Neoliberalism

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darbikrash's picture
darbikrash
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Neoliberalism

 

I’ve read with great interest many of the posts and commentaries of what is happening to our economy and society, and have been struck during my short term on this forum as to just how much disagreement there really is as to the root cause of our “predicament”.

There are many that seem content to assign root cause blame to the construct of our debt based financial system, but even within this common ground there seems to be general disagreement as to how this manifests toward the macro picture of government and politics. In short, I have been struggling to try and redefine my outlook on the top level causes, to that end assigning blame simplistically to debt based financial fraud leaves me dissatisfied as to whether this is symptom or cause. As the topic of money creation  and economic theory  is well covered in other threads, I’ll not comment other than to remark that while I agree with the premise of reconstructing our financial system away from debt based money, I believe the root cause of observable events that we are all witnessing have a higher level explanation, and suggest different conclusions.

For some time, before I found this forum I was fairly well convinced that corporatism and it’s fondness for regulatory capture was really the root cause of what ails us, and although I think it’s fair to say that some here may also agree with this viewpoint, many, if not most do not, instead advocating that some type of government deconstruction is the logical answer to our troubles. These views are fundamentally opposed, if you believe corporatism plays any role in what is occurring, the last thing you want to be doing is dismantling any type of regulatory or government oversight.

I am now wondering if even this assignment of blame to the corporatist agenda is comprehensive enough, and I am beginning to believe that although this view is still largely correct, it does not cast a wide enough net to fully explain what we observe in current events.

A quick Wikipedia search of the term “Neoliberalism” yields some quite surprising (to me) definitions:

Quote:

Neoliberalism is an approach to economic and social policy based on neoclassical theories of economics that minimize the role of the state and maximize the private business sector. 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.

That sounds like trouble to me. Let’s go on:

Quote:

Policy implications

Broadly speaking, Neoliberalism seeks to transfer control of the economy from public to the private sector,[3] under the belief that it will produce a more efficient government and improve the economic health of the nation.[4] The definitive statement of the concrete policies advocated by neoliberalism is often taken to be John Williamson's[5] "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:

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.

Redirection of public spending from subsidies (especially what neoliberals call "indiscriminate subsidies") and other spending neoliberals deem wasteful toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment

Tax reform– broadening the tax base and adopting moderate marginal tax rates to encourage innovation and efficiency;

Interest rates that are market determined and positive (but moderate) in real terms;

Floating exchange rates;

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

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

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.

Deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions;

Legal security for property rights; and,

Financialization of capital.

Many of these line items appear rather familiar, and appear to resonate with many of the tenets of what might pass for conservatism or even libertarianism, which is to say, stock in trade for much popular commentary, both on the forum and off. And many of these seem fairly agreeable to me, except for a few. Especially the brief note on “Financialization”.

Quote:

The term embedded liberalism refers to the economic system which dominated worldwide from the end of World War II to the 1970s. David Harvey argues that at the end of World War II, the primary objective was to develop an economic plan that would not lead to a repeat of the Great Depression during the 1930s.[6] Harvey notes that under this new system free trade was regulated "under a system of fixed exchange rates anchored by the US dollar's convertibility into gold at a fixed price. Fixed exchange rates were incompatible with free flows of capital."[7] Harvey argues that embedded liberalism led to the surge of economic prosperity which came to define the 1950s and 1960s.

And then:

Quote:

David Harvey notes that the system of embedded liberalism began to break down beginning towards the end of the 1960s.[11] The 1970s were defined by an increased accumulation of capital, unemployment, inflation (or stagflation as it was dubbed), and a variety of fiscal crises.[11] 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."[11] 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.[12] 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.

Some argue that the strains which occurred were located in the international financial system,[13][14] and culminated in the dissolution of the Bretton Woods system, which some argue had set the stage for the Stagflation crisis that would, to some extent, discredit Keynesianism in the English-speaking world. In addition, some argue that the postwar economic system was premised on a society that excluded women and minorities from economic opportunities, and the political and economic integration given to these groups strained the postwar system.

To this novices’ eye, these definitions are headed to a very different conclusion that suggest perhaps a higher level state of planning was involved in not only financial matters, but extended (apparently) into a generalized and deliberate divestiture of central planning to the private sector in the form of corporations.

Quote:

Changes occurred from the 1970s to the 1980s. Started off with most of the democratic world governments focused primarily on the primacy of economic individual rights, rules of law and roles of the governments in moderating relative free trade. It was almost considered national self determination at the time.

Stances of organized labour shifted when governments of Ronald Reagan and Margaret Thatcher took strong stances to break down trade barriers entirely to reduce government power; thus allowing the market to be more important. Therefore industries will increasingly shift globally with integrated knowledge boosting the economy.

Socially, neoliberalism is marked by the return of class; rules and the blurring of social and market value.

What is beginning to appear is a continuum of systematic decoupling of government from governing, and capitulating these tasks to private industry in the unspoken belief that these entities are better at “setting the rules” that a theoretically impartial (financially) elected government.

Quote:

The Administration of Ronald Reagan governed from 1981 to 1989, and made a range of decisions that served to liberalizethe American economy. In actual fact, Reagan's administration was the most protectionist since Herbert Hoover's.These policies are often described as Reaganomics, and are often associated with supply-side economics (The notion that, in order to lower prices and cultivate economic prosperity, policies should appeal to producers rather than consumers.

It would appear that the green shoots of corporatism and regulatory capture are by now baked in, and in fact many attribute the Reagan administration with popularizing these artifacts. On a social note, one of the more interesting theories as to how this idea gained widespread acceptance is that the “baby boomers” (made famous during the Reagan tenure and a large part of his voting bloc) were in fact aging hippies, or at least had those rebellious tendencies, and Reagan (brilliantly) was able to create some transference from the “stick it to the man” sensibility hard wired in boomer DNA, into a “stick it to the government” message for the ‘80’s. This notion was eloquently socialized in Douglas Rushkoffs’ excellent book, “Life, Inc”.

Quote:

One of the differences between classical liberalism and Neoliberalism is that while the former called for reducing the role of the state to a minimum and replace it by private capital the latter seeks to expand the role of private capital through the state, making it authoritarian and a dedicated facilitator of its interests.

Anyway, the definition goes on, and is arguably one of the more detailed descriptions of political ideologies, with arguments pro and con. My interest in this is that this seems to capture many of the tangential theories concerning the power elite, debt based currency, shifting inappropriate responsibility and planning function to corporations, regulatory capture, and my favorite, the advocation of the dismantling of government by the far right and their follow tea partiers.

To my points, or rather questions:

1.)   Is this the “big tent” design of what we are witnessing in current events? There are many positive aspects to the above list of tenets, but like most ideological manifestos, the reality rarely bears out the theory.

2.)   What is the logical extension of this? A case can be made we are witnessing the wholesale abdication of virtually all governmental responsibilities to corporations. Look at the ratio of enlisted military to private sector contract hires, it’s like 1:10, in effect, outsourcing war. In the financial sector, much has been made of the famous attitude that concerning derivatives and other difficult to understand (and newly fabricated) debt instruments, that only the private sector could regulate these as “there was no one in government smart enough to legislate or regulate”. You can list any major industry in the news today and draw similar conclusions.

3.)   Is this what’s coming?

4.)   Is this what we want?

5.)   Really?

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strabes
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Re: Neoliberalism

hi darbi, my take is that economics is a "science" that follows the evolution of the monetary system, not the other way around.  the monetary system is built on math that must continually grow or it collapses.  so the economic system was restructured whenever necessary to facilitate continued growth because nobody was willing to say no and face collapse.  a new economic perspective like neoliberalism was just Ivy League dressing to justify what was already happening as a result of the monetary system's perpetual growth dynamics, i.e. Wall St was already engaging in crazy transaction churning and attempts to breakdown government structures, so Harvard/Chicago/Princeton/MIT economists worked with partners in the firms to develop a "science" behind what they were doing, and CFR lawyers were driving government to make sure legal structures evolved accordingly.  in other words, my view is that things like neoliberalism are just confusing BS to hide from the people the simple monetary facts.

I don't think people understand the power of the debt-based monetary system.  it is literally just as powerful as laws of physics like gravity and E=mc2.  it creates a voracious, universal, unidirectional force driving ALL activity in the economic system since we have no sovereign money and ALL money in the system is backed by interest-bearing debt.  the monetary system is so powerful that it has not only hijacked economics, but also philosophy, psychology, spirituality, etc. 

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V
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Re: Neoliberalism

John Perkins

" Confessions of an Economic Hitman"

V

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agitating prop
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Re: Neoliberalism

 

 

 

Neoliberalism is an approach to economic and social policy based on neoclassical theories of economics that minimize the role of the state and maximize the private business sector. 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.

 

Deregulation and regulatory capture, under the auspices or big tent of advancing economic freedoms provided perfect cover for what is currently happening. This can best be explained as a change in status from a systems based, relatively transparent economy, to a relationship based, third world kind of economy.  Greenspan is on record as saying that corporate fraud could be sorted out in the market place, that laws against it were unnecessary.  He further reasoned that this was kind of the natural order of things, as if a corporation practising fraud was functionally stillborn.

Greenspan's  kind of thinking is guaranteed to spiral a society downward into corruption and chaos. Govts fail to prevent disaster, waiting for them to naturally resolve themselves. Fraud has been rewarded in the market place. A correction, if any is possible, will be born by the tax payer, when it could have been prevented if govts had prevented fraud, through enforcement of existing regulations. So even the most liberal of neoliberal policies were extended into the legal sphere and the rule of law was simply ignored. Very third world--very crony capitalist-very "mobbed up".

 

 

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DrKrbyLuv
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Re: Neoliberalism

You raise some interesting points darbikrash.  It is unfortunate that many of our possible paths to the future are given to us as multiple choice items from a preselected menu.  We end up with a concoction of both or progressions from one to the other in what is really a false choice.  This can eliminate superior choices that are totally separate.

For example in economics, we are given a false choice between Austrian or Keynesian (neoclassical schools) or socialism/communism.  Do private companies or the state control/benefit most from the economy?  In reality all they are close relatives and neither is desirable from the perspective of the people who are the most productive members. 

Keynesians are often blamed for leading to neoliberalism by Austrians who claim that their flavor of neoclassical is different as the "market" will determine the outcome instead of the money interests that control it. 

Here are parts of an article that appeared in the Guardian U.K. that does a decent job of explaining the false choice:

How the neoliberals stitched up the wealth of nations for themselves

A cabal of intellectuals and elitists hijacked the economic debate, and now we are dealing with the catastrophic effects

When the Mont Pelerin Society first met, in 1947, its political project did not have a name. But it knew where it was going. The society's founder, Friedrich von Hayek, remarked that the battle for ideas would take at least a generation to win, but he knew that his intellectual army would attract powerful backers. Its philosophy, which later came to be known as neoliberalism, accorded with the interests of the ultra-rich, so the ultra-rich would pay for it.

Neoliberalism claims that we are best served by maximum market freedom and minimum intervention by the state. The role of government should be confined to creating and defending markets, protecting private property and defending the realm.

This, at any rate, is the theory. But as David Harvey proposes in his book A Brief History of Neoliberalism, wherever the neoliberal programme has been implemented, it has caused a massive shift of wealth not just to the top 1%, but to the top tenth of the top 1%. In the US, for instance, the upper 0.1% has already regained the position it held at the beginning of the 1920s.

The conditions that neoliberalism demands in order to free human beings from the slavery of the state - minimal taxes, the dismantling of public services and social security, deregulation, the breaking of the unions - just happen to be the conditions required to make the elite even richer, while leaving everyone else to sink or swim. In practice the philosophy developed at Mont Pelerin is little but an elaborate disguise for a wealth grab.

The first great advantage the neoliberals possessed was an unceasing fountain of money. US oligarchs and their foundations - Coors, Olin, Scaife, Pew and others - have poured hundreds of millions into setting up think tanks, founding business schools and transforming university economics departments into bastions of almost totalitarian neoliberal thinking.

The Heritage Foundation, the Hoover Institute, the American Enterprise Institute and many others in the US, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute in the UK, were all established to promote this project. Their purpose was to develop the ideas and the language which would mask the real intent of the programme - the restoration of the power of the elite - and package it as a proposal for the betterment of humankind.

Neoliberalism, if unchecked, will catalyse crisis after crisis, all of which can be solved only by greater intervention on the part of the state. In confronting it, we must recognise that we will never be able to mobilise the resources its exponents have been given. But as the disasters they have caused unfold, the public will need ever less persuading that it has been misled.

Milton Friedman (in light coat and with hat, in the center) with friends in an excursion at the first meeting of the Mont Pelerin Society in 1947

Today we never discuss what the great advantages of sovereign credit systems because they are off the menu.  Soverirgn credit provides the people with the creative opportunity to be the big beneficiaries, separate from both the state and corporate sectors.

Larry

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Re: Neoliberalism

Great Topic Darb -

This is the debate for our future. False dichotomy of poor choices. Basically "Do you want to be punched, or kicked?"

I read the forums dominated by sheeple every morning just so I don't lose my perspective. I want to make sure I have a good grasp of where the mob is moving. It's hard for me to stay aware of the mob mentallity when I spend so much time studying detatchment from the established schools of thought.

In my morning reading, I've been watching this exact argument play, out on the yahoo forums, over the Wisconsin Public Unions protests. Workers rights vs. Corporate interests, Right vs. Left, etc.... What stuns me is the extreme lack of awareness the people directly involved have about their own situations. No one is even aware of the false choice they are being presented with.

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False choices

Rihter - Please patronize a neophyte and explain to me the "false choices" we are being presented with.  I am a Wisconsin resident, you see.

I often am amazed that people can get bogged down in obsessing on things like gay marriage and abortion and don't ask don't tell so that they don't see that the PTPB and their cronies are carting away the wealth of our nation for their own enjoyment. If you are coming in along those lines, then I can understand what you are saying.   My view is that business and government are one and the same, arrayed against the people who actually produce the wealth.  Critics of neo liberalism, from what I can tell, follow this logic up to a point, but then conclude that government can protect the people from the theives.  They seem to downplay the symbiotic relationship between business and government (and religion). 

Sometimes I actually wonder if collapse and preparation are a pipedream for those looking for a way to wipe the slate clean and to start over.  Given human nature, I doubt if the new world would be any better than the old one, most likely, it would be worse. 

I was drawn to Darbi's discourse on neo liberalism after something I had read over on Al Jazeera.  I was hoping for enlightenment, but only get more confused.  Darbi, with regard to our prior discussion regarding SocSec, if doesn't really matter if I have a better idea.  As I have so often noticed, my Congressmen don't call me for advice, so what I think is irrelevant.  But, I do believe that Socsec was only viable for those of the "greatest generation" and the rest of us will get screwed. 

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Rihter
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False choice expanded on
osb272646 wrote:

Rihter - Please patronize a neophyte and explain to me the "false choices" we are being presented with.  I am a Wisconsin resident, you see.

I often am amazed that people can get bogged down in obsessing on things like gay marriage and abortion and don't ask don't tell so that they don't see that the PTPB and their cronies are carting away the wealth of our nation for their own enjoyment. If you are coming in along those lines, then I can understand what you are saying.   My view is that business and government are one and the same, arrayed against the people who actually produce the wealth.  Critics of neo liberalism, from what I can tell, follow this logic up to a point, but then conclude that government can protect the people from the theives.  They seem to downplay the symbiotic relationship between business and government (and religion). 

Sometimes I actually wonder if collapse and preparation are a pipedream for those looking for a way to wipe the slate clean and to start over.  Given human nature, I doubt if the new world would be any better than the old one, most likely, it would be worse. 

I was drawn to Darbi's discourse on neo liberalism after something I had read over on Al Jazeera.  I was hoping for enlightenment, but only get more confused.  Darbi, with regard to our prior discussion regarding SocSec, if doesn't really matter if I have a better idea.  As I have so often noticed, my Congressmen don't call me for advice, so what I think is irrelevant.  But, I do believe that Socsec was only viable for those of the "greatest generation" and the rest of us will get screwed. 

The false choice I'm referring to is this. Do you support big government to protect you from the corporations?, or Do you support corporations to protect you from big government?

Business and government being one in the same has a definition too. If you believe that is the current state of affairs in the USA, then you believe we are living in a Fascist state. Fascism is basically a Corporation as the government.

No traditional economic theory is going to pull us out of the no growth paradox. That is my view. You can support either side of the Keyenes v. Friedman debate and still not come up with a solution to our economic woes.

I usually get upset with people who present problems with no solutions, so I will try not to do that here in this discussion. I submit that our society needs Business and Government. Also, I submit we need them to work together while being completely separate. Government primary goal is to represent the people who advocate it's existence. Business should be a autonomous tool that allows people to transfer good and services as efficiently as possible.

- Business should be autonomous. Not a "person". Business shouldn't be considered they, he, she, or any other pronoun. IT should remain it. It doesn't bleed, breath, feel remorse, empathy, compassion, or any other human emotion. This distorts it's ability to be treated like a person.

- Government should be limited so as it never loses it's ability to represent the people that advocate it. Term limits, conflict of interest, campaign funding, lobbyist's practices, etc.. should all be regulated to prevent positions in government from becoming anything more than positions of public servitude. Politicians should be revered because they are sacrificing their ability to gain economically by taking time to serve in office. They shouldn't be allowed to become "professional public servants".

Government should be dependent upon the people, not the people dependent upon the government. The same should be said of Corporations.

I hope this explains my position on the subject more coherently.

 

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concernedcitizenx5
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Neoliberalism

As long as I have been trying to discuss these very issues with people around me. I have discovered one thing. Discussing this issue gets in the way of their many distractions. Whether it is religion, sports, music, movies or what ever you choose. The deepest that most people will go is what they parrot off of the corporate crack supply line (abc, nbc, cnn, fox, etc).  I for one feel very alone. People here are very aware and willing to discuss issues and come to a better understanding. But this does not compare to talking with someone face to face. Facism seems to fit the face behind the mask to me. Neoliberalism may just be another form of it. Either way it is government make tough laws for the commoners to follow and little to no regulations for big business. May I suggest a read? http://www.dunwalke.com/

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Carl Veritas
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The Bill Of Rights protects

The Bill Of Rights protects us not from some foreign invading army but from the federal government.    Now why would the framers of the U.S. constitution think we need protection from government?     

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