Internal Affairs admitted at a 1992 press conference, "even our specialists find it difficult to determine the legal from the illegal -- to determine, for instance, what is profiteering and what is honest trade" (cited in Handelman, 1993). Corruption grew so much that up to 30% of illegal gains are reportedly paid to government officials (Glinkina, 1994; Lee, 1999). In the end, distinctions between white-collar crime, organized crime, corruption, and legitimate business are almost impossible to make. Lawbreaking behavior and success are fused. As a businessman told Handelman (1995: 139), "the truth is, everything you see around you, all our success, is not thanks to our wonderful economic laws. It's thanks to the fact that we do not obey them."

Dysnomic conditions also bring about anomie at the global level. As argued elsewhere (Passas, 1999), international law is more essential now than ever for the maintenance of world order and security. Yet, big powers are reluctant to contribute to the required pooling of sovereignty and have been blocking the development of an international criminal code and specific legislation to restrain their corporations. Dependent on rich countries for its operations, the U.N. has not been overly aggressive in pursuing these aims or in establishing a permanent international criminal tribunal. Globalism has thus run ahead of the creation of a desperately needed normative and enforcement infrastructure.

Existing international laws are applied selectively and never against one of the permanent members of the U.N. Security Counsel. This ad hoc approach and the extraterritorial application of national laws undermine the legitimacy of current laws and procedures. We are left with a legal patchwork of inconsistent and conflicting rules. An example of the effect of such asymmetries is the secrecy and anonymity available in certain jurisdictions that hinder investigative work by covering the tracks and proceeds of global offenders, de facto shielding them against prosecution and punishment. By exploiting the cracks between diverse state rules, companies continually commit crimes without law violation. Globalism also leads to a relativization of norms and facilitates law violations with a clear conscience (rationalizations and techniques of neutralization).

Finally, the border-policing problem in the former USSR is not unique, even if the underlying causes were specific to it and other European countries (Yugoslavia, Czechoslovakia). More generally, borders become porous, as technology and mobility enabled people, money, goods, and ideas to travel quickly and cheaply. Criminals can take advantage of this shrinking world, but law enforcement agencies are constrained by parochial laws and procedures. Though the reasons for the porousness may differ, the process and results are the same.

Conclusion

Tremendous structural strains have overwhelmed even the usually patient and submissive Russians. The economic situation deteriorated further, hopes were dashed, opportunities for criminal gain and for looting the USSR's assets multiplied, and the anomic societal context offered no assistance to anyone seeking to restore some law and order. In Russia and around the world, the neoliberal operation was successful, but the patients are being systematically frustrated, are starving, and subject to exploitation by corporations, criminal enterprises, and corrupt politicians. In short, globalization and neoliberalism spread analytically similar criminogenic processes that were once unique to the U.S. culture of the American Dream in a context of structural inequalities. Just as the world supposedly became freer, wealthier, more democratic, more enjoyable, and more equal, people find themselves poorer, more exploited, and facing increased hardships. Just as the need for strong normative guidance grows, norms break down or lose their legitimacy. Just as effective controls become necessary to slow down or stop the vicious cycle leading to higher rates of crime, a dysnomic regulatory patchwork remains in place largely because of nationalist insistence on sovereignty and states' unwillingness to allow the introduction of common principles and law enforcement mechanisms.

Two main points need to be reiterated here. First, it appears that global neoliberalism and serious crime go hand in hand. However, it would be erroneous to argue that stereotypical organized criminals are giving capitalism a bad name and undermining neoliberal policies. The implication is that, were we to rid ourselves of some very bad apples, everything would be fine. Rather, it appears that serious organizational misconduct is a consequence of such policies. Second, when we discuss transnational crime, we should bear in mind that it is not just the stereotyped ethnics who cause most problems. It may be that the biggest threat emanates from legitimate corporations and other organizations.

Detailed discussion of policy implications is beyond the scope of this article. The horizontal arrows in Figure 1 hint at the points of possible policy intervention. Myriad concrete ideas can be found in the literature, ranging from legal changes to informal controls, grass-roots movements, integration of economic growth with environmental and social protection, relocalization of production and consumption, etc. The most important ray of hope, however, is implicit in the foregoing analysis. Neoliberal policies and globalization are largely the fruit of (some) governments. They affect and are affected by governance. Therefore, governments have the ability to reverse some of these processes and to mitigate their adverse consequences. Otherwise, the current processes of globalization and neoliberalism will prove to be unsustainable and at a huge cost.

Conclusions

Situation with neoliberalism in the USA now is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence. Chris Hedges made an apt analogy with The Fall of Berlin 1945

I came across a nice, compact interview with Chris Hedges which illuminates his thesis of the decline of the American Empire and the illusions and the end of rational thinking that accompanies it. Empires seem to give off quite a bit of flash in their latter stages, rather like the last gasp of a dying star.

The interviewer, Allan Gregg, does a particularly nice job of drawing Hedges out.

I would like to add an observation I came to in thinking further about the Sophie Scholl piece which I put up earlier today. Perhaps there is something about gardening that focuses the mind.

The almost frenetic preoccupation and adherence to the Nazi ideology in the latter stages of the war, when it was obvious to any rational observer that they could not win, is remarkable. I had been particularly struck in my reading some time ago with the 'wolf packs' of Nazis who had raged through Berlin, rounding up old men and even boys who had not joined the Volkssturm, and hanging them, even while the Russians were shelling the Reichstag. It never made sense to me until today.

"The radio announced that Hitler had come out of his safe bomb-proof bunker to talk with the fourteen to sixteen year old boys who had 'volunteered' for the 'honor' to be accepted into the SS and to die for their Fuhrer in the defense of Berlin. What a cruel lie! These boys did not volunteer, but had no choice, because boys who were found hiding were hanged as traitors by the SS as a warning that, 'he who was not brave enough to fight had to die.'

When trees were not available, people were strung up on lamp posts. They were hanging everywhere, military and civilian, men and women, ordinary citizens who had been executed by a small group of fanatics. It appeared that the Nazis did not want the people to survive because a lost war, by their rationale, was obviously the fault of all of us. We had not sacrificed enough and therefore, we had forfeited our right to live, as only the government was without guilt."

Dorothea von Schwanenfluegel, Eyewitness account, Fall of Berlin 1945

I was reminded of this phenomenon by the trial of Sophie Scholl, and her words to the judge Roland Freisler, as he ranted his virulent condemnations at them. 'Soon you will be in our place,' she said to him. He did escape the hangman's noose at Nuremburg, but only by virtue of an Allied bomb in 1945. When his body was brought to hospital an orderly remarked, 'It was God's verdict.' He was buried in an unmarked grave, without ceremony and unmourned. Much like his beloved Fuhrer.

This is an almost perfect illustration of the credibility trap. One cannot allow the illusion to falter, even a little, to the bitter end. And as the fraud fades, the force intensifies, becoming almost rabid in its deflection. Because that illusion has become the center of a hollowed people's being, their raison d'être, a mythological justification for their existence.

If the ideology had been a lie, then they are not heroes and gods on earth, but monsters and criminals, and their life has been self-serving and meaningless, without significance and honor. And that is the credibility trap.

And this is the US financial system today.

So the legitimacy of neoliberalism is gone since events of 2008 and consequences of this epochal event are still unclear.  As chances that the USA will get rid of neoliberalism voluntarily are slim, we might be present in a crush of yet another empire.  That might mirror the destiny of the USSR which fell when its ideology became delegitimized. With the key difference that the USA elite is much more aggressive and ready to use whatever means possible to preserve its status when it is under threat.


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[Jul 02, 2014]  Democracy, Freedom, and Apple Pie Aren't a Foreign Policy BY Stephen M. Walt

Funny but the picture depicts the revolution which although started as a typical color revolution quickie acquired brown national socialist overtones. The problem with Stephen Walt that he does not distinguish "liberalism" and "neoliberalism". Also because the current USA has nothing to do with classic liberalism, but is a quintessential neoliberal society (rule of financial oligarchy), I changed "liberal" to "[neo]liberal" to make the article slightly better correspond the reality.   Comments shows that reader does not buy the author line of thinking.
July 1, 2014 | foreignpolicy.com
 
What has gone wrong? Iraq has come unglued. ISIS just announced the founding of a new caliphate. The Afghan presidential election is contested and getting ugly. The nuclear talks with Iran are going slowly, even as opponents devise new ploys to derail them completely. Ukraine is a mess with a tentative cease-fire being blown apart. China continues to throw sharp elbows. Japan is getting martial again. And Britain is getting closer to leaving the European Union. I could go on, but you may not have enough antidepressants handy.

So much for the "new world order" that President George H.W. Bush proclaimed in the heady days following the fall of the Berlin Wall. So much for the alleged demise of "power politics" once hailed by the likes of Bill Clinton and Thomas Friedman. The end of history? Not even Francis Fukuyama believes in that one anymore. The overall level of human violence may be in decline (though a single great-power war could derail that finding), but world politics seems to be spinning more out of control with each passing week.

In the hyperpartisan world of contemporary U.S. politics, Democrats blame these present woes on George W. Bush, while Republicans trace them all to Barack Obama or (looking ahead) to Hillary Clinton. And both sides can find ample evidence for these politically motivated indictments.

... ... ...

In recent months, for example, Secretary of State John Kerry responded to Russia's seizure of Crimea by denouncing Russian President Vladimir Putin as trapped in "19th-century" rules. Similarly, Bill Clinton and George W. Bush denounced their various authoritarian adversaries (Slobodan Milosevic, Ali Khamenei, Kim Jong Il, Muammar al-Qaddafi, etc.) in the harshest terms. Unfortunately, calling someone a part of the "axis of evil" is not a policy, and pointing out that a foreign leader is a despicable tyrant doesn't change anything, especially when the accusation is accurate. Needless to say, real tyrants are not sensitive to this sort of criticism.

...As we have seen in Iraq, Afghanistan, Libya, and many other places, violent "regime change" by definition means destroying existing political and social institutions. Unfortunately, the collapse of the old order and the subsequent foreign occupation make it even less likely that an effective democracy will emerge. The resulting anarchy empowers those with a taste and a talent for violence, and it forces local populations to turn to ancient sources of local identity (such as tribes, clans, or religious sects) for protection. It is hard to think of a better way to destroy the tolerance and individualism that is central to [neo]liberal philosophy.

Moreover, [neo]liberal governments seeking to wage idealistic crusades often end up lying to their own people in order to sustain popular support, and they have to maintain large and secretive national security apparatuses as well. Paradoxically, the more a [neo]liberal society tries to spread its creed to others, the more likely it is to compromise those values back home. One need only look at the evolution of U.S. politics over the past 20 years to see that tendency in spades.

Finally, because most [neo]liberals are convinced that their cherished beliefs are beyond debate, they fail to recognize that non-[neo]liberal societies may not welcome these wonderful gifts from abroad. On the contrary, the more the well-meaning foreign interference overseas -- whether through military occupation, sanctions, or even NGOs like the National Endowment for Democracy -- the greater the allergic reaction the interference is likely to generate. Foreign dictators will heighten repression, and populations that are supposed to greet their liberators with flowers will offer up IEDs instead. Massive state-building projects end up distorting local economies and fueling corruption, especially when the idealistic [neo]liberal occupiers have no idea how the local society works.

The conclusion is obvious. The United States and other [neo]liberal states would do a much better job of promoting their most cherished political values if they concentrated on perfecting these practices at home instead of trying to export them abroad. If Western societies are prosperous, just, and competent, and live up to their professed ideals, people in other societies will want to emulate some or all of these practices, suitably adapted to local conditions.

In some countries, this process may occur rapidly, in others only after difficult struggles, and in a few places not for many decades. This fact may be regrettable, but is also realistic. Trying to speed up a process that took centuries in the West, as the United States has been trying to do since 1992, is more likely to retard the advance of [neo]liberal values than it is to advance them.

Stephen M. Walt is the Robert and Renée Belfer professor of international relations at Harvard University.

Selected Comments

ganason

I disagree. The wars of aggression foisted on the American people were the oligarchs wanting a greater piece of the wealth of the aggrieved countries. And then the gullible public are told it is to establish Democracy, Freedom and Apple Pie.

seolari

The problem in US foreign policy is very effectively shown in the comments below. The US policy cannot be different than the ignorance of its populace. How about leaving other societies figure out their own problems. How can a society developed without making its own decisions be them mistakes or not. The trend or the wave of history in the middle east or Muslim world is not going to change no matter what the US does, these interventions are only a temporary artificial hindrance jest like colonialism was. Once its over the Trend is going to continue to were it was before. This is because certain issue in those societies as in all societies have to be worked out between them and no one else. Americans have this unattractive narcissism to them, they believe that they know better than everyone els. How that narcissism has formed should be studdit very closely because that is where most of the current problems in the world and its long term development rest. You should trust human nature, all societies wont freedom and all that comes with democracy but it can not be artificially implentet in them as if it was a capetlistic brand. Societies are not like consumerism they are much more complicated than that.

glendac

I just noticed the change in headline from "American Values Are to Blame for the World's Chaos" to "Democracy, Freedom, and Apple Pie Aren't a Foreign Policy." What to make of that? I can't help relating this to another FP article on Blackwater's namechanging game. Which makes me think, are the U.S. failures in Iraq, Afghanistan, etc. a failure of ideology or a systems failure - big government unable to take on the complex political risks of liberal values, a government only too willing to pass on the buck (yes, both the $$$ and the blame) to cowboy-swaggering contractors like Blackwater.

anthonyravlich

In my view, the onset of neoliberalism and elitest globalization resulted in traditional liberalism morphing into a liberal collectivism (involving a left-class which uses human rights in its own interests). This liberal collectiviism also took over the UN and on 10 December 2008 the two sets of rights which were at the centre of a major ideological battle between east - the communists promoting economic, social and cultural rights i.e. social justice and the west which championed civil and political rights e.g. freedom and democracy - were given equal status. This rebalanced global power away from the West to other regions - all this was hidden from the global public who only saw the consequences - the Global Financial Crash 2008/9, the increasing involvement of the UN i.e. UNDP, in increasing police, security rule of law so far reaching about half the world's countries and more recently the rebalance of global power saw the rise of repressive regimes to higher positions at the UN. With the equal status given both sets of the rights it meant that now not just civil and political rights but also economic, social and cultural rights have to be compatible to IMF elitist policies and the IMF has 188 member States. This meant the UDHR in its implementation is elitist.

So, in my view, neoliberalism morphed into a neoliberal absolutism - a near absolute control of all human behavior covered under the declaration - the actions of the UNDP is to ensure compliance with neoliberal absolutism which means the elimination of independent thought which will seriously limit the growth of human knowledge and consequently the survival of the human race which may need to live on other planets one day. In short, while much has been done to eliminate extreme poverty - the West's traditional liberties are targeted for elimination the reason being that the liberal collectivists, who are largely descent based by birth or social class and with virtually all academics now captured- are very concerned to hide their hegemony and their pursuit of global dominance e.g. one world government - consequently unsafe truth and ideas must be eliminated. If all this sounds very negative check out my new plan for the world an ethical approach to human rights, development and globalization - first outlined in my book, many articles on the internet (see San Francisco Bay Indymedia) - its virtually banned from the mainstream but amazingly received support from the UN, US States Dept, Open democracy initiative of the White House (and many others) on the internet but not in the mainstream media which might reach the democratic majority. I regard it as a crime against humanity that the UN has failed to inform the global public of this ethical plan in the mainstream media.

qmab

Silly article with an appalling headline. Huge generalizations not backed up by facts. Lots of skewed thinking. For example, "The desire to extend liberalism into Eastern Europe lay behind NATO expansion.." Here's the way that sentence should be written: The desire of the people of Eastern Europe to have a democratic political system and their request to join NATO out of fear of Russia...

And then this bit: John Kerry responded to Russia's seizure of Crimea by denouncing Russian President Vladimir Putin as trapped in "19th-century" rules." That's wrong because...? You're criticizing "sputtering"? Do you want an attack instead?

Can't you see that "it's all our fault" is really part of "we're the most important people on earth"? Drop the Americocentric position. Maybe this headlines and articles get clicked on -- sensationalism always draws a crowd -- but they do nothing to advance understanding of what is happening in the world.

danowen

When did the U.S. ever try to promote democracy? Only when corporations stood to benefit. Salvador Allende was the first president of a Latin American country elected democratically, but because he was a Marxist we supported the military coup and junta that was in power for 17 years and which ruthlessly crushed and murdered any perceived opposition. There are many, many other examples like the installation of the Shah in Iran, replacing the democratically elected Prime Minister Mosaddegh.

It is a bad joke to say that the U.S promotes democracy and deceitful to criticize it for doing something (promoting democracy) when in fact the U.S. promotes dictatorships far more often.

Hardly true

This is a typical article that describes US foreign policy full with "good intentions" but resulting in catastrophic results.

While I agree with the last point I do not agree on the premise. If you look on the history, US has continuously backed up

foreign nation leaders that are anti-liberal, anti-human rights but who have pursued regional interests of US.

I urge readers to examine more carefully this point of view. Good starting point are writings of Prof. Noam Chomsky.

hydroxide

@Ethan Hunt

" We try to help a country, it goes south and it is 100% our fault. "

Yes. If you chase a horde of mustangs through a china store, it IS 100% your fault if the whole place goes south. If you make no effort whatsoever to understand the place and the balance of power and the relationships between different people, it is certainly NOT the fault of these people that you spit into their faces.

Plenty of people predicted the outcome in Iraq - and in other countries. The US has left a string of failed states in its wake. From its desire to control the operation in Somalia all the way to Iraq, Afghanistan and Libya.

The garbage is on your side, because you try to defend committing the same idiocy all over again time after time after time. You are willing to butcher people to cater to your ignorance - please explain how that makes you any different from the likes of Osama bin Laden?

[May 20, 2014]  Far Right Fever for a Europe Tied to Russia - NYTimes.com

[May 20, 2014]  Globalism’s Failed Promise by Curtis Ellis

May 20, 2014  |  The American Conservative

... We were promised deracination would lead inevitably to world peace. The original Cobdenite told us nations that trade with each other don’t go to war with each other. Free trade apologists have been repeating this utopianism ever since, facts notwithstanding. (Germany and France were major trading partners before World War I.) No rational head of state would upset the harmonious workings of the global economy; nationalist passions would be tempered by “market realities.”

It’s clear they didn’t get the memo in Russia and Ukraine. They have been significant trading partners, yet economic realities did not trump nationalism. To be sure, many of the Maidan protestors coveted their own flag more than designer goods from the EU. It is a modern Western conceit to view human aspirations strictly through a materialistic lens. Alexander Solzhenitsyn decried Western society’s tendency to focus on the accumulation of material goods to the exclusion of all other human characteristics.

This stubborn insistence on seeing the world in purely economic terms blinded us to anticipating that Vladimir Putin could do exactly what he did. Putin wasn’t supposed to risk upsetting “the market”—but he did. He was supposed to fear sanctions and economic backlash—but he didn’t. The only possible explanation is that he is disconnected from reality, as Angela Merkel reportedly said.

Blind faith in economism informs the solutions to foreign conundrums proposed by many across the political spectrum. Economic sanctions will promote good behavior in Eastern Europe, while economic engagement will promote human rights and religious tolerance in East Asia. In Ukraine, we can conveniently have it both ways, sanctions and engagement: exporting loads of cheap American natural gas will reward our friends and punish our enemies.

Just as events in Ukraine show us nationalism is not a spent force, the Malaysian Airlines mystery shows us the limits of global technocracy.

We have come to believe that raising everyone to the Western standard of living will spread our values. The assumption is that having the same material goods makes everyone the same—the software goes with the hardware. President Clinton used this formulation to sell PNTR (Permanent Normal Trade Relations) with China: democracy would flourish in China in tandem with a middle class.

[May 04, 2014] End of an era for the West by system failure

 March 10, 2014 | the unbalanced evolution of homo sapiens

The support of neo-nazis in Ukraine destroys the last pretexts and wakes up nightmares of the past

It appears that, for at least six years now, the West is trapped in a situation of permanent recession, while there are many who predict new economic crises in the near future. As long as this situation continues, the true face of neoliberalism and the huge hypocrisy of the West become more and more clear. The neoliberal doctrine has been converted, a long time now, into a global dictatorship, which is revealing more and more its true face and seeks to expand its power in every corner of the world.

The events in Ukraine have shown that, the big capital has no hesitation to ally even with the neo-nazis, in order to impose the new world order. This is not something new of course. The connection of Hitler with the German economic oligarchs, but also with other major Western companies, before and during the WWII, is well known.

Besides, the history of neoliberalism starts with a dictatorship rather than a democracy, when dictator Pinochet with the US support, ousted the democratically elected president of Chile, Salvador Allende, and Chile became the first "lab-rat" of neoliberalism. Milton Friedman and the "Chicago Boys" were the main advisors of the dictator. Chile transformed into an exploitation field for the American companies and powerful cartels, while the majority of the people suffered in poverty by an atrocious dictatorship.

The economic crisis is the main cause for the increasing limitation of democracy in Greece. The Greek government, in many cases, takes decisions through legislative acts without the approvement of the parliament, demonstrations are increasingly criminalized, like in Spain, and it will be worth also to remember how the PMs in Greece and Italy were replaced through an anti-democratic process, by the banks' puppets Papademos and Monti. Europe, which supposedly cares about human rights, has silenced in front of crimes like those in Lampedusa and Farmakonisi and hides the problem of illegal immigration.

This time, however, the last "fig leaf" of the West has fallen for good, exposing its huge hypocrisy. While until today, operations and wars in other countries (Yugoslavia, Iraq, etc.) were taking place under the excuse of the fight against terrorism, the supposed "liberation" of people from authoritarian regimes, or, the supposed defence of human rights, there is no excuse in the case of Ukraine and mostly Crimea. The right of self-determination is not applicable in this case, according to the Western hypocrites, who activate this right only in "special" cases to serve their interests, like in the case of Kosovo.

The most terrifying of all however, is not that the West has silenced in front of the decrees of the new Ukrainian leadership, through which is targeting the minorities, but the fact that the West allied with the neo-nazis, while according to some information has also funded their actions as well as other extreme nationalist groups during the riots in Kiev.

Especially Europe, has already sacrifice its principles and values on the altar of banks and markets. All indications point to the fact that, the global economic elite seeks to impose the new world order through the neoliberal dictatorship, everywhere, by any means ...

Conflicts Forum’s Weekly Comment 25 April – 2 May 2014 Conflicts Forum by Alastair Crooke

Hat tip to Mood of Alabama. Quote: "Alastair Crooke, a former MI-6 honcho and diplomat, is just back from Moscow and has some interesting thoughts on the bigger historic issues which express themselves in the current events in Ukraine."
May 2, 2014  |  Conflicts Forum

Following five days in Moscow, a few thoughts on Russian perspectives:  Firstly, we are beyond the Crimea. That is over. We too are beyond ‘loose’ federalism for Ukraine (no longer thought politically viable). Indeed, we are most likely beyond Ukraine as a single entity. Also, we are beyond either Kiev or Moscow having the capacity to ‘control’ events (in the wider sense of the word): both are hostage to events (as well as are Europe and America), and to any provocations mounted by a multitude of uncontrollable and violent activists. 

In gist, the dynamics towards some sort of secession of East Ukraine (either in part, or in successive increments) is thought to be the almost inevitable outcome.  The question most informed commentators in Moscow ask themselves is whether this will occur with relatively less or relatively more violence – and whether that violence will reach such a level (massacres of ethnic Russians or of the pro-Russian community) that President Putin will feel that he has no option but to intervene. We are nowhere near that point at the time of writing: Kiev’s ‘security initiatives’ have been strikingly ineffective, and casualties surprisingly small (given the tensions). It seems that the Ukrainian military is unwilling, or unable (or both of these), to crush a rebellion composed only of a few hundred armed men backed by a few thousand unarmed civilians — but that of course may change at any moment.  (One explanation circulating on Russian internet circles is that pro-Russian insurgents and the Ukrainian servicemen simply will not  shoot at each other - even when given the order to do so.  Furthermore, they appear to be in direct and regular contact with each other and there is an informal understanding that neither side will fire at the other. Note — we have witnessed similar understandings in Afghanistan in the 1980s between the Soviet armed forces and the Mujahidin.)

And this the point, most of those with whom we spoke suspect that it is the interest of certain components of the American foreign policy establishment (but not necessarily that of the US President) to provoke just such a situation: a forced Russian intervention in East Ukraine (in order to protect its nationals there from violence or disorder or both).  It is also thought that Russian intervention could be seen to hold political advantage to the beleaguered and fading acting government in Kiev.  And further, it is believed that some former Soviet Republics, now lying at the frontline of the EU’s interface with Russia, will see poking Moscow in the eye as a settling of past scores, as well as underscoring their standing in Brussels and Washington for having brought ‘democracy’ to eastern Europe.

There seems absolutely no appetite in Moscow to intervene in Ukraine (and this is common to all shades of political opinion).  Everyone understands Ukraine to be a vipers’ nest, and additionally knows it to be a vast economic ‘black hole’.  But … you can scarcely meet anyone in Moscow who does not have relatives in Ukraine. This is not Libya; East Ukraine is family.  Beyond some certain point, if the dynamic for separation persists, and if the situation on the ground gets very messy, some sort of Russian intervention may become unavoidable (just as Mrs Thatcher found it impossible to resist pressures to intervene in support of British ‘kith and kin’ in the Falklands).  Moscow well understands that such a move will unleash another western outpouring of outrage.

More broadly then, we are moving too beyond the post-Cold War global dispensation, or unipolar moment.  We are not heading – at least from the Russian perspective, as far as can be judged – towards a new Cold War, but to a period of increased Russian antagonism towards any western move that it judges hostile to its key interests – and especially to those that are seen to threaten its security interests.  In this sense, a Cold War is not inevitable. Russia has made, for example, no antagonistic moves in Iran, in Syria or in Afghanistan.  Putin has been at some pains to underline that whereas – from now – Russia will pursue its vital interests unhesitatingly, and in the face of any western pressures, on other non-existential issues, it is still open to diplomatic business as usual.

That said, and to just to be clear, there is deep disillusion with European (and American) diplomacy in Moscow.  No one holds out any real prospect for diplomacy – given the recent history of breaches of faith (broken agreements) in Ukraine. No doubt these sentiments are mirrored in western capitals, but the atmosphere in Moscow is hardening, and hardening visibly.  Even the ‘pro-Atlanticist’ component in Russia senses that Europe will not prove able to de-escalate the situation.  They are both disappointed, and bitter at their political eclipse in the new mood that is contemporary Russia, where the ‘recovery of sovergnty’ current prevails. 

Thus, the era of Gorbachevian hope of some sort of parity of esteem (even partnership) emerging between Russia and the western powers, in the wake of the conclusion to the Cold War, has imploded – with finality.  To understand this is to reflect on the way the Cold War was brought to and end; and how that ending, and its aftermath, was managed.  In retrospect, the post-war era was not well handled by the US, and there existirreconcilable narratives on the subject of the nature of the so-called ‘defeat’ itself, and whether it was a defeat for Russia at all. 

 Be that as it may, the Russian people have been treated as if they were psychologically-seared and defeated in the Cold War – as were the Japanese in the wake of the dropping of the nuclear bombs by the US in 1945.  Russia was granted a bare paucity of esteem in the Cold War’s wake; instead Russians experienced rather the disdain of victors for the defeated visited upon them. There was little or any attempt at including Russia in a company of the nations of equals – as many Russians had hoped.  Few too would contest that the economic measures forced on Russia in the war’s aftermath brought anything other than misery to most Russians.  However unlike 1945, most Russians never felt defeated, and some felt then – and still feel – just betrayed.  Whatever the verdict of history on how much the Cold War truly was a defeat, the aftermath of it has given rise to a Versailles Treaty-type of popular resentment at the consequences of the post-Cold War settlement, and at the (unwarranted) unipolar triumphalism (from the Russian perspective). 

In this sense, it is the end of an era: it marks the end of the post-Cold War settlement that brought into being the American unipolar era. It is the rise of a Russian challenge to that unipolar order which seems so unsettling to many living in the West.  Just as Versailles was psychologically rejected by Germans, so Russia is abdicating out of the present dispensation (at least in respect to its key interests).  The big question must be whether the wider triangulation (US-Russia-China) that saw merit in its complementary touching at each of its three apexes is over too — a triangulation on which the US depends heavily for its foreign policy.  We have to wait on China.  The answer to this question may well hinge on how far the antagonism between Russia and the West is allowed – or even encouraged – to escalate.  Only then, might it become more apparent how many, and who, is thinking of seceding from the global order (including from the Federal Reserve controlled financial system).

In the interim, time and dynamics require Russia to do little in Ukraine at this point but to watch and wait.  The mood in Russia, however, is to expect provocations in Ukraine, by any one of the assorted interested parties, with the aim of forcing a Russian intervention — and thus a politically useful ‘limited’ war that will do many things: restore US ‘leadership’ in Europe, give NATO a new mission and purpose, and provide the same (and greater prominence) to certain newer EU member states (such as Poland).  Russia will have concluded that the second round of economic sanctions has revealed more about a certain lack of political (and financial) will – or perhaps vulnerability – on the part of America’s European allies. Russia no doubt sees the US to be gripped by the logic of escalation (as Administration talk centres on a new containment strategy, and the demonization of Russia as a pariah state), whatever President Obama may be hinting through the columns of David Ignatius. It is a dangerous moment, as all in Moscow acknowledge, with positions hardening on both sides.

Russia is not frightened by sanctions (which some, with influence in Moscow, would welcome as a chance to push-back against the US use of the global interbank payment systems for its own ends). Nor is Russia concerned that, as occurred with the USSR, the US – in today’s changed circumstances – can contrive a drop in the price of oil in order to weaken the state. But Russia is somewhat more vulnerable to the West’s teaming up with Sunni radicals as its new geo-strategic weapon of choice.  

We have therefore seen a Russian outreach both to Saudi Arabia and Egypt (President Putin recently extolled King Abdallah’s “wisdom”). There is a feeling too that US policy is not fully controlled by the US President; and that Gulf States, smelling that US policy may be adrift, and open to manipulation by interests within the US, will take advantage (perhaps in coordination with certain Americans opposed to President Obama’s policies) to escalate the jihadist war against President Assad and to target Obama’s Iran policy.  Russia may be expected to try to circumscribe this danger to its own Muslim population and to that of its neighbouring former Soviet Republics.  But for now, Russia will be likely to play it cool: to wait-and-see how events unfold, before recalibrating any main components of its Middle East policy. 

For the longer term however, Russia’s effective divorce out of the unipolar international order will impact powerfully on the Middle East, where Saudi Arabia (not to say Syria and Iran) have already virtually done the same.

[Apr 17, 2014] Is Putin Being Lured Into a Trap by MIKE WHITNEY

Apr 17, 2014 | CounterPunch

“Russia … is now recognized as the center of the global ‘mutiny’ against global dictatorship of the US and EU. Its generally peaceful .. approach is in direct contrast to brutal and destabilizing methods used by the US and EU…. The world is waking up to reality that there actually is, suddenly, some strong and determined resistance to Western imperialism. After decades of darkness, hope is emerging.” – Andre Vltchek, Ukraine: Lies and Realities, CounterPunch

Russia is not responsible for the crisis in Ukraine. The US State Department engineered the fascist-backed coup that toppled Ukraine’s democratically-elected president Viktor Yanukovych and replaced him with the American puppet Arseniy Yatsenyuk, a former banker. Hacked phone calls reveal the critical role that Washington played in orchestrating the putsch and selecting the coup’s leaders. Moscow was not involved in any of these activities. Vladimir Putin, whatever one may think of him, has not done anything to fuel the violence and chaos that has spread across the country.

Putin’s main interest in Ukraine is commercial. 66 percent of the natural gas that Russia exports to the EU transits Ukraine. The money that Russia makes from gas sales helps to strengthen the Russian economy and raise standards of living. It also helps to make Russian oligarchs richer, the same as it does in the West. The people in Europe like the arrangement because they are able to heat their homes and businesses market-based prices. In other words, it is a good deal for both parties, buyer and seller. This is how the free market is supposed to work. The reason it doesn’t work that way presently is because the United States threw a spanner in the gears when it deposed Yanukovych. Now no one knows when things will return to normal.

Check out this chart at Business Insider and you’ll see why Ukraine matters to Russia.

The overriding goal of US policy in Ukraine is to stop the further economic integration of Asia and Europe. That’s what the fracas is really all about. The United States wants to control the flow of energy from East to West, it wants to establish a de facto tollbooth between the continents, it wants to ensure that those deals are transacted in US dollars and recycled into US Treasuries, and it wants to situate itself between the two most prosperous markets of the next century. Anyone who has even the sketchiest knowledge of US foreign policy– particularly as it relates to Washington’s “pivot to Asia”– knows this is so. The US is determined to play a dominant role in Eurasia in the years ahead. Wreaking havoc in Ukraine is a central part of that plan.

Retired German Air Force Lieutenant Colonel Jochen Scholz summed up US policy in an open letter which appeared on the Neue Rheinilche Zeitung news-site last week. Scholz said the Washington’s objective was “to deny Ukraine a role as a bridge between Eurasian Union and European Union….They want to bring Ukraine under the NATO control” and sabotage the prospects for “a common economic zone from Lisbon to Vladivostok.”

Bingo. That’s US policy in a nutshell. It has nothing to do with democracy, sovereignty, or human rights. It’s about money and power. Who are the big players going to be in the world’s biggest growth center, that’s all that matters. Unfortunately for Obama and Co., the US has fallen behind Russia in acquiring the essential resources and pipeline infrastructure to succeed in such a competition. They’ve been beaten by Putin and Gazprom at every turn. While Putin has strengthened diplomatic and economic relations, expanded vital pipeline corridors and transit lines, and hurtled the many obstacles laid out for him by American-stooges in the EC; the US has dragged itself from one quagmire to the next laying entire countries to waste while achieving none of its economic objectives.

So now the US has jettisoned its business strategy altogether and moved on to Plan B, regime change. Washington couldn’t beat Putin in a fair fight, so now they’ve taken off the gloves. Isn’t that what’s really going on? Isn’t that why the US NGOs, and the Intel agencies, and the State Dept were deployed to launch their sloppily-engineered Nazi-coup that’s left the country in chaos?

Once again, Putin played no part in any of this. All he did was honor the will of the people in Crimea who voted overwhelmingly (97%) to reunite with the Russian Federation. From a purely pragmatic point of view, what other choice did they have? After all, who in their right mind would want to align themselves with the most economically mismanaged confederation of all time (The EU) while facing the real possibility that their nation could be reduced to Iraq-type rubble and destitution in a matter of years? Who wouldn’t opt-out of such an arrangement?

As we noted earlier, Putin’s main objective is to make money. In contrast, the US wants to dominate the Eurasian landmass, break Russia up into smaller, non-threatening units, and control China’s growth. That’s the basic gameplan. Also, the US does not want any competitors, which we can see from this statement by Paul Wolfowitz which evolved into the US National Defense Strategy:

“Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power.”

This is the prevailing doctrine that Washington lives by. No rivals. No competition. We’re the boss. What we say, goes. The US is Numero Uno, le grande fromage. Who doesn’t know this already? Here’s more from Wolfowitz:

“The U.S. must show the leadership necessary to establish and protect a new order that holds the promise of convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests. In non-defense areas, we must account sufficiently for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established political and economic order. We must maintain the mechanism for deterring potential competitors from even aspiring to a larger regional or global role.”

In other words, “don’t even think about getting more powerful or we’ll swat you like a fly.” That’s the message, isn’t it? The reason we draw attention to these quotes is not to pick on Wolfowitz, but to show how things haven’t changed under Obama, in fact, they’ve gotten worse. The so called Bush Doctrine is more in effect today than ever which is why we need to be reminded of its central tenets. The US military is the de facto enforcer of neoliberal capitalism or what Wolfowitz calls “the established political and economic order”. Right. The statement provides a blanket justification for the wars in Iraq, Afghanistan, Libya, Syria and now Ukraine. The US can do whatever it deems necessary to protect the interests of its constituents, the multi-national corporations and big finance. The US owns the world and everyone else is just a visitor. So shut the hell up, and do what you’re told. That’s the message. Here’s Wolfowitz one more time:

“We continue to recognize that collectively the conventional forces of the states formerly comprising the Soviet Union retain the most military potential in all of Eurasia; and we do not dismiss the risks to stability in Europe from a nationalist backlash in Russia or efforts to reincorporate into Russia the newly independent republics of Ukraine, Belarus, and possibly others.”

Wolfowitz figured the moment would come when the US would have to square off with Moscow in order to pursue it’s imperial strategy in Asia. Putin doesn’t seem to grasp that yet. He still clings to the misguided notion that rational people will find rational solutions to end the crisis. But he’s mistaken. Washington does not want a peaceful solution. Washington wants a confrontation. Washington wants to draw Moscow into a long-term conflict in Ukraine that will recreate Afghanistan in the 1990s. That’s the goal, to lure Putin into a military quagmire that will discredit him in the eyes of the world, isolate Russia from its allies, put strains on new alliances, undermine the Russian economy, pit Russian troops against US-backed armed mercenaries and Special Ops, destroy Russian relations with business partners in the EU, and create a justification for NATO intervention followed by the deployment of nuclear weapons on Ukrainian territory. That’s the gameplan. Why doesn’t Putin see that?

[Mar 31, 2014]  The Economics of Immiseration, the Politics of Seduction

Mar 31, 2014 | truth-out.org

...Thom Hartmann reports, "wages have gone down almost seven percent since the recession. And, that decline followed more than three decades of stagnant wages thanks to Reaganomics."

Mutual sharing and aid has no seductive power in our elemental level of being - but domination does.

Neoliberals, moderate or immoderate, pragmatic or crazed, attribute this sorry state of affairs to a number of variables that Liberals agree with, mostly referring to a transition from a low-tech society to a high-tech society, from a manufacturing base to a financial base, from a hunting, farming and manufacturing economy to an information economy. None of this has any drawing power.

But the neoliberal steady refrain, from Reagan's Welfare Queen to Romney's 47 percent, has seductive power with that pivotal, crucial, voting middle class. The seductive spin is well-known:

 "The slow degeneration of working-class family life and the creation of a 'moocher' class too lazy and indulged to get a job results from 'big government' nurturing and coddling."

There is a seductiveness also to other neoliberal reasons as to why immiseration is like the wolf now at every door but those of an elite few. Each "reason" touches a hot spot already fully charged within us.

To read more articles by Joseph Natoli and other authors in the Public Intellectual Project, click here.

All of these briefs are seductive spins within the American cultural imaginary, not because they rest on uncontested fact and evidence, but because they rest on seductions and repressions already deeply embedded in that imaginary. In other words, the way we think now is so heavily layered in fantasies and illusions that the argument that wins the day does not appeal to rationality but rests on those fantasies and illusions.

As I have suggested before, this imaginary and its accompanying fantasies and illusions are not partisan, there being no politics ruling imagination.

 

[Feb 14, 2014]  Economics of the 1%. How mainstream economics serves the rich, obscures reality and distorts policy

Amazon.com

Cyrus Bina,  See all my reviews

February 9, 2014

Review of Economics of The 1%: How Mainstream Economics Serves the Rich, Obscures Reality and Distorts Policy by John F. Weeks, Anthem Press, 2014 (Paperback).

Voltaire (1694-1778), a well-known social critic and philosopher of the eighteenth century, who reportedly had also a cordial meeting with Adam Smith (1723-1790), once said “I have never made but one prayer to God, a very short one: ‘O Lord! make my enemies ridiculous.’ And God granted it.” John Weeks has a fortune of devoting nearly fifty years of his life to observe, inhale, and witness the absurdity of mainstream economics in our textbooks - from freshman to Ph.D. - and in public policy in practice. Thus, he is the de facto witness extraordinaire in this business. In my mind, the subject of John Weeks’s book, Economists of The 1%, is even more pitiful than the nagging pre-modern themes in Voltaire’s age.

Yet John Weeks is more blessed than Voltaire ever was in the view of the fact that the mainstream economics (and mainstream economists) is the subject of self-indictment by everyday life. Today the toxic ideology of mainstream theory is observable by naked eye just like the detection of “toxic assets” in Wall Street and the splendid swindle that has now taken us on the brink of Great Depression since 2007. But John Weeks is revealing a larger story, the story of fakery by “respectable” economists who appoint themselves to the task of perpetuating a fairytale model of economy and stripping the public of intellectual understanding before hitting them in the wallet en masse. He informs us in plain non-technical language that preachers of the mainstream economics, in the classroom or in Wall Street, are faking of the facts and masquerading rather shamelessly in the name of science. Weeks tells us that the mainstream economic ideology is hell-bent on promoting confusion in the interest the 1%, and that in the lexicon of absurd “free” or “freedom” denotes free to fake.

Finally, in this easy to read and easy to understand book, John Weeks - the economist of the 99% - carefully deciphers the secret behind all these fraudulent claims by mainstream (neoclassical) economics. In Economics of the 1%, he shows rather vividly why should we take control of our economics education in order to recognize the difference between the real and fake, particularly “fakonomics,” dished out and bulletproof by peddlers of polarization and captains of economic upheaval in our society and our classrooms. To know how highly I recommend this book: I wish to urge you to refrain from reading (or purchasing) any of my own books (please) until you read this book in its entirety – I mean it!

Cyrus Bina, Ph.D.
Distinguished Research Professor of Economics
University of Minnesota, USA
Elected Fellow, Economists for Peace and Security
binac@umn.edu

Author of most recently A Prelude to the Foundation of Political Economy: Oil, War, and Global Polity (2013)

[Feb 14, 2014]  The Economics of the 1% Neoliberal Lies About Government

John Weeks is Professor Emeritus of the University of London and author of the forthcoming book, Economics of the 1%. How mainstream economics serves the rich, obscures reality and distorts policy. His recent policy work includes an supplemental unemployment program for the European Union and advising the central banks of Argentina and Zambia.

Feb 13, 2014 | The Real News Network

Real News Network(Jaisal Noor): So one of the chapters in your book is titled "Lies about Government", and you start off the chapter by talking about fake economics, which is the term you use to describe mainstream neoliberal economics. And you say it includes as a central message the inherent inefficiency and intrinsic malevolence of governments at all levels. Talk about what you mean and how governments and their role in our economy is so vilified and why that's done.

WEEKS: It derives from a basic ideology that says that everybody and everybody in the world is a consumer and that you derive your pleasure in life from consuming, which, if you reflect on it, obviously is a pretty sick idea. I mean, people who actually behave that way I think are rather unhappy people. But at any rate, if you take that position, if you take that analytical position, then it follows that taxes are a burden--they take away an individual's ability to consume. And they are--some of it may be absolutely necessary. You might say that that's the more benign wing of this school of economics, which I refer to as fakery. And so they begin by saying everybody's a consumer. Taxes should be as small as possible so you can go out and consume. And anything that can be produced through the private sector should be produced by the private sector. And then, in addition to that, if it ends up being produced through the government, it will be produced inefficiently; that is, there are some things you can't avoid, one presumes. You can't have a private fire department. They would just go and put out the fires of the people that paid, not the ones next door that hadn't. But most things, you should go from the private sector, 'cause the government is inherently inefficient.

It's quite extraordinary, actually, that people--many people believe that. The reason they believe it is because it's beaten into people every day, because--think about it for a moment. You'll learn that, say, the environmental agency wastes money building something or other, whether it be subsidizing wind farms or subsidizing people to do research on non-carbon-based energies. But this is peanuts compared to the private sector. I mean, you have these executives who oversaw the collapse of the financial system, and each year they're getting bonuses of up to $100 million, $300 million. Well, I mean, if this isn't a waste, what is?

And then, in addition, many of these companies produce things that are absolutely useless for the economy, making billions of dollars out of producing so-called financial products which led to the collapse of the economy.

But the idea's been sold. You know, government is inefficient. We'll make it as small as possible. And we ought to--oh my deuce. I forget what the cliche is. It ought to be leaner and more effective.

This is nonsense. The government sector needs to be larger. Just about all of the basic things governments do they do more effectively and cheaper than the private sector. One of the best examples is pensions. The U.S. Social Security system is much more efficient than anything in the private sector. And that is because the government doesn't charge you a handling fee and doesn't run a profit doing it.

So there is this ideology that says the natural state of people is markets, and governments are intrusions into those markets, which itself is completely nonsense, because the people out there watching, they might have had bad experiences going down to the post office, having to stand in line, all that sort of stuff, but they sure had bad experiences with the private sector.

The idea that markets should exist without government regulation is absurd. You know, say a supermarket, which is a concrete form of a market--how do you get there? You're driving your car. In order to drive that car, you have to have a licence. You get the license from the state government. You're going to drive on a road. The government will have built that road. There will be regulations about how fast you can drive so you don't kill each other, other people when you do it. The government is doing all of that. That supermarket could not exist. That supermarket chain could not exist without the role of local and federal government. It's not that the federal government intervenes in markets. It's that they are the facilitator by which markets exist.

Now, there may be some things that are silly for governments to do, just like there are some things that are silly for markets to do. But the idea that somehow you could have a market, it wasn't--that had the government out of it wasn't completely contrary to all experience.

Eric_Saunders > Shelly

Weeks in only pointing out the obvious. We need regulation for innumerable reasons. Public ownership of natural monopolies is beneficial because it provides public goods without rent seeking.

The "free market" propaganda was indeed foisted on us through social engineering and all manner of propaganda paid for by the ruling class. If you want to actually understand this, I would recommend David Harvey's A Brief History of Neoliberalism or the book Winner Take All Politics.

You bring up the 1% and then attack Weeks for being a leftist. Your criticism is incoherent. You do not seem to grasp or even acknowledge the neoliberal and neoclassical dogma that Weeks is (justifiably) attacking. You have no economic understanding and are just spouting your uninformed opinions.

William W Haywood

I think he is saying that we now have a government that does not govern for the people's benefit, but governs because those in high elected office have become enamored, highly, of capitalism, extreme wealth, and dictatorial like powers over most other citizens. The upper echelons of our once democratic government are now filled with corporate money makers, and they are busy converting that once democratic government into one that helps the wealthy and powerful stay in wealth and power, and make more of both. What this nation was founded for, our constitution and Bill of Rights, does not mean squat to these devils. MALEVOLENT is an exceptionally well though out description of both of our political parties, and of most of the individuals holding power within the government, Supreme Court, justice system, etc.., To say that their actions are criminal would be an understatement, except that they have also turned our Justice system into a tool for the destruction of public liberty, so they have become quite difficult to prosecute...if not impossible.. Everyone holding political office within the confines of the US, because they are allowing this crap to go on, should be considered a traitor to the American people.

Lavina

Corporations do a good job of covering up the public money they get in subsidies and tax breaks. They don't do anything, alone. Talk about inefficiency?-----Look at the huge salaries CEO's get for sitting on their rear ends. Now, that's inefficiency! Oh, yes, they do a lot of thinking about how to cheat the public out of their hard earned money. They do do that.

David Pear

Excellent interview and John Weeks book, while a little pricey, is well worth the cost. (Maybe he can be encouraged to come up with a little discount for people who donate to TRNN).

While the great mass of the unwashed and uneducated might be excused for believing the propaganda of neoliberalism, those pedaling it can not be excused any longer. They are fakes, frauds, charlatans, snake oil salesmen, conmen and hucksters [did I leave anything out].

Now I will tell you what I really think. As John Weeks and his book so clearly point out this is all a great hoax and lie to keep the 1% at the top of the game at the expense of the 99%. And the only logical conclusions is that they know what they are doing and they are doing it very deceitfully.

Those that are knowledgeable in political-economics [the two field of study should never have been separated] know to a great degree how development and wealth is created; and for whom. Wealth can either largely be created for the 1% as it has been throughout most of human history; or it can be created for the great majority of citizens which a new concept developed only within the past 100 or so years.

So it would seem the "Invisible Hand" of Adam Smith's imagination is in reality an "Invisible Boot" on the neck of the people. That Boot is government which by definition is the monopoly on violence. The Boot can either be benevolent and creative for the 99% or it can be traditionally violent for the benefit of the



 

lasa.international.pitt.edu

In the first decade of the new millennium, Latin America is far from Francis Fukuyama’s prediction of the end of history. At both the elite and mass levels, liberal democracy and market economics are neither the only nor necessarily the preferred models for development. In fact, democratically elected leaders such as Hugo Chávez in Venezuela, Néstor Kirchner in Argentina, and Evo Morales in Bolivia have implemented economic policies at odds with the prescriptions of the Washington Consensus. At the same time, various social movements and leaders have emerged demanding not only the nationalization of economic resources but also new forms of political articulation beyond liberal politics. In this light, it is not surprising that interesting debates are taking place on the (re)emergence of the Latin American left and on the search for new models of development. These debates are at the heart of the six books reviewed here.

... ... ...

From the perspective of political science, Contemporary Latin America shows not only that the Washington Consensus had — and still has, in some countries — an important degree of popular support but also that its decline is due to ideological changes at the global level, as seen in entities such as international fi nancial institutions (IFIs). Consistent with these findings, Governance after Neoliberalism in Latin America looks at newly emergent paradigms, with both individual and comparative analyses by specialists in political science, political economy, and development. Post-Neoliberalism in the Americas provides an overview of recent trends in economic policy in North, Central, and South America to attempt to answer the question of whether Latin America’s turn to the left implies the death of neoliberalism or rather neoliberalism’s inclusion of progressive alternatives. Its contributors vary greatly in orientation, representing development studies, gender studies, international relations, political economy, political science, and sociology.

... ... ...

The theories of Karl Polanyi also receive special attention in four of the six books under review, with his Great Transformation (1944) as a point of reference. Silva explains this interest, and along lines similar to those of Panizza observes,

“Polanyi claimed that market society could not be the foundation for a stable and just social order. It created social tensions that inevitably led individuals and society to seek protection from the market’s destructive power because market society sought to reduce humans to one dimension: that of commodities” (17).

Not surprisingly, several authors see a “Polanyian double movement” in which a market society is constructed, on the one hand, and a protectionist countermovement arises against it, on the other hand. Friesen states, for instance, that

“[l]iberalized market forces run freely until they create socially intolerable outcomes and, at this point, society pushes back with regulation and constraint. This counter-movement continues until a successful case is made for the efficiencies of unfettered markets processes, at which point market liberalization reoccurs and the whole process begins again” (in Macdonald and Ruckert, 83–84).

...the term post-neoliberalism signifies more the intent to move beyond the Washington Consensus than any coherent, new model of governance. Macdonald and Ruckert postulate in the introduction to their volume that

“the post-neoliberal era is characterized mainly by a search for progressive policy alternatives arising out of the many contradictions of neoliberalism” (6).

From this angle, the term postneoliberalism refers to the emergence of a new historical moment that puts into question the technocratic consensus on how to achieve economic growth and deepen democracy. Similarly, Roberts maintains that,

“[s]ince it is not clear whether the region’s new leftist governments have identifi ed, much less consolidated, viable alternatives to market liberalism, it is far too early to claim that Latin America has entered a post-neoliberal era of development” (in Burdick, Oxhorn, and Roberts, 1).

Panizza offers a different and interesting point ... post-neoliberalism seeks not only to contest the technocratic monopolization of political space but also to favor the expansion of the national state, particularly in the economic arena.

...Silva finds, for example, that in Peru, “significant insurrectionary movements and a turn to authoritarianism that closed political space during Fujimori’s presidency inhibited the formation of associational power and horizontal linkages among social movement organizations” (231).

This explanation is shared by Roberts, who, in the introduction to Beyond Neoliberalism in Latin America?, states that a bottom-up perspective helps us understand that market reforms may unintentionally have sown the seeds for protest. That is, the Washington Consensus may have brought with it demands by and on behalf of the poor and disadvantaged.

...Silva observes that the support of transnational entities such as certain UN organizations and international nongovernmental organizations has been decisive in nurturing contention and, by extension, antineoliberal mobilizations.

...Latin American neostructuralism is not necessarily against the Washington Consensus, but it is at odds with the idea that the invisible hand of the market is all-powerful.

...An additional factor in the movement beyond the Washington Consensus is the premise that we have entered a new historical period marked  not only by new global powers but also, as Macdonald and Ruckert note in the introduction to their collection, by “the decline of the United States’ historic hegemony in the southern part of the hemisphere” (10). This became particularly evident after the events of September 11, 2001, which gave Latin American countries more room to test and implement policies
at odds with the Washington Consensus. In addition, the failure of U.S. efforts to create the Free Trade Area of the Americas (FTAA) “paved the way for the emergence of alternative projects of regionalist political economy creating a new environment for the reemergence of nationalism in the South” (Grugel and Riggirozzi, 15).

Another similarity among current left-of-center governments is that they favor an activist state; that is, they believe that state capacity must be built back up after decades of retrenchment (Macdonald and Ruckert). Moreover, they advocate implementing and expanding relatively new kinds of policies, particularly so-called conditional cash-transfer programs, which provide payments to poor persons who meet certain desiderata, such as enrolling their children in school or having themselves vaccinated.

Néstor and Cristina Kirchner in Argentina, Ricardo Lagos and Michelle Bachelet in Chile, and Lula da Silva in Brazil are prime examples of this approach (Cortés, in Grugel and Riggirozzi). The last important
commonality among current leftist regimes is the search for new forms of regional cooperation to counteract the U.S. FTAA. Chávez in Venezuela and Morales in Bolivia illustrate this intent, as Burton and Domingo discuss in Governance after Neoliberalism. Tussie notes that regional cooperation is also supported by more moderate leftists such as Silva, who has sought in particular to promote South-South relations (in Grugel and Riggirozzi).

...Future research on post-neoliberalism requires more precise use of the concept of critical juncture, taken from historical institutionalist literature and loosely defined as a

“relatively short perio[d] of time during which there is a substantially heightened probability that agents’ choices will affect the outcome of interest.”3

Silva asserts, accordingly, that “the fluidity of contemporary developments suggests we may be at a new critical juncture with respect to the incorporation of the popular sectors in politics” (270), yet he does not address a series of related questions. First, can we speak of a common critical juncture, or do different critical junctures exist for the various nations of Latin America? Second, if a critical juncture is a short period of time, does that imply that the current window of opportunity to make major transformations in Latin America is coming to a close? 

[Feb 10, 2014]  Neoliberalism and the Demise of Democracy

August 7, 2004 | Dr.Henry A. Giroux-Online Articles

www.dissidentvoice.org
August 7, 2004

Neoliberalism has become one of the most pervasive, if not, dangerous ideologies of the 21st century. It pervasiveness is evident not only by its unparalleled influence on the global economy, but also by its power to redefine the very nature of politics itself. Free market fundamentalism rather than democratic idealism is now the driving force of economics and politics in most of the world, and it is a market ideology driven not just by profits but by an ability to reproduce itself with such success that, to paraphrase Fred Jameson, it is easier to imagine the end of the world than the end of neoliberal capitalism.

Wedded to the belief that the market should be the organizing principle for all political, social, and economic decisions, neoliberalism wages an incessant attack on democracy, public goods, the welfare state, and non-commodified values. Under neoliberalism everything either is for sale or is plundered for profit. Public lands are looted by logging companies and corporate ranchers; politicians willingly hand the public’s airwaves over to powerful broadcasters and large corporate interests without a dime going into the public trust; Halliburton gives war profiteering a new meaning as it is granted corporate contracts without any competitive bidding and then bilks the U.S. government for millions; the environment is polluted and despoiled in the name of profit-making just as the government passes legislation to make it easier for corporations to do so; public services are gutted in order to lower the taxes of major corporations; schools more closely resemble either malls or jails, and teachers are forced to get revenue for their school by hawking everything from hamburgers to pizza parties. As markets are touted as the driving force of everyday life, big government is disparaged as either incompetent or threatening to individual freedom, suggesting that power should reside in markets and corporations rather than in governments (except for their support for corporate interests and national security) and citizens.

Under neoliberalism, the state now makes a grim alignment with corporate capital and transnational corporations. Gone are the days when the state “assumed responsibility for a range of social needs.” [1] Instead, agencies of government now pursues a wide range of “‘deregulations,’ privatizations, and abdications of responsibility to the market and private philanthropy.” [2] Deregulation, in turn, promotes “widespread, systematic disinvestment in the nation’s basic productive capacity.” [3] Flexible production encourages wage slavery and disposable populations at home. And the search for ever greater profits leads to outsourcing which accentuates the flight of capital and jobs abroad. Neoliberalism has now become the prevailing logic in the United States, and according to Stanley Aronowitz “...the neoliberal economic doctrine proclaiming the superiority of free markets over public ownership, or even public regulation of private economic activities, has become the conventional wisdom, not only among conservatives but among social progressives.” [4]

The ideology and power of neoliberalism also cuts across national boundaries. Throughout the globe, the forces of neoliberalism are on the march, dismantling the historically guaranteed social provisions provided by the welfare state, defining profit-making as the essence of democracy, and equating freedom with the unrestricted ability of markets to “govern economic relations free of government regulation.” [5] Transnational in scope, neoliberalism now imposes its economic regime and market values on developing and weaker nations through structural adjustment policies enforced by powerful financial institutions such as the World Bank, the International Monetary Fund (IMF), and the World Trade Organization (WTO). Secure in its dystopian vision that there are no alternatives, as England’s former Prime Minister Margaret Thatcher once put it, neoliberalism obviates issues of contingency, struggle, and social agency by celebrating the inevitability of economic laws in which the ethical ideal of intervening in the world gives way to the idea that we “have no choice but to adapt both our hopes and our abilities to the new global market.” [6] Coupled with a new culture of fear, market freedoms seem securely grounded in a defense of national security, capital, and property rights. When coupled with a media driven culture of fear and the everyday reality of insecurity, public space becomes increasingly militarized as state governments invest more in prison construction than in education. Prison guards and security personnel in public schools are two of the fastest growing professions.

In its capacity to dehistoricize and depoliticize society, as well as in its aggressive attempts to destroy all of the public spheres necessary for the defense of a genuine democracy, neoliberalism reproduces the conditions for unleashing the most brutalizing forces of capitalism. Social Darwinism has been resurrected from the ashes of the 19th century sweatshops and can now be seen in full bloom in most reality TV programs and in the unfettered self-interests that now drives popular culture. As narcissism is replaced by unadulterated materialism, public concerns collapse into utterly private considerations and where public space does exist it is mainly used as a confessional for private woes, a cut throat game of winner take all, or a advertisement for consumerism.

Neoliberal policies dominate the discourse of politics and use the breathless rhetoric of the global victory of free-market rationality to cut public expenditures and undermine those non-commodified public spheres that serve as the repository for critical education, language, and public intervention. Spewed forth by the mass media, right-wing intellectuals, religious fanatics, and politicians, neoliberal ideology, with its ongoing emphasis on deregulation and privatization, has found its material expression in an all-out attack on democratic values and on the very notion of the public sphere. Within the discourse of neoliberalism, the notion of the public good is devalued and, where possible, eliminated as part of a wider rationale for a handful of private interests to control as much of social life as possible in order to maximize their personal profit. Public services such as health care, child care, public assistance, education, and transportation are now subject to the rules of the market. Construing the public good as a private good and the needs of the corporate and private sector as the only source of investment, neoliberal ideology produces, legitimates, and exacerbates the existence of persistent poverty, inadequate health care, racial apartheid in the inner cities, and the growing inequalities between the rich and the poor. [7]

As Stanley Aronowitz points out, the Bush administration has made neoliberal ideology the cornerstone of its program and has been in the forefront in actively supporting and implementing the following policies:

[D]eregulation of business at all levels of enterprises and trade; tax reduction for wealthy individuals and corporations; the revival of the near-dormant nuclear energy industry; limitations and abrogation of labor’s right to organize and bargain collectively; a land policy favoring commercial and industrial development at the expense of conservation and other pro environment policies; elimination of income support to the chronically unemployed; reduced federal aid to education and health; privatization of the main federal pension programs, Social Security; limitation on the right of aggrieved individuals to sue employers and corporations who provide services; in addition, as social programs are reduced, [Republicans] are joined by the Democrats in favoring increases in the repressive functions of the state, expressed in the dubious drug wars in the name of fighting crime, more funds for surveillance of ordinary citizens, and the expansion of the federal and local police forces. [8]

Central to both neoliberal ideology and its implementation by the Bush administration is the ongoing attempts by free-market fundamentalists and right wing politicians to view government as the enemy of freedom (except when it aids big business) and discount it as a guardian of the public interest. The call to eliminate big government is neoliberalism’s great unifying idea and has broad popular appeal in the United States because it is a principle deeply embedded in the country’s history and tangled up with its notion of political freedom. And yet, the right wing appropriation of this tradition is racked with contradictions in terms of neoliberal policies.

The advocates of neoliberalism have attacked what they call big government when it has provided essential services such as crucial safety nets for the less fortunate, but they have no qualms about using the government to bailout the airline industry after the economic nosedive that followed the 2000 election of George W. Bush and the events of 9/11. Nor are there any expressions of outrage from the cheerleaders of neoliberalism when the state engages in promoting various forms of corporate welfare by providing billions of dollars in direct and indirect subsidies to multinational corporations. In short, government bears no obligation for either the poor and dispossessed or for the collective future of young people.

As the laws of the market take precedence over the laws of the state as guardians of the public good, the government increasingly offers little help in mediating the interface between the advance of capital and its rapacious commercial interests. Neither does it aid non-commodified interests and non-market spheres that create the political, economic, and social spaces and discursive conditions vital for critical citizenship and democratic public life. Within the discourse of neoliberalism, it becomes difficult for the average citizen to speak about political or social transformation, or to even challenge, outside of a grudging nod toward rampant corruption, the ruthless downsizing, the ongoing liquidation of job security, or the elimination of benefits for people now hired on part-time.

The liberal democratic vocabulary of rights, entitlements, social provisions, community, social responsibility, living wage, job security, equality, and justice seem oddly out of place in a country where the promise of democracy has been replaced by casino capitalism, a winner-take-all philosophy, suited to lotto players and day traders alike. As corporate culture extends even deeper into the basic institutions of civil and political society, buttressed daily by a culture industry largely in the hands of concentrated capital, it is reinforced even further by the pervasive fear and insecurity of the public that the future holds nothing beyond a watered down version of the present. As the prevailing discourse of neoliberalism seizes the public imagination, there is no vocabulary for progressive social change, democratically inspired visions, or critical notions of social agency to expand the meaning and purpose of democratic public life. Against the reality of low wage jobs, the erosion of social provisions for a growing number of people and the expanding war against young people of color at home and empire-building abroad, the market-driven juggernaut of neoliberalism continues to mobilize desires in the interest of producing market identities and market relationships that ultimately sever the link between education and social change while reducing agency to the obligations of consumerism.

As neoliberal ideology and corporate culture extend even deeper into the basic institutions of civil and political society, there is a simultaneous diminishing of non-commodified public spheres —those institutions such as public schools, independent bookstores, churches, noncommercial public broadcasting stations, libraries, trade unions and various voluntary institutions engaged in dialogue, education, and learning–that address the relationship of the individual to public life and foster social responsibility and provide a robust vehicle for public participation and democratic citizenship. In the vacuum left by diminishing democracy, religious zealotry, cultural chauvinism, xenophobia, and racism have become the dominant tropes of neoconservatives and other extremist groups eager to take advantage of the growing insecurity, fear, and anxiety that result from increased joblessness, the war on terror, and the unraveling of communities.

As a result of the consolidated corporate attack on public life, the maintenance of democratic public spheres from which to launch a moral vision or to engage in a viable struggle over politics loses all credibility–not to mention monetary support. As the alleged objectivity of neoliberal ideology remains largely unchallenged within dominant public spheres, individual critique and collective political struggles become more difficult. [9] It gets worse. Dominated by extremists, the Bush administration is driven by an arrogance of power and inflated sense of moral righteousness mediated largely by a false sense of certitude and never ending posture of triumphalism. As George Soros points out this rigid ideology and inflexible sense of mission allows the Bush administration to believe that “because we are stronger than others, we must know better and we must have right on our side. This is where religious fundamentalism comes together with market fundamentalism to form the ideology of American supremacy.” [10]

As public space is increasingly commodified and the state becomes more closely aligned with capital, politics is defined largely by its policing functions rather than an agency for peace and social reform. As the state abandons its social investments in health, education, and the public welfare. It increasingly takes on the functions of an enhanced police or security state, the signs of which are most visible in the increasing use of the state apparatus to spy on and arrests its subjects, the incarceration of individuals coincided disposable (primarily people of color), and the ongoing criminalization of social policies. Examples of the latter include anti-begging ordinances and anti-loitering that fine or punish homeless people for sitting or lying down too long in public places. [11] An even more despicable example of the barbaric nature of neoliberalism with its emphasis on profits over people and its willingness to punish rather than serve the poor and disenfranchised can be seen in the growing tendency of many hospitals across the country to have patients arrested and jailed if they cannot pay their medical bills. The policy, right out of the pages of George Orwell’s 1984, represents a return to debtors prisons, which is now chillingly called “body attachment,” and is “ basically a warrant for... the patient’s arrest.” [12]
Neoliberalism is not simply an economic policy designed to cut government spending, pursue free trade policies, and free market forces from government regulations; it is also a political philosophy and ideology that effects every dimension of social life. Neoliberalism has heralded a radical economic, political, and experiential shift that now largely defines the citizen as a consumer, disbands the social contract in the interests of privatized considerations, and separates capital from the context of place. Under such circumstances, neoliberalism portends the death of politics as we know it, strips the social of its democratic values, and reconstructs agency in terms that are utterly privatized and provides the conditions for an emerging form of proto-fascism that must be resisted at all costs. Neoliberalism not only enshrines unbridled individualism, it also destroys any vestige of democratic society by undercutting its “moral, material, and regulatory moorings,” [13] and in doing so it offers no language for understanding how the future might be grasped outside of the narrow logic of the market. But there is even more at stake here than the obliteration of public concerns, the death of the social, the emergence of a market-based fundamentalism that undercuts the ability of people to understand how to translate the privately experienced misery into collective action, and the elimination of the gains of the welfare state. There is also the growing threat of displacing “political sovereignty with the sovereignty of the market, as if the latter has a mind and morality of its own.” [14] As democracy becomes a burden under the reign of neoliberalism, civic discourse disappears and the reign of unfettered social Darwinism with its survival-of-the-slickest philosophy emerges as the template for a new form of proto-fascism. None of this will happen in the face of sufficient resistance, nor is the increasing move toward proto-fascism inevitable, but the conditions exist for democracy to lose all semblance of meaning in the United States..

Educators, parents, activists, workers, and others can address this challenge by building local and global alliances and engaging in struggles that acknowledge and transcend national boundaries, but also engage in modes of politics that connect with people’s everyday lives. Democratic struggles cannot under emphasize the special responsibility of intellectuals to shatter the conventional wisdom and myths of neoliberalism with its stunted definition of freedom and its depoliticized and dehistoricized definition of its own alleged universality. As the late Pierre Bourdieu argued, any viable politics that challenges neoliberalism must refigure the role of the state in limiting the excesses of capital and providing important social provisions. [15] At the same time, social movements must address the crucial issue of education as it develops throughout the cultural sphere because the “power of the dominant order is not just economic, but intellectual–lying in the realm of beliefs,” and it is precisely within the domain of ideas that a sense of utopian possibility can be restored to the public realm. [16] Most specifically, democracy necessitates forms of education that provide a new ethic of freedom and a reassertion of collective identity as central preoccupations of a vibrant democratic culture and society. Such a task, in part, suggests that intellectuals, artists, unions, and other progressive movements create teach-ins all over the country in order to name, critique, and connect the forces of market fundamentalism to the war at home and abroad, the shameful tax cuts for the rich, the dismantling of the welfare state, the attack on unions, the erosion of civil liberties, the incarceration of a generation of young black and brown men, the attack on public schools, and the growing militarization of public life. As Bush’s credibility crisis is growing, the time has come to link the matters of economics with the crisis of political culture, and to connect the latter to the crisis of democracy itself. We need a new language for politics, for analyzing where it can take place, and what it means to mobilize alliances of workers, intellectuals, academics, journalists, youth groups, and others to reclaim, as Cornel West has aptly put it, hope in dark times.

REFERENCES

1. George Steinmetz, ‘The State of Emergency and the Revival of American Imperialism; Toward an Authoritarian Post-Fordism,” Public Culture 15:2 (Spring 2003), p. 337.

2. George Steinmetz, Ibid., ‘The State of Emergency and the Revival of American Imperialism; Toward an Authoritarian Post-Fordism,” p. 337.

3. Barry Bluestone and Bennett Harrison, The Deindustrialization of America: Plant Closings, Community Abandonment and the Dismantling of Basic Industry (New York: Basic Books, 1982), p. 6

4. Stanley Aronowitz, Ibid. How Class Works, p. 21.

5. Stanley Aronowitz, How Class Works (New Haven: Yale University Press, 2003), p. 101.

6. Stanley Aronowitz, “Introduction,” in Paulo Freire, Pedagogy of Freedom (Lanham: Rowman and Littlefield, 1998), p. 7

7. Doug Henwood, After the New Economy (New York: The New Press, 2003); Kevin Phillips, Wealth and Democracy: A Political History of the American Rich (New York: Broadway, 2003); Paul Krugman, The Great Unraveling: Losing Our Way in the New Century (New York: W.W. Norton, 2003).

8. Stanley Aronowitz, How Class Works (New Haven: Yale University Press, 2003), p. 102.

9. Of course, there is widespread resistance to neoliberalism and its institutional enforcers such as the WTO and IMF among many intellectuals, students, and global justice movements, but this resistance rarely gets aired in the dominant media and if it does it is often dismissed as irrelevant or tainted by Marxist ideology.

10. George Soros, “The US is Now in the Hands of a Group of Extremists <http://www.commondreams.org/views04/0126-01.htm>,” The Guardian/UK (January 26, 2004).

11. Paul Tolme, “Criminalizing the Homeless,” In These Times (April 14, 2003), pp. 6-7.

12. Staff or Democracy Now, “Uncharitable Care: How Hospitals are Gouging and Even Arresting the Uninsured <http://www.commondreams.org/headlines04/0108-07.htm>,” CommonDreams (January 8, 2004).

13. John and Jean Comaroff, “Millennial Capitalism: First Thoughts on a Second Coming,” Public Culture 12:2 (2000), p. 332.

14. Comaroff, Ibid., (2000), p. 332.

15. Pierre Bourdieu, Acts of Resistance: Against the Tyranny of the Market (New York: The New Press, 1998).

16. Pierre Bourdieu and Gunter Grass, “The ‘Progressive’ Restoration: A Franco-German Dialogue,” New Left Review 14 (march-April, 2003), p. 66.

[Feb 09, 2014] A Tale of two Conferences. Globalization, the Crisis of Neoliberalism and Question of the Commons by  George Caffentzis

The Commoner

In the last decade the concept of the commons has increasingly become the basis of anticapitalist thinking in the antiglobalization (or, as some now have it, “the global justice”) movement. It has been politically useful both as an alternative model of social organization against the onslaught of “there is no alternative” neoliberal thinking and as a link between diverse struggles ranging from those of agricultural workers demanding land, to environmentalists calling for a reduction of the emission of “hot house gases” into the atmosphere, to writers, artists, musicians and software designers rejecting the totalitarian regime of intellectual property rights. But, like any concept in a class society, it can have many and often antagonistic uses. Our paper will show that there is a use of the concept of the commons that can be functional to capitalist accumulation and it offers an explanation as to why this capitalist use developed, especially since the early 1990s. The conclusion of this paper will assess the political problem that this capitalist use of “the commons” (both strategically and ideologically) poses for the anticapitalist movement. Download full PDF here:

caffentzis_a-tale-of-two-conferences.pdf

The long and often deadly debate about the virtues and efficiencies of “State vs. Market,” or private property vs. state property (as the struggle of capitalism vs. communism was often described in this period) seemed finally to be over while the nuclear weapons backed obstacles to the expansion of the Market to all the categories of social life that Communism purportedly posed vanished. The utopia of neoliberalism seemed finally poised to conquer the world. As Margaret Thatcher apocalyptically put it; “There is no alternative.”

Today this account of world history still dominates the academy and the media. But it is being challenged by another understanding of the last fifteen years whose outlines were only becoming clear in the late 1980s and whose consequences intensified throughout the 1990s. This period saw the origin of the antiglobalization movement in the great riots, strikes and revolutions against structural adjustment policies (SAPs) imposed throughout Asia, Africa and South America in the later half of the 1980s (Federici and Caffentzis 2001). For the insurrections against structural adjustment policies (what is often called “neoliberal globalization”) which exploded in Caracas, Lagos, Algiers, and other urban centers of these regions and the less visible mobilizations in the countryside of the planet at that time (e.g., in Chiapas and the Niger Delta) were as historically significant as the fall of the Berlin Wall.

At first, much of this ”other” struggle was dismissed as a “dead ender” defense of state property; but as the neoliberal period unfolded, it became clear that the aim of SAPs (designed by the planners of the World Bank and IMF) was not only to undermine state property, their overt aim. They were also devised both to destroy the basis of common property that has been struggled for and defended in the Third World and the so-called First for centuries and to prevent future common property regimes from forming anywhere. Just as neoliberal bankers and government officials were demanding the totalitarian transformation of everything into a commodity, many throughout the planet recognized the life-and-death importance of various forms of common property that were rapidly being “enclosed.” The most obvious type of common property was land (in the forms of arable, pasture, and forest land) in many parts of Africa and South America, but soon the types of recognized resources that could or should be communalized included access to water, “rights” not to have your body polluted by industrial waste, indigenous knowledge, cultural artifacts, the oceans, the electro-magnetic frequency spectrum and even the human genome. These, and other examples of near common property including traditional ones like the provision of 'public goods'--e.g., intergenerational support systems, education, and health care--were abominated by the new political economy and their doctrinal fate was to be sold to the highest bidder.

One of the first reactions to these New Enclosures was a worldwide war for land and in defense of the commons that took place in the 1980s, but it passed largely unnoticed since it appeared under a variety of confusing rubrics. Up the Andes into Central America and Mexico there has been desperate and chronic armed struggle over the control of land (frequently referred to in the US as an aspect of the 'drug problem' or the 'spread of communism') (Weinberg 1991). In West Africa there is a micro-level of armed struggle against seizures of communal land by the state, oil companies and development banks (frequently discussed as anachronistic 'tribal war') (Okonta and Douglas 2003). In southern Africa, the battle over land and its communal control, both in town and country, was referred to as an aspect of 'the struggle against apartheid,' while in East Africa it was considered a 'problem of nationalities.' War for common land and resources (including water) was and is, of course, what the 'Palestinian issue' is about... Thus at the moment when the NAFTA and WTO agreements were being finalized in the mid-1990s, with their neoliberal prejudices in favor of private alienable property in land, the "there is no alternative" World Bank was carefully exploring "Plan B," i.e., a political position to fall back on when the antagonistic response to the privatization of land becomes too powerful and aggressive. A key element in this alternative is the acceptance of the land or forest commons at least as a stop-gap, transitional institution when the revolts of the landless or the devastation of the forests become destabilizing to the general exploitation of a territory and population. Of course, the World Bank was not alone in its strategic reassessment of the commons. Both the Food and Agriculture Organization and many national governments also were also forced to recognize common property rights over land in the late 1980s and early 1990s (Colchester and Lohmann 1993).

Clearly by the early 1990s there was a need to conceptualize such an alternative and to train international agency officials to negotiate with the indigenous antagonists who had not been crushed in 'the Fourth World War' (Midnight Notes 2001). Neoliberalism is incapable of theorizing such a negotiation process, since it is logically committed to the subversion of communal forms of ownership. A new theory had to be developed that articulated arguments concerning the “appropriateness” of common property regimes in certain circumstances and integrated knowledge of what neoliberal economists had defined out of existence. Adherents of such a theory would thus be perfect advisors to a government in a political and/or military stalemate with an indigenous apposition demanding common lands or forests (e.g., in Mexico, Guatemala, Ecuador, Bolivia, Brazil, or Nigeria). For they would not simply repeat their economistic version of the imperialist cry -- 'exterminate the brutes' —but would provide other 'possible worlds' and a full 'menu' of options that would make a negotiation feasible.

The realm of 'intellectual property rights' also called for an alternative theory appealing to the commons. Neoliberalism's grandest theoretical and practical efforts were called on to defend the notion that private property institutions should be strictly extended to the realms of scientific, artistic and technological production. Indeed, most of the 'free trade' treaties and SAPs of the 1990s insisted on the imposition of privatized 'intellectual property rights" on formerly colonized or socialist countries where patents, copyrights and licenses did not have much legitimacy. But a planetary revolt against privatized intellectual property rights began in those years. In the so-called underdeveloped world, there was a large scale evasion of the drug, bioengineering, music and film distributing, and computer software corporations' demand that they receive their royalties before 'their' medicines, seeds, musical recordings, film videos, and software programs are used. The so-called developed world also saw a parallel large-scale evasion of privatized intellectual property claims through reproduction of videos, musical recordings, and software programs. This world-wide evasion provoked an attempt to create a planetary police state that would enforce the claims of the corporations demanding their 'rights.'

... ... ....

The rapid collapse of Keynesianism in the early 1980s and the even more rapid collapse of the Soviet Union in 1989, let the Apprentice exchange his broom for a magical wand. Neoliberalism became the paradigm tool for both ideological justification to be used to dismantle problematic regimes and policies, and for actual regime planning. The Structural Adjustment Programs, the “shock therapies,” the wave of privatizations of pension programs, the dismantling of government health care systems around the planet in the last twenty years have had their theoretical basis in this doctrine and the capitalist class forces that became dominant in this period embraced it. The theoretical production of the antiglobalization movement has naturally been seen as the antagonistic response to this doctrine. But over the last decade an a half there has also been a parallel development: an academic and “establishment” literature which rejects the anti-capitalism of much of the antiglobalization movement, supports the commons, and is a theoretical alternative to doctrinaire neoliberalism. Much of this literature, rich in detail and in the experiences of farmers, fishers, and forest dwellers around the planet, can be found in the “Digital Library of the Commons” (http://dlc.dlib.indiana.edu) which has been put together at Indiana University under the auspices of the International Association for the Study of Common Property (IASCP), the group organizing our 'other' conference. The IASCP is an interdisciplinary and international association of scholars formed in 1989 and which has grown dramatically in the 1990s, especially after the crisis of neoliberalism began to become apparent. The bibliography it has established has almost 40,000 titles of articles and books, most of them published in a wide variety of academic or foundation-backed journals, publishing houses or conference web sites and deal in one way or another with the commons, so it would be impossible to survey or characterize this literature in a brief way. What I want to do in this section is to analyze a significant tendency in this literature that recognizes the compatibility of capitalism with common property systems of resource management and is committed to “improving institutions for the management of environmental resources that are (or could be) held or used collectively by communities” (as the IASCP’s mission statement puts it).

Emerging alternative to neoliberalism  By Roland G. Simbulan

May 01, 2009 | Philippine Daily Inquirer/INQUIRER.net

THE crisis of neoliberal economic theory and practice is only proving that an economic and financial system based on the logic of deregulated profit maximization cannot go on. But is it just enough to reform or "redesign" neoliberal capitalism? Those who think that it can be saved by mere bailouts of big business failures by governments will be disappointed.

As the world reels from the crisis of neoliberal capitalism, an exciting process is happening in Latin America led by Venezuela and Cuba. It is a process that is emerging as an alternative to profit-oriented neoliberal economics and a foreign policy subservient to the United States, the IMF-World Bank and the World Trade Organization. It symbolizes the new solidarity and internationalism that draws inspiration from the integration of initiatives from popular organizations and progressive states.

In Latin America, taking concrete shape right in the backyard of the US Empire, there has emerged the Bolivarian Alternative to the Americas (Alba), which is an alternative form of regional integration that is not based on trade liberalization. If not on US-sponsored free trade agreements, what is it based on then? It is based on the vision and idea of social welfare and equity, advocating a socially oriented trade bloc. It is a regional solidarity whose purpose is to eradicate the poverty of the most dispossessed sectors of society. Its linchpin is to allow the economically weakest countries to gain more favorable terms in trade negotiations, thereby undercutting the prerogatives of profit-driven transnational corporations. But it is more than a new and alternative trade agreement. A brainchild of Venezuela, Cuba, Bolivia and other emerging progressive states in Latin America, Alba?s projects which are being implemented for Latin America include the following:

Prioritizing people?s needs and interests. This is being achieved through food self-sufficiency in agriculture before focusing on profit-making processes. Internal production must be protected and states should have the ability to design and implement policies in the defense of their people?s right to have access to essential and high-quality services at fair prices. In effect, public services have to be oriented toward fulfilling the people?s needs, not those of big businesses which have accumulated more private profit through deregulation, liberalization and privatization.

Strengthening the infrastructure of public services especially in education, health care and housing. Foremost of these is ?Operation Miracle,? which provides free eye operations, plus transportation and accommodation, to almost 600,000 Latin American citizens each year. One beneficiary of this was the Bolivian soldier who was ordered to shoot the guerrilla leader Che Guevarra in 1967. Regional exchanges of cheap Venezuelan oil for Cuban doctors and health care expertise sent to the poorest provinces have also been initiated and a Latin American school of medicine has been organized to train more doctors and health workers from all over South America.

Mutual exchanges in technical expertise and markets. One good example is the case of Bolivia, where doctors, engineers and teachers from Cuba, which has the best social services among developing countries, were sent to the countryside to share their technical expertise, especially in managing its hydrocarbon extraction sector. Bolivia also gained a regional market for its soy beans while its contribution is mainly in the form of its natural gas reserves. A continental oil and gas pipeline is being constructed to benefit most Latin American countries.

A cooperative bank of the South. Otherwise also known as a ?compensatory fund for structural convergence,? this bank becomes an alternative to the World Bank and IMF regime which, over the past decades, has only further impoverished many developing nations which have been losing control over their economic planning and fiscal policies.

TeleSUR, a regional TV and radio network presenting a Latin American people?s perspective. TeleSUR, a pan-Latin American network financed by the governments of Venezuela, Argentina, Cuba and Uruguay and supported by Brazil is now in a way serving as the Al Jazeera for South America. It is emerging as the alternative voice of Latin American peoples to the Western viewpoint monopolizing global television through CNN, Univision and BBC.

Alba, in effect, is a far cry from the kind of ?free trade model of integration? which the United States has long dictated to gain economic, political and military hegemony over the region and other parts of the world.

But the scope of the Alba vision and project is even more ambitious. It is a regional anti-poverty project that focuses on upgrading basic social services and developing local economies. Its core objective is to promote the social side of development, the eradication of poverty and provision of the best social services which have for so long excluded the vast majority of the people. It is firmly grounded on popular participation, that is, the solidarity and cooperation not only of governments, but also of their peoples? movements such as workers? movements and indigenous peoples? movements.

It represents a new form of international relations that is worth watching.

Roland G. Simbulan is professor in Development Studies and Political Economy at the University of the Philippines.

[Feb 09, 2014] Dozens injured after violent protests in Bosnia

Fruits of neoliberalism in recently created neoliberal vassal state.
RT In motion

At least 150 people were injured, as protesters across the former Yugoslav republic of Bosnia rebel against corruption, joblessness and political stagnation. Scuffles have reached the presidential residency, resulting in the use of water cannon and tear gas.

Sarajevo is in chaos, with buildings and cars burning and riot police in full gear chasing protesters and pounding batons against their shields to get the crowd to disperse.

In the city of Mostar, protesters stormed the local government building, throwing furniture and files out its windows on Friday before setting it on fire.

Labour has 'betrayed' working-class voters, says Ukip candidate by Jane Merrick

As UK Labour party became neoliberal party it not only betraied wirking class, it thou them under then bus.
February 09, 2014 | The Independent

The Labour Party has "disenfranchised and betrayed" its core working-class voters in northern England by leaving them on the sidelines of society, out of work and on benefits, Ukip's candidate in this week's Wythenshawe and Sale East by-election claims.

John Bickley, who believes he can still snatch a shock victory in the Manchester Labour heartland on Thursday, says his own party is gaining traction in the North because the government of Tony Blair and Gordon Brown failed to get its traditional voters back into work. Ed Miliband, Mr Bickley says, equally has lost touch with typical voters in Wythenshawe, a working-class area of Manchester dominated by a huge housing estate.

While polling suggests that Labour will hold the seat with a reduced majority, Ukip's predicted second place in the by-election, caused by the death of former minister Paul Goggins, shows how politics has changed since the last general election. Nigel Farage's party can scoop up votes from Labour and the Lib Dems because of fears over immigration and the legacy of the last government, suggesting they can win seats outright in May 2015.

Ukip’s John Bickley canvassing locals Mr Bickley, 60, who was born on the Wythenshawe estate, asks why, after 13 years of Labour government, the residents are not doing better. He says: "I look back to when I left at 16. Benefits as a concept didn't exist. They feel left on the sidelines by the political class. They have been made second-class citizens. I am picking up a sense of betrayal by the Labour Party. Working-class people have found that their wages are under pressure. People on benefits have even less of an incentive to get off benefits. The cost of living crisis is firmly laid at the door of Labour."

[Feb 07, 2014] Tom Perkins Apologizes for Making Holocaust Comparisons

A very educational video. The nice question was "Are you connected to reality ?" This guy definitely not. But he is well connected to his privileges...
Jan. 27, 2014 | Bloomberg | Video

Tom Perkins, co-founder of venture-capital firm Kleiner Perkins Caufield & Byers, talks about comments he made comparing today's treatment of wealthy Americans to the persecution of Jews in Nazi Germany.

Perkins, 82, wrote in a three-paragraph letter in the Jan. 25 Wall Street Journal that resentment of the very rich in the U.S. amounts to a "progressive war on the American one percent" paralleling attacks on Jews in the 1930s.

He speaks with Emily Chang on Bloomberg Television's "Bloomberg West."

[Feb 07, 2014] Tom Perkins's Nazi Analogy and the 1%

WSJ is "Pravda" of neoliberalism....   Rupert Murdoch ownership make it even more nasty neroliberal rag...
WSJ.com

Five days on, the commentariat continues to drop anvils on Tom Perkins, who may have written the most-read letter to the editor in the history of The Wall Street Journal. The irony is that the vituperation is making our friend's point about liberal intolerance—maybe better than he did.

"I perceive a rising tide of hatred of the successful one percent," wrote the legendary venture capitalist and a founder of Kleiner Perkins Caufield & Byers. Mr. Perkins called it "a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendant 'progressive' radicalism unthinkable now?"

That comparison was unfortunate, albeit provocative. It's not always easy to be subtle in 186 words, as Mr. Perkins learned, though a useful rule of thumb is not to liken anything to Nazi Germany unless it happens to be the Stalinist Soviet Union.

Amid the ongoing media furor and an ungallant rebuke from Kleiner Perkins, Mr. Perkins has apologized for the comparison, without repudiating his larger argument.

[Feb 07, 2014] Progressive Kristallnacht Coming — Letters to the Editor

This is typical kick below the belt. Nasty, and very devious old guy. Note that this highly educated (MIT) "one percenter" never mentions the word neoliberalism...
Jan 24, 2014 | WSJ.com

I would call attention to the parallels of Nazi Germany to its war on its "one percent," namely its Jews, to the progressive war on the American one percent, namely the "rich."

Regarding your editorial "Censors on Campus" (Jan. 18): Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its "one percent," namely its Jews, to the progressive war on the American one percent, namely the "rich."

From the Occupy movement to the demonization of the rich embedded in virtually every word of our local newspaper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent. There is outraged public reaction to the Google buses carrying technology workers from the city to the peninsula high-tech companies which employ them. We have outrage over the rising real-estate prices which these "techno geeks" can pay.

We have, for example, libelous and cruel attacks in the Chronicle on our number-one celebrity, the author Danielle Steel, alleging that she is a "snob" despite the millions she has spent on our city's homeless and mentally ill over the past decades.

This is a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendant "progressive" radicalism unthinkable now?

[Feb 07, 2014] U.S. diplomat plays down leaked call; Germany's Merkel angry

From political point of view neoliberalism vision is close to Communists vision. The only difference is that now the capital of the world is the USA and it is the USA government that controls the rest of the world. Other states are just vassals who implement directions from benevolent "Washington Obcom" and install leaders recommended, or (YouTube)... Funny that it was communists who actually put a major effort in implementing this vision via the dissolution of the USSR.
Feb 07, 2014 | Reuters/Yahoo

... ... ...

Modern Ukraine is divided between eastern provinces that were districts of Russia for centuries and where most people speak Russian, and Western sections that were annexed by the Soviets from Poland and the former Austrian empire, where most people speak Ukrainian and many resent Russian domination.

Although many Ukrainians say they dream of integration with the West, the Soviet economic legacy gives Moscow extraordinary leverage: Ukraine's heavy industry depends on imports of energy, above all Russian natural gas.

Moscow portrays the anti-Yanukovich demonstrators as paid Western agents and seems to be pushing for Yanukovich to order a crackdown to clear the streets.

In some of the sharpest language yet, the Kremlin's point man on Ukraine, Sergei Glazyev, urged the Ukrainian leader to stop negotiating with "putschists". He accused Washington of arming, funding and training the opposition to take power.

Nuland called the remarks "pure fantasy".

"He could be a science fiction writer," she said. 

Re-Ran:

When any empire ends under the guise of "renewal" organizations tend to show up, like a parasite they eat the legacy of the empire alive often from within. There are remarkable similarities to most if not all A.D. Empires, From the beginning first pioneers of them up to the final conspicuous consumer populations that eventually become a burden on the state of the empire. They all have 6 stages and in total last around 200-250 years before collapsing. The age of pioneers, the age of conquest, the age of commerce, the age of affluence, the age of intellect, ending with the bread and circus' campaigns of the age of decadence. The age of decadence is amazingly similar throughout most empires. This involves an undisciplined, over extended military, a continuous conspicuous display of wealth, a massive and ever growing disparity between rich and poor, desire to live off a bloated state, and a cultural obsession with sex. More importantly the most similar trend throughout empires in the age of decadence is the aggressive debasement of that empires currency. Once the backing resource of an empires currency is abandoned, the denominations go through a continuous corruption, until even the officials who once backed the people, become more fixated on the accumulation of as much wealth as possible. With this corruption comes distractions.

Like Rome and their Gladiatorial events used to keep the public eye off of state affairs and economy, this is a classic trait of declining empires. Today in the U.S. there is an ever prevalent emphasis on all kinds of television shows, sports, and celebrities. Just like today's celebrities and sports stars earn vast sums of wealth, so did the Roman charioteers, one in the second century gained so much wealth, it would equate to several billions today. And ironically like Rome before it's collapse we even make celebrities out of our chef's. We have been lulled into a lethargy and have completely accepted it. through un fettered consumerism, continuous economic bubbles, and the desire for everlasting youth, the "baby boomer" generation squandered their inheritance from the prior. "and our posterity" became "just for us" and part took in the largest misallocation of capitol in our time, and future generations will pay the price.

richard d  

The inmates are not only running the asylum, they own it. Obama and his administration need to be Baker Acted. Welcome to the modern day 'One Flew Over the Cuckoo's Nest'.

[Jan 11, 2014]  The Googlization of Everything: (And Why We Should Worry)

Frank A. Pasquale III

... ... ...

Public Failure

Progressives often cite "market failure" as a reason for regulation. But the term itself has a hidden laissez-faire bias, implying that markets generally succeed and that intervention is extraordinary. Vaidhyanathan balances the playing field by introducing the idea of the "public failure," which itself is parasitic on a larger vision of endeavors naturally performed or sponsored by government or civil society. As he explains,

[N]eoliberalism. . . .had its roots in two prominent ideologies: techno-fundamentalism, an optimistic belief in the power of technology to solve problems . . . and market fundamentalism, the notion that most problems are better (at least more efficiently) solved by the actions of private parties rather than by state oversight or investment.

Neoliberalism [included] . . . substantial state subsidy and support for firms that promulgated the neoliberal model and supported its political champions. But in the end the private sector calls the shots and apportions (or hoards) resources, as the instruments once used to rein in the excesses of firms have been systematically dismantled. . . . .

Google has deftly capitalized on a thirty-year tradition of "public failure," chiefly in the United States but in much of the rest of the world as well. Public failure, in contrast, occurs when instruments of the state cannot satisfy public needs and deliver services effectively. This failure occurs not necessarily because the state is the inappropriate agent to solve a particular problem (although there are plenty of areas in which state service is inefficient and counterproductive); it may occur when the public sector has been intentionally dismantled, degraded, or underfunded, while expectations for its performance remain high.

Vaidhyanathan's call for a "Human Knowledge Project" in response to this trend is one of the few tech policy proposals that is bold, ambitious, and comprehensive enough to address the challenges posed by privatized knowledge systems.

Brainwashed by the cult of the super-rich by Priyamvada Gopal

Cult of super-rich is an integral part of neoliberalism
December 25, 2013 | The Guardian

Followers, in thrall to Harrods and Downton Abbey, repeat the mantra that the greed of a few means prosperity for all. 'We are invited to deceive ourselves into believing we are playing for the same stakes while worshipping the same ideals, a process labelled ­'aspiration'

Last week, Tory MP Esther McVey, Iain Duncan Smith's deputy, insisted it was "right" that half a million Britons be dependent on food banks in "tough times". Around the same time, the motor racing heiress Tamara Ecclestone totted up a champagne bill of £30,000 in one evening. A rich teenager in Texas has just got away with probation for drunkenly running over and killing four people because his lawyers argued successfully that he suffered from "affluenza", which rendered him unable to handle a car responsibly. What we've been realising for some time now is that, for all the team sport rhetoric, only two sides are really at play in Britain and beyond: Team Super-Rich and Team Everyone Else.

The rich are not merely different: they've become a cult which drafts us as members. We are invited to deceive ourselves into believing we are playing for the same stakes while worshipping the same ideals, a process labelled "aspiration". Reaching its zenith at this time of year, our participation in cult rituals – buy, consume, accumulate beyond need – helps mute our criticism and diffuse anger at systemic exploitation. That's why we buy into the notion that a £20 Zara necklace worn by the Duchess of Cambridge on a designer gown costing thousands of pounds is evidence that she is like us. We hear that the monarch begrudges police officers who guard her family and her palaces a handful of cashew nuts and interpret it as eccentricity rather than an apt metaphor for the Dickensian meanness of spirit that underlies the selective concentration of wealth. The adulation of royalty is not a harmless anachronism; it is calculated totem worship that only entrenches the bizarre notion that some people are rich simply because they are more deserving but somehow they are still just like us.

Cults rely on spectacles of opulence intended to stoke an obsessive veneration for riches. The Rich Kids of Instagram who showed us what the "unapologetically uber-rich" can do because they have "more money than you" will find further fame in a novel and a reality show. Beyond the sumptuous lifestyle spreads in glossies or the gift-strewn shop windows at Harrods and Selfridges, and Gwyneth Paltrow's Goop website, shows like Downton Abbey keep us in thrall to the idea of moolah, mansions and autocratic power. They help us forget that wealthy British landowners, including the Queen, get millions of pounds in farming subsidies while the rest of us take back to the modest homes, which we probably don't own, lower salaries and slashed pensions. Transfixed by courtroom dramas involving people who can spend a small family's living income on flower arrangements, we don't ask why inherited wealth is rewarded by more revenue but tough manual labour or care work by low wages.

Cue the predictable charge of "class envy" or what Boris Johnson dismisses as "bashing or moaning or preaching or bitching". Issued by its high priests, this brand of condemnation is integral to the cult of the rich. We must repeat the mantra that the greed of a few means prosperity for all. Those who stick to writ and offer humble thanks to the acquisitive are contradictorily assured by mansion-dwellers that money does not buy happiness and that electric blankets can replace central heating. Enter "austerity chic" wherein celebrity footballers are hailed for the odd Poundland foray, millionaire property pundits teach us how to "make do" with handmade home projects and celebrity chefs demonstrate how to "save" on ingredients – after we've purchased their money-spinning books, of course.

Cultish thinking means that the stupendously rich who throw small slivers of their fortunes at charity, or merely grace lavish fundraisers – like Prince William's Winter Whites gala for the homeless at his taxpayer-funded Kensington Palace home – with their presence, become instant saints. The poor and the less well-off, subject to austerity and exploitation, their "excesses" constantly policed and criminalised, are turned into objects of patronage, grateful canvasses against which the generosity of wealth can be stirringly displayed. The cult of the rich propounds the idea that vast economic inequalities are both natural and just: the winner who takes most is, like any cult hero, just more intelligent and deserving, even when inherited affluence gives them a head start.

We are mildly baffled rather than galvanised into righteous indignation when told that the rich are being persecuted – bullied for taxes and lynched for bonuses. The demonising of the poor is the flip side of the cult of the rich or, as a friend puts it, together they comprise the yin and yang of maintaining a dismal status quo. It is time to change it through reality checks, not reality shows.

kingcreosote

Let them eat cake is as profound these days as it ever was,money makes people into hideous reptiles.

rooster29

GrapeLeaves

"So money doesn't provide happiness."

Maybe, but what it does do is increase the number of choices you can choose from, which, if done wisely, can lead to happiness. If that doesn't work, money allows you to try something else.

rooster29

but what it does do is increase the number of choices you can choose from, which, if done wisely, can lead to happiness. If that doesn't work, money allows you to try something else.

While that is not specifically about the subject of this article - because this article is about the obscenely rich and the effects of that obscenity on the rest of us in society - it is correct about how enough money to sustain one's essentials and also leave room to chase one's goals and use one's talents to better themselves and, hopefully, others. Being freed up to use your time to achieve something other than maintain food and shelter is not asking or expecting too much out of this life.

The obscenely wealthy, and how society has given itself over to same, is destroying the world and most who live in it. That is not an exaggeration.

Machiavelli10

There's the ultra-rich, the pretty rich, the sort-of rich, the "rich for a few years", the well-off, the comfortable, the doing well but dependent on a salary and a few good bonus years, the "lower-rich" class, the upper middle class, the middle class, the lower middle class, the upper lower class, the middle lower class, the lower class, the poor, and the absolutely poor.

Who in this list is a "cult" once you look honestly at the numerous gradations? It is much too "cheap and easy" to use the self-centered greed and undeserved wealth of the Ecclestone daughter whose father bestowed incredible a billion dollars without taste or responsibility, or the useless and classless Paris Hilton as the norm for "fixing" the ills of society through taxation. The problem is that people pushing an agenda on either side do not bother to understand the complexity of the situation and instead continually pose it as a 1% v. the 99% as a political ploy and attempt to gain votes through class warfare. But intuitively most people know it isn't as simple as that. This is why there hasn't been any real tax reform. It also leaves out the issue of whether for some the "cult of the poor" is also a device being used as leverage against others in an effort to obtain votes. It is a mixture of cynicism, stupidity and venality pretty much on all sides.

epidavros -> Machiavelli10

But this tiny percentage is indeed the issue. We have an economy constructed on the notion that people are both creators and consumers of goods and service, with the market mediating the process. But we now have a situation with over 80% of the income in the hands of some 1% of the population - the model is broken, because the creators of wealth (workers) cannot be consumers because the income needed to consume flow to a tiny minority disproportionately. The 99% do not matter in this equation whatever their income - even if they are quite well off - because collectively they do not have enough income to balance the equation.

RobspierreRules

The adulation of royalty is not a harmless anachronism; it is calculated totem worship that only entrenches the bizarre notion that some people are rich simply because they are more deserving but somehow they are still just like us.

Damn! I wish I had written that!

Emmm

This is an excellent, thoughtful and pretty darn accurate analysis of the parasites that run the show.

Changing things though is a Herculean task, and there aren't any of those on the horizon. If Jesus couldn't tame the bankers...

kristinekochanski

Good article Priyamvada. It's bizarre reading posters who turn up to defend the rich, as if we live in a meritocracy & all you need to do is work hard to become one of them. What utter bullshit & how sad that so many are members of the cult.

Even here in Scotland where it is not as popular to be a right wing cult, there are huge issues regarding land ownership & how it was stolen from the poor as they had no lawyers.

Onwards & upwards the fight goes on.

fourfoldvision

Ostentation in the public display of private wealth is part of the strategy of co-optation, and it goes back to Adam Smith's "necessary illusion" of the pursuit of happiness -- of a "happiness" to be realised in futurity by envy and by emulating the rich. It's the donkey and carrot approach that drives the economy forward.

The strategy of co-optation relies, of course, upon envy. First get rid of the envy, then the necromancy of co-optation is ineffective, and the ostentatious displays of private wealth will look like pure folly.

DasInternaut

The super-rich are, and always have been, able to look after themselves. They don't need government to help them accumulate more wealth. In fact, I'd argue that neoliberalism has made them feckless in this endeavour. Making the cult realise this, is hard work, since the cults of wealth and celebrity have long walked hand in hand.

marshwren -> DasInternaut

The super-rich are, and always have been, able to look after themselves.

I seriously doubt that, if what is meant by 'looking after oneself' is hiring flunkies to do all the work -- investment brokers, accountants, tax lawyers, etc. Hell, of these privileged types wouldn't know how to mow their own lawns, change a vacuum cleaner bag, replace a fuse in a circuit breaker, etc. This is particularly true of inherited wealth.

And then there's this:

http://www.learnvest.com/2012/03/when-it-comes-to-social-skills-the-rich-are-poor/http://www.learnvest.com/2012/03/when-it-comes-to-social-skills-the-rich-are-poor/

londonhongkong

Inherited wealth is wrong. Earned wealth is not.

Coolhandluke77

Reaching its zenith at this time of year, our participation in cult rituals – buy, consume, accumulate beyond need

Newsflash: the automaton plebs don't quite see it your way.

Meltingman

What's this "Class envy" you bullshit about ? You're pretending its what tory toffs are saying to the working class, but this petty load of rubbish is just a squabble between the same class. The "Left" of the Guardian are exactly as privileged, as moneyed, as snobby, as privately schooled as the toffs they're squabbling with. The only "Envy" is between themselves.

The most offensive assertion is the Guardian toffs (all on big money; all using the Guardian's perk to send their kids to private schools) is that they "speak for" and "Represent" the working class-a people they know bugger all about save what they got from their Harrovian sociology text books.

Be honest for once; its upper crust totally middle class and well off you that envy's those of your same class , and the only thing you're "ashamed" of is that they flaunt their money, where as you think it should be unostentatious so as you can make believe you're working class and won't loose your cash to those revolutionaries you pretend to be one of should the big day come..

fourfoldvision -> Meltingman

Nothing to do with any of this, of course. The vices of greed, ostentatiousness, envy, etc don't originate in left ideology, but in Christianity, Buddhism, Islam etc.

I think you are very confused.

fourfoldvision -> Meltingman

While we are on the subject, might as well clarify a few things,

The secular political ideologies of the modern era -- liberalism, conservatism, socialism, anarchism -- weren't simply pulled out of a hat. They began life as theological controversies during the Reformation period, and they are principally four because each took its source of inspiration from one or another of the four Gospels.

Socialism pre-existed Marx, and was a Christian movement. Marx simply tried to make it "scientific". Liberals and conservatives were originally called "libertines" or "primitivists" depending on their theological orientation and attitudes toward ecclesiastical authority. The anarchists began as monastic orders -- the Dulcinians and the Brethren of the Free Spirit.

The secular ideologies were so anxious to appear "rational", that they simply censored out their religious origins and ancestry.

paulxx

This is an excellent article, Priyamvada Gopal. It shows far more insight than we usually get at the Guardian. In essence it is about ideology.

" We are invited to deceive ourselves into believing we are playing for the same stakes while worshipping the same ideals, a process labelled "aspiration".

This is akin to one of the points Marx makes in "The Communist Manifesto" which is that the generally-held ideology, in every society, is that of the Ruling Class.

All ruling classes have been a minority in society and one of the most important ways they maintain their control over the majority is by getting the majority to mistakenly think that what is best for the minority is also best for the majority. You can call it "education" or "brainwashing" or "The Free Press" but it amounts to the same thing.

So the capitalist ruling class promote the notions that the Ruling Class are in charge because they work harder than the rest of us and they are cleverer than the rest of us and hence their privileged position in society is justified.

This brainwashing of all of us (and yes, I include even us marxists in this) is ok and works just fine as long as society is stable, however it looses its effectiveness in times of economic change, and the one thing that epitomises capitalism is the economic cycle, or boom-and-slump. Then the ruling-class's ideology/brainwashing comes under severe strain. Revolutionary change becomes possible.

Up until 2007 bourgeois economists were trying to tell us that the days of boom-and-bust were over. (I expect Francis Fukuyama is still hiding under his desk).

However it is clear that the normal state of today's monopoly capitalism is one of slumps. All the ideological nonsense of capitalism is being challenged all over the world, not only by marxists, but by an ever growing body of people not normally involved in politics.

Capitalist ideology is in the dock and looking very guilty.

2014 is probably going to be a very turbulent year politically.

Seasons Greetings! to all the marxists, socialists, communists and lefties of every description out there.

paul

ID256911

This is a fine article, and although I agree entirely with the sentiments, this "them and us" dichotomy is not unique to monarchies. In Ireland, which purports to be a Republic, something similar exists and there is the same deference to wealth and adulation to those who have "made it", regardless of who was trampled upon in the process. "Earned wealth" can be equally dubious. Is someone like Mike Ashley, champion of the zero hours contract, and peddling sweatshop produced goods cheaper than his competitors to be lauded?

citizenJA

Is someone like Mike Ashley, champion of the zero hours contract, and peddling sweatshop produced goods cheaper than his competitors to be lauded?

No.

25YearsinBusiness

I like the basis of this article, a fair and meritocratic society needs to remove the ability of individuals and businesses or institutions to create personal biases.

Scrap all private schooling, make inheritance tax 100% over £10,000, scrap all inheritance of titles, peerages and other institutional advantages, remove the ability of individuals or companies to avoid or evade tax on sales or earnings. Then after those who can't succeed without unfair support leave we can build a society to be proud of.

Walrave -> 25YearsinBusiness

While inheritance is an important point and tax avoidance too, the illusion of the "anyone can make it if they try hard enough" attitude will remain. It's an economic fact linked to the nature of money in our economies that very few people can be super rich. They should be regarded as lottery winners of a sort, whether "self made" or not, not as examples of successful living to be aspired towards. Rather than revolution as some are calling for, transparency may be the antidote here (combined with effective and appropriate taxation). Transparency can transform governments away from corruption, let's see what it can do for wealth distribution.

[Dec 28, 2013]  WHAT WONDERFUL CHRISTMAS GIFTS FOR THE POOR

How to stick it to the poor: A congressional strategy
By Samantha Paige Rosen
14 hours ago
The Week

Well, it's certainly been an eventful year.

The 113th Congress has stuck it to the poor at pretty much every opportunity. In fact, if you take all their past and future plans into account, it looks like they have accomplished that rare feat: To close in on enacting an overarching, radical agenda without control of the Senate or the presidency. How did they do it? Probably by escaping scrutiny through a piecemeal approach to legislation, a president who is willing to meet them halfway, and one diabolic word: Sequester.

Let's drill down into each piece:

1. Kick 'em to the curb
Congress will basically start kicking poor people out of their homes early next year. The idea is, if you can't pay for your home without government assistance, you don't deserve to live in one. In this spirit, budget cuts due to sequestration will take rental assistance vouchers away from 140,000 low-income families by the beginning of next year, making housing more expensive as agencies raise costs to offset the budget cuts. All in all, about three million disabled seniors and families will be affected. The savings? $2 billion, which is pretty much what the government shutdown cost in back-pay to federal workers.

If you're lucky enough to keep your home, don't expect to heat it. Sequester cuts to the Low Income Home Energy Assistance Program (LIHEAP) meant that 300,000 low-income families in 2013 were denied government support for energy costs.

2. Take the food out of their mouths. Literally.

The recent reduction in Supplemental Nutrition Assistance Program (SNAP) benefits has affected more than 47 million Americans and is the largest wholesale cut in the program since Congress passed the first Food Stamps Act in 1964.

The cuts to Food Stamps were implemented on November 1. Yet, Congress won't let the program rest there — House Republicans are pushing to take $39 billion from SNAP over the next decade. If their plan succeeds, the Congressional Budget Office estimates that 3.8 million low-income individuals would lose their benefits in 2014 with 2.8 million more getting kicked off the program each year. SNAP is one of the three most effective anti-poverty programs the government has, keeping four million people out of poverty last year alone. So the initial and further cuts make a lot of sense — if you despise the poor.

And don't worry, other cuts to food programs ensure both the oldest and youngest amongst us won't be spared. Cuts to Meals on Wheels will cost poor seniors four to 18 million meals next year. Meanwhile, the Women, Infants, and Children program (WIC), which provides health care referrals and nutrition to poor pregnant and postpartum women and children up to age five, has grappled with $500 million in cuts this year and faces even deeper ones next. Fair's fair, though.

3. Dim their kids' future

There's nothing that will make our economic future brighter than under-educating our children, right? That's why, again as a result of sequestration, Head Start literally had to kick preschoolers out of their classrooms this March and removed 57,000 children from the program this September (70,000 kids total are will be affected). If this weren't enough, more than half of public schools have fired personnel due to the ominous cuts — and Representative Jim Jordan (R-Ohio) said sequestration "has been one of the good things that has happened." Given that 40 percent of children who don't receive early childhood education are more likely to become a parent as a teenager, 25 percent are more likely to drop out of school, and 70 percent are more likely to be arrested for a violent crime, this is definitely the definition of a "good thing."

4. Erase the roadmap for employment

The United States has one of the stingiest unemployment programs in the developed world and it is getting even stingier. People who have been out of work for 27 weeks or more — 40 percent of the unemployed — have already begun and will continue to lose a large portion of their benefits between January and March. Eight percent of this year's sequestration cuts are coming from unemployment insurance. The logic here is that the program discourages people from looking for work, so why fund something that just makes the unemployed lazier? The evidence, however, proves that government assistance fuels the job searches of these 4.4 million Americans. Yet by the end of December, about 1.3 million will lose their extended jobless benefits if Congress doesn't renew the program. And cuts to the Temporary Assistance for Needy Families program (TANF, or welfare) means there will be even less of safety net to fall back on.

5. Make 'em work till they drop

President Obama put Social Security cuts in his budget for fiscal year 2014, and Republicans are thrilled. Switching to a new formula called Chained CPI would lead to benefit cuts of $230 billion dollars in the next ten years. Apparently, it's Social Security that's driving up the debt, as Speaker of the House John Boehner (R-Ohio) has said. The irony here, according to The New York Times' Paul Krugman, is that while debt can indirectly make us poor if deficits drive up interest rates and discourage productive investment (they haven't), investment is low because the economy is so weak, partly from cutbacks in public spending and investment — the cuts, such as this one, that supposedly protect Americans from a future of excessive debt. Democratic Senators Elizabeth Warren (Mass.) and Tom Harkin (Iowa) have been fighting an uphill battle to boost Social Security benefits. But carry on, Congress. What you're doing really makes sense here.

In just a few short decades, we've gone from LBJ's Great Society, where many of these ideas originated, to this Congress' attacks on the poor. According to the Census Bureau, safety net programs keep tens of millions of Americans out of poverty each year. But that's just not the federal government's priority anymore. This Congress' message: It's every man for himself

[Dec 27, 2013]  'What Obama Left Out of His Inequality Speech Regulation'

Economist's View

Thought I'd highlight this piece from today's links:

What Obama Left Out of His Inequality Speech: Regulation, by Thomas McGarity, Commentary, NY Times: President Obama’s speech on inequality last Wednesday was important in several respects. He identified the threat to economic stability, social cohesion and democratic legitimacy posed by soaring inequality of income and wealth. He put to rest the myths that inequality is mostly a problem afflicting poor minorities, that expanding the economy and reducing inequality are conflicting goals, and that the government cannot do much about the matter.
Mr. Obama also outlined several principles to expand opportunity: strengthening economic productivity and competitiveness; improving education, from prekindergarten to college access to vocational training; empowering workers through collective bargaining and antidiscrimination laws and a higher minimum wage; targeting aid at the communities hardest hit by economic change and the Great Recession; and repairing the social safety net.
But there’s a crucial dimension the president left out: the revival, since the mid-1970s, of the laissez-faire ideology that prevailed in the Gilded Age, roughly the 1870s through the 1910s. It’s no coincidence that this laissez-faire revival — an all-out assault on government regulation — has unfolded over the very period in which inequality has soared to levels not seen since the Gilded Age. ...[continue]...

See here for more.

DeDude:

The increased inequality and revival of laissez-faire are just two sides of the same coin. When the rich plutocrats get more power they reduce restrictions on themselves and take as big a piece of the cake as they possibly can. This all started with a rich sociopath creating Fox news and using Big Boob Blondes to brainwash the sheeple into thinking that it was in their personal inters to let the rich take a bigger piece of the pie (cause somehow by magic that would make the pie bigger).

Jesse:

"It is too bad that so many are distracted, if not ensnared, in the well-crafted emotionalism and stage play of left vs. right puppet show which is put forward in the headlines, while the looting of the nation by its ruling class proceeds almost unimpeded to almost everyone's detriment, except for an obscenely fortunate few."

Robert Reich: JP Morgan and the Corruption of America

http://jessescrossroadscafe.blogspot.com/2013/12/reich-jp-morgan-and-corruption-of.html

kievite:

Deregulation is just one aspect of neoliberalism. And if we view deregulation though the prism of neoliberal ideology, I think international aspect of neoliberalism is very important and, unfortunately was neglected in the article. Also internally growth of neoliberal ideology parallels the growth of the national security state. In this sense the cornerstone events for deregulation were Truman's national security doctrine, JFK assassination, the collapse of the USSR and 9/11.

I don't think that the rise of neoliberalism was just a reaction of rich on "too strict" regulation of New Deal. This view can be called "the theory of revenge of financial elite." IMHO roots are deeper as neoliberalism is also an instrument of the US foreign policy and as such the main blow hit foreign nations, and only as a blowback the USA society ;-)

In the USA, while deregulation wave did exist since Reagan (or Carter) and did enormous damage, not all elements of neoliberal doctrine were implemented. For example growing external debt might be viewed as a semi-official policy of exploiting the status of the dollar as the world reserve currency to the bitter end ("After us deluge"), neoliberal theories be damned.

So while right-wing think tanks played an important role (especially turncoat Trotskyites in those tanks, such as James Burnham and Irving Kristol), fish rots from the head: it was the USA government, and first of all foreign policy establishment, that pushed neoliberal agenda as an export product for foreign nations.

BTW both Democratic and Republican administrations pushed it on foreign nations equally effectively. With democrats often doing the most dirty job (Clinton's economic rape of Russia is one well-documented example). Actually from 1990 till now neoliberalism is the cornerstone of the US foreign policy, viewed by other countries as super-aggressive, imperial ideology, displacing Marxism and National socialism.

On the other hand the internal "implementation" of neoliberalism might also be forced by the law of diminishing returns due to monopolization of most US industries, which hit the USA in 70th and coincided with the first oil crisis of 1973.

At this point the "profit sharing" with the US workers that the latter temporary enjoyed from, say 1941 to 1973 became impractical. In other words there was no longer enough sweets for all children. That's when corrupt hired-guns from Chicago school like Friedman became so valuable. Friedman's "Capitalism and Freedom" (1962) is essentially the manifest of neoliberalism.

Also in 70th it became clear the USSR became a stagnant society that represent little, if any threat to the USA ("paper tiger" as our Chinese friends aptly noted). So the US hands were freed. That weakening of the USSR position probably indirectly led to Chile coup d'état of 1973, the year neoliberalism became official US foreign policy.

And in 1991 the main obstacle for enforcing neoliberal agenda on other nations -- the existence of the USSR -- disappeared. At this point Neoliberal ideology was enshrined as the economic orthodoxy and IMF became the tool for "shock therapy" of unsuspecting nations. This neocolonial approach based on pushing foreign load (which can't be repaid due to natural backflow of money to Western banks by corrupt government officials) and then dictating draconian condition (structural adjustments) for refinancing them. Conditions that open the country like a can for the US (and other Western) multinationals (aka "Washington Consensus".). That's an interesting way to exploit corruption in the third world, while officially fighting it.

Larry:

The interesting part is where policies that lead to greater equality diverge from those that grow the economy. McGarity's claim that "Obama put paid to" such a possibility is probably better phrased as "Obama denied".

He listed "economic productivity and competitiveness; improving education, from prekindergarten to college access to vocational training; empowering workers through collective bargaining and antidiscrimination laws and a higher minimum wage; targeting aid at the communities hardest hit by economic change and the Great Recession; and repairing the social safety net"

All those items save productivity and K-12/higher education/training are about slicing the pie regardless of how they impact its size. It's a profound retreat from his earlier, albeit episodic, focus on "jobs, jobs, jobs".

If he plays it right, it may help his popularity. Do the math. There are a lot more people with jobs who'd like a raise than there are those who would like to get a job in the first place. If he can convince workers that his policies will produce higher incomes, everyone can forget about the unemployed and live happily ever after.

The only policy that will directly (rather than indirectly by e.g., fixing monetary policy) increase both jobs and incomes is wage subsidies. While they have troubles of their own, they maintain the incentive to work and the incentive to hire at costs a tiny fraction of the 00s of thousands per job that came from O's stimulus plan. A subsidy of say $2.50/hr for every incremental hour over the prior year would push incomes up and create jobs as well.

Other than that, he should stick to running his drones.

There is already sufficient regulation that the government can force any private actor to do anything it wants. E.g., see the JPM settlement last month or the nonsense about Reagan landing slots and the AA/USAIR merger. Our "limited" government is effectively limited only by what the media rather than Constitution will allow. The rest is just full employment for lobbyists, lawyers and accountants. They gotta eat just like you and me, so there you are.

kievite:

> The interesting part is where policies that lead to
> greater equality diverge from those that grow the
> economy.

Good point. I would add that sometimes internal policies can become hostage to foreign policy agenda that benefits only multinationals.

> There is already sufficient regulation that the
> government can force any private actor to do
> anything it wants.

Another good point. So absence of regulation is not sufficient condition for deregulation. You need also the absence of will to regulate as a pre-condition. Putting cronies in regulatory agencies as Bush II did was essentially a stealth deregulation without changing any laws.

> Our "limited" government is effectively limited
> only by what the media rather than Constitution
> will allow.

It goes without saying. That's the part of the elite control. That's how saving of financial industry was sold to the nation.

Also returning to the inequality issue, nowhere in MSM you can read that people working in WalMart (many of them single mothers) actually are living not in the USA, but in some third world country with hunger at the end of the month as a common problem.

So the problem (and this is a complex problem) exists but the government is off the hook and can safely ignore it. WalMart workers interests have no representation in MSM and never will unless riots occure.

Larry:

You don't think Dems put cronies in reg agencies? Have you looked at NLRB lately? Fannie Mae? OCR? The whole point is that cronyism is the inevitable consequence of the intrusive state. Why do you think DC became the richest neighborhood in the country during the Obama years.

While single mothers do work in low-wage jobs, so do lots of others. It's up to the women to decide when to have kids, but is it incumbent on the rest of the country to, e.g., pay higher prices and higher taxes because of the choices those women make? The rapid decline in the teenage pregnancy rate in recent years shows that women exercise autonomy in these matters. Further, we have enormous numbers of social programs to help them out. But never mind. Let's give them more free stuff to help them along.

kievite:

Larry,

> You don't think Dems put cronies in reg agencies?

Do you really think there is a big difference between Repugs and Dems?

Obama actually is to the right of Teddy Roosevelt, Eisenhower and Nixon, is not he?

Looks to me like one party with two wings, much like CPSU in the USSR.

> Let's give them more free stuff to help them along.

OK, let's assume those women are either reckless or stupid. But why children need to suffer? Also why military budget should have higher priority then those children?

We don't punish reckless (and criminal) AIG executives with their outsize bonuses after bailout, do we?

So this is a much more complex issue that you are trying to imply. And fixation of punishment does not help...

mrrunangun:

Deregulation has been a big problem in areas of the economy where the beneficiaries of changes in the law purchased the deregulatory changes from the people who controlled the federal government. In most other areas of the economy federal regulation has become ever more extensive and intrusive. In education, health, manufacturing, extractives, exim, regulatory squeeze has gotten tighter over the same period that the SEC and the Fed turned a blind eye to violations of what laws remained to potentially restrain the financial sector. It is the financial sector which purchased laissez faire for itself while the regulatory federal anaconda squeezed everybody else tighter and tighter.

Rusty:

Logically, regulations benefit those that have a hand in creating them - politicians and lobbyists who represent entrenched business interests. Certainly politicians will try with at least lip service towards some equitable aim in the public interest, but they must work with the entrenched interests to achieves anything and to maintain power.

So it makes sense that often regulations serve entrenched interests and thereby increase inequality.

[Dec 06, 2013]  Two Nations, Under Mammon by Patrick J. Deneen

October 2, 2013 | theamericanconservative.com

William Galston has written an important column in the Wall Street Journal, devoted to an assessment of Tyler Cowen’s new book, Average Is Over. The book tells of a coming(?) nation of two economic classes, the meritocratic elite and an increasingly poor, even third-world economic class of underemployed who gather in large ghetto areas (e.g., Texas) with poor public services but plentiful distractions (think: internet porn, 24/7/365 football, and soon-to-be legalized marijuana delivered by e-joints).

Aficionados of science fiction know that Kurt Vonnegut predicted this world already in 1952, with the publication of his first novel, Player Piano. There he describes with chilling accuracy this world ever-more coming into view—one divided between a meritocratic class with all the right degrees (even the secretaries will have Ph.D.s in a credential-inflated future) and the “Reeks-and-Wrecks,” who a visiting dignitary from the Middle East insists on calling “Takaru”—”slaves.”

We should be unsurprised, as Galston seems to be—shocked, shocked!—that this world comes ever more clearly into view. Indeed, as domestic policy advisor for President Clinton, Galston assisted in the expansion of this social and economic arrangement, participating in one of the most libertarian administrations the world has ever seen. According to Cowen, “technology” is displacing middle-class workers into either a shrinking class of “winners” or a growing class of “losers,” but assuredly, part of that “technology” is a regime of free-trade agreements and a host of other government incentives that have supported the infrastructure of globalization and worker replacement.

This inconvenient fact makes Galston’s closing paragraph a real howler: “Whether by accident or design, Mr. Cowen’s book represents a fundamental challenge. To government-hating, market-worshiping conservatives, it poses a question: If this is the consequence of your creed, are you prepared to endorse it? To liberals and progressives: What are you going to do about it? And to all of us: Is this a country you would want to live in?”

It is altogether risible that Galston, or anyone, thinks there is any significant difference between Republicans and Democrats in this regard. One need only look at the widening chasm of income inequality under Obama who—as a candidate running for his first presidential primary—dispatched Austan Goolsbee to Canada directly after pretending to be a populist for rust belt voters in the 2008 Michigan primary, to assure the Canadians that he would do nothing to touch NAFTA.

The fact is that this project was readily discernible to the likes of Vonnegut in 1952 and Michael Young (author of The Rise of the Meritocracy) in 1958, and national and international elites have been busy constructing this world ever since, regardless of political label. The Right laments the decline of “family values” as it supports economic policies that support this arrangement (even as it has garnered votes from those displaced by an increasingly rapacious economy, attracted to its message of traditional values. Notably, many of these voters simply stayed home during the last election, rightly perceiving that neither of the major candidate was in their corner.). The Left laments the income gap, and proposes various forms of social welfare that will cushion the blow, all the while even more enthusiastically constructing the meritocratic society and populating government and leading thinkeries with Ivy League “winners.” These button-down hipsters increasingly accumulate in a select number of urban echo-chambers described most recently by Charles Murray, where they lament the rise of a growing underclass while sipping $7 lattes. These social policies are purportedly to be supported by a tax base of theoretical future citizens that are not being born, a logical outcome of an aggressively expanding and government-subsidized sexual revolution, contracepting, gay marriage, and abortion culture advanced by the very same Left.

I would add two additional observations to Galston’s justified worry about the future of the Republic. First, it has never failed to strike me that it is libertarians (perhaps of a certain stripe) that advance an “inevitability” thesis. Cowen, according to Galston, argues that “resistance is futile.”

There’s nothing we can do, says Mr. Cowen, to avert a future in which 10% to 15% of Americans enjoy fantastically wealthy and interesting lives while the rest slog along without hope of a better life, tranquilized by free Internet and canned beans.

This echoes similar arguments, advanced by libertarian Lee Silver in his book Remaking Eden, that a post-humanist future of biotechnologically enhanced humanoid creatures will come to pass, whether we wish it or not. Similarly, he predicts a future not only of two classes, but of two races: unenhanced humans who become a servant class to their enhanced overlords, and increasingly “perfected” humans who, as their mastery of human biology becomes ever-more complete, even begin to entertain the notion that the God that was once imagined by the underclass is none other than the creature staring back at them in the mirror.

Thus, a philosophy that places in the forefront a theory of human liberty arrives at the conclusion that certain historical, technological, and economic forces are inevitable, and it is futile to resist them. One might bother to ask the Amish if this is true, but they didn’t go to Harvard. Clearly, they don’t value human freedom, since they are not on the historical merry-go-round to inevitable human liberty—and degradation.

The second point worth asking is whether, in some deeper way, this increasingly discernible “future” is in any way related to current government and civic dysfunction. We are, of course, all prone to explain contemporary debates in terms of electoral strategy and personality dysfunction. But if, in fact, we are in the midst of a re-definition of the basic nature of the American polity—from a republic to a banana republic—then we should not be surprised to witness some inevitable political disruptions, dislocations, and even wild and undisciplined opposition to the unfolding arrangement. While the Tea Party receives unending scorn from the chattering classes, forgotten in the mist of time (well, in the course of only five years) is that the anger of this uprising was fomented by the not-unsubstantiated suspicion that there was a deep collusion between government and economic elites in the nation (and beyond) that existed to assure that their growing take would be sustained by policies and even government fiat. This fact, often hidden from plain view by political coverage worthy of ESPN, was exposed in 2008 to ordinary Americans who “played by the rules,” and suddenly plainly saw that their betters had brought their casino to the brink of catastrophe but that access to the levers of power and wealth assured a soft landing, while ordinary citizens were increasingly stripped naked and exposed in a ravaged landscape.

Five years later, with economic disparities growing and social mobility shrinking, the elites regard these voices as unwashed rubes, while cheering for the brief but wholly confined movement of “Occupy Wall Street” that succeeded in—nothing. The Tea Party and Occupy Wall Street have been wholly shorn of a language and tradition by which they could properly protest the current arrangements. Such a tradition would be found in democratic populism, stressing decentralized political and economic arrangements in which policies and national priorities are first and foremost oriented toward the dignity of self-government, not get-rich-quick schemes in which the winners win and the losers move to Texas. But instead we debate whether government or corporations are to blame, while our betters increase their take and enjoy the show.

Lost amid all the discussion of Pope Francis’s many recent statements is the following remark that he offered in the interview with Eugenio Scalfari in La Republicca:

Personally I think so-called unrestrained liberalism only makes the strong stronger and the weak weaker and excludes the most excluded. We need great freedom, no discrimination, no demagoguery and a lot of love. We need rules of conduct and also, if necessary, direct intervention from the state to correct the more intolerable inequalities.

“Liberals” may celebrate the Pope as a liberal, but he is a deep critic of liberalism in its bipartisan form, a set of arrangements by which the State supports the growing strength of the strong and bribery of the weak, in the form of social welfare that poorly substitutes for care of the community, and unceasing entertainment.

Galston is correct to raise alarm bells about this “inevitable” future. But there is currently no major figure in the public sphere that sees with any clarity the deep collusion of the all key players in its construction. So we continue down a road that will give rise to two nations, the winners wringing their hands all the way to the bank, the losers narcotized on a steady diet of cheap and deforming delights.

[Dec 06, 2013] The end of the end of the world  by Joe Weisenthal

Nov 27, 2013 |  www.businessinsider.com 

Japanese investment bank Nomura is out with a big global economic outlook for 2014. The title is "The End Of The End Of The World." The theme is that as 2013 comes to a close, the age of crisis is well and truly over. There are still lingering issues of course, but the really huge themes that have dominated the past several years are gone, and concerns over systemic risk will no longer be high on investors minds.

Strategist Michael Kurtz and Co. write:

There wasn’t any memo, but FYI the Global Financial Crisis is over. Not that clocks have simply rewound to 2006, but: the US property market has been recovering for no less than 20 months, the US household balance sheet is largely repaired, the renminbi is stronger and the US-China current account imbalance vastly reduced, China is grasping the nettle of structural reform, European core-vs-periphery cost differentials have substantially narrowed, and Europe is growing again.

Looking forward, we thus see 2014 as a year in which macrosystemic risks will not dominate equity performance – unfinished QE ‘taper’ business notwithstanding – but equally as a result, a year in which returns will not be spirited along by ‘risk compression’ and multiple expansion either. Rather, global stocks in 2014 will stand or fall in large part simply on whether they deliver earnings. The good news is, 2014 should serve up a reasonably robust growth platform for global corporate earnings: Our economists expect global nominal GDP growth to rise to 7.0% next year from 2013’s 6.1% — leaving our strategy preferences inclined toward cyclical- and reflation-sensitive sectors. But the acceleration will be unevenly skewed toward the Developed Market economies, while Emerging Market growth plateaus and China’s growth further moderates (to 6.9% in real terms).

Looking toward 2014, we believe much of the ‘deep value’ argument for stocks has now played out as the Global Equity Risk Premium has fallen to just 0.4 standard deviations currently vs. its late-2011 high of 2.2 standard deviations. With this, global equities have outperformed the aggregate global bond index since mid-2012 by a sizeable 45% over the same time period.

From here, equities will increasingly require more of a growth rationale for upside, rather than the macro-risk compression of 2012-13. The fact is, after fairly undramatic passages (by 2010-12 standards) of such episodes this year as the Cyprus banking failure and October’s US fiscal standoff, very few developments from here are likely to rise to the level of true systemic contagion threats. But this also begs the question where the superlative earnings growth will be found.

[Dec 06, 2013] The Ends of Capitalism by Rob Urie

November 17, 2013 | CounterPunch

The illusion of prosperity in some evidence in the mid-2000s courtesy of the monetization of the preponderance of U.S. housing equity—the collective savings of home ‘owners,’ to fund purchases of wide screen televisions, 3rd, 4th and 5th automobiles and new porch furniture, had shown its foundations in mass delusion.

On Wall Street the gig was up—the financial ‘system’ was in full collapse from the weight of its own ‘bounty’ and only had left its brethren in financial ‘innovation’ to plunder. The economic ‘efficiencies’ of thirty years of pirate capitalism had shown themselves in the pockets and bank accounts of America’s few hundred richest families and in its residual, the smoldering ruins of an economy that had once made things, for better and / or for worse, as well as in the emergent ‘micro’ economy of the formerly employed trading piece work and stock tips on the Internet to keep the foreclosure wolves at bay.

Western economists view the sequential crises of 1990, 2000 and 2008 as unrelated events to be ‘solved’ through reactive responses—through Keynesian stimulus or with ‘more’ capitalism. However, within each subsequent economic ‘recovery’ the political economy of catastrophe grows. The evidence of social dysfunction—radically skewed income distribution, the increasingly sharp divide between those on the ‘inside’ and ‘outside’ of political economy, political incapacitation and a collective inability to solve even the most basic social problems, is but the detritus of the thread that carries these crises through ‘normal’ times. In the terms of those moving comfortably along in the motorcade there are ‘recessions’ and ‘recoveries,’ life’s facts whose average may impact ‘the people’ differently, but only through the secular god of capitalism’s discriminating hands. The ‘driven by’ wave to themselves, to their ‘embodiment’ that ‘could have been them’ under some alternate order of the universe. If ‘success’ and ‘failure’ are their own ‘proof’ of the efficacy of capitalism as god’s hand in human affairs then so is its attendant social dysfunction—if the rich are busy ‘making money’ and the poor are their own ‘proof’ of their inability to be ‘successful’ then what conceivably could be the point of political reconciliation?

In choosing to ‘save’ the ‘system’ he so willingly entered, Mr. Obama, like those before him, chose the sides inherent in that system. The government money used under Mr. Obama’s direction to buy Wall Street’s garbage ‘assets’ was / is unified in its ‘moneyness’ with that needed to salve the lot of the ‘driven by,’ those dispossessed by birth, race, gender or more general circumstance—economic class. To paraphrase the cliché—‘if you teach a man to borrow he eats for a day, if you give the bank the money to lend to the man he eats for a day and repays the borrowed money for a lifetime.’

Alternatively, and following from that theoretician of ‘system’ John Maynard Keynes, if you give people the money they need to eat and live indoors they spend it and the system of capitalism survives. Given the choice—banks or their ‘customers,’ what system exactly, precisely was it that Mr. Obama saved by choosing the banks?

In either case the system of capitalism would be ‘saved.’ To pretend for a moment that the question hasn’t already been answered, why choose bankers, the ‘embedded,’ over ‘the people,’ those whose hopes and aspirations Messrs. Bush and Obama so readily ‘embodied?’

The system to be so regularly saved is that of the perfectly ordered universe—every man, woman and child in his or her god-determined ‘place.’ How does one know their proper place? Which side of the motorcade are you on?

Rob Urie is an artist and political economist in New York. His book Zen Economics will be published by CounterPunch / AK Press in Spring 2014.

[Nov 11, 2013] Debt and deficit as shock therapy by Ismael Hossein-zadeh

Nov 6, 2013  | Asia Times

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

When Naomi Klein published her ground-breaking book The Shock Doctrine (2007), which compellingly demonstrated how neoliberal policy makers take advantage of overwhelming crisis times to privatize public property and carry out austerity programs, most economists and media pundits scoffed at her arguments as overstating her case. Real world economic developments have since strongly reinforced her views.

Using the unnerving 2008 financial crash, the ensuing long recession and the recurring specter of debt default, the financial oligarchy and their proxies in the governments of core capitalist countries have embarked on an unprecedented economic coup d'état against the people, the ravages of which include extensive privatization of the public sector, systematic application of neoliberal austerity economics and radical redistribution of resources from the bottom to the top. Despite the truly historical and paradigm-shifting importance of these ominous developments, their discussion remains altogether outside the discourse of mainstream economics.

The fact that neoliberal economists and politicians have been cheering these brutal assaults on social safety-net programs should not be surprising. What is regrettable, however, is the liberal/Keynesian economists' and politicians' glaring misdiagnosis of the plague of austerity economics: it is all the "right-wing" Republicans' or Tea Partiers' fault, we are told; the Obama administration and the Democratic Party establishment, including the labor bureaucracy, have no part or responsibility in the relentless drive to austerity economics and privatization of public property.

Keynesian and other liberal economists and politicians routinely blame the abandonment of the New Deal and/or Social-Democratic economics exclusively on Ronald Reagan's supply-side economics, on neoliberal ideology or on economists at the University of Chicago. Indeed, they characterize the 2008 financial collapse, the ensuing long recession and the recurring debt/budgetary turmoil on "bad" policies of "neoliberal capitalism," not on class policies of capitalism per se. [1]

Evidence shows, however, that the transition from Keynesian to neoliberal economics stems from much deeper roots or dynamics than pure ideology [2]; that neoliberal austerity policies are class, not "bad," policies [3]; that the transition started long before Reagan arrived in the White House; and that neoliberal austerity policies have been pursued as vigorously (though less openly and more stealthily) by the Democratic administrations of Bill Clinton and Barack Obama as their Republican counterparts. [4]

Indeed, it could be argued that, due to his uniquely misleading status or station in the socio-political structure of the United States, and equally unique Orwellian characteristics or personality, Obama has served the interests of the powerful financial oligarchy much better or more effectively than any Republican president could do, or has done - including Ronald Reagan. By the same token, he has more skillfully hoodwinked the public and harmed their interests, both in terms of economics and individual/constitutional rights, than any of his predecessors.

Ronald Reagan did not make any bones about the fact that he championed the cause of neoliberal supply-side economics. This meant that opponents of his economic agenda knew where he stood, and could craft their own strategies accordingly.

By contrast, Obama publicly portrays himself as a liberal opponent of neoliberal austerity policies (as he frequently bemoans the escalating economic inequality and occasionally sheds crocodile tears over the plight of the unemployed and economically hard-pressed), while in practice he is a major team player in the debt "crisis" game of charade, designed as a shock therapy scheme in the escalation of austerity economics. [5]

No president or major policy maker before Obama ever dared to touch the hitherto untouchable (and still self-financing) Social Security and Medicare trust funds. He was the first to dare to make these bedrock social programs subject to austerity cuts, as reflected, for example, in his proposed federal budget plan for fiscal year 2014, initially released in April 2013. Commenting on this unprecedented inclusion of entitlements in the social programs to be cut, Christian Science Monitor wrote (on April 9, 2013): "President Obama's new budget proposal ... is a sign that Washington's attitude toward entitlement reform is slowly shifting, with prospects for changes to Social Security and Medicare becoming increasingly likely."

Obama has since turned that "likelihood" of undermining Social Security and Medicare into reality. He did so by taking the first steps in turning the budget crisis that led to government shutdown in the first half of October into negotiations over entitlement cuts. In an interview on the second day of the shutdown (October 3rd), he called for eliminating "unnecessary" social programs and discussing cuts in "long-term entitlement spending". [6]

Five days later on October 5th, Obama repeated his support for cutting Social Security and Medicare in a press conference, reassuring congressional Republicans of his willingness to agree to these cuts (as well as to cuts in corporate tax rates from 35% to 28%) if the Republicans voted to increase the government's debt limit: "If anybody doubts my sincerity about that, I've put forward proposals in my budget to reform entitlement programs for the long haul and reform our tax code in a way that would ... lower rates for corporations". [7]

Only then, that is, only after Obama agreed to collaborate with the Republicans on ways to cut both the entitlements and corporate tax rates, the Republican budget negotiators agreed to the higher budget ceiling and the reopening of the government. The consensus bill that ended the government shutdown extends the automatic across-the-board "sequester" cuts that began last March into the current year. This means that "the budget negotiations in the coming weeks will take as their starting point the $1 trillion in cuts over the next eight years mandated by the sequestration process". [8]

And so, once again, the great compromiser gave in, and gave away - all at the expense of his (unquestioning) supporters.

To prepare the public for the long-awaited attack on Social Security, Medicare and other socially vital programs, the bipartisan ruling establishment has in recent years invented a very useful hobgoblin to scare the people into submission: occasional budget/debt crises and the specter or the actual pain of government shutdown. As Sheldon Richman recently pointed out:

"Wherever we look, there are hobgoblins. The latest is … DEFAULT. Oooooo.

Apparently the threats of international terror and China rising aren't enough to keep us alarmed and eager for the tether. These things do tend to wear thin with time. But good old default can be taken off the shelf every now and then. It works like a charm every time.

No, no, not default! Anything but default!". [9]

Economic policy makers in the White House and the Congress have invoked the debt/deficit hobgoblin at least three times in less than two years: the 2011 debt-ceiling panic, the 2012 "fiscal cliff" and, more recently, the 2013 debt-ceiling/government shutdown crisis - all designed to frighten the people into accepting the slashing of vital social programs. Interestingly, when Wall Street speculators needed trillions of dollars to be bailed out, or as the Fed routinely showers these gamblers with nearly interest-free money through the so-called quantitative easing, debt hobgoblins were/are nowhere to be seen!

The outcome of the latest (2013) "debt crisis management," which led to the 16-day government shutdown (October 1-16), confirmed the view that the "crisis" was essentially bogus. Following the pattern of the 2010, 2011 and 2012 budget/debt negotiations, the bipartisan policy makers kept the phony crisis alive by simply pushing its "resolution" several months back to early 2014. In other words, they did not bury the hobgoblin; they simply shelved it for a while to be taken off when it is needed to, once again, frighten the people into accepting additional austerity cuts - including Social Security and Medicare.

The outcome of the budget "crisis" also highlighted the fact that, behind the apparent bipartisan gridlock and mutual denunciations, there is a "fundamental consensus between these parties for destroying all of the social gains won by the working class over the course of the twentieth century". [10] To the extent there were disagreements, they were mainly over the tone, the temp, the magnitude, the tactics, and the means, not the end. At the heart of all the (largely contrived) bipartisan bickering was how best to escalate, justify or camouflage the brutal cuts in the vitally necessary social spending.

The left/liberal supporters of Obama, who bemoan his being "pressured" or "coerced" by the Tea Party Republicans into right-wing compromises, should look past his liberal/populist posturing. Evidence shows that, contrary to Barack Obama's claims, his presidential campaigns were heavily financed by the Wall Street financial titans and their influential lobbyists. Large Wall Street contributions began pouring into his campaign only after he was thoroughly vetted by powerful Wall Street interests, through rigorous Q & A sessions by the financial oligarchy, and was deemed to be their "ideal" candidate for presidency. [11]

Obama's unquestioning followers should also note that, to the extent that he is being "pressured" by his political opponents into compromises/concessions, he has no one to blame but himself: while the Republican Party systematically mobilizes its social base through offshoots like Tea Partiers, Obama tends to deceive, demobilize and disarm his base of supporters. Instead of mobilizing and encouraging his much wider base of supporters (whose more numerous voices could easily drown the shrill voices of Tea Partiers) to political action, he frequently pleads with them to "be patient," and "keep hope alive."

As Andre Damon and Barry Grey have keenly observed, "There was not a single mass organization that denounced the [government] shutdown or opposed it. The trade unions are completely allied with the Obama administration and support its policies of austerity and war". [12]

Obama's supporters also need to open their eyes to the fact that, as I have shown in an earlier essay, [13] Obama harbors ideological affinities that are more in tune with Ronald Reagan than with FDR. This is clearly revealed in his book, The Audacity of Hope, where he shows his disdain for

"...those who still champion the old time religion, defending every New Deal and Great Society program from Republican encroachment, achieving ratings of 100% from the liberal interest groups. But these efforts seem exhausted…bereft of energy and new ideas needed to address the changing circumstances of globalization". [14]

(Her own shortcomings aside, Hillary Clinton was right when, in her bid for the White House against Obama, she pointed out that Obama's economic philosophy was inspired largely by Reagan' supply-side economics. However, because the Wall Street and/or the ruling establishment had already decided that Obama was the preferred choice for the White House, the corporate media let Clinton's comment pass without dwelling much on the reasons behind it; which could readily be examined by simply browsing through his own book.)

The repeated claim that the entitlements are the main drag on the federal budget is false - for at least three reasons. To begin with, the assertion that the large number of retiring baby-boomers is a major culprit in budgetary shortfalls is bogus because while it is true that baby-boomers are retiring in larger than usual numbers they do not come from another planet; before retiring, they also worked and contributed to the entitlement trust fund in larger than usual numbers. This means that, over time, the outflow and inflow of baby-boomers' funds into the entitlement trust fund must necessarily even each other out.

Second, even assuming that this claim is valid, the "problem" can easily be fixed (for many years to come) by simply raising the ceiling of taxable income for Social Security from the current level of $113,700 to a slightly higher level, let's say, $140,000.

Third, the bipartisan policy makers' hue and cry about the alleged budget/debt crisis is also false because if it were true, they would not shy away from facing the real culprits for the crisis: the uncontrollable and escalating health care cost, the equally uncontrollable and escalating military/war/security cost, the massive transfer of private/Wall Street debt to public debt in response to the 2008 financial crash, and the considerable drop since the early 1980s in the revenue side of the government budget, which is the result of the drastic overhaul of the taxation system in favor of the wealthy.

A major scheme of the financial oligarchy and their bagmen in the government to substitute the New Deal with neoliberal economics has (since the early 1980s) been to deliberately create budget deficits in order to justify cuts in social spending. This sinister feat has often been accomplished through a combination of tax cuts for the wealthy and spending hikes for military/wars/security programs.

David Stockman, President Reagan's budget director and one of the main architects of his supply-side tax cuts, confirmed the Reagan administration's policy of simultaneously raising military spending and cutting taxes on the wealthy in order to force cuts in non-military public spending: "My aim had always been to force down the size of the domestic welfare state to the point where it could be adequately funded with the revenues after the tax cut". [15] That insidious policy of intentionally creating budget deficits in order to force neoliberal austerity cuts on vital social needs has continued to this day - under both Republican and Democratic administrations.

Although the bipartisan tactics of austerity cuts are subtle and obfuscating, they can be illustrated with the help of a few simple (hypothetical) numbers: first (and behind the scenes), the two sides agree on cutting non-military public spending by, let's say, $100 billion. To reach this goal, Republicans would ask for a $200 billion cut, for example.

The Obama administration/Democratic Party, pretending to represent the poor and working families, would vehemently object that this is too much ... and that all they can offer is $50 billion, again for example. Next, the Republican negotiators would come up with their own counter-offer of, let's say, $150 billion. Then come months of fake haggling and passionate speeches in defense of their positions ... until they meet eventually half way between $50 billion and $150 billion, which has been their hidden goal ($100 billion) from the beginning.

This is, of course, an overly simplified hypothetical example. But it captures, in broad outlines, the essence of the political game that the Republican and Democratic parties - increasingly both representing big finance/big business - play on the American people. All the while the duplicitous corporate media plays along with this political charade in order to confuse the public by creating the impression that there are no alternatives to austerity cuts, and that all the bipartisan public bickering over debt/budgetary issues vividly represents "democracy in action."

The atmosphere of panic and anxiety surrounding the debt/deficit negotiations is fabricated because the central claim behind the feigned crisis that "there is no money" for jobs, education, health care, Social Security, Medicare, housing, pensions and the like is a lie. Generous subsidies to major Wall Street players since the 2008 market crash has lifted financial markets to new highs, as evinced by the Dow Jones Industrial Average's new bubble above the 15000 mark.

The massive cuts in employment, wages and benefits, as well as in social spending, have resulted in an enormous transfer of economic resources from the bottom up. The wealthiest 1% of Americans now own more than 40% of the entire country's wealth; while the bottom 80% own only 7%. Likewise, the richest 1% now takes home 24% of the country's total income, compared to only 9% four decades ago. [16]

This means that there really is no need for the brutal austerity cuts as there really is no shortage of financial resources. The purported lack of resources is due to the fact that they are concentrated largely in the deep coffers of the financial oligarchy.

Ismael Hossein-zadeh is Professor Emeritus of Economics, Drake University, Des Moines, Iowa. He is the author of The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007) and Soviet Non-capitalist Development: The Case of Nasser's Egypt (Praeger Publishers 1989). His latest book, Beyond Mainstream Explanations of the Financial Crisis: Parasitic Finance Capital, will be forthcoming from Routledge Books.

[Oct 20, 2013] Polarization

"What would we call such a society? A banana republic"
October 19, 2013 | Economist's View
Comments on this post from Dan Little?:

Polarization: Suppose a country had come to the brink of financial catastrophe because the two parties in its legislature were unable to find compromises in the public interest. Suppose further that the discourse in that country had evolved towards a highly toxic and hateful stream of anathemas by one party against the other. And suppose that one party projects an unprecedented amount of vitriol and hatred towards the leader of the other party, the president of the country. How would we describe this state of affairs? And what hypotheses might we consider to explain how this state of affairs came to be?

First, description. This seems like a society on the brink of political breakdown. It is riven by hard hatreds, with almost no strands of civility and shared values to hold it together. One side portrays the other in extreme terms, with few voices that insist on the basic decency of the other party. (There is one maverick voice, perhaps, who breaks ranks with the extremists of his party, and who expresses a decent respect for his political foes. He is accused of being too soft -- perhaps a secret ally of the opposition.)

Here is how the point is put in a recent piece in the Washington Post:

Today there is a New Confederacy, an insurgent political force that has captured the Republican Party and is taking up where the Old Confederacy left off in its efforts to bring down the federal government. (link)
EMichael -> Alex Blaze...

Ever read Kevin Phillips on the topic?

You are right though, it is certainly not just the South(but they got an awful lot more control there) and all Republicans are not racist.

But all racists are Republicans.

ken melvin:

We're talking about a group of people who hated Lincoln for 100 yrs and still chant 'the south will rise again'. These are the original 'my way or the highway' lot. Why? Whence these beliefs, behavior? And, how are they passed along from generation to generation? Was the suspension of reason part and parcel rationalizing slavery. Was it a wired part of their Scot/Irish roots?

The west? Much of the now west was confederate during the Civil War and, later, states like Arizona saw many southerners resettle within their pre-statehood boundaries. Here too, the attitude persists.

Over the years, my friendships with various members of the Sioux tribe have led me to wonder if traditions aren't often passed along at grandmother's knee. Is something similar going on with the cracker/t-party types of today? If the psyche is formed by 5 yrs old, what process is being employed to transfer this value set? Is it merely emulation common to children. Do they see and hear what it is that they are supposed to believe and come
to believe? Is there a conscious effort on the part of southern parents to instill these 'values' in their offspring?

Religion? How much a role does fundamental religion and its associated disdain for science and religion play a role?

anne:

http://www.nytimes.com/2013/10/19/books/ebony-and-ivy-about-how-slavery-helped-universities-grow.html

October 18, 2013

Dirty Antebellum Secrets in Ivory Towers
By JENNIFER SCHUESSLER

In “Ebony and Ivy,” an M.I.T. historian looks at the role of slavery in the growth of America’s earliest universities.

Perplexed:

The missing piece to this "puzzle" has a name & a long history, its called Anarchism, and it appears as a "strange, unfamiliar ideology" to those who are unfamiliar with this history (as in world history as opposed to "American History").

-"freedom to pursue life’s goals without state interference"

This is the foundation of the "Anarchists Movement." We have renamed it here on the island to hide the origins. The Americanized version is called "Libertarianism" but those who actually study history might well recognize it and know that Anarchism and Democracy cannot coexist; its a paradox, a choice must be made. Most Americans are virtually clueless about the differences and somehow believe its possible to govern & not govern simultaneously. It would indeed be a first if it ever worked.

The "freedom" Anarchists speak of is freedom from you, the majority, governing them, "the free." Freedom is just a catch-all so everyone can have a conversation using their own definitions while no-one really knows what's really being said by the other participants. We can all agree on "loving freedom" without ever realizing what's actually be said, proposed, and accomplished.

Since so few Americans have ever learned the history, they tend to "blur" together very different definitions (and meanings) of anarchism and anarchists, and fail to discern how these differing definitions impede the understanding of what the Anarchists were, and are, really about (see here, the distinctions are highly relevant http://www.merriam-webster.com/dictionary/anarchy). The Anarchists are really not about "anarchy" in the sense of 1b ("b : a state of lawlessness or political disorder due to the absence of governmental authority"), or 2b ("b : absence of order : disorder (http://www.merriam-webster.com/dictionary/disorder) http://www.merriam-webster.com/dictionary/utopian) society of individuals who enjoy complete freedom without government). These are the distinctions that make Anarchism incompatible with democracy. Democracy is a form of rule, a form of government. Anarchists deny that its helpful, or necessary, to have a "governing body." They believe that any attempts to govern are destructive to society. In their "utopian society" of "free individuals," there would be no need for a small "minority" of people to govern (any of this sounding familiar Randians?) To Anarchists (or Libertarians or whatever other label you choose), "liberty" means "liberty from "authority," from "being governed," from you, the majority, "governing," or "restricting in any way" their "freedoms." So democracy (rule by the majority) is entirely incompatible with Anarchy ("denial of any authority or established order"), and its also incompatible with "we are all in this together" and that some "authority" should intervene to prevent unjust results. In an Anarchistic utopia, unjust results don't happen, and "free individuals" will mobilize and come to the aid of victims of disease or disasters without any "authority" intervening to see that it gets done. This is what gets mixed into the "Randian cool-aid."

Bakunin laid it all out before Ayn Rand was even born; its not even very long ago, but Americans are so insular they refuse to even read it so they can maintain their illusion and continue to believe that it was "invented" here, see: http://dwardmac.pitzer.edu/Anarchist_Archives/bakunin/stateless.html And read this for a quick summary of some of the "flavors" of Russian Anarchism (from the Black Banner (Chernoye Znamya) group to the non-violent, non-resistant Tolstoyism:

http://dwardmac.pitzer.edu/Anarchist_Archives/worldwidemovements/anarchisminrussia.html

While Ayn Rand might provide some entertaining fiction, if you really want to understand the Paul Ryan's, Eric Cantor's, Ron & Rand Paul's, and Mitch McConnell's of the world, you need to understand Bakunin, Tolstoy, Znamya, Kropotkin, Proudhon, Malatesta and Reclus et.al. Do you really think Greenspan's "shock" when he discovered that financial markets really do need to be regulated was a result of his extensive training in economics? And if you want to understand either McConnell's legislative strategy or Paul Ryan's budget calculations, you need to understand Machiavelli as well.

Under the ruse of the "Randian" philosophy, Anarchism in the U.S. has already had much greater political success and impact than it ever did in Russia. "Shrinking government," "drowning the government," and "starving the beast" are all Anarchist objectives. Greenspan was the chairman of the FED, McConnell, Ryan, Cantor, and both Pauls are elected members of Congress, Mitt Romney came dangerously close to being elected President. Isn't it about time we at least brought this out into the open so Americans can decide if what they really want is Anarchism? Would Americans really be voting for "Tea Party Conservatives" if they understood that they were voting for Anarchism INSTEAD of Democracy? Maybe it should be a conscious choice instead of a deception? Our ability to govern democratically has been brought to a practical standstill; is it just a coincidence that this is the primary objective of Anarchists? If you believe that, you don't understand what you're up against.

Its actually more than a bit amazing just how a ruse like this can go on for so long when there is so much written about it and published (already translated into the English language).

Ultimately its Loser liberalism at its finest. Everyone runs and hides when the Anarchists shout "socialist" even though the definition doesn't fit, but they can't even identify an Anarchist when they're standing right in front of them shouting "socialist" whenever they try to govern democratically.

DrDick -> John Cummings...

Yeah, anarchism and libertarianism are where the left wing and right wing meet in the lunatic fringe. While there are a number of similarities there are also equally important differences.

Roger Gathman -> Perplexed...

The anarchists were ever into cooperatives. I don't see this as being a very big issue for tea party types, who don't, for instance, want to pull down corporations. Anarchists of course took corporations and absentee ownership as the hallmark of baleful statelike power, power guaranteed by the state.

On the other hand, I do look at the dots and think savings and loans, the most enduring anarchist-like institution we have. And I think that many of those people who hate the government (and I, too, hate it) are the descendents of people who did understand cooperatives and did build savings and loans. There's a muddy echo of that in the anti-Wall street bailout theme that sometimes crops up among them.

Fred. C. Dobbs:

This is more of an Existential Issue for Republicans than for the USA, I think/hope.

They will not Go Gentle Into that Good Night. What'd you expect?

Peter K. -> Fred. C. Dobbs...

Yes after they lose in 2014 and 2016, the careerists will think "wtf?" and the nervous breakdown will begin in earnest.

Joe Smith:

" ... in the GOP's astonishingly hateful reaction to Clinton. Most people now seem to forget the insane, toxic atmosphere ..."

And a Republican judiciary became complicit in attempts to cripple the Clinton presidency.

EMichael -> Joe Smith...

Don't forget, Democrats give things to those people.

You don't have to be black to be hated and despised, it just makes it easier.

cj150:

There is not polarization nor shared fault, it comes down to a group of fanatical extremists who are not able to win in the free democratic play and want to impose their "vision of the world" by force and the blackmail.

Main Street Muse -> EMichael...

Let's see if Typepad lets these words fly. Here's a quote from the NY Times story:

"The words [Lee Atwater] uses are not ones I would normally use in this blog, or anywhere in the opinion pages of the Times, but the quotes require them. [what follows are transcripts from the Lee Atwater interview - i.e. Lee Atwater's words as transcribed by the NYTimes]:

'You start in 1954 by saying ‘Nigger, nigger, nigger.’ By 1968 you can’t say ‘Nigger.’ That hurts you. It backfires. So you say stuff like forced busing, states rights and all that stuff and you get so abstract. Now you talk about cutting taxes and these things you’re talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites. And subconsciously maybe that’s part of it. I’m not saying that. But I’m saying that if it is getting that abstract and that coded, we are doing away with the racial problem one way or the other. Obviously sitting around saying we want to cut taxes and we want this, is a lot more abstract than even the busing thing and a hell of a lot more abstract than nigger nigger. So anyway you look at it, race is coming on the back burner.'"

Thus spoke Lee Atwater in 1981 when Reagan was rising...

Tom in MN:

I can't help but think that had Romney run in 2008, he could have run on his MA health care plan and had he won, implemented it without these attacks from the right. In addition, there would have been fiscal stimulus with no regard for the debt to get any GOP president reelected in 2012.

I still don't like calling it Obamacare based on the posters of him as a witch doctor on which it first appeared.

Concluding it's racially motivated sadly seems to be the only explanation that fits.

bakho:

President Clinton was treated the same way, or perhaps worse than Obama. Racism does not explain it that well. A sense of entitlement does and a fear that changing demographics will change culture for the worse.

The TeaParty has plenty of racists, but they are a coalition including libertarians and others who want less bureaucracy and special interest entitlements. They feel entitled to the government benefits that THEY receive but dismiss benefits that OTHERS receive as unearned. Many of these people live in low tax no service areas. They pay taxes, on property and income, but they don't get benefits. This is the product of years of the GOP cutting taxes for the wealthy, shifting the tax burden to the Middle Class and slashing benefits. The Malefactors of Great Wealth have been steadily eroding benefits to the point where too few get them to win support (in many areas).

The program of cutting government benefits and shifting tax burden from the wealthy to the Middle Class has been the main program of the GOP since the 1960s. It is finally producing the anti-government, anti-tax revolt the Malefactors have desired. The only problem is that the Malefactors are dependent on the Government for much of their wealth.

DrDick -> bakho...

I agree that it is not just about racism, but race has a lot to do with it. There is a reason why the the GOP has been running on the Southern Strategy since Nixon. There is also a reason for the current geography of party affiliation. Clinton was also seen as strongly aligned with African Americans (some people called him America's "first black President").

Dan Kervick:

Well, as long as we are indulging invidious tropes, let's trot out the old "stab in the back" one, shall we?

These old ethnic, regional and paranoid strains are nothing new, but they are intensified by economic stresses. Forty years of neoliberal economics - a creed that, sadly, has been warmly embraced by Democratic policy elites and their Wall Street backers - has helped to hollow out the US middle class, create obscene Gilded Age inequality, commercialize all human relationships, promote financialization and money-class exploitation of honest work, divided people along cultural and class lines, and given us a new philistine culture that is nasty, insecure, corrupt, shallow and cruel.

Even now, neoliberals continue to plow forward post-2008 as though nothing has happened, proposing little as a positive agenda beyond artificial asset value inflation via financial sector monetary injections and supply side giveaways to corporate rent-seekers, while working with billionaires like Pete Peterson to extend plutocratic stagnation. They are able to succeed in holding onto the center because they are so obsequiously obliging to all of the stakeholders in the existing rot. No wonder millions and millions of America feel like a hopeful future is slipping away from them.

kievite -> Dan Kervick...

Dan,

==== quote ===
These old ethnic, regional and paranoid strains are nothing new, but they are intensified by economic stresses. Forty years of neoliberal economics - a creed that, sadly, has been warmly embraced by Democratic policy elites and their Wall Street backers - has helped to hollow out the US middle class, create obscene Gilded Age inequality, commercialize all human relationships, promote financialization and money-class exploitation of honest work, divided people along cultural and class lines, and given us a new philistine culture that is nasty, insecure, corrupt, shallow and cruel.
=== end of quote ===
That's a real insight. I also think that economic stress is the major driver of Tea Party. The country experiences the same intensification of "old ethnic, regional and paranoid strains" that happened in Weimar Germany.

It will be interesting to see how early adopters of national-socialist ideas (predominantly small business owners) correlate with Tea Party membership (also predominantly small business owners). Although neoliberalism corrupted Tea Party program the similarity of demands is difficult to ignore: http://www.teaparty.org/about-us/

1. Illegal aliens are here illegally.
2. Pro-domestic employment is indispensable.
3. A strong military is essential.
4. Special interests must be eliminated.
5. Gun ownership is sacred.
6. Government must be downsized.
7. The national budget must be balanced.
8. Deficit spending must end.
9. Bailout and stimulus plans are illegal.
10. Reducing personal income taxes is a must.
11. Reducing business income taxes is mandatory.
12. Political offices must be available to average citizens.
13. Intrusive government must be stopped.
14. English as our core language is required.
15. Traditional family values are encouraged.

Compare with https://en.wikipedia.org/wiki/National_Socialist_Program :

==== quote ====

16.We demand the creation of a healthy middle class and its conservation, immediate communalization of the great warehouses and their being leased at low cost to small firms, the utmost consideration of all small firms in contracts with the State, county or municipality.

and from Austrian program:

. . the German National Socialist Workers’ Party is not a party exclusively for labourers; it stands for the interests of every decent and honest enterprise. It is a liberal (freiheitlich) and strictly folkic (volkisch) party fighting against all reactionary efforts, clerical, feudal, and capitalistic privileges; but, before all, against the increasing influence of the Jewish commercial mentality which encroaches on public life. . . .

== end of quote ===

I think that there is an anti Wall Street component in the program of Tea Party too.

Juan H.:

'' How would we describe this state of affairs? And what hypotheses might we consider to explain how this state of affairs came to be?'

Without having read comments [but intend to] --

A quasi civil war based on rise - and tensions - between//within interest groups [vertical] rather than classes [horizontal] plus poorly organized Leftist organizations which are rarely arm and arm with rank and file workers much less militarizing. The variety and number of interest groups may be the primary deterrent to a pre-revolutionary condition even as political legitimacy has been deteriorating.

Changer in form of organization from national and international to multinational to trans-national, which has also been a change in form of trade and employment - and, we can day, expansion of an urban peasantry.

So we hear about growth, naturally when the contrary has been the case for many decades -

''Post World War II economic history can be thought of as evolving within two
distinct political-economic regimes. The high growth Golden Age was based on socially or politically ‘embedded’ domestic markets, government responsibility for aggregate demand growth, and state control over cross-border economic activity. It lasted until the early 1970s, to be replaced, after a decade of turbulence, by the Neoliberal Regime, built on deregulation, liberalization, privatization, and ever-tighter global integration...

Unfortunately, Neoliberalism’s promised benefits have yet to materialize, at least  not for the majority of the world’s people. Global income growth has slowed, productivity growth has deteriorated, real wage growth has declined, inequality has risen in most countries, the less developed nations outside East Asia have fallen even further behind the advanced, and average unemployment is higher.

Real global GDP growth averaged 4.9% a year in the Golden Age years from 1950 through 1973, but dropped to 3.4% annually in the unstable period between 1974 and 1979.

Dissatisfied with the instability, inflation, low profits and falling financial asset prices of the 1970s, advanced country elites pushed hard for a switch to a more business friendly political-economic system; global Neoliberalism was the result.

World GDP growth averaged 3.3% a year in the  early Neoliberal period of the 1980s, then slowed dramatically to 2.3% from 1990-99 as Neoliberalism strengthened, making the 1990s by far the slowest growth decade of the post war era.2''

Structural Contradictions of the Global Neoliberal Regime
James Crotty

kievite -> Juan H....

Juan,

=== quote ===
Unfortunately, Neoliberalism’s promised benefits have yet to materialize, at least not for the majority of the world’s people. Global income growth has slowed, productivity growth has deteriorated, real wage growth has declined, inequality has risen in most countries, the less developed nations outside East Asia have fallen even further behind the advanced, and average unemployment is higher.
=== end of quote ==

That the real economic base of the rise of Tea Party in the USA. Predominantly white, the USA middle class is falling behind, and, especially in lower, less educated, middle class, you can almost physically feel the huge level of rage. And readiness to support an extremist agenda. That what drives the Tea Party.

The end of capitalism as we know it  by Phillip Blond

 March 23, 2008 | The Independent

The Western world is in an economic crisis similar in scale to the oil shock of 1973. What we are seeing is nothing less than the unravelling of neo-liberalism – the dominant economic and ideological model of the last 30 years.

The disintegration of Anglo-Saxon-inspired markets has come about largely because of the confluence of two tendencies of the "free market": speculation and monopoly capitalism. Contrary to received opinion, free markets – unless subject to civil regulation, asset distribution and persistent intervention – always tend to monopoly.

Similarly, there is nothing inherently efficient about free markets – they do not of themselves promote sound investment or wise management. Rather, when markets are conceived wholly in terms of price and return, and when asset wealth and the leverage that this provides becomes as concentrated as it was in the 19th century (which is a scenario we are approaching), then markets encourage nothing other than gambling masking itself as sound investment.

For example, before 1973 the ratio of investment to speculative capital was 9:1; since 1973, these proportions have reversed. So huge have the numbers, leverage and derivative instruments become that their value now far exceeds the total economic value of the planet. For instance, in 2003 the value of all derivative trading was $85 trillion, while the size of the world economy was only $49 trillion.

These ratios have risen with the latest estimates that the value of all traded paper instruments exceeds the underlying value of the assets on which they are written by 3:1. The fact that these assets may themselves be devaluing by up to 50 per cent (US housing values have declined by 25 per cent in two years) means that the overall ratio of global paper value to its leveraged base may indeed double.

This average global figure itself masks even more extreme levels of leverage. The Carlyle Group de-faulted on $16.6bn (£8.4bn) of debt last week. The private equity firm had been speculating assiduously on its AAA-rated mortgage base – by some estimates, at the end of its life, Carlyle's loan-to-value ratio and hedge exposure was at 36:1. There are, of course, many other private equity firms in a similar position.

This incalculable level of speculation is abetted by the huge concentration of wealth that has occurred since 1973. Why? Because if markets tend to monopoly then smaller groups of people control larger amounts of assets. The latest figures demonstrate this admirably: the richest 10 per cent of the UK population increased their share of the nation's marketable wealth (excluding housing) from 57 per cent in 1976 to 71 per cent in 2003. Over the same period, the speculative capital that could be deployed or invested by the bottom 50 per cent of the British population fell from 12 per cent to just 1 per cent. Indeed, the wealthiest 1 per cent of the population, on current government figures, now control more than a third of all the marketable wealth – and this ignores the vast sums held in offshore tax havens.

The New Economics Foundation has shown that global growth has not aided the poor. In the 1980s, for every $100 of world growth, the poorest 20 per cent received $2.20; by 2001, they received only 60 cents. Clearly neo-liberal growth disproportionately benefits the rich and further impoverishes the poor.

Real wage increases in the top 13 countries of the Organisation for Economic Cooperation and Development (OECD) have been below the rate of inflation since about 1970 – a situation compounded in Britain as the measure of inflation massively underestimates the real cost of living.

Thus wage earners – rather than asset owners – have faced a 35-year downward pressure on their standard of living. Indeed, the golden age for the salaried worker, as a share of GDP, was between 1945 and 1973 – and not this vaunted age of liberalisation.

The trouble is that nobody in power recognises this crisis for what it is – an asset insolvency crisis brought about by massive debt leverage.

Neo-liberals are still reacting as if the emergency was one of liquidity. They are wrong. Governments should bail out not banks and speculators but the customers who now have every reason to fear for the future.

[Sep 04, 2013] Laissez-faire is, was and always will be a lie

"As Reinhold Niebuhr was quick to point out, what laissez-faire is in practice is laissez-faire for the rich and powerful and a boot to the neck for everybody else."
August 26, 2010

DownSouth

August 26, 2010 at 9:42 am

I agree but with a few changes and additions.

The true progression was Capitalism 1.0 (the classical era of laissez-faire), Capitalism 2.0 (the Depression and the rise of government intervention by and for the people) and Capitalism 3.0 (the stagflation of the 1970s and the rise of government intervention by and for the oligarchs).

I find it amazing that both Kaletsky and Das fail to grasp the simple truth that, as you put it, “Bailout America is a command economy.”

There are command economies that are democratic and serve the interests of the people (Capitalism 2.0). And then there are command economies that are not democratic and serve the interests of the oligarchs (Capitalism 1.0 and Capitalism 3.0).

Laissez-faire is, was and always will be a lie. As Reinhold Niebuhr was quick to point out, what laissez-faire is in practice is laissez-faire for the rich and powerful and a boot to the neck for everybody else. It is a command economy, but commanded by and for the oligarchs. For a little review of what laissez-faire really is, I recommend a reading of the chapters entitled “III. The Big Red Scare” and “VII. Coolidge Prosperity” from Frederick Lewis Allen’s book Only Yesterday. It recounts the history of the 1920s, or the era of Capitalism 1.0. What we have is an environment where business and finance operate with impunity, juxtaposed with the concomitant demonization and harsh oppression of labor.

Here’s how Lewis sums up the mood that pervaded the 1920s:

“America,” wrote Katharine Fullerton Gerould in Harper’s Magazine as late as 1922 “is no longer a free country, in the old sense; and liberty is, increasingly, a mere rhetorical figure. . . .

No thinking citizen, I venture to say, can express in freedom more than a part of his honest convictions. I do not of course refer to convictions that are frankly criminal.

I do mean that everywhere, on every hand, free speech is choked off in one direction or another. The only way in which an American citizen who is really interested in all the social and political problems of his country can preserve any freedom of expression, is to choose the mob that is most sympathetic to him, and abide under the shadow of that mob.

Sentiments such as these were expressed so frequently and so vehemently in later years that it is astonishing to recall that in 1922 it required some temerity to put them in print. When Mrs. Gerould’s article was published, hundreds of letters poured into the Harper’s office and into her house-letters denouncing her in scurrilous terms as subversive and a Bolshevist, letters rejoicing that at last some one had stood up and told the truth. To such a point had the country been carried by the shoutings of the super-patriots.

To sum up, what really transpired is this:

Capitalism 1.0 → Capitalism 2.0 → Capitalism 1.0 

There is no progress here, only atavism.

Siggy
August 26, 2010 at 12:27 pm

Will the last atavist please turn on the lights when they leave?

Full marks for the synopsis: Capitalism 1.0 → Capitalism 2.0 → Capitalism 1.0 is the progression.

Nicely done without too many citations, impressive.

Mickey Marzick in Akron, Ohio
August 26, 2010 at 2:47 pm

Then Capitalism 2.0 – by and for the people – is an aberration, the product of a set of unique historical circumstances.

Say it ain’t so…

Doug Terpstra

August 26, 2010 at 4:32 pm

Thanks, Attempter.

I too was puzzled by the Socialism ‘charge’, tossed out as an immaculate given, like Saddam-al Qaeda, Iraq-911, to be accepted unchallenged and ill-defined.

‘Socialism’ has thus been widely Orwellized with malice and forethought … to obfuscate the current reality of corporate welfare and fascism.

As you write,

 “There is nothing remotely ’socialist’ about ANY of this. … If you don’t have public ownership, you don’t have socialism, by definition. Period. What we have here is a command economy where private rent extractions are maintained. That’s called neoliberalism, corporatism, and is the economic aspect of fascism.”

It’s puzzling that Das even bothered to wade through Kaletsky’s apparently vapid and conflicted work. Kaletsky sounds like a tweaker: all we need is someone more expert like himself to twist knobs and pull levers for better results — just an upgrade, a new release, not a new system. He’s like a lot of economists: supposedly expert at counting, polishing, and distributing golden eggs, but utterly clueless about the care and feeding of geese.

And it’s most strange for capitalist apologist to be so furious with Hank for doing one single thing right, ONE—the bankruptcy of Lehman—allowing one theoretical principle of free market capitalism to actually apply in the real rigged-market world.

Kaletsky must have been among that tiny group of bondholders who actually got a buzzcut when the market collapsed, instead of workers and taxpayers.

Richard Kline
August 26, 2010 at 6:21 am

Kaletsky has spent his career as an economic journalist on the British side of the pond, and from that geographic location his phasing of ‘capitalism’ may make a certain amount of sense.

His ‘3.0′ includes the Big Bang and the ball-breaking of industrial labor in Britain which assuredly changed the political economy there signally.

And in the present economic rupture, Britain’s government seems to have much more forcefully advanced a ‘new rulebook’ for the financial system within its own borders, so a ‘4.0′ phase is at least plausible.

From other global perspectives, though, Kaletsky’s phasing looks wan, indistinct, or just not on.

The US has done nothing remotely like a 4.0 ‘new rulebook’ change, and it’s not clear that the EU outside of Britain has even settled upon a joint regulatory program, let alone what such a program might look like.

Additionally, not having read Kaletsky’s thesis, I can’t say, either, whether he in any significant way considers the relationship of East Asia in general and China in particular in relation to his proposed phasing structure. The ‘Asian model’ of market capitalism—heavy government intervention behind a nominally market economy with big money and big government symbiotically joined—strikes me as a far more important and significant permutation of ‘capitalism’ than either of Kaletsky’s putative ‘3.0′ and ‘4.0′ phases.

It is quite possibly the case that the structure of developed economies in most nations in, say, three generations, will look far more like ‘Asian model’ structures than occidental ‘robber baron model’ or ’social partnership model’ structures, the two significant alignments in the European-dominated portions of the globe since the inception of bureaucratically administered nation-states with industrial economic bases of importance; say, since 1800. [I'm not presenting any comprehensive analysis here, just making, y'know, sweeping observations.]

In short, I don’t place much weight in Kaletsky’s phases as outlined in this summary, though perhaps there’s more support in his actual text. If there is even a credible 3.0 in Western capitalism, I can’t think of it; certainly there doesn’t appear anything in view of a change coming out of the present storm and sorrow.

And regarding Schumpeter, all of these neo-liberal, free market apologists love to quote the ‘creative destruction’ without really giving his theoretical oeuvre significant attention — because that ‘creative destruction’ suits their own purposes, not because they use it as Schumpeter did. Those present purposes? Well, sweeping aside labor bargaining or environmental legal hard limits or government long range planning or community involvement or even informed participation; yeah, all _that_ destruction is part of the creation that concentrators of great [personal] wealth are eager to get on with. If your particular modest, prosperous business happens to get lodged slow-footed beneath their chariot wheels, that must prove that you’re not creative enough so the faults on you.

Joseph Schumpeter actually had a far reaching thesis of many dimensions on how states of order in industrial capitalism changed. It’s been a couple of decades since I read it in detail, so I don’t want to start spouting, but there are at least two important aspects which all fo thse destructive creators don’t get around to including in their analysis.

The reason Schumpeter posited destruction occurred was principally due to the saturation of economic regimes, typically technological regimes. Such regimes reached their optimal utility and penetration in an economy, staled, then declined or were simply overrun by ‘innovations,’ particularly technological innovations. (To my recollection, Schumpeter also considered the possibility that _social_ structural regimes optimized and then were similarly eroded by the new; certainly, Schumpeter’s basic argument could be so extended.)

Secondly, as a separate and surely broader analysis of industrial capitalism, Schumpeter argued for profoundly cyclical actions of long duration within its activity. He did not believe, contra Keynes, that government intervention would overcome such cyclical action but argued instead that we should, well, _get on with it_ letting that destruction be brief and the new prosperity be speedy. Or so he had it.

But all these present creative destructors, never manage to bring either Schumpeterian cyclicality nor the actual inherent senescene of existing regimes affect their judgments. I’ll bet a dollar to a dime we don’t see much of either of these issues in Kaletsky’s synthesis.

Well, Schumpeter could have been wrong on the last two points but right on some kind of ‘creative destruction’ driven by something else entirely—but what does the idea really mean, then? I don’t think Schumpeter was wrong, however, on any of the three points (not that I agree with many things in his thought, nor necessarily with how exactly he framed these issues, either).

So rather than read Kaletsky, I would urge those interested to instead read Schumpeter; he’s worth the time. His 1939 text was, if I recall, _Economic Cycles_, though he summarized much of his though in several later papers into the 1950s, if one cares to look.

Go to the source, and form your own opinion. Sez I.

Patrick
August 26, 2010 at 6:58 am

Anatole knows where his bread is buttered. By blaming the entire mess on Paulson and Bush by default, he’s guaranteed some good sales.

Progressive Ed
August 26, 2010 at 3:25 pm

Here’s a link to a nice essay on corporatism in America that gives a somewhat different point of view than those expressed in the article and comments: http://www.americanthinker.com/2009/05/corporatism_comes_to_america.html

[Aug 19, 2013]  Introducing Government Finance Quasi-Capitalism  by Doug Noland

With households highly leveraged and the private sector unable to expand Credit sufficiently to power our structurally deficient economic structure, Credit expansion/inflation it is left to the federal government and the Federal Reserve.

 Aug 17, 2013 | Safehaven.com

I'll posit that evolution to a consumption and services-based economic structure is an evolution to Credit gluttony. With households highly leveraged and the private sector unable to expand Credit sufficiently to power our structurally deficient economic structure, Credit expansion/inflation it is left to the federal government and the Federal Reserve.

This backdrop has spurred massive Federal deficits, zero interest rates, and unprecedented central bank monetization. Washington policies spur further wealth redistribution and, I would argue, wealth destruction. I'm going to call the new "Minsky Stage" - "Government Finance Quasi-Capitalism" (GFQC).

The government now essentially determines market yields throughout the entire Credit system. The government now basically insures system mortgage Credit and sets mortgage borrowing costs. Massive federal deficits and low Fed-dictated borrowing costs sustain inflated corporate earnings and cash-flows. The Fed has come to believe it is within its mandate to inflate securities and asset prices. It has crushed returns on saving instruments. Amazingly, the Fed believes it is within its mandate to dictate that savers flee the safety of deposits and other "money" for the risk markets.

"Government Finance Quasi-Capitalism" exacerbates fragilities. It fosters ongoing Credit excesses including a historic expansion of non-productive government debt. GFQC and the resulting flow of finance exacerbate imbalances and economic maladjustment. Accordingly, resulting financial and economic fragilities ensure an even bigger role for Washington in the real economy and for the Federal Reserve in the financial markets.

With securities markets near record highs, it has become popular to refer to "enlightened" policymaking. As a student of monetary history, I see the seductive workings of the monetary inflation expedient. And once commenced, it always assumes increasing control.

The expansion of government finance ensures dependency on fiscal deficits and central bank "money printing." Inflating securities prices, highly speculative and distorted financial markets, and economic maladjustment ensure ongoing fragilities.

"Government Finance Quasi-Capitalism" ensures the over-issuance of mispriced finance, the misallocation of resources and a resulting deficient real economy. The widening gulf between weak fundamentals and monetary inflation-induced market Bubbles creates a highly unstable, uncertain and precarious backdrop.

All seem to ensure only greater government intrusion, control and stagnation.

And I'll conclude, as I often do, by stating that I hope my analysis is flawed.

[Jul 12, 2013] More On the German Gold Situation Some Light from Deutschland and Canada

Jesse's Café Américain
Journalist Lars Schall was kind enough to forward this excerpt from one of his articles that is printed below.

I think it 'frames up' the situation with regard to the repatriation of Germany's gold from the US very nicely.

How sovereign is Germany relative to the US? Indeed how sovereign are a number of the western nations vis-à-vis the Anglo-American establishment? The recent search for the elusive Snowden cast some light on the issue of sovereignty.

And as a corollary, how complacent and compliant are the western people to the Banks? Have the Banks quietly assumed the role of government, without proper accountability to the people?

And secondly, what exactly is the problem with the gold? Is it there or gone? And if it is there, is it already spoken for, in the manner of modern banking rehypothecation? And if so, why?

Jeff Nielson casts some light on that subject of central bank leasing in his recent article here. It is finely reasoned. Short selling is legal, but like many legal things it can become illegal if it is done with an intent to manipulate prices, even with the blessing of entities who, through their association with a sovereign, hold themselves to be above the law and public accountability.

This is the excerpt of Herr Schall's interview. You may make up your own mind as events unfold, but it does seem to parse the subject quite nicely.

Lars Schall: In January this year, the Deutsche Bundesbank announced that it wants to repatriate some of its gold holdings at the NY Fed and all of its gold from the Banque de France. Do you consider it a bit strange that apparently it will take seven years to bring roughly 300 tons of gold from New York City to Frankfurt and five years to bring roughly 370 tons from Paris to Frankfurt? Moreover, the Bundesbank will leave a huge amount of its gold in New York City and London to have in the event of a currency crisis ”the ability to exchange gold for foreign currency […] within a short space of time.” Does this argument convince you?

Norbert Haering: The specifics of the plan for partial repatriation of gold seem to be designed to quash the public discussion about gold storage abroad. For many years to come, the Bundesbank will be able to answer these calls by saying: we are already working on it. And that will work well as a communication strategy. But the truth of the matter is that there is no good reason to store your national gold treasure abroad. The issue and the way in which the Bundesbank got itself tangled up in conflicting statements and justifications during these discussions makes one suspicious that either there is a problem with the gold or that Germany might not be as sovereign a state as we like to think. I do not know which one is true.

Lars Schall, Money Lies Disguise Banking Truths: An Interview with Norbert Haering


I find the refusal of the Federal Reserve to release the national gold of Germany for repatriation for seven years to be one of the most remarkable of recent developments in the world of money. And it is all the more remarkable in that so few are willing to even ask the most fundamental of questions regarding the custodial integrity of the bankers.

It is truly the dog that did not bark.

Stand and deliver. Either the bullion, or the truth.

School of Assassins Guns, Greed, and Globalization by Jack Nelson-Pallmeyer, Roy Bourgeois

Amazon.com  

A Customer

SOA/WHISC- not an issue of the past December 20, 2001

Jack Neslon-Pallmeyer's new book, School of Assassins: Guns Greed and Globalization, brings the history and development of the School of the Americas, including its recent name change to The Western Hemisphere Institute for Security Cooperation, into perspective along with the developments of the global and national economies and militaries.

In a time when the role of the SOA/WHISC is being seriously and persistently challenged, the name change and other cosmetic alterations represent a need to continue to build and strengthen the thoughtfulness and articulation of the movement and voices that are calling for the school's closure. This book ties together many of the critical issues at play in the debate over the SOA/WHISC and puts it in the context of the role it has in the world today, as well as how it has developed and changed with the changing world and economy in which we all live. One of the key points stressed in this book is that the SOA/WHISC's role has never been stagnant or unaltered, but rather that it has and continues to change along with the goals of the United States foreign policy. The purpose and role that the SOA/WHISC fulfilled at its inception is not the same as the purpose it is serving today. The US foreign policy, beginning around the time the SOA was opened in Panama, has evolved throughout different stages, each trying to maintain a different balance between military and economic strategies and tactics to enforce and implement its goals:

  1. Beginning in a period of major military domination, the SOA was created at a time when military repression and power was the main way of enforcing and achieving the US foreign policy goals.
  2. However, economic tools and leverage, such as those achieved by the International Monetary Fund and The World Bank, began to gain momentum and strength as efficient ways of implementing foreign policy. The second stage of US foreign policy was thus a balance between the growing use of economic leverage and the lessening of the need for military repression.
  3. During the third stage that the SOA/WHISC functioned in, economic power implemented through the afore mentioned institutions and their programs (such as Structural Adjustment Programs), took the front line in US foreign policy. The decreasing role of the need for military and violent repression in this stage had a great impact. It threatened and concerned those in the military to seek ways to maintain the immense budget and importance of the military at a time when it was not really being used or was as necessary.
  4. This "military industrial complex" is another key issues at stake in Nelson-Pallmeyer's book, and plays a large role in the remilitarization that characterizes the fourth stage of US foreign policy. The SOA/WHISC's role in the present day is greatly founded on this remilitarization as an important tool in order to achieve the goals and stability desired by the US foreign policy.

The new name given to the SOA represents a face lift, as many refer to it, which attempts to make the goals of the SOA/WHISC seem worthy of the absurd amount of money the US government budget allots the military.

Nelson-Pallmeyer makes a point that the

" `any means necessary' foreign policy is possible when advocates are convinced that the means they employ, whether the torturer's hand or the banker's rules, are justified because they promote the common good or protect particular interests they represent" (98).

Changing the name of the SOA to WHISC, along with the other cosmetic curriculum changes, is attempting to do just this; to create a new image of the school that is one promoting `security cooperation' and human rights. As this book states, however, these changes do not represent any sense of remorse, accountability, or separation from the past policies and deeds that a truly new institution would need to be based on.

The impact of corporate-led globalization is another key issue in The School of Assassins: Guns Greed and Globalization; and likewise, is a factor that plays into the remilitarization that characterizes stage four of US foreign policy. Although globalization, as stated by Nelson-Pallmeyer, is a reality, corporate-led globalization is not inevitable and is furthermore, undesirable. Corporate-led globalization undermines democracy, aggravates problems rooted in inequality, and is altogether destabilizing. This destabilization in turn becomes a reason for remilitarization, and a problem to be handled through military repression rather than systematic, economic, and global changes. Corporate-led globalization is not the beneficial development or progress that the myths make it out to be.

Finally, the debate and struggle around the SOA/WHISC is but a glimpse at the greater picture, the tip of an immense iceberg. Nelson-Pallmeyer states that "the SOA is a window through which US foreign policy can be seen clearly" (xvii). The struggle and movement to close the SOA/WHISC is also fighting against many of the greater issues at stake in our foreign policy and international involvement and is only one of many battles to be fought. Closure of the SOA/WHISC will not appease or end the movement, just allow it to move on to the next battle. Many of the aspects of the US foreign policy that break down the false image of the benevolent superpower are brought in to focus through connections and impacts on the SOA/WHISC. The SOA/WHISC is like a case study of the many components and factors of US foreign policy and its goals. In exposing oneself to the SOA/WHISC debate, history, and struggle, it is inevitable to come to some greater understanding of the US's involvement and true goals in its foreign policy and international affairs. This book is atriculate, thought provoking, and worth reading.

[Jun 06, 2013] The Great Persuasion: Reinventing Free Markets Since the Depression

economistsview.typepad.com

The end of an era?:

Persuasion, Great and Intimate, by David Warsh: ...The Great Persuasion: Reinventing Free Markets Since the Depression by Angus Burgin, of Johns Hopkins University ... is the latest of a lengthening shelf of books by intellectual historians that seek to explain the election of Ronald Reagan in 1980 in terms of the influence of ideas or money or both. To most of those writing the narrative of American politics in the 1970s, the enthusiasm for markets and reduced government that accompanied “the Reagan revolution” (or, earlier, the deregulation of transportation, under Jimmy Carter, or finance, under Richard Nixon and Gerald Ford), seemed to come out of nowhere. They were expecting, per Keynes and Schumpeter, “the end of laissez-faire.”
Burgin’s argument is that a group of market advocates formed in the late 1930s,   around a discussion of Walter Lippmann’s The Good Society, then took flight after World War II as the Mont Pelerin Society, and subsequently influenced the evolution of postwar economic and political thought. That thought isn’t new, but Burgin’s is the by far the best account of the organization’s history. The MPS was the brainchild of  Austrian economist and social philosopher Friedrich von Hayek, then in the process of relocating from London to Chicago.  He intended the organization to be “something halfway between a scholarly association and a political society. ”Thirty nine persons attended its first meeting, in April 1947, at a mountain hotel near Vevey, Switzerland, on the north shore of Lake Geneva, not far from Lausanne.
Among them were economists (Hayek, Lionel Robbins, Maurice Allais, Fritz Machlup, Ludwig von Mises, Frank Knight, Milton Friedman, George Stigler, Aaron Director); philosophers (Karl Popper, Michael Polanyi, Bertrand de Jouvenal); journalists (Henry Hazlitt, John Davenport); and activists (Leonard Read and representatives of the Volker Fund, the Kansas City, Mo., foundation that bankrolled the Americans’ participation) – a regular Who’s Who of young men (only one woman, British historian Veronica Wedgewood, was included). They would become influential theorists of the turn towards markets.
Burgin, a historian, shows that from the beginning the group comprised two factions, European traditionalists and American upstarts.  The Europeans were concerned with the difficulty of reconciling capitalism with social traditions that had evolved over the centuries. The Americans were not.  Eventually, Burgin writes, Milton Friedman got the upper hand and brought in “a more strident version” of market fundamentalism.  His predecessors’ work, Burgin writes, had been “ingrained with a sense of caution at the knife’s edge of catastrophe. Friedman’s was infused with Cold War dualisms…. Friedman’s philosophical models brooked no concessions to communism, and the America of his time found a ready audience for a philosophy that did not allow itself to be measured in degrees.”
For all his fascination with Friedman, Burgin does not pay much attention to developments in economics itself. Robert Solow, of the Massachusetts Institute of Technology, has written that Burgin tends to endow the MPS with more significance than it ever really has, whether within the economics profession or in the world at large.”  And surely Burgin stints the debates that gave rise to the Mont Pelerin Society.  He doesn’t mention the “calculation debate” about the technical possibility of planning that had preoccupied the Austrians economists since Germany’s surprisingly successful administration of its national economy during World War I; nor the controversy over the New Deal’s National Industrial Recovery Act of 1933, which was the background for the Lippmann book; nor the various crises of peacetime planning that were unfolding in Europe as the group first met.
Moreover, as a historian of ideas, Burgin ignores various more purely experiential means of persuasion by which faith in markets was renewed in the 1960s,’70s and ’80s.  There was the success of Toyota, for example, in improving standards of automotive quality.  Then, too, the Cultural Revolution in China and the Prague Spring of 1968 had powerful effects on views of political economy, in both East and West; so did the US war in Vietnam.  Populism, meaning the durable sectional rivalries within the US itself (Midwest vs. the Coasts, South vs. North) played a role as well. So did rivalries between the United States and Europe.
For my money, Burgin’s real find (apparently for his, too, since his book ends with an account of it) is a 1988 essay by Milton and Rose Friedman (his economist wife and collaborator) tucked away in a Hoover Institution volume, Thinking About America: The United States in the 1990s. In “The Tide in the Affairs of Men,” they discerned a tendency of powerful social movements to begin as works of opinion, spread eventually to the conduct of policy, then generate (often) their own reversal, only to be succeeded by another tide.

The Friedmans discerned three such movements in the past 250 years – a laissez-faire or Adam Smith tide, beginning in 1776 and lasting until around 1883 in Britain and the United States (with policy lagging: 1820-1900 in Britain, 1840-1930 in the US);  a Welfare State or Fabian tide, beginning around 1883 and lasting until 1950 in Britain and 1970 in the US (policy tide 1900-1978 in Britain, 1930-1980 in the US); and a resurgence of free markets or Hayek tide, beginning around 1950 in Britain and 1980 in the US, whose opinion phase was “approaching middle age” and whose policy phase twenty-five years ago was “still in its infancy.”

This is standard cycle theory, familiar to readers of Ralph Waldo Emerson, Henry Adams, Arthur Schlesinger Sr. and Jr, Albert Hirschman and a host of others, unexceptional except insofar as it portends, even in the Friedmans’ view, not exactly the end of laissez-faire, but the beginning of some new tide of emphasis on the social. 

Burgin doesn’t make much of it except to note that, at the height of the financial crisis, in the autumn of 2008,

“commentators on both sides of the political aisle declared that a long era in American political history was drawing to a close.”

 ...

Lafayette:

HAYEKISM

Interesting exposure on the development of Hayekism in Europe.

I maintain nonetheless that there is very little residual belief in his tenets ... in Europe. In the US, otoh, there remains a residual belief in "laissez-faire Free Markets". One can see that clearly in the movement towards Market Consolidation that has occurred in cars, in commercial aircraft, in banking …. etc., etc., etc. ad nauseam.

Free to do what?, I ask. To consolidate as companies go chasing one another down the Learning Curve. Tantamount to the integration of markets into oligopolies practicing tacit price-fixing. What is so "free" about that development.

Free Markets effectively demonstrate the existence of two factors: *The ability for new entrants to the market to have no-barrier and rather facile access, and *The plethora of market actors such that real competition exists and not just three or four or five companies that, having oligopolized the market, sit back and count their revenues/profits ... laughing all the way to the bank.

Some will think that the Internet is the latest example of Free Markets and how they liberate competition for the greater benefit of the Consumer. I don't see the Internet, in terms of consumer markets, at all in the same manner.

The eponymous Amazon is the typical example, where Market Hegemony is the practice. There is no viable alternative to Amazon in France, though there are at least 4 other such outlets (all retailers, one a copy-cat eBay).

If you want a "price", you go to Amazon to see if it has the article. Likely it will, then you look at price-bot sites for the same product elsewhere. It is rare that anyone is cheaper than Amazon (shipping included). It is current that they align with the Amazon price.

Meaning, Amazon sets the price. How is that a competitive market? It isn't. Rather, it is "Sleeping Beauty and the four dwarfs".

Another such example is the “natural monopoly” (legalism) that was initiated and developed in PC Operating Systems by Microsoft. There was no effective competition to MS-DOS and then Windows. Even though, by all accounts, Apple is a more rigorous operating system. The other real alternative at the time, DR’s CP/M, simply lost an equitable battle with MS-DOS and eclipsed itself. And Apple remained an “also ran”. Many markets behave in this manner, and when they do, there is not much one can do about either “natural monopolies” or “oligopolies” that evolve.

So what is a nation to do about oligopolies that develop to oversized entities that simply sit on entire markets and milk them like cash-cows? Zat Iz Ze Kwestchun …

MY POINT?

Hayek was a product of his times. His times were pre-WW2 when world trade went to hell in a handbasket because during the interwar period countries employed heavily tariff barriers to protect their own industries. This arcane protection led to a stifling of international trade.

There are remnants of that philosophy that exist today. The Right in France often calls for the state to protect its "National Champions", which are large companies, often lacking in innovation who stagnate their product/service offering. The French automobile industry is a prime example.

Which is reduced to two national producers and a bunch of comparative dwarfs in niche markets (for instance the German VW, Merc and Audi lines). Followed by the orientals (Toyota, Hyundai, Kia who are presently taking major market shares).

Protecting National Champions in the automobile industry certainly will certainly impress the Socialist Unions - because the higher salaries cause French cars to be much cheaper than those coming from the Far East.

So, what is a country to do? Install a tariff barrier against the presumptuous foreign interlopers? That is the same thinking that brought Hitler to power and started WW2?

And I'd love dearly to hear what Hayek would say about that motion today, some eighty years later ...

Hayek: {We must make the building of a free society once more an intellectual adventure, a deed of courage. What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible…Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide.

Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost.}

Liberalism promotes the prevalence of individual spirit, invention, effort and risk-taking. It provides the foundation of the individual and his/her effort to better themselves.

But liberalism largely forgets that to do so one needs a balanced Market Economy - where, on the one side, is Individual Effort to produce goods/services and on the other a Collective Effort to buy those goods/services. And both sides benefit equitably, though not equally, in the mechanism.

We, the laborers, are on both sides of the equation. To produce goods/services we contribute our labor and to buy them we employ the monetary return in exchange for our labor.

Consumption is and always will be that Collective Effort that also must benefit from equitable markets (for goods/services and our labor) in which to thrive and flourish.

Which individuals do you know made their riches on a deserted island alone and by themselves ... ?

The Blorch -> Lafayette...

I think that in a Democracy politicians compete with other politicians for office. Obvious enough but now consider that holding office allows the politician to do favors for the groups of lobbyists who contributed to the campaign. So, really politicians compete to do favors for the donors.

At the same time a politician helps the donors, the favors he dispenses may come at the expense of the general welfare of the people. For example, allowing monopolies and price gauging in household internet delivery by the cable companies. Or, say, allowing the insurance industry to write a health care bill.

So a politician in a democracy must juggle keeping two balls in the air. He/she must administer to a declining general welfare while continuing to please their donors.

Moving on from the juggling metaphor, it is efficient for the politician to kill two birds with one stone: a twofor, if you will. In this scenario, the clever politician promotes a policy that is pleasing to many but really, only benefits the few donors that fund the campaigns.

Take the housing debacle, for example. Many were pleased to get a mortgages and refies. A few benefited in the end and these few were naturally amply represented by lobbyists.

Second Best:

Milton Friedman once said there is a fundamental conflict between economic freedom and political freedom, that the freedom of the latter to suppress the former will always prevail and therefore must be restrained with eternal vigilance

It did turn out that way, but in reverse order of what he meant. The economic freedom he had in mind in terms of maximum economic welfare for all was actually suppressed for maximum welfare for the few.

All those foxes guarding the henhouses just couldn't stand up to the onslaught of corporate lobbyists.

Zoniedude:

If the original question is the "Reagan revolution" the answer is much simpler. The United States Supreme Court decisions on one man one vote destroyed the typical political control of local corporations in the states. This forced a national political coalition of corporations that was enunciated by the Powell Memorandum to the U.S. Chamber of Commerce to coordinate this coalition. The Powell Memorandum emphasized the growing threat of democratic social movements such as the autosafety efforts of Ralph Nader and the environmental movement.

The Republican "Southern Strategy" reflected this national corporate effort to channel political funds to low population states where they could overwhelm local efforts. Ronald Reagan was dominantly a creation of the Powell Memorandum efforts, he became a national spokesman for this pro-corporate movement and then implemented the "Southern Strategy".

The creation of a national corporate economic coalition funding local political activity fell under the influence of the international rise of multinational corporations which sought to elude political restraints imposed by rising democratic movements such as environmental and consumer safety laws. That, in turn, created the need to reinterpret "Laissez Faire" to mean a pro-corporate deregulation. And, of course, the reinterpretation of Hayek et al in this vein.

Thus the simple answer is that the underlying effort is a thin political skin over the multinational corporate effort to eliminate legal restrictions on their ability to operate on the basis of profits unconstrained by concerns about workers and environmental issues.

Darryl FKA Ron:

In “The Tide in the Affairs of Men,” they discerned a tendency of powerful social movements to begin as works of opinion, spread eventually to the conduct of policy, then generate (often) their own reversal, only to be succeeded by another tide.

[Please let's not conflate market economics as a powerful social movement such as civil rights. The conflicted views of Joe Schumpeter regarding capitalism as valiant entrepeneurs innovating juxtaposed against the efficiency of innovation by monopoly seeking uber corporations somehow interlocking into a creative destruction that in the end would evolve into a system of capitalism so evil that it would be overthrown is the dream, or nightmare, that we are living. For Schumpeter it was both the dream and the nightmare. That's what conflicted means. The thoughts of the economic elite never changed. They needed no new idea. They were just trying to get the old one back in motion. The policy shift from this idea started as soon as FDR lay cold and dead and its first major victory was the tax reform of 1954, which was a clever act of tax the rich stealth by Republicans to rescind the dividends tax credit making the return to capital via capital gains incentive the transformational force in enterprise. Democrats took over Congress after 1954, but who were they to go against raising taxes on the rich if that is what Republicans wanted? It looked great while growth potential was unbound by virtually limitless resources and rapid population growth. But it facilitated the consolidation of corporate enterprises large enough to rule every aspect of public life that they deemed useful. Then every kind of incremental deregulation and liberlization of finance and assurance for the value of currency for capital's muscle would follow. ]

kievite

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.

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.

[Jun 05, 2013]  Utopia  by Stephen Eric Bronner

Logos

Utopia is usually considered a dirty word. The concept has been too often been employed to justify the worst totalitarian terror and justify passivity in the face of actual political issues. Rarely is utopia understood as a regulative ideal that resists translation into practice yet remains necessary to guide any genuine attempt at liberation. It instead conjures up images of demagogues, dreamers, fanatics, apocalypse, gullibility, and – perhaps above all — what Samuel Butler, the great Victorian satirist, called “erehwon” (or “nowhere” spelled backwards). But this is only part of the story. Utopia has an anthropological appeal, especially for the lowly and the insulted, and Ernst Bloch was surely right when he noted in Heritage of Our Times (1935) that “man does not live by bread alone – especially when he doesn’t have any.” Most civilizations have their unique ideals of a heavenly or secular paradise from which, given a cosmopolitan outlook, every other civilization can learn.

... ... ...

Utopia is inherently unfinished: the society or regime that views itself as utopian, or even firmly on the path to utopia, is dystopian by definition. That is because history does not move in linear fashion. Progress in one realm of society can occur while regression takes place in another. Extraordinary scientific breakthroughs, for example, have accompanied the rise of religious fundamentalism; cultural liberation has flourished since the 1960s while economic equality has increased. There is no uniform and prefabricated teleological process leading humanity to a happy end. Unresolved conflicts, or what Bloch termed “non-synchronous contradictions,” are often carried over from one epoch to the next. Clearly, for example, racism and sexism and religious prejudices are pre-capitalist in character but play an important role in capitalist society—and, potentially beyond. Tensions exist not only between the whole and its dynamic parts but between the parts themselves. To conceptualize utopia in a serious manner thus calls for both recognizing the critical and liberating inheritance of the past –while overcoming its limitations.

Non-stop expansion

Edited Google translation from Russian
Evrasia

Today, March 6, the 68th U.S. Secretary of State John Kerry completes first overseas tour. The list of the countries he visited, beginning on February 24, is impressive: the UK, Germany, France, Italy, Turkey, Egypt, Saudi Arabia, United Arab Emirates and Qatar.

Some experts heard in the statements that the new head of U.S. diplomacy systematically made throughout his journey, an attempt to remedy the situation, into which Hillary Clinton plunged the U.S. foreign policy  - raffling feathers of the U.S. opponents and alienating allies. Once again they are talking that, at least for now, the U.S. expansionist pressure eased somewhat. There are opinions that   Barack Obama will give us a chance to take a breath. Never mind that  the first time "reset" did not work. There are even opinions that now Obama is starting to build a new foreign policy framework. And even that the time is not far off, when America will be forced to abandon its expansionist plans.

Americans are constantly finding new and new ways, new approaches and apply tremendous  pressure as soon as existing technology of keeping vassals under control start failing and cease to work. That include tough scenarios that we have seen Afghanistan or Iraq.

Indeed, the American foreign expansion slowed somewhat, and pressure from the U.S. to other countries weakened - for objective reasons. However, the crisis faced by the American elite, the crisis of promotion of their interests, their values, like  any crisis, even on a global scale - was never a reason for the Americans to retreat. The emergence of such difficulties for persistent, bend on world domination elite, with is the type of elite that the US has, the elite which relentlessly try to increase their sphere of influence, can not be something that will knock them out of the saddle, demoralizing and/or cause to abandon their plans.

This situation can develop into to separate paths. First, the current crisis for American expansion will create some kind of immunity among the American elite, meaning that they adapt to this crisis, amend  exposed the weaknesses, strengthen them and will continue to move toward their goal of word domination, but using other methods, and other technologies.

What we have, in principle, and have seen in recent years. Americans take any technology to promote their interests, for example, the technology of "color" revolutions, deploy it once, twice, three times ... and then a fourth, and fifth. But on the sixth time it begins to falter as states and nations are beginning to resist the technology by solving its nature, and better understanding its meaning, its consequences. At this point they immediately abandon it, or postpone until better times. But at this very moment they adopt a different, alternative technological model, which they begin to implement immediately.

American intellectuals pursue non-stop development of new technologies of subduing and controlling other nations by manipulation of social processes, contradictions in the societies, and, in fact, by working with elites of those societies. History of selection of such technologies can be traced for the last several decades. We still remember how in the Soviet period, they used economic leverage to get a foot in those States, which tried to rely more on the Soviet bloc. This, incidentally, is fine details was described by former U.S. political consultant John Perkins in his book "Confessions of an Economic Hit Man." But when this technology has ceased to operate, has exhausted its possibilities, they moved on to the "color revolutions" technology developed by Gene Sharp. When the "color revolutions" technology  begun to fail, they moved on to the theory of controlled chaos by Steven Mann, which is implemented today in the Middle East. And on the other approach is in the pipeline.

Americans are constantly finding new and new ways, new approaches and apply tremendous  pressure as soon as existing technology of keeping vassals under control start failing and cease to work. That include tough scenarios that we have seen Afghanistan or Iraq.

Therefore it is naive to argue that stopping or slowing U.S. expansion due to economic crisis will cause them to abandon their idea of ​​global domination. Especially, taking into account that the historically expansionist policy of the United States can't be changes by election of the next U.S. president, no matter what are his own views and approaches. He is only a nominal representative of the entrenched  for the last two centuries American elite, a hired manager, recruited by the powers that be.

But there is another scenario - a situation in which the number of failures, errors and blunders will increase, and the errors can became self-reproducible. In this case a single failure will entail two new additional failures, which in their turn will cause another  four, and so on.  This is what is called a systemic crisis, which can be eliminated only by the change of the elite.

Church Must Help the Poorest, Not Dissect Theology, Pope Says

"The world was going through not just an economic crisis but a crisis of values."
NYTimes.com

Pope Francis shared personal moments with 200,000 people on Saturday, telling them he sometimes nods off while praying at the end of a long day and that it "breaks my heart" that the death of a homeless person is not news.

Francis, who has made straight talk and simplicity a hallmark of his papacy, made his unscripted comments in answers to questions by four people at a huge international gathering of Catholic associations in St. Peter's Square.

But he outdid himself in passionately discussing everything from the memory of his grandmother to his decision to become a priest, from political corruption to his worries about a Church that too often closes in on itself instead of looking outward.

"If we step outside of ourselves, we will find poverty," he said, repeating his call for Catholics to do more to seek out those on the fringes of society who need help the most," he said from the steps of St. Peter's Basilica

"Today, and it breaks my heart to say it, finding a homeless person who has died of cold, is not news. Today, the news is scandals, that is news, but the many children who don't have food - that's not news. This is grave. We can't rest easy while things are this way."

The crowd, most of whom are already involved in charity work, interrupted him often with applause.

"We cannot become starched Christians, too polite, who speak of theology calmly over tea. We have to become courageous Christians and seek out those (who need help most)," he said.

To laughter from the crowd, he described how he prays each day before an altar before going to bed.

"Sometimes I doze off, the fatigue of the day makes you fall asleep, but he (God) understands," he said.

CRISIS OF VALUES

Francis, the former Cardinal Jorge Bergoglio of Buenos Aires, said the world was going through not just an economic crisis but a crisis of values.

"This is happening today. If investments in banks fall, it is a tragedy and people say 'what are we going to do?' but if people die of hunger, have nothing to eat or suffer from poor health, that's nothing. This is our crisis today. A Church that is poor and for the poor has to fight this mentality," he said.

Many in the crowd planned to stay in the square overnight to pray and prepare for Francis' Mass on Sunday, when the Catholic Church marks Pentecost, the day it teaches that the Holy Spirit descended upon the apostles.

On Saturday morning, Francis met German Chancellor Angela Merkel and discussed Europe's economic crisis.

Apparently responding to his criticism of a heartless "dictatorship of the economy" earlier in the week, Merkel, who is up for re-election in September, later called for stronger regulation of financial markets.

On Thursday, Francis appealed in a speech for world financial reform, saying the global economic crisis had made life worse for millions in rich and poor countries.

[May 18, 2013] Sheila Krumholz and Danielle Brian on How Money Rules Washington

May 18, 2013 | naked capitalism
masaccio

I agree that we have a political class, one devoted exclusively to the protection of the interests of the feral rich and the corporations they own and control. In the same way, the two political parties serve as window dressing for the similarity of purpose.

We don’t govern ourselves now, if we ever did. We simply select a uniform to vote for, no differently than we pick a sports team to root for.

allcoppedout

Very interesting post. After years researching and teaching research methods I come up dry on tools to make the analysis effective. We have known for 2500 years that equally powerful arguments can be made from many perspectives or frames of reference and got nowhere outside science on decisions between ‘paradigms’. Structuralist analysis would no doubt throw up royal routes through schools, universities and management training, along with networked, family connections. Jane Marceau is one of many who have written on this theme of the making of business elites and the political class. Literature is legion and already tells us a lot on how the system developed and perpetuates itself through an ideology of meritocracy. My preference is to wonder why we have to deal through this scumbag system at all. There clearly are many alternatives and the dominant system spends much of its time strangling them at birth. The most obvious alternative would be transparent money and qualification and lot systems with salary caps. I’d like to see analysis build the alternatives and probe why we have none. I’m pretty sure that just replacing people by sortition probably won’t work without transparent money – and that we need to do something about privacy in considering anything like this. Salary caps might seem to chase off the ‘best’ – but what do we really know about who the best are and what motivates them?

We don’t really get to see the competing scenarios on how our politics and economic system might work. Most haven’t realised yet that we have no democracy and economics is detached from any relation to structure. It’s obvious even basic data don’t get through to people – as in people not realising how unequal their societies are and what this inequality within societies does to us. We’ve had lots of posing with Gramsci, Foucault and postmodern text-engines. Do we really need Nietzsche or any philosophy to teach us to recognise what’s myth and ideology? We end up grounding our epistemology in a profound denial of – er – epistemology! I’d go with trying to establish the scenario of what a modern society would be – as Latour said we are profoundly non-modern. One could build back to what we need to do to achieve this. And should we not try to break the mold of the solus ipse now we have the technology to work more easily together? What account of ignorance and apathy should we work with including our own Idol of the theatre?

Will any effort we make be beaten to the punch by mobs in the street? After all, the intellectual effort has left most of us jaded and protecting our own sinecures. Radical politics in the UK is UKIP! What have we done to make our ideas so unappealing?

banger

Most healthy people, despite the 24/7 propaganda to the contrary are not mainly motivated by money when their basic needs are met. The quest for riches is perverse and anti-social and ought to be seen that way. People, when allowed to express their true nature, are cooperative, creative and want to avoid stress and conflict. Parties are what healthy people really love not the stupid Scrooge McDuck quest for money.

The fact we as a society honor money-making in itself corrupts our civil society. We need to stop that and ask the followers of the philosophy of selfishness if any of their assertions are backed by social science or neuro-science. Because there is absolutely no basis for the fundamental driver of current conservative philosophy which is not in the least bit “conservative” in the Burkean sense because it devalue society and social mores.

John Jones

Banger if people are like that then would it not be possible to ban money in politics eventually?

I would like to believe that there is altruistic people out there that could serve as politicians without lobby group money etc and make decisions based on scholarly methods, facts, truth and the common good.

I agree with what you say though. Just my ignorant 2 cents.

Andrew Watts

Nope, it doesn’t matter. In days past there was individuals like Daniel Webster who cashed checks from such praiseworthy institutions like the second Bank of the United States during his political tenure. Webster was a stalwart defender of the central bank from it’s enemies during his time in Congress. Even in his capacity as a private citizen Webster represented bank interests and strengthened the hand of the federal government relative to the states in legal cases that furthered monopolistic private interests. One of which has a bit of relevance in the present day; McCulloch v. Maryland. This particular legal battle made it to the Supreme Court where it effectively buried the capacity of a state to ban banks not chartered in the state. It also legalized the federal government’s ability to charter a central bank.

That didn’t matter at the time though. Those groups that Webster panhandled for couldn’t stop a political coalition comprised of slave owners and western farmers (Free-Soilers) from destroying the second Bank of the United States. Ushering an era of Jacksonian democracy that was diametrically opposed to government by and for the elite.

Gee, wern’t all our esteemed representatives who opposed the bank bailouts mostly from western and southern states? History…. something, something. Har, har!

allcoppedout

I watch UK coverage more or less doing what Lambert has here. Most of our television reporters are vapid and all prevent any real argument. RT and Al Jazeera now provide most of the best news in the UK, though bias of other kinds shows up there. Tedious conversation or discourse analysis is not the answer – we need something in real time. But even if we could put Lambert on screen in a live critique box … Some of our reporters are pretty bright, so we might look at the psychology-sociology of how they sell out so easily. There’s plenty of work to look at here and it extends into how bright people manage to be so stupid in banks.

banger

I know something about mainstream journalists and their culture. Mainstream journalists, like politicians, are mentored, vetted and groomed at places like Columbia by senior editors and journalists who take an interest in promising students and guide them in their careers. American journalism is very much a community and the mores, attitudes and political stances they take in their reporting is carefully monitored by their editors.

If you want to work for a prestigious news outlet you have to be “responsible” and cultivate your sources and avoid putting your editor in the embarrassing position of being chewed out by an official or a tycoon on an unnamed beach in New England or a Washington dinner party. American journalists today are political functionaries who must be careful of what they say and write at all time because there are many people who want their jobs. If you break the rules, at least in Washington, you are socially shunned and you will never work anywhere in the mainstream.

The most telling example of this is when Christian Parenti offended the dean of Washington hack journalists, Jim Lehrer, by reporting, early in the Iraq occupation, something to the effect that people in Iraq were concerned by corruption with American contractors. By simply passing on what everyone knew and what was, in fact, the case he was castigated by Lehrer who said he’d never be on his show again.

Stories and political positions are worked out politically in Washington–the actual “truth” is not considered. Now, they will tell you just the opposite that they are are “objective” and this is self-deception. Some journalists are, thankfully, cynical but most, in my experience are true believers in their exalted position that Walter Lippman prepared for them.

Today, much journalistic content actually comes from PR firms (just a little trade secret) but that’s another story and is a development of the last decade. Also true (yes, I had an inside seat) is that PR firms (surprise) hire young people to blog at all kinds of places to spread disinformation throughout the most trafficked blogs but that too is another story.

clarence swinney

BARNEY FRANKS SPEAKS “ Every time a group would come in my office for more money for housing, elderly, I would say you forget one thing. You forgot to say Raise taxes and Cut the out of control military.” So much truth. Three things will ruin our fiscal condition. Military, Medicare and Interest. All three can be reduced. We can pay down debt. We must tax wealth. We can cut Medicare and military. We are in peace time why keep loading $$$ on the Pentagon where they now own almost one third of our Total budget when you add in Energy Dept. and Veterans. We must do better. Two things brought down empires. Internationalism and Debt.

Mary Bess

The legal sanctioning of their own criminal behavior is certainly the goal of the Banksters and the Pete Petersons of the world and their work is nearly complete. Whistleblowers are jailed for telling the truth and Banksters are rewarded for stealing. The moral universe turned on its head.

I saw the latest film version of Les Misérables a few days ago. It looked so familiar. Poor Jean Valjean, having redeemed himself as he approaches death, still views himself a criminal, having internalized the views of his oppressors. Valjean’s mind is totally colonized. I sat next to a Romney supporter (or Obama, it wouldn’t matter), who was crying her eyes out.

Europe’s depression deepens

May 16, 2013 | naked capitalism
Paul:

Unfortunately Italy’s woes go hand-in-hand with a rentier class who has busied itself building a fine mess of an Extractive Economy (obligatory reference to “Why Nations Fail”). Italy’s best talent has been forced to emigrate elsewhere, and that trend isn’t stopping. A crying shame, really.

Middle Seaman

A crucial question is whether the oligarchic system, including the US, will collapse or whether an insurrection will stop the rich from the ongoing destruction by returning control to a sane really free market. OWS established that the seeds for the insurrection were planted. Will OWS version 2 be strong enough, Western world Arab Spring, to prevail?

Working Class Nero

What is happening is that US-led neoliberal globalization is affecting a levelling move towards convergence between the wealthy First World and the less well of Second and Third World. This is a long term trend dating back at least thirty years. Both in social structure (a wealthy elite vs. a mass of disempowered peasants) and in relative standard of living — the wealth First World countries are getting poorer while some Third and Second World countries are getting slightly richer. Now if order to accomplish this, the elite First Worlders were lowering their own standard of living, that may be seen as a good thing. But no, the elite First Worlders have elected their bottom 60% to take the hit in their bid at global redistribution of wealth.

The antidote to neoliberal globalization is nationalism. And you do see nationalist movements arising in many European countries. The complication is that domestically, one needs a more leftist outlook in terms of distribution of income. But beyond the nation’s borders, one needs to have a more traditionally right wing attitude and to accept that some nations will be rich and others poor. That doesn’t mean one should colonize or oppress those other nations, but a well organized and productive nation should not be ashamed of the fact that it has a higher standard of living than other nations. And the only way to protect against the levelling tendencies of globalization is through strong, well-conceived borders on issues of trade, currency, and immigration.

But in Europe things are further confused by the ambivalence of the EU towards US-led neoliberal globalization. On the one hand the EU could be a “nationalist” entity; it could create strong borders against unfair trade and uninvited immigrants and be a large enough market to hold its own on the global scale. This is what the US / UK fear most and spend huge amounts of effort trying to avoid. On the other hand the EU can be a simple tool of US-led globalization to destroy the prosperity of its citizens in a do-gooder attempt at global levelling. Lately it is this latter tendency that one sees coming out of Brussels. For example this is how concern troll Peter Sutherland of BOTH Goldman Sachs and BP explains it:

The EU should “do its best to undermine” the “homogeneity” of its member states, the UN’s special representative for migration has said.

Peter Sutherland told peers the future prosperity of many EU states depended on them becoming multicultural.

Mr Sutherland, who is non-executive chairman of Goldman Sachs International and a former chairman of oil giant BP, heads the Global Forum on Migration and Development, which brings together representatives of 160 nations to share policy ideas.

He told the House of Lords committee migration was a “crucial dynamic for economic growth” in some EU nations “however difficult it may be to explain this to the citizens of those states”.

So as Europe reacts against such machinations, we will see the rise of particularist nationalism which is going to eventually force the EU to take a side. If the UKIP continue to rise and are able to get Britain out of the EU (let us pray they do, although the US will never allow it) then there is a chance that the EU could adopt a “nationalist” strong borders policy. If not then the EU will crumble as the various local nationalists start winning power.

In the US things are slightly different. There are a few paleoconservative groups that have a “citizens” approach but most right wing groupings in the US are hopelessly infected with the disease of Libertarianism which translates into open borders and “free” trade as well as a bunch of other stupid stuff. OWS, being a more left leaning group, did not manage to become a much of a force due to certain limitations. In order to “occupy” something it meant militants had to be on site most of the time which meant the movement was closed to most people with jobs or families. Worse it was often just a restatement of liberal priorities, it never was able to clearly articulate a message against outsource of jobs and the massive insourcing of low-skill labor. The partial exception I know if is in Oakland (people from NoCal just happen to be more clued in…) they did get it right and marched to the Port and tried to shut it down. I never saw anything about OWS being anything but for more mass third world immigration. For example an amendment to the latest “Amnesty” bill tried to limit to the number of new “American Dreamers” to 33 million per decade. This was voted down so we will likely get something like 50 million per decade. Given the already low participation rate for labor, is it really a good idea to add 100 million more mostly low-skilled people to the US in the next 20 years? No one from OWS or any right wing libertarian organization will be against this. Even environmentalists refuse to speak out about the Environmental Impact of so many new American Dreams. Only paleoconservatives are against it but there are not so numerous and many of them are compromised on other subjects.

In Europe, the taboos are breaking down and more and more people are recognizing that a strong U-turn is required against neoliberal globalization. The left offers some good theory on the subject but not much in the way of on the ground political movements, so it’s to the right people turn. But the right in Europe sometimes are taking — at least in their rhetoric — a working class perspective on things (for example, Marine Le Pen in France). In the US, where globalization is the new nationalism, both the left and right are united in support of globalization and only very small groups exist to fight against it. The only way for these groups to grow and become effective is if people of both a left and right leaning perspective join together. But given the partisan heat in the US this is a tall order to fill.

http://www.bbc.co.uk/news/uk-politics-18519395 

banger

Nice comment. Indeed, in the U.S. at least the only chance to make positive change has to come from some kind of alliance between left and right–I think that most of the major political differences among young people, for example are cultural and those cultural, racial and regional differences are ruthlessly exploited by propaganda outlets by which I mean every single major outlet from Fox to Comedy Central. All these outlets should be ignored as honest presenters of the news except Colbert can still be funny.

I find that young people in the South who favor conservative politics have a lot more in common with young people in the north even if they have different tastes in music. Both groups are much more skeptical of authority and the mainstream media than their parents and grandparents–so there is hope.

Cynthia

The power that the banks and financial institutions have obtained means they can frequently dictate policy to the government. In this new form of inverted totalitarianism, it will be interesting to see if this much power and influence in one sector of civil society will cause even more social unrest. Given what we have seen in Cyprus, Spain and Greece, my guess is yes.

The Dork of Cork.

Thanks for posting the obvious dark undercurrent within the plan. A certain section of the Hibernian / Anglo / Dutch elite are some of the darkest forces on the planet. These self same forces conspired to turn Ireland into some sort of sick gigantic ranch in the 16th & 17th century.

The chaos on the shop floor of a typical Irish factory in the early /mid noughties was something to behold. Almost unlimited profits were to be had from the extraction of labour value. Given the astounding lack of wages & labour remittances relative to productivity domestic credit was produced to capture value……..malinvestment followed.

I often imagined Mr Sutherland sucking the marrow from the bones of dumb Irishmen back them – which he was.

The absence of even a doomed captain rock like rebellion in Ireland is mainly a result of a lack of cohesion and deliberate policies of social atomization beginning in the 1960s under state television

Now that a estimated 25%~ of new mothers is of a non national extraction the pillage can continue without agrarian style interruption.

As in the 1980s ………..get rid of the cohesive coal mine community and the rest will follow.

It has moved on from lowly meat factory type operations to the once “protected sectors” – working its way up until all value is destroyed via extraction.

http://www.independent.ie/regionals/newrossstandard/news/appeal-made-to-protestors-at-great-island-27514517.html 

Thor's Hammer

Working Class & others Your analysis of the politics of class domination is spot on, as are the comments from others that followed.

What is missing is a recognition of the underlying background conditions.

Capitalism is a system of exploitation wherein power is invariably accumulated by a small group of owners of the means of production. They then use that economic power to achieve domination over the mechanisms of the state and means of violence and use this power to further their enrichment. Thus capitalism evolves into kleptocracy as a natural course of development unless countervailing events, social movements,or revolutions prevent it.

However, capitalism grows not just by exploiting the surplus value of labor, but by exploiting the natural capital of the earth. And the natural laws of physics pay no attention to politics or economics.

The industrial civilization that capitalism has built, and the productive output that allows seven billion people to live on a planet where only one billion lived formerly has only one real currency. Not gold, not the dollar— only energy derived from fossil fuels. And that energy source is finite. No amount of hopium and delusion can change that fact. Most of the noise around the energy sources of industrial civilization is just that– sometimes a few gigajoules of energy are freed up by new technologies or changes in the cost of extraction, but that doesn’t change the finite nature of the energy base of our civilization and only shifts the time frame by milliseconds of geological time.

We have built that civilization upon the free ride of cheap fossil fuel energy, and that era has come to an end. The peak production of the most concentrated and transportable form, oil, has already passed. And the same will be true of coal and natural gas in a future measured in only decades or at most a generation or two. Not only have fossil fuel energy extraction costs reached a point where they limit future growth, but the ability of the planet to absorb the bi-products of burning them for energy has been exceeded, perhaps irreversibly.

This is the underlying background in which the class struggles of the present and future will take place. Banksters and oligarchs are behaving as if they are competing in a zero sum game— which is in fact the case unless radical redistribution of human priorities were to somehow take place. Which of course would require the elimination of their power over the economy and ideology as a pre-condition.

banger

There is no possibility of an OWS 2 movement in the U.S. The trend is away from coming together and more towards everyone for themselves so to speak. More specifically, the trend is to have a circle of friends and family (or not) and focus on their needs.

Another Gordon

That is a lot like the traditional Chinese approach where the extended family is the only basis for social security AND, very often, physical security. It’s a sensible response to the lack of the Rule of Law. Basically, the US is becoming more like China in its dark years – a preserve of clashing warlords (read oligarchs and bankers) unrestrained by law or decency.

mmckinl

Unfortunately the author doesn’t get it … Austerity is all by design to save the banksters while eviscerating public services. So far the governments have done a masterful job of implementing just that program. A few protests and riots but nothing too threatening.

The EU will see a shrinking economy for years to come. Between resource depletion and climate destruction only those countries with slave wages and lax environmental protections will manage to grow and slowly … Growth for the EU, US and Japan is now a relic.

What needs to happen is planning for a sustainable economy that can’t rely on “growth”. Only with Public Banking can the financial sector survive the years and years ahead of de-growth in the developed world. Don’t let them fool you, this is all about protecting the plutocracy at any cost.

skippy

Its like watching plutocracy surf that big antonymous wave of electrons of price, seeing who can stay standing up the longest, as it washes over the globe.

Skippy… and these – are not – zen surfers… this is the winner takes all… comp of all comps… the last wave thingy…

Walter Map

‘What needs to happen is planning for a sustainable economy that can’t rely on “growth”.’

Precisely.

Won’t happen, though, at least not anytime soon. It contradicts the greed goals of the terminally rapacious, and their control, for the time being, is total.

banger

Well, I don’t see why you say the author doesn’t get it–DE is just reporting on recession in Europe that seems likely to get worse. Other than that you make a lot of sense.

I believe we will stumble towards developing new solutions to the extent we can deconstruct the mainstream narrative that exists, at this point in history, largely to deceive us. Great ideas, techniques, technologies are out there just waiting to be used that would allow us to bypass the robber-barons from collecting tolls each time we sneeze. Task number one is to deconstruct the narrative then we can get to work. The tragedy is that people think there are no solutions and that this system is all that is possible.

mmckinl

The author is calling for growth … Groth is largely over for the developed world … Japan, EU and the US.

Resource depletion and climate destruction have already stagnated growth. It will only get worse.

Yes there will be periods of growth … after severe downturns that once again collapse prices and wages.

The picture is of a roller coaster ride descending with intermittent rises followed by rinse and repeat.

banger

Well I’m for growth–growth in the direction of actually trying to realistically solve our collective problems. This activity is what I would call growth.

HotFlash

I think this is an apt analysis. I believie that one of the (many) factors inhibiting recovery is our clinging to the GDP metric. Anybody got a better metric? GINI is not a lot better, but until the scoring method gets better, we will be working for bad goals. Which means we will never be able to win for losing.

A better metric, PLEASE!

Doug Terpstra

Agreed. Once again, the unstated premise is that the obvious consequences of austerity are purely unintended; that spreadsheet errors were entirely inadvertent; that kleptocrats are well-meaning really, just mistaken; that Obama is not Machiavellian, merely a tragically-inept negotiator who only becomes aware of his administration’s crimes when he first sees them on CNN.

If only these shortsighted supply-siders could be encouraged to see the light, just a few more years of compelling proofs about the epic failures of free-theft pacts and global war and then maybe our basically-sound system of rigged-market cannibalism could be reformed and set back on the straight-and-narrow path of unbridled growth.

Those who can’t or won’t recognize the malicious greed and powerlust driving disaster capitalism are really obscuring compounding the problem with inappropriate fixes. The system doesn’t need pruning; it needs to be uprooted and replaced.

Cynthia

The trouble is, many people see that much of the “austerity” checklist is also the playbook of those who would impose a form of corporate feudalism.

The “austerity” measures tend to gut the middle class. The poor will remain poor, and the benefits accrue to the rich.

By the time any benefits might “trickle down” to the middle class, there won’t be a middle class, because they’ll all be poor. Those who have benefited the most from the current fiasco will benefit again, and those who are paying the price will pay the biggest price. It’s only “austerity” for those who have gone along and upheld their end of the social bargain.

Whether or not you agree with that assessment, that’s how a growing number of people worldwide see it. And that’s why there’s growing resistance. Perhaps an “austerity” that didn’t target the middle class, and affected all levels of society equally relative to their means would be less unpopular.

banger

I really don’t believe Obama is inept at all. He’s the administrator of an extremely diverse multi-polar, multi-agenda ship of state that is not even remotely unified. I’ve repeated many times that the President is not the power in Washington -– he’s one actor among many–his function is administrative, ceremonial, and, mainly, he’s a power-broker dealing with a lot of very, very heavy hitters who don’t f–k around.

The Dork of Cork.

A interesting Irish economic paper by John Fitzgerald

http://www.esri.ie/UserFiles/publications/RN20130102.pdf 

The Effect of Redomiciled Plcs on GNP and the Irish Balance of Payments

But like all such papers it does have political consequences.

“There is also a corresponding implied adjustment needed in the official current account figures, as shown in Table 2. This would imply that, instead of having a current account surplus of around 6.1 per cent of GNP in 2012, the underlying surplus was closer to 0.6 per cent of GNP. When these undistributed profits or retained earnings are taken into account, it makes a big difference to the headline numbers for Ireland for 2012. A current account surplus of close to 6 per cent of GNP would imply that there was 4 | Quarterly Economic Commentary – Spring 2013 considerable scope for domestic demand to increase in the future, once deleveraging ends. However, if the true figure is closer to 0.6 per cent of GNP the scope for such an increase in domestic demand in coming years is more limited.”

This is a very narrow way of looking at things.

We live in a world without final settlement.

Global rent flows into London and other financial capitals…… The people with claims on so called sov debt, now private utilities & other more sophisticated methods of extraction burn real resources at others expense.

Under a national free floating currency domestic demand should be a domestic affair and nothing else.

The level of capture by global rentier forces is truly astounding.

banger

May 16, 2013 at 7:58 am

Indeed, I think the first thing all people have to do is to understand that the current system is morphing into new form of feudalism. The systems that rules us are being gamed systematically by an international oligarchy that is becoming indistinguishable from organized crime. This class is international in scope and loyalty -– oligarchs have loyalty to their families, tribe/clan and to their peers not to their countries of origin.

In American it is understandable that most people don’t get it though it’s beginning to dawn on more people–but in Europe which is not as insular as the U.S., I don’t understand why the people seem largely clueless about what is going on internationally. Europe has more real democracy than we do in the U.S. where we have a captive corporate media and two fake political parties with two right-wings.

Paul W

Banger, you captured our problem perfectly with your opening line: “the first thing all people have to do is understand”

The majority do not want to understand. Even after it will be too late they’ll still be in a state of denial.

banger

I don’t think people want to be ignorant -– I think that people are overloaded with having to deal with too much information and a mind-control regime engineered to weaken us intellectually, morally and spiritually so that we can be a food source for the oligarchs. Our shamanic class is centered in the advertising, PR, media and entertainment industries who profit directly from our weaknesses. If we can create counter-spells people will open up an flower.

NotTimothyGeithner

“I don’t think people want to be ignorant–”

I think you hit the nail on the head, or at least the majority don’t want to be ignorant. Its the undeserving elite who are the problem.

I used to be involved in Democratic politics, but there was a Repubican state Senator where I use to live who was conservative. He is a doltish believer. I’m confident there is no hidden malice. He had a few heavily African-American precincts who would give him votes or at least not vote against him. These were places where having a Republican sticker would mark it for being stolen. What happened? The answer was the Republican elected went or had his staffer go to every community meeting. The Democratic candidate was too busy worrying women not being allowed at Augusta and avoiding poor neighborhoods like the plague. The voters of these precincts more or less kept saying, “here is a candidate who we disagree with but respects us enough to come out and pretend he likes us, and here is a candidate affiliated with Team D who we never see and wants everyone to know how conservative they are.”

The local Democratic elite would whine and complain about turnout, but if you suggested, they do something other than look for pats on the head from important state Democrats they would whine even more about voters being idiots. I think the voters in those precincts were making the best decision they could make with the digestible information available to them.

David Archer

Banger writes:

“Our shamanic class is centered in the advertising, PR, media and entertainment industries who profit directly from our weaknesses. If we can create counter-spells people will open up an flower.”

Yes. One of my constant themes, much more elegantly stated by Banger. Though it’s hard to blame them (us) when poverty is a very real alternative, the range of the sell out by our creative class – for crumbs or fortunes – can break one’s heart.

This aspect of the over-all picture definitely needs more focus and attention, especially the notion of “real world” artistic or financial counter-spells to help bring on the flowering of our collective humanity.

The Dork of Cork.

A simple explanation why Irish Youth unemployment is not at Greek or Spanish levels.

One of the reasons why Irish youth unemployment is lower then in Spain is that the birth rate in Ireland reached new lows in the early ,mid 1990s The domestic Irish women were having less kids back then.

http://www.cso.ie/px/pxeirestat/Statire/SelectVarVal/Define.asp?maintable=PEA01&PLanguage=0 

Just type in under one year , all sexes and all years. The estimated number of kids under one year reached a low of 48.2 thousand in 1995 rather then the current 70+ thousand. The 1995 group are now leaving school.

This current high birth rate is chiefly a result of external workers which came into the country during the boom – these are generally workers in the 20s to 30s age group …….prime child bearing years.

Now type in the 15 to 19 group (all ages and years)

This Irish age group is back down to 1972 -73 levels.

Please note that these numbers may seem small but of course in % terms these are the biggest rise and fall seen in euro area birth rates by a wide margin.

Aussie F

In Europe we’re witnessing the slow destruction of all humane and civilised values for the sake of a discredited economic theory and a handful of gambling banksters.

It’s a major problem for everybody, because without wishing to ignore Europe’s history of atrocities and colonialism, in recent decades it’s slowly evolved into one of the most civilised places in the world, enjoying some major advances in social justice, social equality, and human rights.

Now neoliberal orthodoxy reigns supreme, and another alternative to ruthless, corporate supremacy and unending war is being destroyed, closing down hope for millions.

The Dork of Cork.

On France “The structure of its economy at present is based on internal consumption which requires external capital.”

Yes – Greek ,Spanish etc etc capital rations

“What is the credible plan to make the transition from this model to one of export-led growth in an environment of non-floating currency and while major trading partners are all trying the same trick.”

I don’t think thats the plan now.(at least in France) A country exports so as to afford car inputs. No cars and therefore no need to export. More wine is simply consumed.

People need to ask where is the Greek capital ration going and why build such overcapacity in French public transport ?

http://www.sudouest.fr/2013/05/15/des-trains-a-l-heurela-pau-canfranc-dans-les-tetes-1054104-4321.php 

Just 420 people a day use this line which was relayed in 2010….. 420 people they wish to extend the line south by 20 km to a few villages of 1000~ people.

Why ?

banger

Since you ask “why” of course I don’t know the particular situation or the byzantine deals that underlie public spending in France but I can guess. Public morality and a sense of cohesion is gradually disappearing in Europe and that was easily predictable in a culture that is based on nationalism and cultural chauvinism.

Multiculturalism does not sit well in Europe -– they’ve done a great job in integrating other nationalities and radically different cultures, but it just weakens cultural bonds and, in my view, increases corruption and the power of organized crime as a major factor in society.

Europeans like Americans are losing faith in their institutions.

The Dork of Cork.

@Banger

Unlike the Irish anti State,  the French state never does anything without a purpose. These investments have massive overcapacity for the moment.

I think they are preparing for a time when oil will simply not be available in quantity.

The experience of Norway during the war points to the possible direction of things.

“The fuel shortage during World War II made trolleybuses extremely popular, since Norway had an abundance of cheap electricity.[2] After the war the construction of the 4.1-km line 5 started, and in 1950 tramline 3 was replaced with the new trolleybus line 5. By that time, five gasolene buses had been converted, giving a headway of 10 minutes. A year later, three more buses were bought from Strømmens Værksted and the headway was reduced to 7.5 minutes. The line was popular, and traffic increased. In 1954 the conversion of tramline 2 to trolleybus started, and in 1957 the 6.5-km line 2 opened with 18 new buses. The ridership reached its peak in 1959 with more than ten million passengers per year on the two routes. In 1960 the sale of cars in Norway was deregulated, resulting in fewer public transport riders”

At the end of the day Cattle need to be shipped to market as the current breds can’t walk very far.

http://www.youtube.com/watch?v=kDZCvFehkf8 

Its the car or food.

banger

Thanks, good answer–I suppose I’m jaded since in the U.S. where I live corruption is very deep and ubiquitous. I lived half of my working life working in Washington DC and know how the system has radically degenerated.

The Dork of Cork.

Corruption is alive and well in Paris.

They have turned the euro periphery into Imperial markets & now a negative energy hinterland.

Walter Map

Why? Because it costs a lot of money, so lots of money is spent. All money spent contributes to GDP, and if you spend enough money, GDP rises and the economy is ‘growing’.

If the EU would simply print up $50 trillion or so and piss it away, GDP would go through the roof and everybody would be happy.

Economics is easy.

The Dork of Cork.

@Walter

I advise you to look at the history of French transport systems.

They closed down the last of the rural branch lines in France in 1980……. The year of external $ hyperinflation.

They are now opening a couple of these lines and relaying the stuff in disrepair.

http://www.youtube.com/watch?v=rJ_Jx34gJJE 

allcoppedout

Spot on Walter – I’ll map out the necessary pub crawl and have the get out of jail free cards printed for those who get out of hand – though one has to consider whether these economic units would contribute more to GDP in the CJS and prison system.

The Dork of Cork.

Yee guys don’t understand the post Great war & certainly the post second war European economy.

Its entire physical foundation orbits the car.

Ireland is perhaps the most extreme example of this external input economy.

It has probably more roads per person then any other country on earth.

If you refer to British balance of payments data ……its income from the rest of the world reached a peak at Q1 2008 at I think £18 billion + Much of this was from Irish operations of its Scottish banks. Income from the rest of the world is now normally only a couple of billion a quarter.

Income from the rest of the world was got through running oil mindlessly through sectors of the economy so as to get a return. Now the UK has decided to chose real goods over income.

This means activity in conduit / Imperial markets nose dives.

Walter Map

The rentier class is doing just fine, so it’s really just a PR problem, and not an economic one. The people who matter aren’t suffering, and the people who are suffering don’t matter.

And since it’s really just a PR problem, all that’s really needed is to fudge the data a bit more to provide the appearance of economic recovery, as is done in the U.S.: fix the data around the policy, make your own reality, and all that. Having the recovery official, however phony, makes it possible to say, with a straight face, that the impoverished have only themselves to blame, there’s nothing the government can do, and nothing the government should do, except rest on its laurels and get reelected.

Problem solved. See how easy it is?

The fact is, even if the rentier class wasn’t on a permanent world-wide pillage and all national economies were doing well, it still wouldn’t be possible to maintain flush times indefinitely. The present conventional economic paradigm of infinite growth in a finite world simply isn’t sustainable and sooner or later, and with much gnashing of teeth, it will be replaced, once global ecological collapse forces global economic collapse. Ugly doesn’t cover it: try weird ugly, so ugly and so weird you can’t even get your head around it. The petri dish of human civilization is already way past full, and such populations always and inevitably have massive rebalancing events. Always.

Deal with it.

Terry Mock

Walter, unfortunately, you are correct when you say, “The present conventional economic paradigm of infinite growth in a finite world simply isn’t sustainable and sooner or later, and with much gnashing of teeth, it will be replaced…”

As far as your advice to “Deal with it”, here you go:

The Beginning of the Sustainable World http://www.triplepundit.com/2013/01/budding-model-sustainable-community/ 

allcoppedout

Good stuff Terry – but can we do the sustainable in a manner such that big oil and rentier class thieves will just wither away simply by us ignoring them? I wish it were so.

JeremyGrimm

Growth — no growth — sustainable growth —- why can’t we have growth in culture and growth in knowledge? The GDP includes some factors to count these things doesn’t it? Why is growth always discussed in terms of material goods? How about a growth in leisure and recreation? I strongly favor growth in the areas I’ve mentioned and doubt that they will greatly impact the usage of petroleum. Why do discussions of growth seem so tied to material goods? Material goods are only a small part of the well-being of most (I hope!) people living in the United States and Europe.

allcoppedout

A quick scan of Lambert, rather more time with excellent comments and the esoteric delights of Norwegian bus timetables. The idea of being given money and forced to drink until we drop sums economics up to a T. It’s the sort of policy UKIP will adopt. Not quite as radical as Raving Looney’s ‘sell Britain to the Arabs and dole the money out on a per capita basis’ -I did vote for that one. I’m struck that austerity-pisspooronomics is well described by the very fact we are in here ‘chatting’. I was even over at Zerohedge for a few minutes reading some drivel on the UN being crap (true) and Mcdonalds marvelous (lunacy). Sad puppies like us who are motivated to work to spend time here rather than rushing off to India to eat curried Mcdonalds are the cause of the depression.

We probably need to sack Wall Street and the City because our democracies don’t work. The choice is really between economics and democracy. We shut a dormitory for homeless people in Salford last week – clear need, no other provision, not much money needed. Google and Amazon dodge tax. Economics is the means tax dodging corporations use to hide the links to murder. It produces a high street of so little interest to me I’m here! A politics so dull I don’t vote. Products so dull and vile I don’t want them.

What we need is something that would have allowed the ordinary sailors on both sides of the Armada to embrace and fight the real enemy (Brits actually enlisted to avoid almost certain death from disease or starvation on not being paid). What we get is ‘big oil’, TBTF banks and the chance to eat burger “beef” grown on genocide-cleared land, lamb (China) made from rat – all while wearing clothes made by slave labour in buildings falling down around the workers.

Maybe what decent economists should focus on is the abolition of economics as the divine right of kings? If we were sane we’d all be occupying. One has to think we are too scared – but what of and how do they do it to us?

[May 01, 2013] The Real Story Behind Executive Pay

If such a neocon rag as FP admit the problem it's a really severe problem that no longer can be ignored...
Foreign Affairs

As the share of income taken home by top earners in the United States has risen over the past few decades, so, too, has popular concern about economic inequality -- something the Occupy Wall Street movement loudly reminded Americans about in 2011. Much of the outrage has centered on the compensation of the United States’ top corporate executives, who are said to be taking home ever-fatter paychecks, while the incomes of lower-level employees have stagnated. “American workers are having to make do with less,” an AFL-CIO official complained to The New York Times last year, “while C.E.O.s have never had it better.” (Europeans have also gotten worked up over these issues, with the EU proposing rules that would cap bankers’ bonuses.)

Part of the problem, allegedly, is that the corporate boards that determine CEOs’ pay packages have severed the link between salary and achievement. Lucian Bebchuk and Jesse Fried, authors of the 2004 book Pay Without Performance, conclude that “flawed compensation arrangements have not been limited to a small number of ‘bad apples’; they have been widespread, persistent, and systemic.” Mihir Desai of Harvard Business School has claimed that skewed incentives for executives have fueled “the twin crises of modern American capitalism: repeated governance failures . . . and rising income inequality.”

Economists such as these argue that although CEOs are in theory beholden to the boards that hire and fire them, often the reverse is true, with directors striking sweetheart deals to stay in the good graces of powerful executives.

[Apr 29, 2013]  Reinventing Bretton Woods Global Finance In Transition - Currency Wars - Exorbitant Privilege

Apr 25, 2013 | Jesse's Café Américain

As you may recall, Bretton Woods was the name of the conference, taken from its location, that set up the post World War II international currency arrangement with the US dollar as the reserve currency of the world. It was based on a dollar convertible in gold.

When Nixon arbitrarily shut the 'gold window' in 1971 the world entered a reserve currency system of purely fiat dollars, often called Bretton Woods II.

There are a number of theories that suggest that such a system is not sustainable, for many of the same reasons that the euro is not sustainable. 

And as some have remarked, the control of a currency by a small group of men operating in private is an exorbitant privilege.

But putting that aside, the BRICs in particular are not happy with the existing arrangement which has been slowly falling apart for some time as the Federal Reserve imposes its domestic needs and policy on what is intended to be the rest of the world's currency. It finds itself in much the same position as is Germany in the EU.

I have addressed this many times before, suggesting that the eventual outcome may be a reconstituted SDR-like instrument based upon a broader basket of currencies and the inclusion of gold and perhaps silver as well.

The Anglo-American banking cartel are fighting this at every turn, because as we know to control the world's currency brings remarkable power. I suspect quite of bit of the hysterical antagonism against gold and silver is tied up in this.  And an ardent desire to 'cover up' some of their past shenanigans.  Germany should put pictures of its gold on milk cartons.

It is possible that they will thwart the objectives of this effort and most likely this conference. And what will happen then is a continuing fragmentation of the world into regional trading zones and spheres of influence.

This may be used as a reason to propose a one world government, that will be similar in composition to the European Union and controlled by a few elite politicians and their bureaucrats. 

We are eyewitness to one of the great events of economic history, and if anything it is remarkable how few economists and politicians understand what is happening. They are firmly embedded in their theory, and too often are willfully blind. 

Let us free markets from regulation, the Banks from restraint of law, and the money creation process from the bindings of oversight and transparency, and we will reach new pinnacles of prosperity.

I find that a well educated layman with a grounding in history and the practical side of finance and business has a better understanding of what is going on than the great bulk of theoreticians whose models are heading quickly towards the dustbin. I just read a strikingly good letter from my friend Hugo Salinas-Price, that proposes a basic model for regulating international trade.

And I told him it would get nowhere, even though it was probably directionally correct, and about as good a start as many I have seen. The status quo and their hounds would rise up against it, because they are not ready to accept change.

They will produce many weighty and learned papers that 'prove' that it is wrong. And they will twist and torture the data to serve their ends no matter what the data may actually say.  The Rogoff-Reinhart scandal is not an outlier in what is a generally disgraced profession.  But these are signs of the times, where there is little downside and enormous profits for deceit in the obsessive pursuit of money and power, at least for the exorbitantly privileged.

Money is power, and those who love power above all seek to control any and all changes to its structure, for their own ends.

[Apr 28, 2013] Money lies disguise banking truths By Lars Schall

"The attempts by central banks to restart the economy are almost entirely based on re-inflating asset markets. This means, the level of debt in the economy is not reduced. It might be that the ultimate crisis is only pushed back this way."
Asia Times

Norbert Haering studied economics at the German universities of Heidelberg and Saarbruecken, receiving a doctorate from the latter in 1994. He then worked, inter alia, at the Commerzbank and the German edition of Financial Times. Since 2002 he has been a correspondent for monetary policy, financial markets and economics at Das Handelsblatt, the leading German business newspaper. He is the co-founder and director of the World Economics Association and editor of the ''World Economic Review''. His five books include Economics 2.0: What the Best Minds in Economics Can Teach You About Business and Life (Palgrave Macmillan, 2009, co-authored with Olaf Storbeck), and Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards (Anthem Press, 2012, co-authored with Niall Douglas).

Lars Schall: Dr Haering, recently you have attended the fourth annual conference of the Institute for New Economic Thinking (INET) that was held in Hong Kong. Has it been worthwhile for you to have been there?

Norbert Haering: It was of course a great honor to have a whole session at such an important meeting dedicated to the subject of my book. I presented in a session called ''Economics and the Powerful'' with Keynes-biographer Lord Robert Skidelsky and Steve Keen. We had a very interesting and lively discussion. On top of that, I benefited in my function as an officer of the World Economics Association: Hong Kong was a very good place to explore possibilities to co-operate with INET and other institutions which share our goals, like the Fung Global Institute for example. And of course, Hong Kong is a great place to visit.

LS: What’s the intention of the World Economics Association, which emerged from the Post-Autistic Economic movement?

NH: Our ultimate goal is to replace the intellectual mono-culture that currently rules economics by something which we call complementary pluralism. We want different theories to be accepted as different and complementary ways of looking at the social and economic reality. That is where physics has arrived. Think of quantum physics and relativity theory. They are hardly compatible, but they are both respected theories and they explain different aspects of nature very successfully. There is no good reason why economics should not achieve something similar.

LS: More personally, what drives you in general in your work as a journalist and book author?

NH: I am a political person and economics is a very important political science. A lot of politics is done by misinforming people about economics and pretending that it is an objective, apolitical science. That bugs me.

LS: Why do you focus in your work often on the phenomenon of power?

NH: I like to ask questions that others do not ask, like: Who is it good for? And this questions often points to the powerful groups who can shape the discourse. They have successfully imposed a taboo on discussing power and the powerful in economics. I like to break taboos.

LS: One simple question: What is power?

NH: I don’t like to spend a lot of time on defining and classifying the many sorts of power that there are. A definition that would encompass them all would become very abstract and boring. Just like you do not need to define sex to understand it, you do not need to define power. In our book, we deal with the power to abuse informational advantage, the power to charge customers more than it costs you to produce, the power to create money out of nothing, the power to change the institutional setting to your advantage, the power of the corporate elite to set their own pay and the power of rating agencies to issue self-fulfilling prophecies and several more.

LS: Has power played a role in the build-up of the financial crisis?

NH: Definitely. It was absolutely crucial. Banks and credit rating agencies used their power conferred from informational advantage and from the trust in their judgement to create the conditions for the crisis. But the most pernicious abuse of power was the power of banks to create money by pushing credit into the housing market. Too much bank-created money and debt was what made the crisis so catastrophic and so hard to deal with.

LS: Why is the power factor for the most part in economics completely ignored?

NH: The powerful need to legitimize their power. If they can’t, the next best thing is to have it become invisible. That is what economists are doing for them. They pretend that workers always have a next best alternative to their current job, which is almost as good. Thus, no power for the employer. They pretend that something close to perfect competition is the norm. Thus, no market-power of companies. They claim that money is not important. They compare it to a veil over what is going on in the real economy. Thus, the institutions that make money and control the flow of money have no power.

LS: It is noticeable that you have no problems to identify yourself in public as a "conspiracy theorist''. Is it sometimes inevitable to be a "conspiracy theorist" when it comes to the analysis of power in the world?

NH: I have to admit that I enjoy flirting with the term because it is one of these taboos used to shut critics down. In truth of the fact, there are no conspiracy theories in our book Economists and the Powerful. The Bilderberg group is not even mentioned. It is all about incentives for economists to conform with the interests of the elites, which do not need active conspiracies do their trick over time.

LS: On the top of the hierarchy of power in the world stands the financial industry with a commanding lead. Why is that the case? Or, to put it differently, what’s the historical source of the power enjoyed by the financiers?

NH: Money is power goes the saying. Money is crucial for survival and often in too short supply. If that happens to you, those who control it can impose conditions before they lend you some. That is how big financiers and bankers got important privileges from the monarchy already in the middle ages. A government that did not have enough money, would lose its wars. Thus, bankers like the Rothschild, the Medici and the Fugger became key players in politics.

Starting with Alexander Hamilton and probably not ending with Hank Paulson and Jack Lew, it was a matter of routine in the US that Wall Street bankers would obtain the office of Treasury Secretary. It is no wonder at all under these conditions that a financial system was designed over time which suits bankers very well and gives them great power.

LS: You’ve published recently a paper, ''The veil of deception over money: how central bankers and textbooks distort the nature of banking and central banking''. Ultimately, you’re arguing in it that there are some clearly specified interests at work that intend that as few people as possible understand our financial system. Why? Maybe because it is in the end a special kind of Ponzi scheme?

NH: Yes, you could call it a Ponzi scheme. Banks give the people and companies who take credit from them deposit money, which everybody uses to pay bills and taxes as if it was as good as cash. The extra money fuels the economy and increases the demand for loans. Money is created ever faster. But, just as in a Ponzi-scheme, as soon as not enough suckers are found any more to further increase the speed at which money and debt are created, the system breaks down, and we have a crisis. Then everybody learns that bank deposits are not as good as cash because banks could only exchange a fraction of these deposits for cash. Just think of Cyprus.

LS: Please explain how money is actually created in our modern money system, starting with central banks.

NH: It does not start with central banks. That’s just what we are led to believe. We are supposed to think that central banks start and control the process. There have been systems entirely without a central bank. It starts with a bank giving me 100,000 euro as a mortgage loan, for me to buy a house. The bank clerk does a few keystrokes, creates an account for me and puts a deposit of 100,000 euro on it. This is new money.

The central bank comes in only later to make sure that the deposits created by individual banks get distributed evenly through the system. The central bank also requires a so called minimum reserve in the form of cash or deposits at the central bank. The banks have to borrow these reserves from the central bank. But the central bank will always provide the loans that the banking system needs. Otherwise it would cause a liquidity crisis.

LS: And what’s wrong with that, as far as you are concerned?

NH: There are a number of things wrong with that. The government gives a valuable privilege to the banks by declaring the deposits they create effectively legal tender. You can pay your taxes with deposit money that banks have created. Everybody is required to accept these deposits for payment. The banks make a lot of money creating money out of nothing. This is a profit that I think the government should get.

Taxes could be a lot lower if the government did not give away this very valuable privilege for free. And, what might be even worse, commercial banks have a tendency to blow up debt bubbles, which later burst and cause financial crisis.

LS: In your paper you draw special attention to remarks by Jens Weidmann, the current president of the Deutsche Bundesbank, and Otmar Issing, the former chief economist of the European Central Bank (ECB). Why so?

NH: I use these remarks to show that central bankers give us a distorted account of the nature of money and of the role of commercial banks and central banks. They wrongly make it seem as if central banks had a monopoly to create money and as if central banks had always been agents of general well-being. In reality, a number of them were originally created as private banks and until today there is a strong element of lobbying for and protecting commercial banks.

LS: So what has to be said from your point of view about the famous ''independence'' of central banks that we always here about?

NH: Even Adam Posner admitted in Hong Kong that it is usually in places which have a large financial system that the calls for independence of central banks from the government are heard first and the loudest. Independence form the government goes along with the prohibition to finance government debt, and this means that banks get most of the benefit from money creation.

LS: This year will see the 100th anniversary of arguably the most influential among the central banks of the world, the US Federal Reserve. What is your judgment in general on this peculiar entity?

NH: For one, they have been hiding for a long time the fact that the regional Feds who are in charge of supervising the banks are controlled by these banks. People like Jamie Dimon of JP Morgan, who sit on the Board of the New York Fed, are effectively controlling themselves. If the interest of the banking community and of the country are in synch, the Fed often works very well. They did a much better job in dealing with the financial crisis than the ECB. If and as far as the interests of Wall Street are conflicting with the interests of Main Street, the Fed will know on which side their bread is buttered.

LS: With regards to one group of bank costumers, the savers, there’s something only a very few people really know about - if I bring my money to the banks in order to have a bank deposit, I am a creditor of the banks, even though I do not want to lend them money. Can you elaborate on this, please?

NH: This is the core of the problem of our financial system, that we do not have a save payment system, which is independent from the solvency of banks. This is the reason why we always have to save the big banks if they screw up. If they go under, our payment system goes under and people lose their money. The money that people hold in accounts in order to pay their bills should be treated differently from money they want to invest.

If you just want to use the services of the banks to pay your bill in a convenient way, you should not have to give the bank a credit. The money should remain in your possession, just like money you have in a money market fund or in stocks remains yours. If that was the case, we would not have to save all the banks any more, and they could not create too much money any more.

LS: A little, but growing number of people is advocating a return to the classic gold standard. Would a return to the classic gold standard change anything on the banking problem as you see it?

NH: Not fundamentally. The gold standard reins in the amount of money the central bank can create, but not the amount of money that commercial banks can create on top of that. It might make a debt bubble a little less likely, because banks know they cannot be bailed out as easily any more. But if a crisis happens, it will be really disastrous, if the central bank is constrained by a gold standard. We have seen this in the Great Depression.

LS: So what are the real alternatives according to your analysis? What needs to be done?

NH: The key is to limit banks’ ability to create money and to pour too much new money into asset markets, like the stock market and the housing market. There are various ways to do this. Richard Werner, a banking professor at the University of Southampton, argues for credit guidance. He says central banks should limit the growth of bank credit going to consumers and into asset markets, while encouraging credit for productive investments.

This credit guidance was an important element in the industrialization of countries like Japan, South Korea, Taiwan and Germany after World War II, and still is in China. Another approach is the Chicago-plan or 100%-money, which was promoted by Henry Simons and Irving Fisher among others. Currently International Monetary Fund economist Michael Kumhof is creating quite a stir with this proposal. It is being discussed a lot these days.

LS: How does 100%-money work?

NH: It would mean that banks have to have all their deposits covered by their own deposits at the central bank. They could not create deposits any more, but could only intermediate money which the central banks have created. The central banks would have to create a lot more money of course, which would mean that governments would receive much higher central bank profits.

LS: What sorts of resistance against fundamental reforms and new directions can be expected coming from interested parties?

NH: The right to create legal tender out of nothing is almost as good as the ability to make gold out of sand. Bankers will fight teeth and claw to preserve that privilege. They will continue to try and portray those who argue for fundamental reform as crazy weirdos, who do not understand money and economics.

LS: How do you interpret the beginning renaissance of gold in the international monetary / financial system in general? What reasons do you see for it?

NH: Gold is fundamentally different from paper money and bank deposit money in that its quantity cannot be increased at lib. It differs also, because it does not have debt as its counterpart. Banks have eroded the trust in deposit money by the money and debt bubbles that they have blown up. Gold looks attractive in such a situation.

LS: In January this year, the Deutsche Bundesbank announced that it wants to repatriate some of its gold holdings at the NY Fed and all of its gold from the Banque de France. Do you consider it a bit strange that apparently it will take seven years to bring roughly 300 tons of gold from New York City to Frankfurt and five years to bring roughly 370 tons from Paris to Frankfurt? Moreover, the Bundesbank will leave a huge amount of its gold in New York City and London to have in the event of a currency crisis ''the ability to exchange gold for foreign currency […] within a short space of time.'' Does this argument convince you?

NH: The specifics of the plan for partial repatriation of gold seem to be designed to quash the public discussion about gold storage abroad. For many years to come, the Bundesbank will be able to answer these calls by saying: we are already working on it. And that will work well as a communication strategy. But the truth of the matter is that there is no good reason to store your national gold treasure abroad. The issue and the way in which the Bundesbank got itself tangled up in conflicting statements and justifications during these discussions makes one suspicious that either there is a problem with the gold or that Germany might not be as sovereign a state as we like to think. I do not know which one is true.

LS: Let’s speculate for a second. With what kind of thoughts do you think does the leadership of China and Russia - two big gold buyers - observe this German gold story?

NH: My guess is that they do not have any of their gold in New York. If they did, they would probably consider taking it home now.

LS: Is it the right thing for the BRICS nations [Brazil, Russia, India, China and South Africa] to do to launch their own development bank to rival the IMF and the World Bank?

NH: This is a good development for the BRICS as well as for potential customers of their development bank. It will mean that IMF and World Bank will have a harder time to impose their market ideology and their creditor-friendly policies on any country in trouble.

LS: Are trade imbalances the crux of the euro crisis?

NH: Trade imbalances are the main problem of the European currency union. Germany has a huge surplus. This means that Germany continues to give new credit to the other countries, who get deeper and deeper in debt. Without Germany accepting a trade deficit, it is impossible for the other countries to ever pay down this debt. It would require having strongly increasing wages in Germany for a while, in order to increase domestic demand and at the same time help other countries to regain competitiveness. Germany seems unwilling to countenance this option.

LS: Why do the politicians of the EU and the main protagonists in mainstream media say on a constant basis: ''We’re rescuing the Greeks, we’re rescuing the Spaniards, et cetera,'' when in reality the EU is rescuing private banks (predominantly German and French ones)? Can’t this be communicated in an honest way with the supposed sovereign in a democracy, the people?

NH: Influential groups are influential because they get their own messages and views across. The financial sector is very influential. It has managed to distort the thinking of media people, economists and policy makers alike.

LS: If you were calling the shots, how would you solve the euro crisis? And do you think a real solution is desirable right now seen from a standpoint of the financial and political elites in euroland?

NH: I would order the central bank to end the acute crisis by doing similar things to what the Federal Reserve has been doing, perhaps more focused on pumping money into the real economy, rather than into the asset markets. Then I would give people the choice of either ratifying a new European Treaty, which would envisage a fiscal union among other things, or go back to national currencies in a harmonious way.

I suspect a new treaty would be rejected. What I see instead as the plan pursued by the elites is to keep the crisis going to force reforms in the direction of fiscal union, without materially involving the parliaments or the people. This is highly undemocratic.

LS: What are currently your biggest concerns when it comes to the world economy?

NH: The attempts by central banks to restart the economy are almost entirely based on re-inflating asset markets. This means, the level of debt in the economy is not reduced. It might be that the ultimate crisis is only pushed back this way.

LS: Thank you very much for taking your time, Dr Haering.

Lars Schall is a German financial journalist.

[Apr 28, 2013] The Biggest Price-Fixing Scandal Ever

Rolling Stone

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture. 

Why? Because Libor already affects the prices of interest-rate swaps, making this a manipulation-on-manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price-fixing corruption. If you can imagine paying 20 bucks for a crappy PB&J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.

"It's a double conspiracy," says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. "It's the height of criminality."

[Apr 28, 2013]  The Scam Wall Street Learned From the Mafia

Rolling Stone

Contracting corruption has been around since the construction of the Appian Way. The difference here is the almost unimaginable scope of the crime – and the fact that it's mobsters from Wall Street who are getting in on the action. Until recently, such activity has traditionally been the almost­exclusive domain of the Mafia. "When I think of bid rigging, I think of the convergence of organized crime and the government," says Eliot Spitzer, who prosecuted two bid-rigging cases in his career as a New York prosecutor, one involving garbage collection, the other a Garment District case involving the Gambino family. The Mafia moved into bid rigging, he says, because it observed over time that monopolizing public contracts offers a far more lucrative business model than leg­breaking. "Organized crime learned their lessons from John D. Rockefeller," Spitzer explains. "It's much more efficient to control a market and boost the price 10 percent than it is to run a loan-sharking business on the street, where you actually have to use a baseball bat and collect every week."

What Spitzer saw was gangsters moving in the direction of big business. When I ask him if he is surprised by the current bid-rigging case, which looks more like big business moving in the direction of gangsters, he laughs. "The urge to become a monopolist," he says, "is as old as capitalism."

[Apr 28, 2013]  The Making of Global Capitalism

Amazon.com

Hans G. Despain (Longmeadow, MA) October 7, 2012

Powerful Political Economy

Panitch and Gindin argue that market economies have never existed independent of nation states. The state was necessary for the genesis of capitalism, and the state was, and still is, necessary for its historical development and continuous reproduction. Nonetheless, Panitch and Gindin argue there is significant autonomy, or historical "differentiation," between the economy and the nation state. There are economic structural tendencies manifest from the logic of capital and the functioning of the market-system. At the same time nation states can affect these structural tendencies in remarkable ways.

In this sense, there has never been "separation" between capitalist reproduction/development and the state, but there is "differentiation" which has radically significant effects. There is a symbiotic relationship between the state and capitalistic reproduction/development.

This is a book of economic history. But is also a book of economic theory. The economic history is rich and interesting, aimed at explaining the historical emergence of global financial capitalism. While the history Panitch and Gindin offer is rich and interesting, the theory is still richer and even more intriguing.

Their history is primarily aimed, (1) at explaining the emergence of the "informal American empire" (what makes this empire "informal" is the hegemony is accomplished primarily through economic strategy, policy, and diplomacy; and less through military might and political coercion) and (2) demonstrating the historical shifting relationship (from decade to decade since the World War I) between workers, business, finance, and the state.

Their theoretical concern is threefold; (1) offer a theoretical explanation of the crisis of 2007-8; (2) offer guidance toward the direction the future the "informal American empire" has for guiding the economies of world; and (3) to understand the "informal American empire" as a set of beliefs, doctrine, and ideology of how to organize modern societies (workers, business, finance and the state) and the global order (both political [e.g. UN, NATO, etc.] and economical [World Bank, IMF, WTO) for the (ideological) common good.

Although Panitch and Gindin accept that capitalistic development is uneven and unstable, it is crucial to their thesis that each crisis is unique depending upon the particular relationships and alliances forged between workers, business, finance, and the state. In this sense, the crisis of 2007-8 is necessarily unique and the solutions or economic fiscal policies necessary for recovery necessarily different from previous crises.

The highlights of their economic global history include that there have been four! major historical global crises, the long depression in the 1870, the Great depression of 1930, the Great recession of 1970s, and the Great financial crisis of 2007-09.

According to Pantich and Gindin, the 1970s is an economic watershed moment which separates "two Golden ages" of American capitalism. The first Golden Age is from 1947 - 1973; the Great recession and various political crises ensue (1973 - 1983), there is a reconfiguration of both the organization of society (workers, business, finance, and state; along with the role of the IMF, World Bank, and global trade); then the second Golden Age from 1983 - 2007.

It may be quite strange to many readers to call 1983 - 2007 a Golden Age. But in fact when looking at the economic data of the period it was quite literally a Golden Age, with millions of Americans and Global financiers and business leaders becoming impressively wealthy. Moreover, the levels of production (GDP) and productivity during the second Golden Age generally outperform the levels of production and productivity during the first Golden Age. Nonetheless the distribution of this wealth is radically narrow and concentrated within primarily finance, while political power concentrated toward "free-trade" orientated states, and away from workers and industrial production. Moreover, Pantich and Gindin maintain that workers are generally weaker during the second Golden Age, finance is strengthen and trumps over production processes, which is more or less conventional wisdom of this period of modern history. Less conventional is their thesis that the state, in particular the American domestic fiscal state and global "informal American empire," greatly strengthened post-1973-83 crisis.

It is not clear the direction the post-2007-09 crisis will take the global economy and American capitalism. What is clear is that the symbiotic relationship between workers, business, finance, and the state, and the global order (U.S. Treasury, IMF, World Bank, WTO, UN) is once again shifting. Pantich and Gindin's book offers to the reader a far clearer picture of what is at stake and who are the main institutional actors in the historical drama and capitalistic tragedy we call modern human history.

Thatcher – Sorry You’ve Lost Your Job by  Michael Hudson

JAY: So what’s your take on Margaret Thatcher’s place in history?

HUDSON: Her legacy wasn’t what she started out to do. She’s most famous for privatizing British industry, starting with British Telecom and introducing what she called “labor capitalism,"a term that she borrowed from her fellow free-market autocrat, General Pinochet in Chile.

When she became prime minister in 1979, most of the Conservative Party was against privatization. This was not part of the program she ran on. When I was in England, I saw the proposals by various Conservative Party members that were put to her, and it took about half a year for her to be convinced that privatization would help in her fairly simple objective. She wanted to break the labor unions, thinking then that would help the working class evolve into the middle class. She believed that fighting unions would help raise the working class into the middle class – as if unionized labor and governments that protected labor’s interest were responsible for the fact that one had to wait many months to get a telephone fixed. (One BT repairman once came to a London apartment I was staying in, and told me, “I can’t fix this phone. It’s broken!")

Fighting unionization was supposed to lead to lower wages, and thus cut costs and re-industrialize England. What her fight achieved, of course, was the opposite. So she’s going to go down in history as a compendium of internal contradictions par excellence.

Britain’s labor unions were strongest in the large public utilities. The largest tangible capital investments in England – and every other country – were in this public infrastructure: the roads, real estate, bus lines, railroad and communications systems. Mrs. Thatcher believed the anti-government “free market"guff that if government regulation and planning were dismantled, the magic of the marketplace would raise productivity. Prices would decline.

There was no suspicion that privatized companies would simply keep the productivity gains as a financial surplus, to be paid in the form of exorbitant executive salaries, interest to bondholders and dividends to stockholders, creating capital gains for stockholders – who turned out to be the 1%, not the 99%.

The way in which she privatized British companies took the form of the biggest giveaway in England history. Privatization didn’t have to happen in quite this way. But her blind spot led her to leave bankers in control of the program – and she gave them whatever terms they asked for, with the sky being the limit. (That is indeed what they asked for – and found no government official trying to bargain them back down to “economic"rates. That, to Mrs. Thatcher, would have been government “interference"leading on the slippery slope to fascism, Hayek-style.)

So economic planning was centralized in the City of London, the nation’s financial district. Mrs. Thatcher presided over the giveaways in England that were the counterpart of the great American railway giveaways after the Civil War in this country. She started by privatizing British Telecom, then the bus lines and water, all on credit. This created a vast new market for British investment banks, first in underwriting, then in reaping first-day and first-week capital gains, and soon in lending at interest to buyers who saw public utilities as potential rent-extracting rights to place tollbooths throughout the entire British economy. So Mrs. Thatcher’s “free market"became a market free for predatory rent-seekers creating the largest set of special privileges since the Crown Corporations from1600 through 1720 – the commercial trading monopolies granted to royal favorites. So she was the prototype for Boris Yeltsin in Russia.

The problem facing Mrs. Thatcher, of course, was how to get voters to support privatization. After all, it was against what most voters believed, and even against what most of her own party believed. Former Prime Minister Harold Macmillan likened privatization to selling off the family silver. But she saw it as balancing the British budget until North Sea oil came online. And her ideological cover story – which she actually seems so stupid to have honestly believed – was that the private buyers would raise productivity, and reduce prices in keeping with these productivity gains. The concept of unearned income or economic rent was absent from her vocabulary. It was if her upbringing had given her a surgical lobotomy – which made her so powerful a useful idiot to Britain’s predatory financial class. When her obituary writers speak of her “decisiveness,"they mean her tunnel vision and absence of reflection.

Her insistence that it was possible for the working class to rise into the upper class was indeed personified by one family, the Gloags. Bus driver Gloag spent about £12,000 to buy a small bus line, which ultimately became Stagecoach. Bus lines weren’t making much money, but the company did have the bus terminal in the center of London. So what seemed to be a transport deal turned out to be a real estate killing on the land’s site value. The Gloags sold the bus terminal for a huge amount of money, which they spent on buying up other bus lines.

They “raised productivity"in a way that led the government to accuse the company of monopoly practices, abusing the monopoly it acquired over the transport system by raising the prices and the cost of British transportation. Unfortunately for most of Londoners, they now had to go outside the central city to catch a bus. Time schedules were scaled back, and service declined. But it made the bus driver’s daughter the richest lady in England next to the Queen. And to Mrs. Thatcher, productivity increased, because much less labor was employed to operate the transport service.

Neoliberalism

Wikipedia, the free encyclopedia

Opponents of neoliberalism commonly argue these following points:

Critics sometimes refer to neoliberalism as the "American Model," and make the claim that it promotes low wages and high inequality.[100] According to the economists Howell and Diallo (2007), neoliberal policies have contributed to a U.S. economy in which 30% of workers earn low wages (less than two-thirds the median wage for full-time workers), and 35% of the labor force is underemployed; only 40% of the working-age population in the U.S. is adequately employed. The Center for Economic Policy Research's (CEPR) Dean Baker (2006) argued that the driving force behind rising inequality in the U.S. has been a series of deliberate, neoliberal policy choices including anti-inflationary bias, anti-unionism, and profiteering in the health industry.[101] However, countries have applied neoliberal policies at varying levels of intensity; for example, the OECD (Organisation for Economic Cooperation and Development) has calculated that only 6% of Swedish workers are beset with wages it considers low, and that Swedish wages are overall lower due to their lack of neoliberal policies[102] John Schmitt and Ben Zipperer (2006) of the CEPR have analyzed the effects of intensive Anglo-American neoliberal policies in comparison to continental European neoliberalism, concluding "The U.S. economic and social model is associated with substantial levels of social exclusion, including high levels of income inequality, high relative and absolute poverty rates, poor and unequal educational outcomes, poor health outcomes, and high rates of crime and incarceration. At the same time, the available evidence provides little support for the view that U.S.-style labor-market flexibility dramatically improves labor-market outcomes. Despite popular prejudices to the contrary, the U.S. economy consistently affords a lower level of economic mobility than all the continental European countries for which data is available."[103]

Notable critics of neoliberalism in theory or practice include economists Joseph Stiglitz, Amartya Sen, and Robert Pollin,[104] linguist Noam Chomsky,[105] geographer David Harvey,[106] and the alter-globalization movement in general, including groups such as ATTAC. Critics of neoliberalism argue that not only is neoliberalism's critique of socialism (as unfreedom) wrong, but neoliberalism cannot deliver the liberty that is supposed to be one of its strong points. Daniel Brook's "The Trap" (2007), Robert Frank's "Falling Behind" (2007), Robert Chernomas and Ian Hudson's "Social Murder" (2007), and Richard G. Wilkinson's "The Impact of Inequality" (2005) all claim high inequality is spurred by neoliberal policies and produces profound political, social, economic, health, and environmental constraints and problems. The economists and policy analysts at the Canadian Centre for Policy Alternatives (CCPA) offer inequality-reducing social democratic policy alternatives to neoliberal policies.

Santa Cruz History of Consciousness professor Angela Davis and Princeton sociologist Bruce Western have claimed that the high rate (compared to Europe) of incarceration in the U.S. – specifically 1 in 37 American adults is in the prison system – heavily promoted by the Clinton administration, is the neoliberal U.S. policy tool for keeping unemployment statistics low, while stimulating economic growth through the maintenance of a contemporary slave population and the promotion of prison construction and "militarized policing."[107] The Clinton Administration also embraced neoliberalism by pursuing international trade agreements that would benefit the corporate sector globally (normalization of trade with China for example). Domestically, Clinton fostered such neoliberal reforms as the corporate takeover of health care in the form of the HMO, the reduction of welfare subsidies, and the implementation of "Workfare".[108]

Neoliberal policies advanced by supranational organizations have come under criticism, from both socialist and libertarian writers, for advancing a corporatist agenda. Rajesh Makwana, on the left, writes that "the World Bank and IMF, are major exponents of the neoliberal agenda" advancing corporate interests.[109] Sheldon Richman, editor of the libertarian journal The Freeman, also sees the IMF imposing "corporatist-flavored 'neoliberalism' on the troubled countries of the world." The policies of spending cuts coupled with tax increases give "real market reform a bad name and set back the cause of genuine liberalism." Paternalistic supranational bureaucrats foster "long-term dependency, perpetual indebtedness, moral hazard, and politicization, while discrediting market reform and forestalling revolutionary liberal change."[110] Free market economist Richard M. Salsman goes further and argues the IMF “is a destructive, crisis-generating global welfare agency that should be abolished."[111] "In return for bailouts, countries must enact such measures as new taxes, high interest rates, nationalizations, deportations, and price controls." Writing in Forbes, E. D. Kain sees the IMF as "paving the way for international corporations entrance into various developing nations" and creating dependency.[112] He quotes Donald J. Boudreaux on the need to abolish the IMF.

The shock of the neoliberal

Thatcher RIP. She managed not to outlive the doctrine neoliberalism...
By now, the phrase “too big to fail"is a household term for arrogant financial institutions. But it also describes the neoliberal economic paradigm that has fuelled that arrogance for decades: the unwavering faith in laissez-faire and the devotion to deregulation. Since the 1970s, such thinking has swayed policymakers on both sides of the Atlantic and on both sides of the political aisle. Ronald Reagan’s famous proclamation that “government is not the solution to our problem; government is the problem"has been accepted in much of Westminster and Washington, even by many liberal politicians.

Hijacking America How the Secular and Religious Right Changed What Americans Think by Susan George

Amazon.com
George Bush leaves the White House in January 2009 and the United States goes back to "normal", right? Wrong, argues Susan George in this fascinating, thorough and often chilling account of the decades-long transformation of American society and political culture. Using the four "Ms" - money, media, marketing, management -- but above all with a keen sense of mission, the American secular and religious right has made its "long march through the institutions" and changed the way Americans think.

As the left went about its business in blissful ignorance, convinced that its policies, programmes and projects spoke for themselves and would always prevail; the right's well-oiled machine of foundations, lobbies, think-tanks, publications, political cadres, lawyers and activist organizations slowly and strategically took over. A broad alliance of neo-liberals, neo-conservatives and the religious right successfully manufactured a new common sense, assaulted Enlightenment values and targeted the top of society where culture is created and legitimized, because they knew that ideas have consequences - and not just in the United States.

Reviews

Right way to power in US Tribune, 11 September 2008

"The forces that have been 'hijacking America,' lucidly exposed in this well-informed and searching study, are doubtless powerful as well as ominous. Their influence is not confined to the United States. Unless they are contained and reversed, prospects are not bright for a decent and civilized world."

- Noam Chomsky

"A powerful, shocking and extremely important book. In a gripping investigation, Susan George uncovers the central problem with the US state and shows us how to confront it."

- George Monbiot

To order go to www.polity.co.uk

Introduction
1. Culture in Chains: How the Secular and Religious Right Captured America
2. Manufacturing Common Sense or Cultural Hegemony for Beginners
3. Foreign Affairs
The American Religious Right and Its Long March through the Institutions
4. Extinguishing the Enlightenment: The Assault on Knowledge
5. Lobbies, Corridors and Seats of Power
Conclusion
Why Undertake This Book?
Bibliography

[Apr 05, 2013]  Neoliberalism Neoconservatism Without a Smirk by Thomas H. Naylor

February 16, 2010 | Second Vermont Republic

It has become increasingly obvious that the only difference between Barack Obama and George W. Bush is that the famous Bush smirk has been replaced by the Obama smile.  The neoconservatism of Dick Cheney, Paul Wolfowitz, and Bill O’Reilly has given way to the neoliberalism of Bill Clinton, Timothy Geithner, Bernie Sanders, and Chris Matthews.  The differences between neoliberalism and neoconservatism are similar to the differences between Coke and Pepsi, virtually nil.

Neoconservatism is best defined by its foreign policy agenda which includes full spectrum dominance, imperial overstretch, nuclear primacy, the right of pre-emptive strike, and unconditional support for the State of Israel.  Although neoliberals are much less bellicose in their rhetoric than their neoconservative counterparts, they passively acquiesce to the neocon foreign policy paradigm.  They do little or nothing to end the wars with Iraq and Afghanistan as well as the annihilation of Palestine carried out by our close ally Israel.  Obama’s Nobel Peace Prize acceptance speech in Oslo was little short of a global call to arms couched in the language of the doctrine of “just war."  Although neocons make it abundantly clear that they are military hawks, most neoliberals are closet hawks as well.

Consider the case of Vermont Senator Bernie Sanders, the darling of the Left, who pretends to be a socialist, which he is not.  Not only does Sanders support all military appropriation bills and military aid to Israel, but he is currently promoting the opening of a satellite facility of the Sandia Corporation in Vermont.  The Sandia Corporation, a subsidiary of Lockheed Martin Company, develops, creates, maintains, and evaluates nuclear weapons systems.  Sandia’s roots go back to the Manhattan Project in World War II.  Just what peace loving Vermonters need, a nuclear weapons manufacturer located in their own backyard.

Both neolibs and neocons are apologists for globalization and are steeped in the ideology that bigger, faster, and more high-tech make better.  In their heart of hearts neolibs and neocons know that only the federal government can solve all of our problems, failing to realize that the federal government is the problem.  Both embrace corporate socialism, socialism for the rich, and the social welfare state while pretending to be opposed to publicly financed social welfare.  It’s all about people of the lie.

Neoliberals pretend to be concerned about inequities in the distribution of income and wealth.  Neoconservatives make it abundantly clear that they couldn’t care less.

Both neolibs and neocons are authoritarian statists each with their own definition of political correctness.  Politically correct neolibs are expected to be pro-abortion, pro-gay-lesbian, pro-affirmative action, pro-Israel, pro-gun control, anti-clerical, pro-big government, and pro-American Empire.  Anyone who does not conform to this litany or who associates with those who do not, is at risk of being attacked by a left wing truth squad such as the Southern Poverty Law Center and accused of the likes of homophobia, racism, anti-semitism, religious fundamentalism, or even hate crimes.  Politically correct neocons are more likely to be pro-life, anti-gay-lesbian, anti-affirmative action, pro-Israel, anti-gun control, pro-clerical, pro-big government, and pro-Empire.  Both are vehemently opposed to secession.

Above all, what neoliberals and neoconservatives have in common is that they are technofascists.  Benito Mussolini defined fascism as “the merger of state and corporate power."  Technofascism is the melding of corporate, state, military, and technological power by a handful of political elites which enables them to manipulate and control the population through the use of money, markets, media and the Internet.

Neoliberals and neoconservatives alike march to the beat of the same drummer – the largest, wealthiest, most powerful, most materialistic, most racist, most militaristic, most violent empire of all time.

Ultimately the differences between neoliberalism and neoconservatism are purely cosmetic.  You may either have your technofascism with a smirk or you can have it with a smile.

The new liberal imperialism

Democratic Underground

As someone familiar with the skullduggery that buttressed the British Empire I take the neo-liberal's professed altruism with giant pinch of salt. If there are failed states persisting in the 21st century we can look no further than the gangsterism that drives Anglo/American foreign policy. It was the United Kingdom that bolstered the Muslim Brotherhood and reactionary Wahhabism in order to thwart Nasser's attempt to modernize the Middle East and foster Arab nationalism. And it was our own beloved Jimmy Carter who armed the mujahedeen to undermine the Soviets ushering in the destruction of Somalia and Afghanistan and the rise of the Taliban.

If we as progressives are to have a say in what our governments are doing we need to clearly understand the game as it is now being played. Ultimately it is we, the people, who will bear the brunt of their failures. Contrast the "make believe" that Cooper outlines in his article with the way an insider describes the actual thrust of the "neocons" agenda:

"We were driven by greed rather than any desire to make life better. ...the new elite had made up their minds to attempt to rule the planet... close fraternity of men moved between corporate boards and government positions."

"often results were a system that resembles medieval feudal societies"

- John Perkins, from "Confession of a Hit Man"

The notion that preemptive war and crony capitalism can lead to postmodern global stability is a load of bull. But then the drivers of this policy are making a fortune. Far be it from me to say that for our modern day "neo" robber barons, the "War on Terror" has been anything but a "catastrophic success."

10. There are movements taking place. Unfortunately mostly in places like Australia, New Zealand and Singapore and on a more limited scale in India and eastern Africa. There are discussions in the U.S. but so far left to academia. Here's an example of planning to "modernize" more cost efficiently while advancing local autonomy and democracy: http://nga.alga.asn.au/generalAssembly/2004/ngaBusiness... omega minimo, Jul-30-05 07:55 PM
12. These are creative solutions

In the States, we have communities and local governments held hostage by the agendas and the coffers of the dreaded Developers! Our local council members are owned by the fat cats and do their bidding. Cities starved for dwindling state and federal funds turning to the new Big Brother, corporate sponsorship!

We have a local shop that sells imports from around the globe. The owner visits and forms relationships with the artists who make his goods. He promotes fair trade and educates through the fantastic offerings in his beautiful shop.

This helps in the "connect the dots" point above-- it helps people understand better where things come from, as well as the fact that someone actually made the object with their hands.

Many beautiful items are made out ot discards, things Americans think are waste and MAYBE recycle.

Thanks for the link.

National Agenda

Principles of local democracy

1. Local government is the expression of Australia's commitment to community democracy.

2. The rights of citizens to the democratic pursuit of community values through elected local government must be protected in the Australian Constitution. State Constitution Acts must also entrench the existence and status of local government, and such provisions should be altered only by referendum.

3. Local government seeks constitutional recognition in the Australian constitution.

4. Local government calls for the immediate establishment of a national Constitutional Convention to specifically consider constitutional recognition of local government and review the efficiency, effectiveness and responsibilities of the three spheres of government.
......
7. A broad competence power must be granted to all local government authorities in Australia so that those authorities may respond to the needs of their communities in the most appropriate manner. There must be no limits imposed by other governments on the performance of local government's legitimate activities.
....
10. Restructuring of local government - owned utilities such as water and sewerage undertakings should also occur only with the concurrence of the councils concerned.
....
14. Local government supports efforts to ensure gender equity and will continue to pursue the implementation of the National Framework for Women in Local Government (2001).

15. The role of local government must be given full recognition in campaigns and educational programs aimed at increasing community understanding of the Australian system of government

bloom
11. All of these words like "liberal" and "progressive can get really messed up - with people using them different ways.

You get some people being proud they are liberals because they are altruistic and idealistic.

Others because they think it means people can do whatever they want.

Some others because they believe in "classical liberalism" or "neo-liberalism" - in more of an economic imperialistic sense.

Seems like the DLC and Rush Limbaugh are against the altruistic, idealistic type of liberal. They are for themselves doing whatever they want and for - ends for themselves justifies the means - the effects on others.

DU tends to get a mix of altruistic and idealistic & "do whatever they want liberals" with a few DLC neo-liberals thrown in.

It is difficult for me to distinguish between a neo-liberal and a Rush Limbaugh type of liberal basher. Maybe the neo-liberals are nicer about their bashing. The DLC are just going to politely "distance themselves".

----

"Critics of neoliberalism associate it with globalization, and with the rise of multinational corporations, as well as monetary and fiscal austerity at the expense of social programs.'''

Anti-globalization advocates are the most vociferous opponents of neoliberalism, particularly its implementation as "free capital flows" but not free labor flows. They argue that neoliberal policies encourage a "race to the bottom" as capital flows to the lowest environmental and labor standards, and is merely updated "beggar thy neighbor" imperialism, dating back 200 years. In this they are in fundamental agreement with many of neoliberalism's supporters who argue that neoliberalism represents an updated version of classical liberalism."

http://en.wikipedia.org/wiki/Neoliberalism

[Apr 04, 2013] Zombie Economists and Why Financial Genius is After the Fall

Zero Hedge

Shizzmoney

The main problem with NeoLiberals during their Reign of Terror is the fact they REFUSE, absolutely REFUSE, to admit their wrong.

When The Markets, and or Society, eventually implode due to their pumping of erroneous facts which justified corporate looting of governments around the globe (including ours).....only then will assholes like Krugman, Hubbard, and Delong actually realize they are morons whose economical theories resulted in thousands of deaths, lifetimes of misery, and a collective insult of intelligence of citizens, everywhere.

Not too long ago, I asked Nobel Prize laureate Joseph Stiglitz how many economists he'd met who still adhered to the Chicago School approach, otherwise known as Neoliberal economics, that was proven to be severely flawed by the recent economic crash.

"About 60 percent," said Stiglitz.

“Why is that?"I asked.

"For the most simple human reason of all,"Stiglitz told me. “People don’t like to admit that they’re wrong."

 [Apr 03, 2013] Beyond neoliberalism by Nicolas Pons-Vignon

June 1, 2010 | Global Labour Column

For the generation that came of age in the 1990s, the belief in the labour movement’s ability to inspire progressive change collapsed soon after the Berlin Wall. Not unlike the Wall, this belief had been seriously shaken during the 1970s and 1980s, which saw the rise of neoliberalism from Chile to the United Kingdom and, thanks to the Washington-based international financial institutions, to much of the developing world. Jan Breman (1995), in a biting analysis of the triumphant World Bank’s World Development Report on “Workers in an integrating world", notes that the Bank saw “drastic restructuring in the balance of power in favour of capital"as a necessary condition for both economic growth and poverty reduction. Written at the height of the Washington Consensus, the report represented an arrogant dismissal of workers as political actors. Only if they would keep quiet, letting the invisible hand of the market decide how many shillings (3, maybe) to put in their pockets, would their lives improve.

While some economists and politicians were genuinely convinced that neoclassical economic theory could offer an alternative to the previous dominant Keynesian paradigm, it has since appeared that, behind the market fundamentalism justified “scientifically"by economists (such as those of the Public Choice School) eager to show that governments and unions were predatory self-interested agents, lay the formidable enterprise of shifting the balance of forces in society towards private business and particularly capital holders. As Harvey (2006) points out, far from being a technical choice over allocative efficiency, neoliberalism is first and foremost a political enterprise aimed at restoring the power of capital. It does so in two ways: first by shifting economic resources back to owners of capital, and second by weakening the capacity of organized labour to resist policy changes in the workplace or in public policy.

At odds with the professed neutrality of neoclassical economics, neoliberal policies have actively promoted the interests of large (often Western, in developing countries) companies by extending the realm where they could invest (through privatization and liberalization) and the conditions under which they were able to do so (repatriation of profits, low taxation and regulation)1. Such measures have been accompanied by the systematic undermining of labour’s capacity to constitute itself as a political force that could challenge these policies, as exemplified by the aggressive behaviour of Margaret Thatcher’s Government towards the miners’ strikes of the 1980s in the United Kingdom. The victory of the Conservatives in this country paved the way for far-reaching deregulation of the labour market, which resulted in widespread precariousness for working people. This not only made life harder but also undermined the strength of unions, since the number of workers employed in permanent contracts started dropping rapidly. In light of these facts, it remains a puzzling reality that in most developed countries critical views did not catch the imagination of people and that majorities repeatedly voted for minority interests. The result of these policies has thus been a massive skewing of income towards the very rich, with remarkably little resistance in the process. The extent of this growing inequality in the United States can be strikingly observed in the long-term evolution of the income share of the top 1 per cent (figure 1)2.

Figure 1: United States: Income share of the top 1 per cent, 1913–2006

Notes: [1] = including realized capital gains; and [2] = excluding capital gains. Three-year moving averages.
Source: Palma, 2009.

For many years, neoliberal policies have undermined the living conditions of workers, from Chile to the United States and Africa, and with a possibly greater impact than anywhere else in former communist countries. The current crisis confirms what many heterodox economists have been arguing for many years, namely that neoliberal policies are not only bad for workers, but also for growth and development. Amsden (2010) thus points out the paradox of their continued dominance in the face of a proven inability to generate higher growth than the policies they replaced: per capita growth performances have been superior in the period 1950–80 than in the period 1980–2000 everywhere but in South Asia and in the United States. In the latter, as has been discussed above, growing inequality has meant that growth has disproportionately benefited the richest, with the “bottom 90 per cent"of earners in the United States having actually experienced stagnation between 1971 and 2005 (Palma, 2009). Moreover, China and India, two countries which seem to be steadily emerging despite the crisis, have adopted development policies markedly different from those recommended by the Washington Consensus, even if their labour policies have been more aligned with it. And the current economic crisis offers convincing evidence that the growth path of the leading neoliberal countries was premised on very shaky foundations.

Depleted growth, stagnating income for workers and their families in many countries, and at the same time a massive enrichment of the wealthiest, in particular capital owners in the West: the outcome of neoliberal policies is such that its continued dominance can indeed be astonishing. The collapse of the Soviet bloc and the deep disillusion with state-managed planned economies has certainly played an important part in the difficulties experienced by the labour movement to resist and propose an alternative to neoliberal globalization. This was particularly clear in the case of South Africa, where the fall of the apartheid regime, achieved largely through worker mobilization, took place in an environment where the international and internal pressures to follow the neoliberal trend proved too strong to resist for the new leadership.

Despite several crises related to burst “bubbles"of over-valued assets, it is only with the current crisis that a consensus – claiming unlikely allies such as Alan Greenspan – is emerging to argue that the entire finance-driven system of accumulation is in need of regulatory reform. However, while growing numbers recognize its deep flaws, many still favour superficial changes in line with Guiseppe Tomasi di Lampedusa’s ultimate advice for the continuity of power in a time of crisis: “everything must change so that everything can stay the same".

While finance has been a locus of incredible accumulation over the last 25 years, it must be emphasized that this cannot be reduced to harmless speculation. At the core of finance, of its inflated assets and their over-inflated derivatives, lies the way in which neoliberal capitalism has been able to supplement the loss of demand linked to the depleted incomes of working people by trapping them in ownership of expensive yet worthless homes (or other goods) through credit. Indeed, it is thanks to credit that demand levels have been maintained for so many years; the fact that this credit growth was entirely linked to self-fulfilling fantasies regarding asset values signals an irrationality which ridicules the claims to science often heard in mainstream economics departments. Moreover, the hardships many average informal and formal workers and their families are suffering in the crisis has shed a particularly crude light on the readiness of states to invest hitherto unavailable billions of dollars in bailouts, which have often not even been used to re-assert control over the banking system.

This book and the Global Labour Column hope to make an important and engaged contribution to the public debate on some of the issues discussed above, but also to stimulate an exchange of ideas contributing to the rebuilding of the union movement. Moving towards more inclusive and more equal societies requires stronger unions and a broad-based movement for change. The column offers a unique meeting point to progressive academics, from universities, trade unions and international organizations, and activists and trade union leaders. The title of the book – Don’t waste the crisis – is meant to emphasize that, if one good thing can come out of this crisis, it is to reopen debate on the direction of economic policy and on how people are employed. Now that the claim that worker-adverse policies were “good for growth"has been dismissed, it is essential to join forces for a new economic dispensation, which will ensure economic development with decent job opportunities. It is time to question the central policies of neoliberalism and their assumptions, such as the “requirement"for the state and social security systems to spend less. Union members are among the first victims of state spending cuts. Challenging such policies requires economic strategies and political mobilization that are focused on quality jobs, fair wages, comprehensive public services, political as well as industrial democracy and long-term social and environmental sustainability, rather than on the narrow interests of a financially affluent minority. But it is also time to discuss, honestly and in a constructive manner, the shortcomings of trade unions when they have sometimes failed to defend the weakest workers; and to propose ways in which unions can be inclusive and at the forefront of social and economic progress.
1 Harvey (ibid.) shows how the very first series of measures adopted by Paul Bremer in Iraq in 2003 all revolved around the opening of the Iraqi economy to US corporate investment, while “[t]he right to unionize and strike … were strictly circumscribed"(p. 10). One can appreciate the sense of priorities that inhabited the US Government in the immediate aftermath of a war waged in the name of freedom, when much of the country’s critical infrastructure had been destroyed by bombs.
2 Gabriel Palma, the source of this graph, argues that neo-liberalism is the art of achieving such “redistribution"in a democracy.

Download this article as pdf

Nicolas Pons-Vignon is the editor of the Global labour Column and a Senior Research Fellow with the Corporate Strategy and Industrial Development (CSID) research programme, University of the Witwatersrand, South Africa. He is also the founder and director of the African Programme for Rethinking Development Economics (APORDE).

References:

[Nov 05, 2011] Steve Keen Harvard Starts its Own PAECON Against Mankiw

Neoclassicals are hacks who “electively pick research to suite their agendas"-- and this includes ignoring critical literature generated even when it comes from leading lights within neoclassical economics.
November 3, 2011 | naked capitalism

aletheia33:

here is the full text of the economics 10 walkout students’ letter to mankiw: ______________________________

Wednesday November 2, 2011

Dear Professor Mankiw—

Today, we are walking out of your class, Economics 10, in order to express our discontent with the bias inherent in this introductory economics course. We are deeply concerned about the way that this bias affects students, the University, and our greater society.

As Harvard undergraduates, we enrolled in Economics 10 hoping to gain a broad and introductory foundation of economic theory that would assist us in our various intellectual pursuits and diverse disciplines, which range from Economics, to Government, to Environmental Sciences and Public Policy, and beyond. Instead, we found a course that espouses a specific—and limited—view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today.

A legitimate academic study of economics must include a critical discussion of both the benefits and flaws of different economic simplifying models. As your class does not include primary sources and rarely features articles from academic journals, we have very little access to alternative approaches to economics. There is no justification for presenting Adam Smith’s economic theories as more fundamental or basic than, for example, Keynesian theory.

Care in presenting an unbiased perspective on economics is particularly important for an introductory course of 700 students that nominally provides a sound foundation for further study in economics. Many Harvard students do not have the ability to opt out of Economics 10. This class is required for Economics and Environmental Science and Public Policy concentrators, while Social Studies concentrators must take an introductory economics course—and the only other eligible class, Professor Steven Margolin’s class Critical Perspectives on Economics, is only offered every other year (and not this year). Many other students simply desire an analytic understanding of economics as part of a quality liberal arts education. Furthermore, Economics 10 makes it difficult for subsequent economics courses to teach effectively as it offers only one heavily skewed perspective rather than a solid grounding on which other courses can expand. Students should not be expected to avoid this class—or the whole discipline of economics—as a method of expressing discontent.

Harvard graduates play major roles in the financial institutions and in shaping public policy around the world. If Harvard fails to equip its students with a broad and critical understanding of economics, their actions are likely to harm the global financial system. The last five years of economic turmoil have been proof enough of this.

We are walking out today to join a Boston-wide march protesting the corporatization of higher education as part of the global Occupy movement. Since the biased nature of Economics 10 contributes to and symbolizes the increasing economic inequality in America, we are walking out of your class today both to protest your inadequate discussion of basic economic theory and to lend our support to a movement that is changing American discourse on economic injustice. Professor Mankiw, we ask that you take our concerns and our walk-out seriously.

Sincerely,

Concerned students of Economics 10

Richard Kline:

So Memory, exactly. Mankiw’s synthesis is political propaganda designed to socialize candidates for the ruling class in what their acceptable worldview is to be, nothing more. Analysis would interfere with that, as would contrast-and-compare exercises; thus, both are omitted. What Mankiw is doing is political indoctrination, his snuffling remark in his response to the walk out that “I leave my politics at the door"when teaching notwithstanding. Maybe he does—since all he shows _is_ a political perspective, he can leave ‘I’ statements out and simply point, disingenuously, at this syllabus. —And it wouldn’t matter who was teaching this class, no; the function is exactly the same. Kind of like catechism, really . . . .

Lloyd Blankstein:

Mankiw is world famous economist. Steve Keen is only a nameless blogger, who teaches economics in his spare time. I want to stay on the side of the titans – Mankiw, Summers, Krugman, Greenspan, Bernanke. The only purpose of economics is to justify and legalize theft. If Steve Keen cannot do that, he is a BAD economist. Why listen to him?

monte_cristo:

 I studied 101 economics in 1981, I seem to recall. The analytic component was easy, it’s like arithmetic, maths, logic, you know we have the axioms and we proceed. The ‘descriptive component’ .. basically unions versus management I choked on. I had a sweet lecturer. He actually held to a marxist analysis: roi/s the logic etc etc. It made a lot more sense than the reqired ‘understanding’ that the course required. Right at this moment I find myself in awesome agreement with the Harvard protesters. Mankiw is my opinion (and who am I(?)) is just a semi-second rate academic that rode the wave with his text book. Nearly any fool can do it given the auspicious historical circumstances. That doesn’t make it right, in fact it just makes him cheap, opportunistic, and confused. Just to expand this criticism I have an interest in clinical psychology. Any idiot that believed Freud after he sold himself out when his m/c//r/c audience kicked up when he told them that their childrens problems were the result of their abuse needs to be hanging their heads in shame, as should have Freud. Freud was brilliant but a disgrace to himself. It is a beautiful analog this moment. You either get this or you don’t. My message is “Screw the rich."Analogue: Screw the abusers.

Skippy:

 @Brito,

I’m still waiting for your reply, how do you model trustworthiness, see below:

http://ageconsearch.umn.edu/handle/104522 

Look, if the model can not describe the human condition, then all you are building is a behavioral template, which you then_shove down_upon_humanity. All Mankiw is doing is reinforcing his worldview cough neoliberal see:

David Harvey notes that the system of embedded liberalism began to break down towards the end of the 1960s. The 1970s were defined by an increased accumulation of capital, unemployment, inflation (or stagflation as it was dubbed), and a variety of fiscal crises. He notes that “the embedded liberalism that had delivered high rates of growth to at least the advanced capitalist countries after 1945 was clearly exhausted and no longer working."[10] A number of theories concerning new systems began to develop, which led to extensive debate between those who advocated “social democracy and central planning on the one hand"and those “concerned with liberating corporate and business power and re-establishing market freedoms"on the other. Harvey notes that, by 1980, the latter group had emerged as the leader, advocating and creating a global economic system that would become known as neoliberalism.[11]

———-

Skippy…Humanity is the horse pulling the cart. Neoliberalism is nothing more than a glazed apathetic leash to ones own chosen addictions (see economic menu), to justify egregious wealth and power concentration. I find this state deeply wrong. And like Mr. Kline pointed out, one day you_may_wake up and can’t pull your head out of the bucket, drowning in recognition of past deeds or even worse, look in the mirror and see Dick Cheney and be OK with it.

http://video.google.com/videoplay?docid=-925270800873130790 

Steve Keen:

“Steve Keen is a hack who selectively picks research to suite his agenda".

Cute Brito! From my reading of economics, most neoclassicals are themselves hacks who “electively pick research to suite their agendas"–and this includes ignoring critical literature generated even when it comes from leading lights within neoclassical economics.

Here’s a few “selectively picked research papers"on IS-LM and DSGE modelling that I’d like to see you prove are wrong and should be ignored:

Hicks, J.R., (1980). ‘IS-LM: an explanation’, Journal of Post Keynesian Economics, 3 (2): 139–54:

“I accordingly conclude that the only way in which IS-LM analysis usefully survives – as anything more than a classroom gadget, to be superseded, later on, by something better – is in application to a particular kind of causal analysis, where the use of equilibrium methods, even a drastic use of equilibrium methods, is not inappropriate"

Solow, R. M. (2001). From Neoclassical Growth Theory to New Classical Macroeconomics. Advances in Macroeconomic Theory. J. H. Drèze. New York, Palgrave.

[N]ow … if you pick up an article today with the words ‘business cycle’ in the title, there is a fairly high probability that its basic theoretical orientation will be what is called ‘real business cycle theory’ and the underlying model will be … a slightly dressed up version of the neoclasssical growth model. The question I want to circle around is: how did that happen? (Solow 2001, p. 19)

Solow, R. M. (2003). Dumb and Dumber in Macroeconomics. Festschrift for Joe Stiglitz. Columbia University.

. The preferred model has a single representative consumer optimizing over infinite time with perfect foresight or rational expectations, in an environment that realizes the resulting plans more or less flawlessly through perfectly competitive forward-looking markets for goods and labor, and perfectly flexible prices and wages. How could anyone expect a sensible short-to-medium-run macroeconomics to come out of that set-up? My impression is that this approach (which seems now to be the mainstream, and certainly dominates the journals, if not the workaday world of macroeconomics) has had no empirical success; but that is not the point here. I start from the presumption that we want macroeconomics to account for the occasional aggregative pathologies that beset modern capitalist economies, like recessions, intervals of stagnation, inflation, “stagflation,"not to mention negative pathologies like unusually good times. A model that rules out pathologies by definition is unlikely to help. (Solow 2003, p. 1)

Solow, R. M. (2007). “The last 50 years in growth theory and the next 10."Oxford Review of Economic Policy 23(1): 3–14.

the main argument for this modeling strategy has been a more aesthetic one: its virtue is said to be that it is compatible with general equilibrium theory, and thus it is superior to ad hoc descriptive models that are not related to ‘deep’ structural parameters. The preferred nickname for this class of models is ‘DSGE’ (dynamic stochastic general equilibrium). I think that this argument is fundamentally misconceived… The cover story about ‘microfoundations’ can in no way justify recourse to the narrow representative-agent construct…

The nature of the sleight-of-hand involved here can be made plain by an analogy. I tell you that I eat nothing but cabbage. You ask me why, and I reply portentously: I am a vegetarian! But vegetarianism is reason for a meatless diet; it cannot justify my extreme and unappetizing choice. Even in growth theory (let alone in short-run macroeconomics), reasonable ‘microfoundations’ do not demand implausibility; indeed, they should exclude implausibility. (Solow 2007, p. 8)

Lefty :

You hate the word neoliberal because of how much of a failure neoliberal policies have been. Yes, there is some disagreements amongst neoliberal economists, but there are many, many commonalities as well. Same goes with words like socialism. There is, or was, social democracy in Western Europe that was different than the socialism of the Nordic countries, which was different than Yugoslavian socialism which was different than Cuban socialism which was different than Maoist China. They were all different, sometimes radically different, but shared certain characteristics which made them “socialist". You are running away from performance of neoliberal economics, not the label.

“further exposing how completely untrue your lies are about economists being rigidly right wing"

I have a degree in economics, which I mentioned. I am taking classes this fall. Never once had a non-neoclassical teacher. Not once. I wish I had a Yves Smith or a Steve Keen teaching me. I had to work hard to find economists like them. I DID hear lots of hostility to unions, regulation, non-market based solutions to environmental issues. Lots of pretending things about perfectly competitive markets, perfect information, all information being encoded in prices, preferences of all market participants being identical. Was taught how great “free trade"was by teachers who obviously never read Ricardo, never read the assumptions Ricardo articulated in defense of free trade that are radically different than the world we live in today. Again, neoclassical economics HAS dominated the profession and we know the types of ideas and theories neoclassical professors regurgitate.

One last time, the heads of institutions like the ECB, IMF, the US Treasury, the World Bank, the BIS, they all were taught this type of economics. They all have roughly the same ideas, even after their policies have caused economic collapse. I see no evidence they’ve learned any lessons at all. They’re willing to force countries to socialize the losses of their financial puppet masters in order to save their pet theories. Sorry, but its your type of mentality that makes me embarrassed to tell people close to me that I am an economist in training.

They, understandably, are skeptical. Many of my friends are politically astute and progressive, or whatever the term is. They ask, “aren’t you economists ruining Europe?"“Didn’t you economists deindustrialize the country, financialize the economy, cause wealth inequality to explode, private and governmental debt to balloon?". Yep, and I have to explain that there are many schools of thought in economics and…by that point they have heard enough. They respect me, but not what I am studying. Economics wasn’t always such a joke. It used to have meaning, it was a powerful tool to make the world a better place. Neoclassical economists have ruined a wonderful field of study and they’ve caused lots of harm to people the world over. Go to bed!

Philip Pilkington:

 “Nevertheless, economists are constantly disagreeing with each other, it is not a rigid cult, get over it."

Here’s the deal, buddy. The accusation we make is this: a training in mainstream economics narrows a person’s perspectives so much that they simply cannot see outside the counterfactual and empirically unjustifiable claims the whole discipline (barring a small few) make.

You’re caught up in this too. That’s why what you think of as dissent is, to the rest of us, just pointless nonsense.

You say Marxism. There are different strains but most believe in the labour theory of value. If I debunk the LTV the WHOLE OF MARXISM GOES WITH IT. Likewise for neoclassical economics. There may be different currents, but if I debunk, say, equilibrium analysis when applied to complex systems constantly subject to entropy THE WHOLE OF NEOCLASSICAL ANALYSIS GOES WITH IT.

You’re already trapped, I’m afraid. You’ve swallowed the party line and you’ll never see beyond it. When people raise critiques you’ll react as you did above (“But dur-hur, then my ideas about inflation [which are derived from the same system of knowledge being criticised] don’t work… therefore you must be wrong"). Do you see the trappings here? It’s like a cult.

If I said to an evangelical that evolution is true, they’d respond by saying something like this (“But then my theory of creation doesn’t work… therefore you must be wrong"). It’s the same thing. Your ‘education’ has trapped you in a closed, self-referential system of knowledge. This is what the Harvard students protested. AND THEY ARE DAMN RIGHT.

Lefty:

“I don’t want to get into a debate about some boring discussion on some technical crap"

I do. I am saying that the assumptions that get mentioned continuously throughout an undergraduate and graduate education have no basis in reality. If you can’t prove they do then what exactly are you arguing?

“I’m absolutely certain that you look at certain models and reject the ones that do not fit into your ideology and come up with pseudo-scientific ad hoc justifications for doing so, I simply have no interest in that."

Except when you’re the one doing it. You dismissed Dr. Keen’s work out of hand. You haven’t shown that you have even a passing knowledge of what he’s written. I DO have an ideology, as do you. I can at least admit it. I read those I disagree with however and try to keep an open mind. Neoclassical economics is very ideologically rigid and you know it. We both also know how non-neoclassical economists are treated by economics schools, and it has nothing to do with the soundness of their ideas.

“when it can almost always be shown empirically that it’s actually a result from massive levels of corruption and corporate capture, leading to policies certainly counter to what not only modern economics would suggest but even common sense."

All of the empirical evidence shows this, huh? The US, New Zealand, Australia, most countries in Europe, they’ve all moved to the right on economic policy in recent decades. They have privatized services & resources, lowered individual and corporate taxes, deregulated finance, liberalized trade. Left wing, right wing, centrist parties have implemented these policies. Higher, moderate and middle income countries. All are in horrible shape as a result, and it is because of “corruption". the ECB’s massive policy failures? All the empirical evidence shows this? Same with with most countries in Latin America. Have many countries in the region seen growth increase, inequality decrease, access to basic services vastly improve, happiness with democracy increase (take a look at latinobarometro polls during and after neoliberal governments took power), because they tackled corruption? Is it just a coincidence that they have largely turned their backs on neoliberal economic policies?

“just because you knowledge of postgraduate economics does not mean you will be able to solve the worlds problems"

Never said that, wasn’t my point. Economists, once again, almost without exception, have studied neoclassical economics. It has been their jobs to craft economic policy. Not to solve the world’s problems, to craft economic policy. Their policies have been miserable failures, for decades. In the developed, developing and underdeveloped world. Their job has been to draw up and implement economic policy and they have done a horrible job. We can pretend that something other than neoclassical and neoliberal economics is to blame if you’d like.

Neoliberalism and OWS by John Holbo 

real neoliberals were primarily a political group, promoting “market liberalism" by any means necessary.
October 22, 2011

Tim Worstall 

Standard whine: neoliberal seems to have two different current meanings.

Hayek/Friedman etc style and Yglesias/DeLong style. The latter seemingly being a recent and American neologism.

/whine.

“Were neoliberals wrong all along, or is it the case that, like ‘pure’ communism, neoliberalism has never really been tried? (We never tried to conjoin market liberalization with appropriately fair and equitable taxation and regulation schemes, so we don’t know that it wouldn’t work.)"

Using the US meaning of neoliberalism a good argument could be made that the Nordics are doing just that. Seems to work out OK. A reasonable description of what they’re doing is classical liberalism (ie, UK style neoliberal) with a decent dose of govt spending on top.

As Lane Kenworthy has pointed out, the Swedish tax system is less progressive than the US (or UK) one. For it raises a lot through a regressive VAT, but that’s what raises the cash to do all the spending.

And as Scott Sumner delights in pointing out, underneath the tax system (and even including parts of the tax system, like the taxation of corporates and capital) the Nordics are generally more neoliberal (classically so, UK style neoliberal) than the US.

Henri Vieuxtemps:

Neoliberalism is not just some idea; it’s an idea that clearly and directly benefits the establishment. And so one shouldn’t take think~tank~invented/useful~idiot~amplified ‘sure, there will be winners and losers, but don’t worry: the losers will be well~compensated’ bullshit seriously.

John Quiggin

Promise this is the last time on terminology: “Liberal"has different meanings in US and elsewhere, and differences in “neoliberal"follow from this. As long as we understand which is meant, no problem.

Coming to the bigger issue, the “correct line"coming out of the globalization debates was, something “For progressive globalization, against neoliberal (non-US sense) globalization". That meant switching the focus from old-style protectionism to a bunch of measures that aimed to challenge the global dominance of capital, which is very much what #OWS is about. Examples

■“No Logo"style pressure on corporations like Nike and Apple regarding working conditions, including those of their subcontractors ■Inclusion of labor conditions in trade negotiations (the point being to demand some form of “best practice", including things like union rights, not to exclude imports from low-wage countries) ■Restrictions on global capital, of which the Tobin tax is at least symbolically, the number one demand I also don’t want to restart previous threads, but clearly #OWS has learned a tactical (or maybe strategic, I’m never sure about this distinction either) lesson from the anti-globalization protests of the last decade – smashing windows is fun, and gets quick headlines, but marginalizes you in the long run.

wilfred 

“We never tried to conjoin market liberalization with appropriately fair and equitable taxation and regulation schemes, so we don’t know that it wouldn’t work."

It’s interesting that this is placed parenthetically, as if the thought had not entered into anyone’s mind at the time.

Does this means that we still don’t know if it wouldn’t work. What does ‘work’ even mean in this context. Clearly the previous situation worked quite well for a small group of people and practically obliterated a large group of people. The political fact is that neoliberalism was pitched as the next great thing in political economy.

Well, here we are.

Barry:

Wilfred is right – and I add that I never noticed any of the neoliberals even trying; they consigned it to the ‘far future, when the state withers away, and True Communism emerges’.

John, the entire right-wing movement (including movement libertarianism) makes much much more sense when viewed through the paradigm of ‘redistribute wealth upwards’. And we’ve seen what the GOP does when stripped of the usual luxuries, and put backwards onto their core – they went for removing as much money from the 90-odd percent as possible, while happily subsidizing the top 1%. And over the decades, the right has eagerly and successfully attacked entitlements, while keeping and extending crony capitalism. When they start acting like people who actually believe their propaganda, I’ll believe it. Until then, their propaganda is just designed to set up the victims, and to salve the conscience of those ‘useful idiot’ liberals who look upon evil works, and come up with bullsh*t to cover for those works.

You put out a sweet review of Frum’s ‘Dead Right’ several years ago, and have now seen those views put into actual operation. You and he both figured that those views were not politically achievable – yet the right has achieved most of them.

Are you willing to accept the evidence in front of you?

I’m getting a bit personal, John, but this has become your trademark, coming up with reasons to not accept the evidence of evil.

Cranky Observer:

> This is [A-list political analyst]’s point. He considers himself a neoliberal > and sees, correctly, I think, that anyone committed to that market-oriented > outlook is more or less committed to sympathy for the core grievances > expressed by the OWS protesters. Neoliberalism was always in favor of > markets as means, not ends. Neoliberalism was never – or was never > supposed to be – the view that being in favor of trade liberalizaton > means market fundamentalism in everything. Neoliberalism says market > liberalization should go hand in hand with progressive taxation and > appropriate regulation so the pains that buy the gains are mitigated > and borne equitably.

As far as those who are not [Charles Peters-type] neoliberals can see, the neoliberal manifesto consisted of these steps:

1) Cave in to the libertarian wing of the Republican Party on taxes, regulations, tariffs, privatization, and worship markets as a god 2) Beat down liberals and “the left"on behalf of Republicans, big business, and big money and reorient the Democratic Party to the service of those groups 3) Talk a lot about the possibility of redistributing from winners to losers and a big progressive tax rate system 4) ???? 5) Pie paradise on Earth!

The problem is that the modern neoliberals, particularly the 2nd generation who are a large percentage of today’s A-list bloggers, simply refuse to discuss the little problems that have occurred in steps 3 and 4 in their program. And they absolutely refuse to acknowledge that if steps 3 and 4 are politically impossible that maybe, just maybe, starting with steps 1 and 2 was not and is not today a good idea.

Cranky

tomslee  

I agree with half of Rich Puchalsky’s kinetic theory of movements.

The idea that the pronouncements of (armchair?) theorists are more representative of a movement than the actions of people actually moving (involved in demonstrations) seems very odd. And more than one window has been broken.

But the difference between static occupations and kinetic marches makes sense to me. Plus, police with video footage can more easily track down static occupiers than they can marchers who have long-since travelled back to where they came from.

Antonio Conselheiro  

We’ve had some debates on Crooked Timber of late about what ‘neoliberalism’ means. I’ve not participated because, honestly, term’s more trouble than it’s worth, worrying what it means.

Nobody should claim to understand neoliberalism or claim that neoliberalism is impossible to understand without first reading Mirowski (ed.) The Road From Mont Pelerin.

We can now, if we like, refight old battles. Were neoliberals wrong all along, or is it the case that, like ‘pure’ communism, neoliberalism has never really been tried?

Can we at least note that the non-conservative neo-liberals, like the liberal neocons, were useful idiots who have now ceased to exist since there’s really nothing for them to do any more? They got the conservative part of what they were trying for and the liberal part of what they were trying for has been a dead letter since as early as NAFTA. The new-liberals’ left opposition has been defeated, destroyed, and humiliated, and if the neoliberals aren’t feeling so good themselves either, why should anyone care?

Maybe Yglesias has finally decided that drum circles and giant puppets aren’t absolutely the most horrible thing in the world, after all, but his work is done and he’s of no further importance. He never knew what his job was, but he did it. The reality that his efforts contributed to producing has little resemblance to the one he claimed he was aiming for, but that’s the way it goes with emergence.

It’s time to say that the dog is dead.

David Kaib:

For the record, I think a lot of the globalization critics did not describe themselves as either anti-globalization or anti-trade. They described themselves (accurately, in my opinion) as supporting global justice. They critiqued trade polices they argued were destructive to the earth as well as to the bulk of the people in both the ‘developed’ and ‘developing’ worlds. They argued that these polices were being developed in secret in the interests of the already too powerful. Isolationism and protectionism are largely epithets hurled at those who question the orthodoxy, rather than useful description of actual political positions.

Also, ditto what Rich said about window smashing. This is not an unimportant point. The idea that these protestors were violent and engaged in routine property destruction was the main justification for the army of police in riot gear that was assembled in response to these protests. Of course, it was the idea that regular people were trying to have a say in some of the more important aspects of how they were governed that scared the governors back then (which has obvious parallels to today).

Antonio Conselheiro:

Standard whine: neoliberal seems to have two different current meanings.

Hayek/Friedman etc style and Yglesias/DeLong style. The latter seemingly being a recent and American neologism.

Mirowski et al describe the real, Hayek Friedman neoliberals. American liberal neoliberals were a transient phenomenon which no longer has any meaning to exist.

The neoliberals believed that Greenspan, the Randian, was a neutral technocrat who could be trusted to use his unchecked, accountability-free power for the good. After the disaster he had contributed to head taken place, he said the equivalent of “Oh, gee, I guess I should have done a few things differently"and went on to enjoy his retirement and cheerlead the Republican dismantlers of the welfare state.

So economically, in some sense, he lost, but politically he won. And according to Mirowski, the original, real neoliberals were primarily a political group, promoting “market liberalism" by any means necessary.

Antonio Conselheiro 10.22.11 at 2:29 pm

Non-violence is not a moral good or an obligation. No one is saying that the police or the military or the Israelis should be non-violent. It’s a tactic imposed on weak and unpopular political groups which are basically begging for mercy.

Martin Luther King and Gandhi were fine, but they didn’t change the world, delegitimize all violence everywhere forever, and bring us to a world where all disputes are settled within the law by peaceful discussion. They just dealt with the situations they found themselves in.

Breaking windows is a bad tactic these days, and not the transformational revolutionary act people wish it was, but it’s not wrong because the world has renounced violence. It’s just a tactic that the weak and unpopular are barred from using. Police on drug raids break lots of windows.

A different question: OWS is actually popular, but in most of the US you couldn’t tell that from what you see and hear out in public. The center right and right domination of the mass media means that majorities think that they’re minorities.

William Timberman:

My problem with the Yglesias/Delong tendency — I refuse to call such a graceless socio-economic collage a style — is that it literally has no sense of how the other half lives, and not much interest in whether it does or doesn’t. Being very smart fellows, of course, they’ll never, ever wind up walking behind a plough, although you may find them reading Greek to the idiot sons of the plutocracy from time to time.

Cahal 

‘Which brings up another line entirely. Which income inequality? In country or global? Trade, the globalisation thing, has been doing pretty well at reducing global inequality even if it could (and people better at all this than I argue that it does) increase in country inequality.’

Slow down! Poverty in the developing world, outside of China (who are incredibly protectionist) has increased over the past few decades, particularly in Africa:

http://www.stwr.org/globalization/world-bank-poverty-figures-what-do-they-mean.html

Gene O'Grady:

Mr. Timberman is basically correct (although unlike Duncan Foley neither DeLong nor Yglesias know Greek), but the problem is not so much their not knowing how the other half (or 99%) live as their not respecting the work the 99% (or the other half) do. Which gets to the original point that redistribution to people whose world of work has been destroyed is pointless, insulting, and will never happen.

Antonio Conselheiro :

Violence did eventually help delegitimize white supremacy, but the violence in question was hundred and hundreds of murders and a few towns burned to the ground, and it took 50-100 years before anyone noticed. In the same way, one broken window delegitimized a left movement overnight.

Of course, about a third of the US Senate supported the murders, so it wan’t exactly real “violence"violence, if you know what I mean.

Mitchell Freedman:

Neo-liberals were always wrong, and their grand bargain never occurs. There are no higher taxes on the wealthy. There is no regulation that mean any real help to consumers or God forbid, workers. And let’s face it. The neo-libs hate unions almost as much as Sam Walton did.

The economic lefties who said, essentially, we need to make what we buy and buy what we make, were and are spot on. And let’s not fall for the canard that we are hurting Third World folks with a protectionist policy. The way for the US to start not hurting Third World people is not bombing them. And the next step would be to support policies in those nations which are in regions where all are exploited. The idea would be for those nations to band together economically where their people can build what they buy and buy what they build where people are on the same economic plane.

It has never made sense to me why we keep pushing down the income and stability of our workers. This current economic mess is a result of the Reagan-Bush I-Clinton-Bush II consistency in attacking the middle class with their neo-liberal and conservative economic policies. And as Dean Baker notes, there is no “free"trade. The trade deals protect patents, which is a rent inuring to the top 10%. And they protect us lawyers, doctors, etc. from having to compete with people from foreign lands who will work cheaper than we are working.

The thing that also amazes me is how most Americans consistently poll against these trade deals, which codified the very trends that have undermined the middle class in the US, and beggar peasants in Third World nations. Yet, the monied interests prevail…and John says, “Oh, can’t we all get along?"with “we"meaning the neo-libs like Obama, Clinton, Biden, Pelosi, Reid, et al. and folks like me. In case John hasn’t noticed, Obama has ignored even semi-trade agreement supporters like Reich and Krugman, let alone Rich Trumka of the AFL-CIO and Lori Wallach of Public Citizen, who Obama, Pelosi, Reid, Biden and Clinton simply hate. Really, John, they hate folks like them, and they really hate folks like me. That’s what David Frum was saying when he said the Democratic Party leaders hate their base.

And yet you ask “Why can’t we get along?"Sorry, John. Maybe you can sneak into a cocktail party in DC and ask those tone deaf political leaders who do the bidding of corporate and financier America why they hate us. They hate us, of course, because, like John, the evidence shows they were wrong and we were correct.

Harold:

“The idea that these protestors were violent and engaged in routine property destruction was the main justification for the army of police in riot gear that was assembled in response to these protests. Of course, it was the idea that regular people were trying to have a say in some of the more important aspects of how they were governed that scared the governors back then (which has obvious parallels to today)."

Don’t forget that riot gear , surveillance equipment, security consulting domestically and abroad, etc., etc., are boom-time make-work industries for the crony capitalists, revolving door military, mercenaries, and 1% wannabes. It’s perhaps the most prosperous going, right now. Any excuse for grabbing those big security bucks.

John:

I just read your review of Frums “Dead Right", Mr Holbo. Very funny stuff indeed. I know these are more serious times but any chance anyone might critique Mark Steyns new production with the same rigour? I really dont want to read it myself, (it appears the US is doomed as too many people are going to Harvard, joining NGOs/dreaming up ways of regulating capitalism to death, starting work too late in life, 35 apparently, and retiring to early, 44, and not doing enough amateur carpentry in their spare time. Of course all of this would be bad enough without an unstoppable Muslim takeover that political correctness prevents us from tackling) The mans clearly insane

Antonio Conselheiro:

“They hate us, of course, because, like John, the evidence shows they were wrong and we were correct."

Mostly they hated us because we’re their defeated victims but aren’t completely dead yet.

Robert:

I think the point was that not only is Duncan Foley a better economist than Brad DeLong, he is also better on classical Greece.

Antonio Conselheiro  

Marc, very few of us are absolute pacifists. (My argument with them is a different one.) Most of us support police violence, military violence, and violence in self-defense, up to and including homicide in all three cases. Homicide, not murder. We do not condemn homicide by the legitimate authorities.

Pretty much any insurgent movement (good or bad) that’s ever come along, including the successful ones that eventually became legitimate, has used homicide at some point. That’s a normal part of history. There’s a transition when murder and other illegitimate revolutionary violence, if successful, are reclassified as legitimate violence. Ireland and Israel are cases in point, as well as most Latin American regimes and most third world regimes.

The argument isn’t about violence but legitimacy and about prudence.

Whenever this kind of thing comes up, a lot of people briefly adopt absolute pacifism, the way you put on a disposable raincoat during a sudden shower. Then they return to normality, which is 5% of the GDP spent on death-dealing.

I agree that weak movements should avoid violence. I agree that in Heaven there will be no violence. I just disagree with the way non-violence raincoat is briefly put on whenever a dissident movement arises, and with the way broken windows are conflated with murder.

bob mcmanus:

They’re desperate, either to get Obama re-elected or to make a feint to the left so they can blame the Left for Obama’s loss in 2012.

They will betray us. This is about the only truth.

Cahal:

‘And as Scott Sumner delights in pointing out, underneath the tax system (and even including parts of the tax system, like the taxation of corporates and capital) the Nordics are generally more neoliberal (classically so, UK style neoliberal) than the US.’

This is a massive myth. The UK and US are the least regulated countries in the developed world, and the Nordic ones are somewhere in the middle:

http://flipchartfairytales.files.wordpress.com/2011/06/oecd-regulation-index.png?w=640&h=352 

Heritage simply bias their results so the countries with the highest ‘economic freedom’ indexes also have the highest growth.

Corporate tax is also slightly higher in most Scandinavian countries (and effective tax rates will be even lower in the UK/US due tax havens).

elm

Here’s the meaningful part of Yglesias’s comment:

some of the solutions offered by some protestors are unsound. This is all the more reason that liberals with confidence in liberal solutions should show up and try to persuade people to champion a more sustainable set of economic policies.

The Occupy Wall Street protestors must be co-opted and serious people (like, for example, Matt Yglesias) should be put in charge of implementing their own solutions.

Rich Puchalsky 

“The Occupy Wall Street protestors must be co-opted and serious people (like, for example, Matt Yglesias) should be put in charge of implementing their own solutions."

To be fair, that’s pretty much the position of every existing tendency with regard to OWS. My blog post plus comments here has a good sample.

Everyone who is actually going to try to do this is in OWS or one of its regional groups already, so that kind of “we should show up and educate them"thing is becoming more and more dated.

David Kaib

Harold @25,

A very good point. The uses of military hardware for domestic purposes, for responding to protestors, immigrants / borders, urban drug use, etc., is big business.

shah8 

The OWS movement is inherently incapable of offering any sort of sustainable policies. I find it weird to expect sustainable policies, and I certainly would not “advise"such a movement about potentially better policy goals.

It’s just a phenomenon. That doesn’t mean that there aren’t important things underlying it, or that it can’t be important in its own fashion. However, it’s a signal/symbol and not an action per se, and its importance has to do with that.

Charles Wheeler

“Neoliberalism was never – or was never supposed to be – the view that being in favor of trade liberalizaton means market fundamentalism in everything. Neoliberalism says market liberalization should go hand in hand with progressive taxation and appropriate regulation so the pains that buy the gains are mitigated and borne equitably."

Well, they’ve certainly had me fooled all this time. There was I thinking ‘neoliberalism’ meant privatisation, small government, more regressive taxation to float all the boats, slashing state spending on healthcare, education and pensions, increased inequality, lower social mobility, sink or swim economics.

How silly.

john c. halasz 10.22.11 at 6:24 pm

@9:

“In country"inequality has been rising “globally".

.45 geo 10.22.11 at 6:27 pm

Yglesias has (quite rightly) taken a lot of criticism in this and previous CT threads, but my hat’s off to him for his TNR symposium comment. Though their presence and influence is now fortunately on the wane, those smug bastards at the New Republic have done considerable damage over the years, and it’s nice to have someone they respect tell them so, however politely.

.46 bert 10.22.11 at 6:40 pm

Talking of broad appeal, it’s not just Mitt Romney making nice:

Kozlowski says he shares the outrage over corporate greed expressed by the Occupy Wall Street protesters, many of whom wonder why the recent financial crisis didn’t send as many executives to prison as the scandals of a decade ago. “I understand their frustration,"Mr. Kozlowski said in an interview in a visitors’ room here at the Mid-State Correctional Facility. http://dealbreaker.com/2011/10/guy-who-used-company-funds-to-throw-wife-birthday-party-featuring-vodka-pissing-ice-sculptures-morally-offended-by-corporate-greed/

Colin Danby 10.22.11 at 7:54 pm

One of OWS’ strongest insights is that finance is not played by neoliberal rules: losses are nationalized. And this pattern is not unrelated to a rising Gini coefficient, because the part of wealth that is thereby protected is relatively concentrated. This connection has been made by none other than Tyler Cowen: http://www.the-american-interest.com/article.cfm?piece=907 (start at about the middle).

Krugman has also recently restated an obvious point: financial institutions that are likely to need bailouts in bad times should be regulated in good times—and this means regulation covering the whole balance sheet, not just fine-tuning capital requirements. One of the many meanings/uses of “neoliberal"was in the push for financial liberalization in the 80s and 90s: both domestic deregulation and lifting of restrictions on cross-border finance. Larger financial mkts would better allocate finance. Of course this meant comprehensively forgetting the politics of bailouts. For me the canonical critique is Carlos Diaz Alejandro’s 1985 paper: http://www.econ.uchile.cl/uploads/documento/27d99b44b4a2c5d46679ee694d81b18a2289a728.pdf

In any case the questions in the final paragraph of the initial post seem to me rather too broad. I would rather think through different kinds of markets than have to opt for one or another fundamentalism re “markets."

Brad DeLong:

Tim Worstall whines: “Standard whine: neoliberal seems to have two different current meanings. Hayek/Friedman etc style and Yglesias/DeLong style. The latter seemingly being a recent and American neologism. /whine."

Manfred Steger and Ravi Roy’s “Neoliberalism: A Very Short Introduction"calls Bill Clinton and Tony Blair “second wave neoliberals". David Harvey’s “Brief History of Neoliberalism"is, if I recall correctly, rather strident in its claims that their ain’t a dime’s worth of difference between Reagan and Thatcher on the one hand and Clinton and Blair on the other.

It’s not an American neologism. It’s not recent either—people have been calling me a “neoliberal"since at least 1993…

Brad DeLong

.52 Ben Alpers 10.22.11 at 9:29 pm

@51: The U.S. neologism is indeed not very new (it’s from the early 1980s), but it has a distinctly different meaning from Steger, Roy, and Harvey’s usage. As someone pointed out upthread, the core difference is that while the early 1980s U.S. “neoliberalism"was proposed as a variation on what Americans mean by liberalism (i.e. the mildly social democratic legacy of the New Deal and Great Society), “neoliberalism"in the sense that nearly everyone else uses it is a variation of liberalism in the European sense.

Things are further complicated by the following factors:

1) Neoliberals (in the American sense) sought to move the Democratic Party to the right, especially on economic issues. Though they adopted the self-descriptor “neoliberal"as a parallel construction to “neoconservative,"the policies they proposed were also often neoliberal in the more usual, international sense (which is, incidentally, largely used as a pejorative, unlike the U.S. term in its heyday).

2) The U.S. term “neoliberal"had virtually disappeared from public discourse by the early 1990s. It was replaced by terms like “third way"(another term with competing meanings) and “New Democrat."

3) Meanwhile, the more internationally usual usage of “neoliberal"began to enter U.S. public discourse in the 1990s. Unsurprisingly, in the US context, “neoliberal"in the international sense was most effectively applied polemically against people who, a decade earlier, would have called themselves “neoliberal"in the U.S. sense, as these were actors who nominally presented themselves as being on the left, but in fact were not. Though the vast majority of American conservatives are as neoliberal (in the international sense) as, e.g. Bill Clinton, saying so is less polemically interesting.

.53 Ben Alpers 10.22.11 at 9:34 pm

Just to clarify my last point: calling political actors who present themselves as liberals (in the American sense) “neoliberal"(in the international sense) is, in effect, denying that they are liberals in the U.S. sense at all. The folks who coined the American term “neoliberal"in the 1980s (and a much smaller and more recent group of people like Matt Yglesias who seem to be trying to revive the term to describe themselves), on the other hand, use it precisely in order to continue to lay claim to the legacy of American liberalism, while largely embracing the policies associated with liberalism in the European sense.

.54 Watson Ladd 10.22.11 at 9:41 pm

Salient, the proof that a business benefits society is its customers and its employees. You aren’t proposing a world in which human efforts meet human needs as part of a global division, but a return to the 1950’s.

.55 Mandos 10.22.11 at 9:59 pm

I would like to second, third, and nth Mitchell Freedman at 24. That is the key point about this situation. Economists of a “utilitarian consequentialist"bent of mind would like us to treat the outcomes/allocation of resources as the moral object, and the means of distribution (trade, prices) as morally neutral.

Then they can propose astonishingly absurd things like “the winners can compensate the losers".

This—-promising post hoc rectification of unsustainable situations—-is the overall pattern of prescriptions from mainstream economics, and the only real response is to demand prior restraints on inequality: by restraining trade, capital flows, etc.

Barry 10.22.11 at 10:27 pm

“It’s not an American neologism. It’s not recent either—people have been calling me a “neoliberal"since at least 1993…"

Brad DeLong

IIRC, you’ve been calling yourself that for a while, to the point of having a blog post where you marked your neliberal beliefs to market.

.58 John Quiggin 10.22.11 at 11:03 pm

I agree with Rich that the window-smashing was in reality Some Guy with a Sign. I also think OWS has done a much better job getting that point across than was done 10 years ago. Of course, people like Patrick Howley have helped in that task – the presumption now is that it’s not even Some Guy with a Sign but a conscious agent provocateur.

.59 bob mcmanus 10.22.11 at 11:07 pm

Whatevah, alpers

David Atkins at Digby’s place has a great history of the fight between assets and wages since the 70s. “It has to do with a battle between the forces trying to raise wages, and the forces trying to raise assets. "Keys off Schumer’s terrific plan to offer visas to foreigners who buy the foreclosed houses of the outsourced and downsized Americans, who can then just die.

Assets vs. wages. Capital vs labor. Which side are you on. This is not complicated.

I’m wise to the lies of the company spies.

bob mcmanus 10.22.11 at 11:20 pm

halasz at 37 in the “Wealth and Recession"thread also does the asset-inflation class war thing. I know which side he is on. I know which side his opponents are on,

“…and we get in the main the contradictory policy response of attempting to restore the status quo ante, through reflating asset prices with extraordinary monetary policy, while imposing fiscal austerity."…jch

NGDP targetting has pretty much outed itself over at Nick Rowe’s place this week. I knew from day one that Sumner was about asset inflation at the expense of wages, employment, and gov’t services. I just didn’t have the cops to explain it. Rowe actually came out with the accusation of “envy"to anyone who would stand in the way of Chuck Norris.

MSM economists haven’t given a damn about wages and human beings for thirty years, and they aren’t starting now.

.61 Antonio Conselheiro 10.22.11 at 11:48 pm

49: Efficiency is an aspect of prudence. The main but but seldom-expressed objection to violence at demonstrations is not “Violence Is Wrong"but the recognition of the state monopoly of legitimate violence. If a cop shoots a demonstrator it’s unfortunate but he gets the benefit of the doubt, but if a demonstrator shoots a cop it’s monstrous. And this can be reasonable, though your attitude toward police violence is an index of your authoritarianism. And as the state’s legitimacy becomes more doubtful, the demonstrators’ violence becomes more legitimate.

The momentary devotion to Gandhi of loyal citizens facing violent demonstrations is at best the commonsense acceptance of the status quo monopoly of violence, if it isn’t a concern troll attempt to delegitimize the demonstration.

I’m sure that scholastic casuists had an explanation of why government violence is OK, while the same act by a private citizen would be immoral and wrong, but non-violence should be left out of it.

Another index of authoritarianism is the degree to which the heinousness of small violent acts is multiplied when it’s perceived that they are directed against the state power. Small-time vandalism isn’t even a felony in most places, but many feel that one demonstrator’s (or provocateur’s) vandalism can delegitimize a whole movement. But that’s just an index of authoritarianism again, and a litmus test for your relative acceptance of the status quo.

People should prepare their response to the first violence, because it will come sooner or later. My own opinion is that we’ve entered the zone where delegitimization starts to become reasonable, but few agree with me on this or anything else. Sometime things do change, though.

.63 mpowell 10.23.11 at 12:52 am

NGDP targetting has pretty much outed itself over at Nick Rowe’s place this week. I knew from day one that Sumner was about asset inflation at the expense of wages, employment, and gov’t services. I just didn’t have the cops to explain it. Rowe actually came out with the accusation of “envy"to anyone who would stand in the way of Chuck Norris.

Not that your opinion really matters Bob, but if this is the kind of attitude you’re going to bring to the subject the only way you are going to help shift the status quo to the left is if there is an opportunity for violent revolution. Maybe this is what you’re hoping for, but there are an awful lot of problems with that outlook. In the meanwhile, I’m not going to confuse people like Sumner for what they are. And that is someone who is unlikely to be a big supporter of the 99%, but is an advocate for sane monetary management in a legitimate effort to improve economic growth on behalf of everyone. I don’t know what you think you’ve discovered about him recently but bringing down unemployment is almost certainly a necessary precondition to improving worker incomes.

I also find it quite remarkable that Yglesias comes in for so much criticism regarding the neoliberal agenda. Liberalism lost control of the Democratic party at least before Yglesias was in college. I don’t see how he’s responsible for it. Regarding actual policy proposals on the table in the United States, I don’t remember him taking the ‘wrong’ view except on Iraq and ed reform. The former I’d ascribe to naivete and the latter pigheadedness. The folks at TNR will not waste any time undermining a legitimate effort to recapture the Democratic party or the national discourse for the left, but I don’t have any reason to believe Yglesias would join them, this article being exhibit A.

.64 John Holbo 10.23.11 at 1:57 am

Refighting the battles of the past it is then!

Most critics of neoliberalism think it is fundamentally a dishonest economic philosophy – a mask. It’s just apologetics for malefactors of great wealth that dare not speak its apologies. This is a really really important concern. If you have a philosophy that lots of people will pretend to espouse, for strategic and merely rhetorical purposes, then it’s a bit hard to believe that philosophy when anyone espouses it. The bad drives out the good. Nevertheless, it’s mistaken (I think so) to explain, for example, Matt Y’s or Brad DeLong’s neoliberalism as cunning or even just knee-jerk defense of the interests of the 1%, wrapped up in faux concern for the 99%. Nor is it the case that they are just Gertrude Himmelfarb-lite, or any of that.

The hermeneutics of suspicion is an important tool, and it is unquestionably your best entertainment value. Even so …

OWS might be regarded as a kind of litmus test, then. Not definitive or anything. My point was that neoliberal, as it has been espoused over the years, ought to be sympathetic to the grievances of OWS. If neoliberals at TNR aren’t sympathetic to those grievances, I would conclude that, for them, neoliberalism was a mask something more like market fundamentalism. And if neoliberals like Matt Y and Brad DeLong are sympathetic, that just goes to show that they actually believe in neoliberalism, in the sense that they are sincerely committed to its stated normative goals.

All this is consistent with saying that neoliberalism is still a strategic catastrophe, because you always get the liberalism first – that is, the market stuff – and then you never get the ‘neo’. Because the process of getting the liberalization stuff erodes the progressive base that could demand the ‘neo’. And the paranoid point applies here, too: if neoliberalism requires sincere neoliberals, in positions of power, to implement it, and – in the nature of things – most neoliberals are really just apologists for malefactors of great wealth, wearing a mask (or holding a copy of TNR in front of their faces) then you’ve got a problem. I’m increasingly sympathetic to that point of view. But again, this is Matt’s point, too.

.65 John Quiggin 10.23.11 at 2:15 am

“If a cop shoots a demonstrator it’s unfortunate but he gets the benefit of the doubt, but if a demonstrator shoots a cop it’s monstrous. "

Right now, I think Deputy Inspector Anthony Bologna is wishing that rule still applied the way it usually does. For that matter, I don’t think there is likely to be a Bull Connor Memorial in the Mall any time soon.

But your point about the presumption is valid. If a demonstrator throws a punch, and a cop uses a baton and pepper spray, it won’t matter who hit who first – the cop will, as you say, get the benefit of the doubt. The tactical implications are pretty obvious.

.66 jjllss33 10.23.11 at 2:17 am

We are rapidly approaching, for obvious reasons, the point at which fifty percent of the work force (including foreign workers) will be able to produce all that society can reasonably consume. The inevitable result is high unemployment forever, Is there an obvious and easy solution? No. Perhaps some form of job sharing (see the German Kurzarbeit program) can contribute to a solution. But we need to prepare now for this scary but inevitable future.

.67 john c. halasz 10.23.11 at 3:21 am

@62:

I’m not denying that, say, Red China, is on average much better off with rising inequality, but also a large growth rate, vs. earlier when things were far more equal, but everyone was dirt-poor, obviously. (Red China’s Gini is now around 47, just a hair more than the U.S. at 46.7). And some countries, such as Brazil, have seen declining inequality, with its Gini falling from 62 to 56, real “progress", which was no doubt felt by the popular classes, which is why Lulu retired from office with an 80% approval rating, though it’s still a very high level of inequality. However, the U.S. and the E.U. together are 50% of world output, at least measured in $ terms, with Japan maybe another 5-6%, etc., so rising inequality in developed countries/economies plays a large role in the overall picture, whereas the only thing that is required for “between-country"inequality to diminish is that growth rates in “developing"countries/economies exceed those of developed ones, which is easily the case, since the latter are starting from a much lower level, playing catch-up, and are not at the technical production possibility frontier. So it’s not prima facie clear how much the declining “global"inter-country inequality really counter-balances the “global"rise in intra-country inequality, as a justification, nor an explanation. What does seem clear is that the old “Kuznets curve", whereby developing nations experience rising inequality, as developing, modernizing sectors race ahead of traditional sectors, whereas, as development/modernization takes hold across sectors, inequality should decline, is holding up. Which should be cause for some re-thinking of both theory and evidence.

.71 William Timberman 10.23.11 at 4:23 am

JH @ 64

From where I stand on the left, the difficulty with both the angelic and demonic strains of neoliberalism is only incidental, and only incidentally a matter of economics. Both strains define what’s gone wrong with modernity as a management problem. Concerning our present crisis, DeLong freely admits that we thought we had it under control, and I was surprised to find that we didn’t. Sometimes he feels a little bolder and goes so far as to claim that we know what to do, but not how to make anybody do it. Implicitly in such statements, and more explicitly in others, he advances the two-part thesis that a) once we figure out the politics, we’ll be home free, and b) we don’t need any help doing that from people who are both too stupid and too ignorant to run the machinery of the economy, and by extension the machinery of civilization itself. That, in case anyone fails to get it, means most of us. Democracy, in other words, is not only not indispensable, it’s mostly a pain in the ass.

To which I reply, even if it’s all true what you say, Matt and Brad, it’s deeply unsatisfying. If what we’ve got is the best you technocrats can do, we don’t really care whether you want our help or not, you’re going to get it. We suppose we should be sorry for the inconvenience, but maybe we’ll wait to apologize until we see how well we do.

Dr. Hilarius 10.23.11 at 6:04 am

David Kaib @ 15 makes an important point. The portrayal of anti-WTO activists by the MSM as isolationist cranks was completely wrong while being very effective in marginalizing WTO critics. In Seattle, a few broken windows and one (and only one) fire in a dumpster was all it took for shift the focus off of economic and environmental violence worldwide. This was, in turn, a repeat of the vilification of anti-Vietnam protests: “don’t you people know that violence never solved anything?"The OWS people must be violent, otherwise why so many cops around them?

Contrast the above with the Tea Party folks showing up at Obama events with open-carry firearms. No response from the cops, Secret Service or right-wing lawn order types other than tepid recitations about 2nd Amendment rights. And this was in an atmosphere of public jokes about killing Obama. This old leftist was actually surprised, recalling acquaintances getting Secret Service visits for clearly farcical statements. The Panthers public displays of arms was all it took to get them killed in their beds.

Liberals, neo, neo-classical, or otherwise, have become little more than token opposition to the the 1%, a fig leaf on naked economic exploitation.

Chris Bertram 10.23.11 at 6:58 am

Here’s that Saez graph set for the real income gains of the 1990s:

http://www.stateofworkingamerica.org/pages/interactive#/?start=1990&end=2000

Sandwichman 10.23.11 at 7:37 am

OWS has already changed the conversation. The cat is out of the bag. As my articulate new friend, Jay Smooth, says in his fantastic video, “I looove the way OWS manipulates the news media cornballs into outing themselves as cornballs."

http://youtu.be/i9zkQcLi4Yo

That’s the dynamic now. Does something have something to say for themselves or are they another cornball competing in the news media game show to see who can build the biggest straw man?

Everyone knows the Wall Street/Washington three-card monte game is rigged. Why does anyone want to waste my time telling me OWS should do this or it should be like that or it won’t be effective unless it… OWS has already changed the conversation. The cat is out of the bag. End of story.

Sandwichman 10.23.11 at 7:56 am

So from 1993 to 2001, the richest 10% got 63% of the growth in real income.

Mandos 10.23.11 at 8:30 am

But the point, Brad, is that neoliberal policies (in the sense of what was wrought under Clinton) are self-undermining, even when they “succeed,"leaving aside rather quaint arguments about Nader.

Henri Vieuxtemps 10.23.11 at 9:07 am

Yeah, if only Gore got elected, the top 1% would’ve been in trouble now. And the 99% swum in luxury. Lol. So, it is the case of “neoliberalism has never really been tried". Really, there are only two possibilities here: utterly idiotic or outright disingenuous.

Harold 10.23.11 at 12:56 pm

Clinton and Gore, with their policies of demonizing welfare and the federal workforce, represent neo-liberalism par excellence. They threw the poor under the bus. They did some good—I’m not sure what.

john c. halasz 10.23.11 at 1:12 pm

@86:

“Given that we’ve two global phenomena going on here, it seems a little odd to blame either of them on domestic policies in any one country."

A fine piece of sophistry, directed at what no one claimed. There are not two entirely separate “global"phenomena, but rather an overall pattern of global income distribution in which an analytic distinction was made, which, after all, suggests some connection between the two. And no one is blaming them on “domestic policies in any one country", since they are correlated with MNC and Wall St. Hi-Fi sponsored globalization and financialization, which, by definition, span the globe and influence domestic policies and international co-ordinations across numerous countries. Though some countries are more equal than others, in being associated with the promotion of these globe-spanning organizations.

90 john c. halasz 10.23.11 at 1:54 pm

@89:

Yes, there are various data sources with differing measures and Gini estimates alone can vary widely. I did recently eyeball a chart,- (sorry, no link),- listing Ginis for a large number of countries and their 20-year change, and Ginis declined for just a very few countries and rose for the large majority, sometimes modestly, sometime by a lot. As to those Nordic Ginis, pre-tax they are actually quite high and are sharply reduced after-tax. I’d suspect that some of that pre-tax income leaks out through, er, international trade exposure and shows up elsewhere.

Peter Dorman:

Back to the original post—although the thread has been fascinating.

Here is my take on neoliberalism: In the parts of the world (just about all of it except the US) where liberalism meant support for limited government, civil liberties, cosmopolitanism, anti-militarism and free markets, neoliberalism means support for free markets, period. A neoliberal is willing to use repression and war to impose free markets on the unwilling. This would horrify traditional liberals.

In the US, where liberalism refers to activist government in the tradition of FDR and Dewey, neoliberalism refers to a reformulation that embraces markets and rejects the ethical critique of profit-seeking. US neoliberals want free trade, outsourcing of government functions (e.g. charter schools or even vouchers), market-friendly environmental policies, etc. On the financial crisis front, a neoliberal like Geithner probably stays awake at night thinking of new ways the government can make financial stability profitable.

I am not casting judgment here, just describing. For what it’s worth, over the years I have moved a bit toward some aspects of neoliberalism, but mostly not.

The alter-globalization movement definitely had the “wrong"issue at the wrong time. Trade liberalization was a core commitment of US neoliberals, and they were armed with a theory that said that (a) unrestricted trade is in the collective interest of every society, (b) nevertheless some interest groups would lose out, and therefore© those who understand (a) and (b) must either defeat the “losers", buy them out or both. Most economists to this day think that (a) has the status of a mathematical truth, even though this is not at all the case.

On top of this, the liberalization of developing countries in the 80s as a condition of life support in the post 1982 period and the entry of the ex-Communist world into the capitalist world market in the 1990s dramatically raised the stakes for trade and capital liberalization. The purpose of trade and investment treaties like NAFTA was to make as permanent as possible the liberalization temporarily achieved through pressure. Backsliding would have severely restricted profit-making opportunities. Between the intellectual and political-economic arguments, there was no space at all for opposition to the trade agenda short of outright rebellion.

The OWS situation is similar and different. Impinging on the freedom of investors to pursue the highest returns possible under the broadest public guarantees possible is also very dicey from a political-economic standpoint. The 1% has a lot of money and a lot of power. OTOH, the intellectual argument is clearly not there in this case. The global justice crowd could be attacked as “protectionists"(which some of them were), and it was difficult to explain why that was misleading, but the corresponding epithet, “populists", is not very epithetical (to coin a word), nor does it point to a ready-made frame in the sense of the free-trade-versus-protectionism trope.

On top of which, the views of elites of all sorts have been called into question by the economic morass, even to the extent of engendering some self-doubt at the very top of the economic pyramid.

It’s a more favorable moment.

Sandwichman:

Brad DeLong @ 75:

We neoliberals-in-power got an awful lot of real wage gains and considerable gains in employment back in the 1990s. If the proof of the pudding is in the eating, that was pretty tasty “neo", IMHO at least…

And here is what that pudding looks like (drumroll): http://anticap.files.wordpress.com/2011/10/top.jpg

Will there be cake with that pudding or just pie-in-the-sky?

A Brief History of Neoliberalism  by  David Harvey

Amazon.com

Izaak VanGaalen (San Francisco, CA USA)June 15, 2006A Critical Look at the Post-Keynesian Era

This review is from: A Brief History of Neoliberalism (Hardcover) 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 criticiem 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 goverment 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. Help other customers find the most helpful reviews Was this review helpful to you? Yes No Report abuse | Permalink Comment Comments (8)

Malvin (Frederick, MD USA) : 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: the rollback of labor rights, the privatization of public assets, cuts in public services, and increased policing, surveillance and political repression of a markedly polarized population.

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 (South Euclid, Ohio USA): 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.

Swans and Zombies Neoliberalism's Permanent Contradiction  by Joshua Clover

April 6, 2011

It wasn’t a black swan.

The term was coined by Nassim Taleb, a former hedge-fund manager turned author of bestselling books on finance, and it served as a popular description of the 2008 financial crisis. It refers to an event of such peculiarity that it cannot be predicted or related to preceding developments. All swans are white until they aren’t. Taleb’s characterization had that charisma of the paradoxical analysis that says this can’t be analyzed. At best you can expect the unexpected.

As months have passed and molten panic has cooled to the rocky facts of a global slowdown, this idea has been quietly abandoned. There are still a few ideologues who think the crisis was caused by the Community Reinvestment Act or by a claque of particularly invidious bankers; that it was just a few ill-advised or morally dubious decisions made by lenders, borrowers or speculators sometime in the 2000s that brought the economy to a halt. It is now high time—and highly possible—to move toward a more thorough understanding, and it is in this direction that much of the thinking and writing about the crisis has been going.

In lieu of the black swan theory, the following things have become clear. The crisis wasn’t financial but economic. The supposed failure of liquidity was, in fact, insolvency; it was a long time coming; finally there was not enough actual value (as opposed to paper profits) in the circuits to sustain the economic order. This wasn’t a momentary event; we are in the fourth year of an unfolding sequence that is itself the climax of a lengthier reorientation of politics, economics and social relations commonly known as neoliberalism.

Scarcely existing before 1980, the term “neoliberalism"became commonplace between the fall of the Berlin Wall and the fall of Lehman Brothers. It is surely tossed about more than understood. This much is something like common knowledge: neoliberalism’s roots are in the classical liberalism of Adam Smith and John Stuart Mill, and the idea that a government exists to assure the individual liberty and economic opportunity of its people. Its parents are Margaret Thatcher and Ronald Reagan; thus, its birth is often dated to around 1979. It is inseparable from the idea of globalization, but it seems to emanate from the United States. Its ideological field contains both Republicans and Democrats; more confusing, it includes liberals and conservatives, and even—especially—neocons. It is the triumph of the liberal idea at a planetary scale. In Thatcher’s famously implacable pronouncement, “There is no alternative."

And yet, lacking a serious challenge globally and going from electoral victory to victory in its home countries, neoliberalism has nonetheless managed to overcome itself. Or at least to weaken so dramatically as to seem vulnerable, if not its own worst enemy. The question of what next—whether we should be imagining an alternative to the complex of political and economic relations or pursuing a restoration—must be rather high on our agenda.

* * *

This is the question of John Quiggin’s Zombie Economics, albeit phrased differently. The book offers itself as a compendium of economic ideas from the past several decades that should have been slain by the force of overwhelming counterevidence—ideas that, nonetheless, still walk among us, neither living nor dead. Quiggin, an Australian economist, dodges the term “neoliberalism"(as well as Reaganism, Thatcherism, et al.) because of concerns about ideological overtones: “The most neutral term I can find for the set of ideas described by these pejoratives is market liberalism."Why he would pursue such politesse in the midst of what will reveal itself as a decisive taking of ideological sides is not entirely clear.

The book is a survey of key concepts, and thus a nice companion to the more narrative (if less combative) The Myth of the Rational Market, Justin Fox’s comprehensive intellectual history from 2009. Quiggin offers five undead ideas, from general conceptions to somewhat technical theories. These are the “Great Moderation,"the idea that we may live amid the gentle swells of the business cycle but have tamed excessive risk and overcome the tendency toward dizzying bubbles and disastrous busts; the “Efficient Markets Hypothesis,"which suggests the price is always right—that the market, as an aggregate of what everybody knows and intends, is itself the best information about value, and gets more perfect the more it grows and the less it is regulated; “Dynamic Stochastic General Equilibrium,"an array of concepts revolving around monetary mechanisms to match supply and demand, designed to mitigate inflation before unemployment; “Trickle-Down Economics,"the proposition that economic intervention should always help profit-making enterprises, said profits then purportedly flowing naturally toward wage workers and other poor people; and “Privatization,"which is more of a worldview than an idea and should by this juncture need no parenthetical gloss, being a first principle of capitalism.

The book is a cogent and readable debunking of these ideas—or at least of the market fundamentalism holding that they are true at all times and in all situations. Each idea gets a chapter, and each chapter follows a zombie Bildung wherein the idea is born; comes of age as a core concept of market liberalism; is dealt what should be a fatal blow by later developments, the culmination of which is the reality machine that Quiggin calls “the Global Financial Crisis"; and then rises from the grave, out but not down. Quiggin measures the ideas against the empirical data and finds them lacking: “The prevailing emphasis on mathematical and logical rigor has given economics an internal consistency that is missing in other social sciences. But there is little value in being consistently wrong."Quiggin also revisits some of the logic on its own terms, showing where it was always dubious and threadbare. Somewhat more provocatively, he insinuates that such ideas might have taken on the force of facts not because they described the world or made it better but because they served the interests of the mighty (see “Trickle-Down,"above; see also William Kristol and Robert Kagan’s ill-fated Project for the New American Century).

Quiggin may believe he takes the side of truth against flimflammery (don’t we all?). In truth, he is engaged in a partisan war of position, pillorying neoliberalism in favor of the preceding Keynesian compromise, with its allowance of regulation, capital controls and social-democratic programs. Though he admits “that Golden Age ended in the chaos and failure of the 1970s,"he concludes rightly that the current failure is “at least as bad."Older and wiser, we ought to prefer “a return to successful Keynesian policies that take account of the errors of the past."Though he occasionally promises “radical new directions in macroeconomics,"none are forthcoming.

Something rankles about Quiggin’s plainspoken conclusion, despite the able history of ideas and the enjoyable skewering of some disingenuous beliefs. His book doesn’t seem to take its lovely, lurid starting point as anything more than a hook. There is a rich tradition of zombies as figures of capitalism, perhaps most gloriously in George Romero’s film Dawn of the Dead. Lumbering automatons stripped down to the most ingrained habits, his living dead recall nothing but ceaseless consumption. They can only return to the mall’s torpid palace of commodities: they are blank, mindless, their arms outstretched for sustenance. The disease that has captured them is not a local phenomenon; as with countless other versions of the allegory, it is everywhere. Dawn of the Dead was made in 1978 and cannot be adduced either to the Keynesian or neoliberal era; it is not a withering critique of one importunate variant of modern economics but a total allegory.

Quiggin misses this. Indeed, it verges on intellectual malpractice that the fifteen pages of references running up through 2010 do not include Chris Harman’s 2009 book, Zombie Capitalism: Global Crisis and the Relevance of Marx. It is not Harman’s provocative text but the specter it represents that Quiggin must suppress: the possibility that the zombie arises from capitalism itself. Such scope is foreclosed. The entirety of Quiggin’s historical presentation reduces to an alternation between two recent and closely related modes, which have together prevailed for less time than my mother has been alive. It is a glaring omission to leave unexplored the fact that the conditions under which Keynesianism thrived—a historically high rate of profit, driven by an unchallenged imperial leader—no longer obtain, and do not seem on the verge of returning, for reasons that have very little to do with the stinginess of Obama’s stimulus or the dearth of WPA-inspired work programs. Those are ways of treating the symptoms; they are far from a diagnosis, much less a cure. In such circumstances, a reversion to Keynesianism is somewhere between a tactical retreat and wishful thinking writ large. But the intrinsic flaw of the book is that Quiggin is unwilling to apply his analytic frame to the larger picture, to wonder whether his most basic assumptions might themselves be due at the boneyard.

The Crisis of Neoliberalism confronts the same situation as Zombie Economics, and its authors surely share much of the same skepticism regarding the intellectual landscape. Amplifying the glimpses found in Quiggin, French economists Gérard Duménil and Dominique Lévy proceed from the somewhat heterodox proposition that ruling ideas arise not from their persuasive power or inner logic but from the interest of ruling groups. Quiggin’s limits present themselves clearly in his choice to go after these ideas rather than their political foundations; it’s a bit like attacking a lemon tree by plucking its fruit.

Duménil and Lévy move directly to the social and political history that led us to this turn, the underlying situation in which such intellectually bankrupt ideas could prevail. And what might become of a world that can no longer sustain such beliefs. As they say, “the stakes are high."

Though elements of their analysis proceed (in their words) “à la Marx,"the book is scarcely what one might thereby expect—that is, the opposite of Quiggin’s unreflective apologia for capitalism’s premises. There is barely a trace of schadenfreude at neoliberalism’s misfortunes, much less a flare of revolutionary fire; the Marxism is largely a matter of fidelity to the idea of social class and the significance of class struggle. The authors are less polemical than Paul Krugman or Joseph Stiglitz, though like them Duménil and Lévy tend toward the empirical. The book makes sincere use of charts and graphs, though not more than the thoughtful reader will appreciate. Moreover, the pair have previously made the case that global capital was actually doing better than many of the left’s crisis mavens would admit. In brief, they argued that if one filtered out certain capital-intensive industries (railroads, mining and the like), the economy had succeeded in recovering to boom levels of profitability sometime in the ’80s, largely through the artifice of depressing real wages and lowering corporate taxes. The neoliberal program, they concluded, had worked.

But worked for whom? The two argue (like David Harvey in his clarion A Brief History of Neoliberalism) that neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a class strategy designed to redistribute wealth upward toward an increasingly narrow fraction of folks. This transfer is undertaken, they argue, with near indifference to what happens below some platinum plateau—even as the failures and contradictions of the economic system inevitably drive the entire structure toward disaster.

Duménil and Lévy offer two provocative and interlocking schemas. They decline the bluntest of Marxist oppositions, which supposes a world divided only between owners and workers. But they equally abjure the endless proliferation of categories and distinctions, the slippery slope of micro-differences that leads to the paradoxical homily of conventional American thought: that individuals are just that, and thereby classless—and that everybody is middle-class. One might well see in this the shadow of Thatcher’s other hyperbolic dictum of neoliberalism: “There is no such thing as society. There are only individuals and families."

Duménil and Lévy are having none of that. Instead, they proffer the simplest possible formulation that allows for both the existence of class interest and the dynamics peculiar to the current epoch. With the modern increase in size and complexity of enterprises, a managerial class came into being to run the show on behalf of owners. This new cohort is distinct from modernity’s legion of clerical staff, who are grouped with production workers into what the authors call (after the French tradition) the “popular classes."

The new managerial class rests between that stratum and the capitalist class proper, and therein lies the tale. For Duménil and Lévy, the century is a story of shifting alliances. In the century’s first third, this tripartite formation comes into being under the auspices of a new breed of monopoly barons. In the period following the Great Depression came an alliance between the managerial and popular classes; this “compromise to the left"is the enabling condition for the Keynesian era, the Long Boom and eventually the cluster of political and economic failures that defined the 1970s. The last third of the century can thus be called “the neoliberal compromise"—a “compromise to the right"between the managerial and ownership classes, with its own restoration of capital’s power (hence the title of their previous book, Capital Resurgent) at the expense of the popular classes.

The book’s other seductively lucid schema concerns the history of structural crises, which follow an alternating pattern. The authors count four in the “long twentieth century": the first “great depression"in the 1890s, the Great Depression, the 1970s collapse and the current morass. The first and third they identify as crises of profitability; the second and fourth, crises of “financial hegemony."In these periods the profit rate is relatively stable, but the unchecked power of the upper echelons allows for unsustainable demands. They are gilded ages, perhaps; yet every such age gilds not the lily but the tulip: they are built out of bubbles. With the wealthy unwilling and the poor unable to support the mountain of social debt, the bubble eventually pops. This is, for our authors, the nature of the present crisis, and it is from here we must seek a way forward.

Duménil and Lévy see a series of branching possibilities, none of them brilliant. In line with Quiggin, they can imagine a New New Deal with Keynesian characteristics, as well as a short-term restoration of the neoliberal regime under the fig leaf of a couple of regulatory concessions. This latter is a fair description of what we have seen so far; there have been only the most timorous signs of the consequential social and labor militancy that might force a renewal of the New Deal.

On balance, their vision remains one of American hegemony, if their more sophisticated historical model allows them more nuanced forecasts than Quiggin’s Manichaeanism. For them a less likely, but not impossible, outcome is a real lurch to the far right, of the sort presaged by the Tea Party and its ilk—wherein ascendant economic distress opens a path for a craven and belligerent nationalism. But their most suggestive scenario is a renewed compromise to the center-right. This time, however, the managerial classes will not be a supplement to higher powers but will be the leading faction. This “neomanagerial capitalism"would be empowered to contain the volatilizing influence of the lords of finance without yielding economic ground to the popular classes.

* * *

This is a somewhat gnomic conclusion. Certainly, it is appropriately sober and takes the book’s preceding logic seriously. It follows a clear and elegant trajectory leading from the pair’s model of the long twentieth century and from the underlying nature of its crises and class dynamics. Yet certain things about it are obscure. It is not entirely clear how such a development would, in the immediate future, restore the solvency of the West (and recent indications are that China may be resting on a bubble). At a concrete level, then, the management in question would be something on the order of a super-powerful central bank maintaining rigorous control over a zero-growth economy that is mortally sensitive to the slightest imbalance. It is hard to see this coming to pass without dramatic changes to the ideological landscape, and it is hard, in turn, to imagine such a revolution just to achieve centrally managed capitalism. Surely revolution would have better things to do.

A further analytical conundrum arises in Duménil and Lévy’s rigid distinction between kinds of crises, treating each as a discrete event concluding its own sequence. This risks reproducing Taleb’s error at a more subtle level: in their accounting, each crisis-punctuated era becomes a singularity—not quite unexpected but unthinkable beyond its own particulars, a three- or four-decade swan.

It might make more sense to see each of the periods as overlapping in a complex and extended chain. From this perspective, each crisis would end one era and start the next, and each era would thus link together a pair of crises into one sequence. This would allow us to consider the past two dramatic failures as part of an ongoing story: to see the 1970s decline in profits and the current crisis of financial hegemony as facts that together form a unity. Neoliberalism is less a new era, in such a view, than the specific outcome of the earlier bust.

It would not be terribly unfaithful to Duménil and Lévy’s thesis to suggest that neoliberalism is less an economic system or social order than global capital’s management style for a situation of lower profits. In this sense we might recognize the birth of neoliberalism not in the ideologies of Thatcher and Reagan but in the California tax revolts of 1978: what played at being a moral jihad of suburban homeowners was simply part of an intensifying competition for a smaller pool of profits. Similarly, New York City’s 1975 brush with bankruptcy was a struggle between municipal government and Wall Street over insufficient revenues; the utter triumph of the latter was the shape of things to come.

But the seeming restoration of profit by the financial sector proved illusory. The neoliberal strategy of opening new markets to sell more widgets, and internalizing more cheap labor into the growing empire of capital, arrived both at diminishing returns and at the limits of the globe. One could say that the ’70s crisis was a wound to the economy; the following decades provided a series of wrappings, poultices and painkillers. The blowout of 2008 was akin to their sudden removal—beneath which the old wound had only deepened and abscessed. Real profit was not restored, even if the profit rate briefly danced on air; it was a temporary fix to a permanent contradiction.

The current catastrophe is a rare creature, to be sure. But it is not a black swan; it is a zombie. It is the last crisis come calling, and the one before that and before that again—not just returned but fortified by the intervening years and the deferral of a reckoning. This crisis that keeps returning, now dressed in finery, now in rags, is evidently not a monster sprung from one particular deviation. Global crisis is, increasingly, the unnatural natural state of modern capital. It will not be laid to rest by fiddling with the alignment of parts, much less returning to a previous mode—these parts, these modes, are what set it shambling forward, hungry, blindly grasping, in the first place.

[Review] The Blinding March of Neoliberalism by Philip S. Golub

Material Reviewed:

David Harvey, A Brief History of Neoliberalism, (New York: Oxford University Press, 2005)

In his seminal account of the collapse of the 19th century liberal European order, the rise of fascism and the outbreak of general war, Karl Polanyi traced the ultimate source of the “self-destruction of (European) civilization"to the ravages produced by the institutionalized utopia of a “self adjusting market"[i]. Anchored in a metaphysical construct (the “invisible hand") detached from the anthropological realities of social life, the self-adjusting market became the dominant paradigm of market societies that commodified labor, land and money. Over the course of the century, the market became “the only organizing power in the economic sphere"and the dominant institution of society. Whereas economic activity had forever been “a function of the social in which it was contained", it became a law unto itself, severed from its social foundations, “subordinating the substance of society itself to the laws of the market."

This process of universal commodification, Polanyi argued, “could not endure for any length in time without annihilating the human and natural substance of society". Indeed, most European societies ultimately took measures to protect themselves from the corrosive effects of the self adjusting market by opting in the late 19th and early 20th centuries for strong mercantilist states that pursued narrow national goals and strove for imperial monopoly at each others’ expense. Mid-century transnational capitalist cooperation, embodied by pan-European networks of haute finance whose functional role was to “avert general wars", gave way to ruthless national power politics: despite the high degree of European economic integration at the turn of the century, the webs of capitalist interdependence were swept away in the rising nationalist wave.

The outcome was “a social transformation of planetary range, topped by wars of an unprecedented type in which a score of states crashed (and new empires emerged) out of a sea of blood". Fascism, a deadly pathological “solution to the impasse reached by liberal capitalism… a reform of market economy achieved at the price of the extirpation of all democratic institutions", was the predominant but not the only “solution"to the impasse of market societies: Soviet socialism in one country and Roosevelt’s New Deal were synchronous alternative pathways out of universal commodification. Both emerged strengthened from the war.

In the West, social states with varying levels of protection and state intervention, reflecting different national pathways and traditions, were created and/or consolidated around a new growth regime and a new international institutional order. At the national level, the “Keynesian welfare state"appeared to resolve two of the central contradictions of capitalism: cyclical uncontrolled slides into depression and unrestrained class warfare. At the national level, the compromise between capital and labor, mediated by the state, helped to mute the competitive pressures of the market by promoting relative social fairness: throughout the industrialized West, income and wealth inequalities were significantly reduced. In Europe, this helped to contain potential challenges to liberalism from mass based Communist parties. At the international level, the institutional architecture created at Bretton Woods created a stable international regulatory framework for the capitalist political economy. In David Harvey’s words, “the restructuring of state forms and of international relations after the Second World War was designed to prevent a return of the catastrophic conditions that had so threatened the capitalist order in the 30’s."

As the core state in the post-war capitalist order, the United States was the driving agent of the restructuring process. It sustained the international institutions it had helped to create, and supported the establishment of (liberal) interventionist welfare states in Europe and (authoritarian or semi-authoritarian) developmental states in East Asia. This mixed-economy policy, contrary to the US’s pre-war liberal credo, was not driven by altruism but by self interest: the US hegemonic project during the Cold War required a belt of stable hence prosperous subordinate states ringing the Soviet Union and the Peoples’ Republic of China[ii]. This could not be achieved through the markets alone. The Marshall Plan embodied the US’s interventionist management of the capitalist world economy. In the US itself the Rooseveltian welfare state took on a minimal form but it nonetheless became a major component of the postwar US state and the American political economy. Apart from a few isolated followers of the Austrian school (Friedrich von Hayek, Ludwig von Mises) Keynesianism was hegemonic economic policy: government intervention and counter-cyclical policies to stimulate demand and support the unemployed had become the orthodoxy, even within the conservative camp. “We are all Keynesians now", said Richard Nixon in 1971. Ironically, that statement was uttered the year the Bretton-Woods system began to unravel, ushering in the monetarist counter-revolution of the 80’s and contemporary neo-liberal hegemony.

The proximate causes of the breakdown of the Keynesian paradigm are well known. Facing inflationary pressures due to the war in Vietnam, declining productivity, intensifying trade competition from Europe and Japan, and hence rising foreign claims to redeem dollars with gold, the US unilaterally tore down the fixed but adjustable exchange rate regime set up at Bretton Woods. The convertibility of the dollar to gold, the pillar of the post-war international monetary system, was ended. John Connolly, Nixon’s Treasury Secretary, put matters bluntly: “it’s our currency but it’s your problem", delicately adding: “foreigners are out to screw us and it is our job to screw them first". Two years later generalized floating exchange rates reintroduced pre-war international monetary anarchy. Meanwhile, on the domestic front, prolonged “stagflation"and mass unemployment challenged counter-cyclical macro-economic policies. Inflation that had been building up since the early years of Vietnam peaked at 13.58% in 1980. In 1979, the Federal Reserve launched the global monetarist backlash by implementing highly restrictive monetary policies. Monetarism had a series of profound domestic and global effects: it forced drastic industrial restructuring and decisively shifted the balance of forces between labor and capital. By favoring rentier capitalism it restored and expanded the power of the increasingly autonomous financial sphere.

Globally, as Giovanni Arrighi points out[iii], the prolonged US rates rise restored the US’s declining world hegemony by redirecting capital flows back to the US and disciplined the periphery into submission (the Latin American debt crisis of 1982). The neo liberal reconfiguration that followed was not the work of an “invisible hand". Though structural transformations played an underlying role, notably the decline of the “rust belt"industries, the  neo liberal mutation would not have been possible without coercive state intervention: In the early 80’s, the leaders of the “conservative revolution"in the US and UK joined forces to lock in the transformation by crushing organized labor. Ronald Reagan suppressed the air controllers’ strike in the US and Margaret Thatcher waged a vicious and ultimately victorious war against the miners in the UK[iv]. Neo liberalism was thus a “political project"mobilizing the repressive powers of the state to “restore the power of economic elites."

This narrative goes some way to explaining the macro mechanisms of the paradigm shift. But it does not tell us why neo-liberalism, a contemporary globalized variant of the “self regulating market"of the 19th century, subsequently gained near universal hegemony. That is the central question of David Harvey’s latest, intellectually stimulating, book. As a doctrine and a practice, neoliberalism was designed, writes Harvey, to “liberate corporate and business power (and) re-establish market freedoms"that had been contained by the social state, that is to restore “the conditions for the resumption of active capital accumulation". The restoration, theorized by a tightly knit group of ideologues in the UK and US, and legitimized by a discourse deeply embedded in the American mind on individual freedom and autonomy, had four major components:

These components, writes Harvey, were fused in the “Washington Consensus of the mid-1990’s which “defined the US and UK models of neoliberalism as the answer to global problems". Those models called for limitless market freedom. “Shareholder value"became the war cry of the business class during the 90’s, culminating in the later part of the decade with shameless displays of wealth, crony capitalism and corruption. Today, one of its most obscene expressions is the unrestrained enthusiasm of the financial markets whenever mass layoffs occur.

The last frontier of the free market project was opened with the collapse of the Soviet Union in 1991. Liberalization, deregulation and privatization spread worldwide to areas previously outside of market control. Led by an oligarchy of robber barons, Russia underwent “shock therapy"which it has still not fully recovered from. India began its own deregulation and privatization process, though in a far more controlled fashion. China, which had initiated an gradual state-managed policy of agricultural de-collectivization and selective international opening in the late seventies, accelerated the liberal turn in the mid 1980’s. After a parenthesis in the late 80’s, liberalization was deepened again when Deng toured southern China in 1992.

As anyone who has visited China over the past decade knows, the labor market has been nearly entirely “freed"from regulatory constraint, leading to Darwinian competition between the “old"industrial working class in the declining state sector and the great mass of disenfranchised and unprotected workers flowing from the countryside into the cities. Health care and the best parts of the school system have been privatized. Meanwhile, the dynamic developmental states of northeast Asia and the emerging states of Southeast Asia were subjected to intense western pressure to liberalize their capital accounts and open them to foreign investors. The outcome was the great financial crisis of 1997/1998, caused by overinvestment in short term speculative assets, whose ripple effects nearly engulfed the global financial system. That said, the spread of neoliberalism has not been a uniform process: Harvey is right to point out that neoliberalization proceeded unevenly, with local outcomes depending on the “interplay of internal dynamics and external forces", and the institutional configurations of different societies.

The external forces were the US state, the international institutions dominated by the US, and the transnational companies with a vested interest in unfettered global investment, trade and financial flows. Since the early 80’s, successive US governments intervened overtly and covertly to produce outcomes favorable to American business and, more broadly, transnational companies, American or not. Given the permanence of US economic nationalism this may at first sight appear contradictory. Yet as Susan Strange pointed out in the late 1980’s, “globalization"did not submerge all states, merely the weaker states of the international system: “all the decisions about the regulation of market operators and intermediaries that used predominantly to be the prerogative of each national government are now shared unevenly between a few governments of the largest and richest countries, of which the US is by far the most important". As a result, transnational firms are less autonomous than many post national theorists have claimed. They were and remain "responsible to policy decisions taken by the US government."[v] Global liberalization affirmed the US’s comparative advantages in the FIRE sector (Finance, Insurance, Real Estate). Capital account liberalization allowed the US to reshape national development paths, and to dig deeply into the savings of the rest of the world (at high rates of return).

Simply put, the establishment of a global free capital market was essential for the economic and financial well being of the world’s leading debtor. This helps to understand the continuity of US global liberalization policy since the mid 80’s. In 1985, Ronald Reagan set out to knock down barriers to trade, foreign investment and the free movement of capital between industrialized countries, especially in Japan. His successor continued this effort though the Enterprise for the Americas Initiative, designed to support free markets and the free movement of capital in the western hemisphere. The policy was globalized under Bill Clinton: "Previous administrations had pushed for financial liberalization principally in Japan, but under President Clinton it became a worldwide effort" directed in particular at the new area of wealth accumulation in East Asia, "seen as a potential gold mine for American banks and brokerages". According to The New York Times, the Clinton White House worked out a plan, coordinated by the Department of Commerce, that “identified 10 rising economic powers from the Pacific to the Atlantic whose economies were to be opened up, and it called upon all government departments, from the CIA, to US Ambassadors abroad"[vi].

During the 90’s the power political objectives of the US State and the wealth maximization objectives of market actors coincided to an extraordinary degree. Robert Wade suggested a few years ago that liberalization and the "increasing mobility of information, finance and goods and services frees the American government of constraints while putting everyone else under tighter constraints". This is undoubtedly the case. Yet, as Harvey argues, “the grim reach of US imperial power…by no means constitutes the whole story"of the global slide to neoliberalism. The US did not directly impose liberalization and opening on China, India, or continental Europe for instance. What it did was set the global agenda and create a global context favorable to local forces pursuing their own market objectives. In most emerging countries the small domestic constituencies favoring the liberal turn that were strengthened by internationalization (they are now in retreat in Latin American and South East Asia). This was also obviously the case in continental Europe and Japan where thin but very influential business circles (the European Business Round Table) were empowered by the US’s turn to neoliberalism. These constituencies acted to reshape government agendas as part of a growing global elite consensus around common objectives. Indeed, private institutions of global governance became the locus of transnational elite dialogue and convergence around the neoliberal agenda (World Economic Forum), buttressing the global disciplinary function of public institutions such as the IMF.

The continuity of US foreign economic and financial policy over the past two decades does not mean however that there was continuity in other domains. While Harvey is very persuasive in his detailed discussion of the complex mix of factors leading to neoliberal hegemony, he is less so when he argues more speculatively that neo-conservatism (and implicitly the US’s imperialist drive since 2000) emerged as an “answer"to the contradictions of the neoliberal state in crisis. While neoliberalism entails forms of social control, surveillance and repression – of governmentality in the Foucauldian sense – that are inherently disciplinary, it does not necessarily follow that neo-conservative authoritarianism is, as Harvey seems to imply, an outcome of a critical moment in neo-liberal rule. Underlying this is the assumption that the US hegemony has been “crumbling"since the 70’s and that militarism is a convulsive response to that trend.

In fact, US hegemony which was indeed waning in the 70’s and early eighties was restored in the late eighties and the nineties. Under Bill Clinton neoliberalism proceeded without militarization, through the subtle operation of governmentality within and muscular economic “diplomacy"abroad. Though it is neoliberal in the sense that it has done more than any other government to favor the owners of capital (mostly in the energy and national security sectors), the sovereign authoritarian state of George Bush, or what Judith Butler calls the Bush administration’s “lawless exercise in state sovereignty", has little to do with its predecessors in all other regards. This is not a minor matter: different forms of exercise of  state power under specific hegemonic configurations produce very different outcomes. There is no continuity between the silky discussion on the trading state and interdependence of the 90’s and the forward march of neo-imperialism since 2000. Indeed, the US’s lawless exercise of power of the past years has deeply split ruling elites within the US, but also globally.

Be that as it may, the outcome of the decades-long reconfiguration of social forces has been an extraordinary increase in social inequality. In the US, income and wealth polarization has reached levels not seen since the twenties, with a tiny fraction of the population concentrating most of the country’s income and wealth. According to the Economic Policy Institute, in 2000 “the share of income held by the top 1% by income was the largest  since the run-up to the Great Depression. In 1979, the average income for the top 1% was 33.1 times the income of the  lowest 20% and 10.1 times the middle fifth. By 2000, the average income of  the top 1% was 88.5 times that of the bottom fifth, an increase of 55.4 points."In the US and in continental Europe, average living standards have either stagnated or regressed. Inequality has also risen sharply in Asian societies with historic traditions of relative social equity (Japan, South Korea). Everywhere, large fractions of the population, the “unqualified", have been written off and left to fend for themselves. Apologists of this brutal process of social selection have naturalized the transformation, making it appear an historic necessity. Like all hegemonic narratives, neoliberal theory has cloaked the real world objectives of the reconfiguration behind high sounding ideals: “the genius of neoliberal theory is to provide a benevolent mask full of wonderful-sounding words like freedom, liberty, choice and rights, to hide the grim realities of the restoration or reconstitution of naked class power."

The reconstitution of market societies marked by extreme inequalities is not sustainable in the long run. Polanyi’s analysis and warning must be kept in mind. Social backlashes of various types will emerge, indeed are already apparent: right-wing populism and religious conservatism, on the one hand, progressive movements of global social transformation (the World Social Forum) on the other. The growing demand for protection from world market forces is already translating in nationalism (Russia, for instance) or regionalism (Mercosur) in various parts of the world. Ultimately, the content and pathway of change will depend on the balance of forces of the social agencies at work. For the moment, the constituencies favoring social and democratic alternatives to commodification are in retreat in the West. But they are still sufficiently present to influence the course of events. The real test will come in times of crisis. The timing and trigger of fundamental crisis, at systemic level, is of course hard if not impossible to predict (likewise mass mobilizations still elude the grasp of the social sciences). Nonetheless, some of the conditions may be crystallizing now. In particular, the US, the main normative agent in the process of global marketization over the past decades, appears to be losing control: the country’s rapidly growing indebtedness and reliance on foreign capital flows creates global financial volatility and generates systemic vulnerabilities. If the trend continues it will severely strain the world financial system.

The US already consumes 75% of world savings to meet its daily financing needs. At some point not yet determined, rising US foreign debt will conflict with the requirements of the US’s main financiers. The US will then be forced to adjust. Harvey argues that to free itself from growing external constraints, the US has a polar choice: hyper-inflation or deflation, both of which imply a crisis of the US hegemonic order and hence a fundamental and possibly violent restructuring of the world system. This may be too starkly put: Clearly, under its present leadership the US is heading towards financial disaster (not to speak of the disaster produced by imperial foreign policy in the Gulf). Yet, under wiser management, the US may be able to find a softer middle way out of its present economic and financial dilemma. That pathway would however require the US’s acceptance of real interdependence, that is a downsizing of US imperial ambitions and a major change in economic policy…

One needn’t agree with Harvey’s hypothesis, widely shared in Marxist circles, that neo-conservatism emerged as an authoritarian solution to the instabilities and contradictions of neooliberalism, or his assumptions about structural US decline, to share his intellectual and ethical concern over the neoliberal destruction of society. His Brief History is a valuable conceptual and descriptive history of the great regression of our times. It also a normative statement about what should be. In denouncing universal commodification Harvey rightly suggests that it is urgent that we reinvent and reinvest the meanings of  “democratic governance", of “political, economic and cultural equality and justice". With the renaissance of the left, neoliberal hegemony has ended in Latin America. It is being challenged in parts of Asia. What is needed now is a progressive global agenda in a difficult but not hopeless reactionary age.

 

[i] Karl Polanyi, The Great Transformation, Beacon Press, Boston, 1973 (1944).

[ii] See Bruce Cumings, Parralax Visions (Durham, NC: Duke University Press, 1999).

[iii] Giovanni Arrighi, “The social and political economy of global turbulence", New Left Review, N° 20, March/April, 2003.

[iv] For a Foucauldian reading of this critical turning point see Noelle Burgi, L’Etat britannique contre les syndicates", Kimé, Paris, 1993.

[v] Susan Strange, “Toward a Theory of Transnational Empire", in Ernst_otto Czempiel and James Rosenau, eds, Global Change and Theoretical Challenges

[vi] Nicholas D. Kristof and David Sanger, "How US  Wooed Asia to let the Cash In",  New York Times, 16 February 1999.

Philip S. Golub is an editor of Le Monde Diplomatique. 

[Jun 5, 2008] Has Neo-Liberalism Failed to Deliver the Goods

naked capitalism

From Juan, in response to a comment in italics by reader DownSouth:

The one place I might disagree with you is to the question as to what high oil prices represent. Are they a further manifestation of market fundamentalism run amok? Or are they the antithesis of this, a refusal by non-OECD countries to participate in a market system that demands natural resources and agricultural products on the cheap?

If price of oils was determined by cost of production/supply/demand rather than trade in financial instruments, I would place more weight on 'refusal to participate'. As it's developed since 1987, it strikes me that the producing nations and major integrated oilcos' abilities to move price has been substantially diminished.

Neo-liberal market fundamentalisms include financial opening and deregulation which, in different forms, were applied on a world scale right along with the theft of public goods through privatizations, et cet -- a 'grand' global looting had been unleashed in a (partially directed) effort to overcome systemic crisis.

Here let me repeat something which I wrote elsewhere three months ago:

Between 1965 and 1973, the U.S. manufacturing sector's rate of profit fell by 40%, a decline that worsened with the 1974-5 recession, was hit again by the severe early 80's slump, began recovering in the 1990s but peaked in 1997, falling into 2003 since which there has been some rise but - in all cases over the last decades - never to pre-1965-73 levels.

Andrew Glyn considered the world to have been "suddenly projected from boom to crisis"with the first phase of above.

The failure of political Keynesianism, and then monetarist policies to ressurect rate of profit dovetailed with a 'we don't know what to do so lets try 19th c laissez-faire on a world scale' set of policies demanded by the U.S., given voice by Reagan and Thatcher in her famous statement: 'There Is No Alternative [to a worldwide free market]', or TINA.

Borders to capital flow in all its manifestations had to be everywhere broken; state owned industries had to be privatized; poor fiscal management had to be tightened and almost everywhere on the backs of the working class and poor as needed social services were cut and cut again. Debt payments, no matter how great a percentage of export earnings, had to be made if a government were to expect future access to IMF and World Bank funds.

Neoclassical economists and their theories provided ideological justification; a sort of 'we are all neoliberals now' attitude infected world leaders until, in 1989, John Williamson coined the term 'Washington Consensus', which was very much not the consensus of those most subject to the various 'shock therapies'.

So, how did the world do under this set of misguided fundamentalisms?

"Real global GDP growth averaged 4.9%a year in the Golden Age years from 1950 through 1973, but dropped to 3.4% annually in the unstable period between 1974 and1979. Dissatisfied with the instability, inflation, low profits and falling financial asset prices of the 1970s, advanced country elites pushed hard for a switch to a more business friendly political-economic system; global Neoliberalism was the result. World GDP growth averaged 3.3% a year in the early Neoliberal period of the 1980s, then slowed dramatically to 2.3% from 1990-99 as Neoliberalism strengthened, making the 1990s by far the slowest growth decade of the post war era." (James Crotty)

As would be expected, the post-1973 annual growth rate of world real gross domestic investment fell substantially through 1996.

With the exception of parts of Asia, economic development throughout the world failed to gain traction, chronic excess capacity on one hand and credit fueled financial exuberance on the other.

Given the system's inability to create employment so rapidly as required, a glut of labor and an expanding informal sectors as well. All the 'better' to intensify the international (and domestic) competition among workers, drive and hold wages down so also make consumer credit increasingly important to retention of living standards, no matter that this has been only another transfer to loan capital.

Average weekly earnings, constant 1982 dollars, for all private nonfarm workers in the U.S. peaked in 1972 at $331.59, falling to $257.95 in 1992 until 'recovering' to $277.57 in 2004 and likely having faltered again since then.

It is at least interesting that conditions of surplus labor, lower wages, deficit funding, tech innovations, etc, have not been able to generate another long wave expansionary phase. One might even suspect that finance has been 'pumping' too much from the real and that 'long-felt unease' is related to this.'

The primary contradictions which I've seen developing over the last number of decades have been:

1. The ending of national economies v. what can only be national states, a contradiction between economic mode of organization and national states.

2. Progressive expansion of fictitious capital v. the possibility of satisfying such claims, a 'satisfying' which depends upon a) global creation of surplus value and b) substitution of credit for a relative insufficiency of realized surplus value (profit). This has provided much of the 'advanced' world with what is no more than a superficial prosperity even as it has also helped undermined its real basis. The spectacle of finance hides too much.

3. In combination, the above two have generated greater class, ethnic, international and subnational tensions. The social relations of the world capital system have become quite strained, which is not to say that capitalism is 'doomed' but that its present form has become increasingly untenable and a 'change in state' is almost certainly unavoidable, in fact seems to be underway.

Comments
mat :
why must global GDP growth be maximized in order for a global order to be considered a success? in spite of some well known ongoing wars, global violence has decreased since the 50's while average life expectancy has gone up. if we measure economic orders strictly in economic terms then we miss the purpose of having an economic order in the first place. and isn't it possible that in the 60's average weekly earnings in the US reached unsustainable levels on a relative basis? if we're taking a global perspective of things, have the declines in the US been offset by gains elsewhere in the world, particularly in asia?
DownSouth:
Juan,

First I want to thank you for the link to "OPEC Pricing Power."

http://www.td.com/economics/special/db0608_oil.pdf

I printed it out and read the whole thing and found it to be a most thorough and enlightening analysis.

Now back to neo-liberalism. Carlos Fuentes, in his book A New Time for Mexico, gives a short history and analysis of how neo-liberalism played out in Mexico--of its introduction and slow build in the administration of Miguel de la Madrid (1982-88), its unbridled application under Carlos Salinas Gotiari (1988-1994) and the ensuing crash and financial caos of 1995. In response to your comments, I would like to offer some quotes from Fuentes:

"But foreign investment was concentrated mainly in stocks, bonds, and other short-term instruments: in the volatile and transitory paper economy. Only 15 percent of foreign investment went into the real economy, into the creation of factories, increased employment, and increased production."

"It is worth recalling that the prefix neo is particularly well suited to this doctrine, which already had its chance in Latin America in the last century. Throughout the nineteenth century, Latin America followed the precepts of laissez-faire and the magic of the market, and its nations implemented policies geared toward exporting raw materials while importing capital and manufacutred goods. Powerful economic elites emerged from Mexico to Argentina. The hope was that the wealth accumulated at the top would sooner or later find its way down to the bottom. This did not happen. It has never happened. Instead, the wealth generated at the working base found its way up to the top and stayed there."

"The straitjacket of extreme protectionism, subsidized consumption and production, captive markets, and lack of competitiveness needed to be loosened--and was. But in its stead came a demonization of national states, a delusional faith in the free play of market forces, and the cruel complacency of social Darwinism in lands of extreme hunger and need."

"We now know that the shrinking or absense of the state ensures neither well-being nor order... The Mexican crisis and its Latin American repercussions should oblige us to open our eyes and realize that we are blinded only by seduction, convenience, or hypnotism. Peter Drucker, the apostle of the new economy of information, urges us to forget the neo-liberal illusion that the state must disappear. Modern capatilist societies (or postmodern, in the fashionable phrase) need neither more nor less government but better government.

"Neoliberal governments, in their purest Reaganite or Thatcherite manifestations, generated more expenditure and regulations than ever before in the United States and Great Britain and brought about the largest deficits in those countries' history."

"Financial capital has no national allegiance. It pursues its own interests, not those of the nations it visits."

"Henry Kaufman of the Wall Street Journal notes that the analysists who guide banks, insurance companies, and mutual funds no longer consider the long term. Their professional bias leads them to look myopically only at the short term--at immediate, high-risk profits, which is why this capital is not productive... We are dealing with management funds that are uncontrollable, volatile, and enamored of the short term -- enemies of productive investment..."

"As the Mexican congress debates the financial-aid package organized mainly by the U.S. government, Mexico is pledging to follow an economic policy that is precisely the one that led to the current situation: zero growth in the money supply, cuts in government spending, and more privatization. This is a renewed formula for disaster in a country that needs to stimulate growth even at the risk of inflation, as Brazil has done (though one need not go to the same extremes). Mexico has yet to learn the lesson that economists everywhere else have deduced from the crises perpetrated by the supply-side economics practiced during twelve years of Reagan, Bush and Thatcher: that to restrict money supply and spending during a recession leads to depression, not recovery."

"Mexico's nationalization of the oil industry caused the industrialized democracies to rise up against us; the subsequent boycott obliged Cardenas to sell oil to his logical enemies, the Nazi and Fascist powers... The renegotiation of the petroleum debt...was a decisive moment for the good-neighbor policy of Franklin D. Roosevelt. Beleagured by the interest groups that since 1821 had been demanding war against Mexico, invasion of Mexico, dismemberment of Mexico, suffocation of Mexico, Roosevelt courageously played the card of negotiation."

"Mexico needed--and did not get--policies encouraging investment in activities that would further employment, wages, growth, and savings. Instead, the Salinas reforms provoked a flood of speculative, unregulated capital that did not go into productive areas."

"Never has Mexico received as much foreign investment as it did during the Salinas years: almost $59 billion between January 1989 and September 1994, but of that enormous sum, almost 85 percent was speculative flight capital."

Annonymus:

The breakup of the AT&T monopoly is the perfect example of what good government in action looks like. It did not entail the complete abrogation of regulation as free market revisionists would have us to believe.

One can read about the entire history here...

http://www.ieee.org/portal/cms_docs_iportals/iportals/aboutus/history_center/yurcik.pdf

but the crucial element is this:

"Judge Greene held that as long as the RBOCs have a monopoly in the local loop they will be regulated."

Contrast the way the AT&T breakup was handled in the U.S. to what happened in Mexico with the government's divestiture of the national phone company. In Mexico it was a free market fundamentalist's wet dream. Absolutely no regulation. And as a result, for the same call in the U.S. that you pay 5 cents a minute, we in Mexico pay 25 cents a minute. And the guy who engineered the buyout, Carlos Slim, is now one of the third richest men on the planet. His wealth represents 14% of Mexico's annual GNP, as opposed to that of Bill Gates, which represents less than 1/2 of one percent of U.S. GNP.

Also of great interest is how the free market zealots of the Reagan administration tried to undermine the judicial proceedings against AT&T. The case began under Carter but the decision was not handed down until Regan had occupied the White House:

"The U.S. DOJ versus AT&T antitrust case was filed in October 1974 by Attorney General William Saxbe, an aging former Senator from Ohio... Saxbe filed the hout even consulting with then-President Ford. Within the Department of Justice a succession of antitrust chiefs handled the case until 1981 (Thomas Kauper, John Shenefield, Sanford Litvack, and William Baxter). The Attorney General in 1981 was William French Smith who was recused from the AT&T case because he was a past Board Member of Pacific Telephone. Reagan’s designated number-two man at DOJ, Deputy Attorney General Edward Schmults, was also recused because of law firm dealings with AT&T. This made the then newly appointed Antitrust Chief, William Baxter, the top ranking Government official directing the case. William Baxter was an eccentric Stanford University Law Professor who had not addressed a court in session for about 20 years. Baxter considered himself an economist although he had no formal training as such. Baxter’s nomination and the disqualification of his superiors created an ironic situation. Baxter had publicly argued that no one company should be able to integrate regulated and unregulated divisions of its business because it could use the 'safe' profits from its regulated side to subsidize the price of unregulated products (a cross-subsidy). Reagan’s closest advisors including William
French Smith, Edwin Meese (Counselor), Malcolm Baldridge (Commerce Secretary), and
Casper Weinberger (Defense Secretary) believed unequivocally that the DOJ’s case
against AT&T should be dismissed. This created a situation that if AT&T sympathizers in the Reagan inner circle were going to intervene, they would have to quickly go through or around Baxter. Baxter would have none of this and stated before a press conference staged to announce the case, 'The case is perfectly sound…and I intend to litigate it to
the eyeballs.' "

The assault by the Reagan administration against Judge Greene continued after he handed down his judgment, but Greene, against all odds, somehow managed to prevail, and the benefits to everyday Americans are manifold, as this excerpt from a consumer advocate web page illustrates:

"January 1, 2004
It was 20 years ago that AT&T, the once-mighty 'Ma Bell,' was broken up on the order of Judge Harold H. Greene of the U.S. District Court in Washington, D.C."

"Since the break-up, consumers have had a staggering array of choices for local and long-distance phone service, they've been able to buy their own telephones, hook up fax machines, modems and other devices and they've been presented with a multitude of new services, including cellular service, DSL and even Internet and cable-based telephony."

"All this choice is no doubt what Judge Greene, who died four years ago, would have wanted. His ruling, after all, was based on a finding that AT&T had such a stranglehold on all aspects of the telephone business that newcomers like MCI weren't able to compete on a 'level playing field,' a phrase that has since become a standard verse in every lobbyists' litany."

http://www.consumeraffairs.com/news04/att20.html

 
DownSouth:
......correction......

The correct address for "OPEC Pricing Power" is as follows...

http://www.oxfordenergy.org/pdfs/WPM31.pdf

...not the address I mistakenly gave above.

 

Swans and Zombies Neoliberalism's Permanent Contradiction Joshua Clover

April 6, 2011|

It wasn’t a black swan.
 
The term was coined by Nassim Taleb, a former hedge-fund manager turned author of bestselling books on finance, and it served as a popular description of the 2008 financial crisis. It refers to an event of such peculiarity that it cannot be predicted or related to preceding developments. All swans are white until they aren’t. Taleb’s characterization had that charisma of the paradoxical analysis that says this can’t be analyzed. At best you can expect the unexpected.

As months have passed and molten panic has cooled to the rocky facts of a global slowdown, this idea has been quietly abandoned. There are still a few ideologues who think the crisis was caused by the Community Reinvestment Act or by a claque of particularly invidious bankers; that it was just a few ill-advised or morally dubious decisions made by lenders, borrowers or speculators sometime in the 2000s that brought the economy to a halt. It is now high time—and highly possible—to move toward a more thorough understanding, and it is in this direction that much of the thinking and writing about the crisis has been going.

In lieu of the black swan theory, the following things have become clear. The crisis wasn’t financial but economic. The supposed failure of liquidity was, in fact, insolvency; it was a long time coming; finally there was not enough actual value (as opposed to paper profits) in the circuits to sustain the economic order. This wasn’t a momentary event; we are in the fourth year of an unfolding sequence that is itself the climax of a lengthier reorientation of politics, economics and social relations commonly known as neoliberalism.

Scarcely existing before 1980, the term “neoliberalism"became commonplace between the fall of the Berlin Wall and the fall of Lehman Brothers. It is surely tossed about more than understood. This much is something like common knowledge: neoliberalism’s roots are in the classical liberalism of Adam Smith and John Stuart Mill, and the idea that a government exists to assure the individual liberty and economic opportunity of its people. Its parents are Margaret Thatcher and Ronald Reagan; thus, its birth is often dated to around 1979. It is inseparable from the idea of globalization, but it seems to emanate from the United States. Its ideological field contains both Republicans and Democrats; more confusing, it includes liberals and conservatives, and even—especially—neocons. It is the triumph of the liberal idea at a planetary scale. In Thatcher’s famously implacable pronouncement, “There is no alternative."

And yet, lacking a serious challenge globally and going from electoral victory to victory in its home countries, neoliberalism has nonetheless managed to overcome itself. Or at least to weaken so dramatically as to seem vulnerable, if not its own worst enemy. The question of what next—whether we should be imagining an alternative to the complex of political and economic relations or pursuing a restoration—must be rather high on our agenda.

* * *

This is the question of John Quiggin’s Zombie Economics, albeit phrased differently. The book offers itself as a compendium of economic ideas from the past several decades that should have been slain by the force of overwhelming counterevidence—ideas that, nonetheless, still walk among us, neither living nor dead. Quiggin, an Australian economist, dodges the term “neoliberalism"(as well as Reaganism, Thatcherism, et al.) because of concerns about ideological overtones: “The most neutral term I can find for the set of ideas described by these pejoratives is market liberalism."Why he would pursue such politesse in the midst of what will reveal itself as a decisive taking of ideological sides is not entirely clear.

The book is a survey of key concepts, and thus a nice companion to the more narrative (if less combative) The Myth of the Rational Market, Justin Fox’s comprehensive intellectual history from 2009. Quiggin offers five undead ideas, from general conceptions to somewhat technical theories. These are the “Great Moderation,"the idea that we may live amid the gentle swells of the business cycle but have tamed excessive risk and overcome the tendency toward dizzying bubbles and disastrous busts; the “Efficient Markets Hypothesis,"which suggests the price is always right—that the market, as an aggregate of what everybody knows and intends, is itself the best information about value, and gets more perfect the more it grows and the less it is regulated; “Dynamic Stochastic General Equilibrium,"an array of concepts revolving around monetary mechanisms to match supply and demand, designed to mitigate inflation before unemployment; “Trickle-Down Economics,"the proposition that economic intervention should always help profit-making enterprises, said profits then purportedly flowing naturally toward wage workers and other poor people; and “Privatization,"which is more of a worldview than an idea and should by this juncture need no parenthetical gloss, being a first principle of capitalism.

The book is a cogent and readable debunking of these ideas—or at least of the market fundamentalism holding that they are true at all times and in all situations. Each idea gets a chapter, and each chapter follows a zombie Bildung wherein the idea is born; comes of age as a core concept of market liberalism; is dealt what should be a fatal blow by later developments, the culmination of which is the reality machine that Quiggin calls “the Global Financial Crisis"; and then rises from the grave, out but not down. Quiggin measures the ideas against the empirical data and finds them lacking: “The prevailing emphasis on mathematical and logical rigor has given economics an internal consistency that is missing in other social sciences. But there is little value in being consistently wrong."Quiggin also revisits some of the logic on its own terms, showing where it was always dubious and threadbare. Somewhat more provocatively, he insinuates that such ideas might have taken on the force of facts not because they described the world or made it better but because they served the interests of the mighty (see “Trickle-Down,"above; see also William Kristol and Robert Kagan’s ill-fated Project for the New American Century).

Quiggin may believe he takes the side of truth against flimflammery (don’t we all?). In truth, he is engaged in a partisan war of position, pillorying neoliberalism in favor of the preceding Keynesian compromise, with its allowance of regulation, capital controls and social-democratic programs. Though he admits “that Golden Age ended in the chaos and failure of the 1970s,"he concludes rightly that the current failure is “at least as bad."Older and wiser, we ought to prefer “a return to successful Keynesian policies that take account of the errors of the past."Though he occasionally promises “radical new directions in macroeconomics,"none are forthcoming.

Something rankles about Quiggin’s plainspoken conclusion, despite the able history of ideas and the enjoyable skewering of some disingenuous beliefs. His book doesn’t seem to take its lovely, lurid starting point as anything more than a hook. There is a rich tradition of zombies as figures of capitalism, perhaps most gloriously in George Romero’s film Dawn of the Dead. Lumbering automatons stripped down to the most ingrained habits, his living dead recall nothing but ceaseless consumption. They can only return to the mall’s torpid palace of commodities: they are blank, mindless, their arms outstretched for sustenance. The disease that has captured them is not a local phenomenon; as with countless other versions of the allegory, it is everywhere. Dawn of the Dead was made in 1978 and cannot be adduced either to the Keynesian or neoliberal era; it is not a withering critique of one importunate variant of modern economics but a total allegory.

Quiggin misses this. Indeed, it verges on intellectual malpractice that the fifteen pages of references running up through 2010 do not include Chris Harman’s 2009 book, Zombie Capitalism: Global Crisis and the Relevance of Marx. It is not Harman’s provocative text but the specter it represents that Quiggin must suppress: the possibility that the zombie arises from capitalism itself. Such scope is foreclosed. The entirety of Quiggin’s historical presentation reduces to an alternation between two recent and closely related modes, which have together prevailed for less time than my mother has been alive. It is a glaring omission to leave unexplored the fact that the conditions under which Keynesianism thrived—a historically high rate of profit, driven by an unchallenged imperial leader—no longer obtain, and do not seem on the verge of returning, for reasons that have very little to do with the stinginess of Obama’s stimulus or the dearth of WPA-inspired work programs. Those are ways of treating the symptoms; they are far from a diagnosis, much less a cure. In such circumstances, a reversion to Keynesianism is somewhere between a tactical retreat and wishful thinking writ large. But the intrinsic flaw of the book is that Quiggin is unwilling to apply his analytic frame to the larger picture, to wonder whether his most basic assumptions might themselves be due at the boneyard.

The Crisis of Neoliberalism confronts the same situation as Zombie Economics, and its authors surely share much of the same skepticism regarding the intellectual landscape. Amplifying the glimpses found in Quiggin, French economists Gérard Duménil and Dominique Lévy proceed from the somewhat heterodox proposition that ruling ideas arise not from their persuasive power or inner logic but from the interest of ruling groups. Quiggin’s limits present themselves clearly in his choice to go after these ideas rather than their political foundations; it’s a bit like attacking a lemon tree by plucking its fruit.

Duménil and Lévy move directly to the social and political history that led us to this turn, the underlying situation in which such intellectually bankrupt ideas could prevail. And what might become of a world that can no longer sustain such beliefs. As they say, “the stakes are high."

Though elements of their analysis proceed (in their words) “à la Marx,"the book is scarcely what one might thereby expect—that is, the opposite of Quiggin’s unreflective apologia for capitalism’s premises. There is barely a trace of schadenfreude at neoliberalism’s misfortunes, much less a flare of revolutionary fire; the Marxism is largely a matter of fidelity to the idea of social class and the significance of class struggle. The authors are less polemical than Paul Krugman or Joseph Stiglitz, though like them Duménil and Lévy tend toward the empirical. The book makes sincere use of charts and graphs, though not more than the thoughtful reader will appreciate. Moreover, the pair have previously made the case that global capital was actually doing better than many of the left’s crisis mavens would admit. In brief, they argued that if one filtered out certain capital-intensive industries (railroads, mining and the like), the economy had succeeded in recovering to boom levels of profitability sometime in the ’80s, largely through the artifice of depressing real wages and lowering corporate taxes. The neoliberal program, they concluded, had worked.

But worked for whom? The two argue (like David Harvey in his clarion A Brief History of Neoliberalism) that neoliberalism is not a collection of theories meant to improve the economy. Instead, it should be understood as a class strategy designed to redistribute wealth upward toward an increasingly narrow fraction of folks. This transfer is undertaken, they argue, with near indifference to what happens below some platinum plateau—even as the failures and contradictions of the economic system inevitably drive the entire structure toward disaster.

Duménil and Lévy offer two provocative and interlocking schemas. They decline the bluntest of Marxist oppositions, which supposes a world divided only between owners and workers. But they equally abjure the endless proliferation of categories and distinctions, the slippery slope of micro-differences that leads to the paradoxical homily of conventional American thought: that individuals are just that, and thereby classless—and that everybody is middle-class. One might well see in this the shadow of Thatcher’s other hyperbolic dictum of neoliberalism: “There is no such thing as society. There are only individuals and families."

Duménil and Lévy are having none of that. Instead, they proffer the simplest possible formulation that allows for both the existence of class interest and the dynamics peculiar to the current epoch. With the modern increase in size and complexity of enterprises, a managerial class came into being to run the show on behalf of owners. This new cohort is distinct from modernity’s legion of clerical staff, who are grouped with production workers into what the authors call (after the French tradition) the “popular classes."

The new managerial class rests between that stratum and the capitalist class proper, and therein lies the tale. For Duménil and Lévy, the century is a story of shifting alliances. In the century’s first third, this tripartite formation comes into being under the auspices of a new breed of monopoly barons. In the period following the Great Depression came an alliance between the managerial and popular classes; this “compromise to the left"is the enabling condition for the Keynesian era, the Long Boom and eventually the cluster of political and economic failures that defined the 1970s. The last third of the century can thus be called “the neoliberal compromise"—a “compromise to the right"between the managerial and ownership classes, with its own restoration of capital’s power (hence the title of their previous book, Capital Resurgent) at the expense of the popular classes.

The book’s other seductively lucid schema concerns the history of structural crises, which follow an alternating pattern. The authors count four in the “long twentieth century": the first “great depression"in the 1890s, the Great Depression, the 1970s collapse and the current morass. The first and third they identify as crises of profitability; the second and fourth, crises of “financial hegemony."In these periods the profit rate is relatively stable, but the unchecked power of the upper echelons allows for unsustainable demands. They are gilded ages, perhaps; yet every such age gilds not the lily but the tulip: they are built out of bubbles. With the wealthy unwilling and the poor unable to support the mountain of social debt, the bubble eventually pops. This is, for our authors, the nature of the present crisis, and it is from here we must seek a way forward.

Duménil and Lévy see a series of branching possibilities, none of them brilliant. In line with Quiggin, they can imagine a New New Deal with Keynesian characteristics, as well as a short-term restoration of the neoliberal regime under the fig leaf of a couple of regulatory concessions. This latter is a fair description of what we have seen so far; there have been only the most timorous signs of the consequential social and labor militancy that might force a renewal of the New Deal.

On balance, their vision remains one of American hegemony, if their more sophisticated historical model allows them more nuanced forecasts than Quiggin’s Manichaeanism. For them a less likely, but not impossible, outcome is a real lurch to the far right, of the sort presaged by the Tea Party and its ilk—wherein ascendant economic distress opens a path for a craven and belligerent nationalism. But their most suggestive scenario is a renewed compromise to the center-right. This time, however, the managerial classes will not be a supplement to higher powers but will be the leading faction. This “neomanagerial capitalism"would be empowered to contain the volatilizing influence of the lords of finance without yielding economic ground to the popular classes.

* * *

This is a somewhat gnomic conclusion. Certainly, it is appropriately sober and takes the book’s preceding logic seriously. It follows a clear and elegant trajectory leading from the pair’s model of the long twentieth century and from the underlying nature of its crises and class dynamics. Yet certain things about it are obscure. It is not entirely clear how such a development would, in the immediate future, restore the solvency of the West (and recent indications are that China may be resting on a bubble). At a concrete level, then, the management in question would be something on the order of a super-powerful central bank maintaining rigorous control over a zero-growth economy that is mortally sensitive to the slightest imbalance. It is hard to see this coming to pass without dramatic changes to the ideological landscape, and it is hard, in turn, to imagine such a revolution just to achieve centrally managed capitalism. Surely revolution would have better things to do.

A further analytical conundrum arises in Duménil and Lévy’s rigid distinction between kinds of crises, treating each as a discrete event concluding its own sequence. This risks reproducing Taleb’s error at a more subtle level: in their accounting, each crisis-punctuated era becomes a singularity—not quite unexpected but unthinkable beyond its own particulars, a three- or four-decade swan.

It might make more sense to see each of the periods as overlapping in a complex and extended chain. From this perspective, each crisis would end one era and start the next, and each era would thus link together a pair of crises into one sequence. This would allow us to consider the past two dramatic failures as part of an ongoing story: to see the 1970s decline in profits and the current crisis of financial hegemony as facts that together form a unity. Neoliberalism is less a new era, in such a view, than the specific outcome of the earlier bust.

It would not be terribly unfaithful to Duménil and Lévy’s thesis to suggest that neoliberalism is less an economic system or social order than global capital’s management style for a situation of lower profits. In this sense we might recognize the birth of neoliberalism not in the ideologies of Thatcher and Reagan but in the California tax revolts of 1978: what played at being a moral jihad of suburban homeowners was simply part of an intensifying competition for a smaller pool of profits. Similarly, New York City’s 1975 brush with bankruptcy was a struggle between municipal government and Wall Street over insufficient revenues; the utter triumph of the latter was the shape of things to come.

But the seeming restoration of profit by the financial sector proved illusory. The neoliberal strategy of opening new markets to sell more widgets, and internalizing more cheap labor into the growing empire of capital, arrived both at diminishing returns and at the limits of the globe. One could say that the ’70s crisis was a wound to the economy; the following decades provided a series of wrappings, poultices and painkillers. The blowout of 2008 was akin to their sudden removal—beneath which the old wound had only deepened and abscessed. Real profit was not restored, even if the profit rate briefly danced on air; it was a temporary fix to a permanent contradiction.

The current catastrophe is a rare creature, to be sure. But it is not a black swan; it is a zombie. It is the last crisis come calling, and the one before that and before that again—not just returned but fortified by the intervening years and the deferral of a reckoning. This crisis that keeps returning, now dressed in finery, now in rags, is evidently not a monster sprung from one particular deviation. Global crisis is, increasingly, the unnatural natural state of modern capital. It will not be laid to rest by fiddling with the alignment of parts, much less returning to a previous mode—these parts, these modes, are what set it shambling forward, hungry, blindly grasping, in the first place.

Neoliberalism - Wikipedia, the free encyclopedia

Neoliberalism is a market-driven[1] approach to economic and social policy based on neoclassical theories of economics that maximise the role of the private business sector in determining the political and economic priorities of the state.

The term "neoliberalism" has also come into wide use in cultural studies to describe an internationally prevailing ideological paradigm that leads to social, cultural, and political practices and policies that use the language of markets, efficiency, consumer choice, transactional thinking and individual autonomy to shift risk from governments and corporations onto individuals and to extend this kind of market logic into the realm of social and affective relationships.[2]

In the 1970s some Latin American economists began using "neoliberalismo" to designate their program of market-oriented reforms. By the 1990s, however, the term "neoliberalism" had become a pejorative to classical liberal critics, who dismissed it as a catchphrase invented by academic radicals to denigrate the ideas of Milton Friedman and Friedrich von Hayek.[3]

Neo-liberalism first took hold in Chile under Augusto Pinochet (from 1973) and spread, first to Great Britain under Margaret Thatcher (from 1979) and the United States under Ronald Reagan (from 1981).

Broadly speaking, neoliberalism seeks to transfer control of the economy from public to the private sector,[4] under the belief that it will produce a more efficient government and improve the economic health of the nation.[5] The definitive statement of the concrete policies advocated by neoliberalism is often taken to be John Williamson's[6] "Washington Consensus", a list of policy proposals that appeared to have gained consensus approval among the Washington-based international economic organizations (like the International Monetary Fund (IMF) and World Bank). Williamson's list included ten points:

Economics as science? No chance.

Lifted directly from comments by cactus from the open thread:
Economics is not a science. Physics wouldn't be a science either if esteemed members of that profession who got prestigious jobs running the country were willing to make statements that contradict all known facts. But here's the thing - if the administration's position is that you can use gravel as fuel in a nuclear power plant (a convenient position give that gravel is so much cheaper than uranium), they're going to have a hard time finding eminent physicists willing to agree with that position, and any physicists that did agree would quickly cease to be eminent physicists.

But consider an equivalent economic position. In 2001 told us we were going to get tax cuts, resulting in a rapidly growing economy leading to debt falling to 7% of GDP in 2011. This is extremely similar to the promising you will get electricity from a pile of gravel. But, there was no shortage of well-known economists willing to explain why that plan was, indeed, going to work. And they explained it over and over. Since then, they have gone to explain to us why things haven't worked out as planned... and wouldn't you know it, it has nothing to do with the fact that they used gravel to try to run a nuclear power plant. Instead, the problem seems to be that some terrorists slammed some planes into the WTC.

Which brings us to, well us. See, its our fault that economics is not a science. The folks who peddled this line of bs to us, the folks who promised that gravel was going to produce electricity and have since been making all sorts of excuses and promises that it really will work the next time its tried, are still around, and still held in high esteem. The Harvard Professor, the governor, the ivy league business school dean, and the rest of that crowd don't feel a need to hide their faces in shame the way their counterparts in physics would.

No, they've been well rewarded for their actions, and still continue to be honored by others in the profession they so badly denigrated. So the lesson is clear - this is the most lucrative way to behave. By sending this message, we have dishonored ourselves, and we have paved the way for the next Harvard professor, the next governor, and the next business school dean.


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Lifted from comments by cactus

Read More on "Economics as science? No chance."

Posted by rdan at 6:06 AM

Angry Bear

6-53 AM

Soc Sec XVI: Democracy and Reaction Well this is even less of an economics post than XV and in thinking on this the last couple days I realized I didn't have a firm enough grip on the historical particulars to make it as definitive as I wanted. But still the concept is important and I could use some feedback so here goes.

When we talk about a Reactionary today we generally mean nothing more than 'very Conservative'. But the term has a specific historical reference, it describes those who lined up behind the forces of Reaction in the years on either side of the nineteenth century. This Reaction was to specific events, notably the American and French Revolutions which were perceived, and rightly, as being systemic risks to the political, economic, and religious structure of society as it existed, not just to crowned monarchs (though Louis XVI showed that had to be taken into consideration), but to the aristocracy, the merchant and industrial class, and to the landowners. The key point to understand is that for the original Reactionaries 'Democracy' was quite literally a dirty word, it was considered and called 'Mob Rule'. Then further consider that the forces of Reaction did not at all believe that 'All Men are Created Equal' and rejected all three parts of the French slogan 'Liberte, Egalite, Fraternite', at least as they pertained to the working class in relation to them. These Revolutions unleashed forces that put the whole concept of Privilege and Birth at risk, because once you start leveling things who knows where the stopping point is.

Which leads to the second point. In nineteenth century it was nearly impossible to draw any kind of clear lines between the drives for universal franchise, for the right to organize and bargain collectively, and for socialism. Indeed when the British Labour Party came into being at the end of the century it was organized specifically on all three lines.

Which leads to two questions. One was the classical economics stemming from Adam Smith shaped by the fact that its practitioners by and large lived in a society where exclusive privilege was a societal norm and where democracy was seen as an existential threat to that society? Two can the continued hostility to Social Security be explained as a simple continuation of a politics and an economics formed within a framework of Reaction?

Personally I think the answer to both questions is 'Yes'. Orthodox economists tend to look at the world through the lens of a discipline formed in days when democracy and hence pragmatic greatest good solutions could not be distinguished from socialism and class warfare. If we accept this frame much of the mystery behind the denials of income inequality, resistance to minimum wage, denial that wages are set by power relations to begin with, and yes opposition to Social Security all can be explained as stemming from the same source, that of Reaction pushing back on perceived Socialism.

Sea Change in Japan? Western Market Fundamentalism Denouncing Opposition PM Candidate Leads Polls

 Japan may be on the verge of some major shifts, The fact that what amounts to one-party rule in Japan appears at an end ought to be significant, but the proof will be in the pudding. The island nation has been ruled by the Liberal Democratic Party for virtually the entire postwar period, with politics consisting of fights among various party factions.

But Yukio Hatoyama, leader of the opposition Democratic Party of Japan, appears slated to become Prime Minister next month. And, at least on paper, he is firmly renouncing "market fundamentalism" and placing higher priority on social values.

Even more so than in English, it is possible to give speeches in Japanese that sound great but are devoid of content, so the lack of clarity on policies is not surprising. But one has to wonder if this might mean less willingness to accede to US demands. For instance, Japan has quietly playing both sided of the street, aligning with American or China on various issues while taking care not to alienate either party.

But US influence is waning. Japan wanted to sponsor Asian-led rescued during the 1997 Asian crisis, but the IMF and US Treasury aggressively beat back the measures. Some of the economies, South Korea in particular, were forced to remake themselves on Western lines. Plans are now moving forward to develop a fund to facilitate salvage operations in the region, If nothing else, if Hatoyama wins and can implement its vision, Japan may become more willing to distance itself from US initiatives and stand with its region.

But many Americans are not willing to see the US as a fading power.

From the Financial Times:

Yukio Hatoyama, the leader of Japan's opposition Democratic party who is strongly placed to become prime minister after elections this month, has condemned “US-led market fundamentalism"and vowed to shield his nation from the effects of untrammelled globalisation.

With the era of US unilateralism ending and worries about the dollar’s future role growing, Japan should also work towards regional currency union and political integration in an “East Asian Community", ...

Mr Hatoyama offered a robust defence of his political philosophy of yuai – fraternity – which critics have derided as wishy-washy wishful thinking, but which he declared a “strong, combative concept"and “banner of revolution"....

A poll released by the Kyodo news agency on Monday found nearly half the respondents thought Mr Hatoyama most suited to be prime minister, compared with 20 per cent for Taro Aso, the LDP incumbent.

In his essay, Mr Hatoyama said the global economy had “damaged traditional economic activities"while market fundamentalism had destroyed “local communities"...

“Under the principle of fraternity, we will not implement policies that leave economic activities in areas relating to human lives and safety, such as agriculture, the environment and medicine, at the mercy of the tides of globalism,"Mr Hatoyama wrote.

Analysts say that wide policy differences within the often fractious DPJ make it difficult to predict how such statements of principle might be put into practice. Mr Hatoyama highlighted the need for better welfare, more child support and wealth redistribution.

He made clear that while security ties with the US would remain a “diplomatic cornerstone", Japan must do much more to tighten links with Asian neighbours such as China and South Korea.

“As a result of the failure of the Iraq war and the financial crisis, the era of the US-led globalism is coming to an end and …we are moving away from a unipolar world led by the US towards an era of multipolarity,"the DPJ leader said, adding that fears about China's military rise were a big factor in “accelerating regional integration".

Japan should "aspire to the move towards regional currency integration" and "spare no effort" in building the security frameworks needed to make union possible, he wrote, adding that the example of European Union showed that integration itself could be the best way of defusing territorial disputes often seen as an impediment to closer ties.

The Twilight of Free-Market Ideology by Charles Wheelan, Ph.D.

October 24, 2008

When I heard Alan Greenspan's testimony before Congress last Thursday, I had one immediate thought: This is the beginning of the end for the free-market ideologues.

According to press reports of the testimony, Greenspan told Congress that he "had put too much faith in the self-correcting power of free markets." That's no small statement.

In fact, it struck me that if 1989 was the year when no reasonable person could still believe in communism (or any of its government-intensive relatives), then 2008 will go down in history as the year in which the free-market zealots saw their "wall" come crumbling down.

Too Free to Last

You don't have to take it from me. Just look around. One by one, the economic meltdown is slaying one shibboleth of the uber-free-market camp after another.

Here are some of the inflexible, hardcore beliefs that are crashing along with the stock market:

A colleague of mine, who worked in (and was frustrated by) the George W. Bush administration, coined a term that summarizes it best: faith-based economics. That's not supposed to be how it works.

  • Mainstream economists have a profound belief in markets

    But they also understand that markets fail in some cases. And they recognize that most markets work better with some government infrastructure, whether it's information, modest regulation, or just a place to sue someone who cheats you.

    Mainstream economists recognize the costs of taxation; taxes take money out of people's pockets and distort behavior in ways that can have serious economic costs. But the non-ideologues also recognize that tax revenues can be used to provide government services that make people better off. Good policy is about managing that messy tradeoff.

    Mainstream economists recognize that individuals have a pretty good idea of what they want -- but that those same individuals sometimes make systematic errors of judgment, which can lead to things like bubbles and panics.

    Mainstream economists recognize that too much regulation can harm innovation and diminish prosperity. But they also recognize that sensible regulation provides information and security, both of which make it much easier to do business with strangers. Regulation also protects third parties from market behavior that has negative spillovers, whether it's the guy who drinks too much at the bar before getting into his car or the paint factory that cuts costs by dumping lead in your drinking water.

    A Monument to Self-Interest

    There's now a museum in Berlin where visitors can go to see a remnant of the Berlin Wall and learn about the damage done by an overly rigid, poorly conceived ideology.

    Maybe there should be some kind of 2008 Meltdown Museum. It would have a large subdivision of homes, all with "for sale" signs out in front. And there would be a quotation from Alan Greenspan inscribed over the arch at the entrance:

    "Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief."

  • "The Liberal Hour"

    Economist's View
    Comments on this?:

    The ’60s: Once Upon an Optimistic Time, by Barry Gewen, Book Review, NY Times: ...“The Liberal Hour"by G. Calvin Mackenzie and Robert Weisbrot ... [contends that t]oo many historians who write about the 1960s ... have focused on the decade’s very visible rebellions and disruptions — all that sex, all those drugs, all that rock ’n’ roll.

    What is often ignored, they say, is the hard work of little-known politicians and bureaucrats who were methodically creating a ’60s revolution from within. ... Senators and congressmen ... were permanently transforming the country with a tsunami of social and economic legislation.

    Granted, it’s more fun to read about Abbie Hoffman than about Edmund Muskie, but ... their overall argument is a valuable corrective to a lot of hackneyed thinking about the significance of the ’60s.

    The “liberal hour"lasted only a few years, from 1963 to 1966, from the final days of John F. Kennedy’s presidency through the first three years of Lyndon B. Johnson’s, but in that brief period of time came two civil rights acts...; ...Medicare and Medicaid; pioneering environmental laws; education and immigration bills; stronger protections for consumers; a host of antipoverty programs, including food stamps and Head Start; new federal departments of transportation and housing and urban development; and other reform measures, literally hundreds. Washington hadn’t seen such legislative energy since the New Deal.

    If it was poverty and want that drove the New Deal, it was prosperity that provided the momentum for the ’60s, and with it the confidence to take on any challenge. “In the early years of the 1960s,"Mr. Mackenzie and Mr. Weisbrot write, “national optimism reached epidemic levels."Inspired by Kennedy’s rhetoric and Johnson’s acumen, hundreds of inside-the-Beltway role players set about to change their country and the world. ...

    [I]t seemed that liberals would be on top for a very long time..., even a liberal century. Yet their moment quickly passed. ... What happened?

    It’s not a question that lends itself to easy answers, but ... they come up with a powerful one: liberal overreaching. During the ’60s liberals were certain they could solve any problem — at home or abroad — with the right expertise, appropriate government policies, the application of reason and gobs of money.

    “Do we have or can we develop a knowledge of human social relations that can serve as the basis of rational, ‘engineering’ control?"the eminent sociologist Talcott Parsons asked. “The answer is unequivocally affirmative."Officials puffed up with a sense of their own omnipotence spoke of a “world New Deal."Johnson himself exclaimed: “We’re the richest country in the world, the most powerful. We can do it all."

    Such arrogance led directly into the mire and jungles of Vietnam, the prime example of liberal overreaching... Suddenly, Americans were being called upon to make sacrifices, not only of money but also of blood, sacrifices that seemed endless.

    It was little better at home. The legislation of the liberal hour was supposed to end poverty, heal racial divisions. Yet all at once, the cities were going up in flames. The primary beneficiaries of liberal largesse, it seemed, were ungrateful for the assistance, while Democratic leaders looked helpless in the face of riots and rising crime. Great Society solutions weren’t working, and so voters turned elsewhere.

    “By 1966,"Mr. Mackenzie and Mr. Weisbrot report, “more than half of northern whites had come to believe that government was pushing too fast for integration."

    Johnson had come to grief because, to use Mr. Mackenzie and Mr. Weisbrot’s word, he had “overpromised."Not every problem had a solution. Reasoning together didn’t work in the urban ghettos or the Mekong Delta. “The Liberal Hour"presents itself as a book about the brilliant legislative legacy of the ’60s, but by the end it has become a book about the legacy of the Johnson administration’s failings....

    More optimistic than most of his optimistic countrymen, more confident and overbearing too, Johnson seemed incapable of understanding the virtues of skepticism and caution, the wisdom of pessimism. He never appreciated the limits of good intentions, especially his own. Like many a tragic hero, Johnson was brought down by hubris. And Democrats, Mr. Mackenzie and Mr. Weisbrot tell us, are still paying the price.

    Have we just been through a period of "conservative overreaching"? Andrew Samwick quotes Warren Coats on the swing back to the left:

    The Death of the Right?: As public sentiment swings back to the left what the public wants (domestically), I think, are largely free but better regulated markets and a better social safety net (health care and pensions). Those like me who think that too much regulation stifles beneficial market innovation and worry about the work incentive stiffing effects of excessive or poorly designed safety nets need to take note of these sentiments. The freedom for me to lead my life largely as I choose and to enjoy the fruits of my labor depends heavily on the willingness of my neighbors (fellow citizens and residents) to accept those rules of the game. Our society functions as it does because of a broad social consensus on the rules of public behavior. This consensus rests in part on each player’s confidence that if he fails there is a safety net that makes it worth his taking the risk of playing. We need to compromise what we consider first best for society (and Republicans and Democrats tend to differ on what this is) to the extent needed to preserve that broad consensus.

    He goes on to say:

    Congressman Barney Frank, Chairman of the House Financial Services Committee, epitomizes the best of the new left wing reaction to the Reagan Revolution. Frank is fully aware of the virtues of the market ... and the need to get the incentives right, but insists that market excesses and rough edges should be removed with limited and well focused regulation. His collaboration with Republican Treasury Secretary Henry Paulson to fashion a Housing Rescue and Foreclosure Prevention Law enjoyed sufficient bipartisan support to gain the President’s signature on July 30. The bill’s many provisions were generally sensitive to moral hazard problems and market incentives... There were things for both Republicans and Democrats to like and to dislike in this bill.[8]

    Frank is a pragmatist who is willing to sacrifice his version of “the best"for “the good."He sees a major victory for his preference for limited, market friendly regulations in the Federal Reserve’s new rules (Regulation Z – Truth in Lending) to prohibit “unfair, abusive or deceptive home mortgage lending practices."... These are not the sentiments of a wild eyed socialist and this is not a return to the heavy handed economic (as apposed to prudential) regulations of the 50s and 60s when government regulated, e.g., capital flows and interest rates on bank deposits. When asked why congress refuses to pass the no brainer free trade treaty with Columbia, which Frank has visited several times, he replied that “it has nothing to do with Columbia, nor the failure to recognize the benefits of trade. No trade liberalization deal will be passed by this Congress until more attention is given to compensating the losers. And don’t forget that today when someone losses their job, they also loss their health insurance."[12]

    For the next few years, maybe even a decade, until the next swing back in the political center, we can expect more regulation and more extensive safety nets. If we collaborate with market friendly Democrats like Frank, we can not only fix some of the genuine deficiencies with existing arrangements, but we can probably prevent some of the worst excesses of the over extension of government, until it is our turn again. ...

    Would health care reform guaranteeing universal coverage be considered one of "the worst excesses of the over extension of government"? The "brilliant legislative legacy of the ’60s" produced important programs that are still with us today. If Obama wins the election, I'm not too worried about overreaching, I more worried about Democrats not reaching far enough.

    >January 21, 2008 | NYT Paul Krugman

    Historical narratives matter. That’s why conservatives are still writing books denouncing F.D.R. and the New Deal; they understand that the way Americans perceive bygone eras, even eras from the seemingly distant past, affects politics today.

    And it’s also why the furor over Barack Obama’s praise for Ronald Reagan is not, as some think, overblown. The fact is that how we talk about the Reagan era still matters immensely for American politics.

    Bill Clinton knew that in 1991, when he began his presidential campaign. “The Reagan-Bush years,"he declared, “have exalted private gain over public obligation, special interests over the common good, wealth and fame over work and family. The 1980s ushered in a Gilded Age of greed and selfishness, of irresponsibility and excess, and of neglect."

    Contrast that with Mr. Obama’s recent statement, in an interview with a Nevada newspaper, that Reagan offered a “sense of dynamism and entrepreneurship that had been missing."

    Maybe Mr. Obama was, as his supporters insist, simply praising Reagan’s political skills. (I think he was trying to curry favor with a conservative editorial board, which did in fact endorse him.) But where in his remarks was the clear declaration that Reaganomics failed?

    For it did fail. The Reagan economy was a one-hit wonder. Yes, there was a boom in the mid-1980s, as the economy recovered from a severe recession. But while the rich got much richer, there was little sustained economic improvement for most Americans. By the late 1980s, middle-class incomes were barely higher than they had been a decade before — and the poverty rate had actually risen.

    When the inevitable recession arrived, people felt betrayed — a sense of betrayal that Mr. Clinton was able to ride into the White House.

    Given that reality, what was Mr. Obama talking about? Some good things did eventually happen to the U.S. economy — but not on Reagan’s watch.

    For example, I’m not sure what “dynamism"means, but if it means productivity growth, there wasn’t any resurgence in the Reagan years. Eventually productivity did take off — but even the Bush administration’s own Council of Economic Advisers dates the beginning of that takeoff to 1995.

    Similarly, if a sense of entrepreneurship means having confidence in the talents of American business leaders, that didn’t happen in the 1980s, when all the business books seemed to have samurai warriors on their covers. Like productivity, American business prestige didn’t stage a comeback until the mid-1990s, when the U.S. began to reassert its technological and economic leadership.

    I understand why conservatives want to rewrite history and pretend that these good things happened while a Republican was in office — or claim, implausibly, that the 1981 Reagan tax cut somehow deserves credit for positive economic developments that didn’t happen until 14 or more years had passed. (Does Richard Nixon get credit for “Morning in America"?)

    But why would a self-proclaimed progressive say anything that lends credibility to this rewriting of history — particularly right now, when Reaganomics has just failed all over again?

    Like Ronald Reagan, President Bush began his term in office with big tax cuts for the rich and promises that the benefits would trickle down to the middle class. Like Reagan, he also began his term with an economic slump, then claimed that the recovery from that slump proved the success of his policies.

    And like Reaganomics — but more quickly — Bushonomics has ended in grief. The public mood today is as grim as it was in 1992. Wages are lagging behind inflation. Employment growth in the Bush years has been pathetic compared with job creation in the Clinton era. Even if we don’t have a formal recession — and the odds now are that we will — the optimism of the 1990s has evaporated.

    This is, in short, a time when progressives ought to be driving home the idea that the right’s ideas don’t work, and never have.

    It’s not just a matter of what happens in the next election. Mr. Clinton won his elections, but — as Mr. Obama correctly pointed out — he didn’t change America’s trajectory the way Reagan did. Why?

    Well, I’d say that the great failure of the Clinton administration — more important even than its failure to achieve health care reform, though the two failures were closely related — was the fact that it didn’t change the narrative, a fact demonstrated by the way Republicans are still claiming to be the next Ronald Reagan.

    Now progressives have been granted a second chance to argue that Reaganism is fundamentally wrong: once again, the vast majority of Americans think that the country is on the wrong track. But they won’t be able to make that argument if their political leaders, whatever they meant to convey, seem to be saying that Reagan had it right.

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